Q4 2024 Novocure Ltd Earnings Call
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Speaker Change: Good day and thank you for standing by. Welcome to the Novocare fourth quarter 2024 earnings conference call. At this time all participants are in listen-only mode. After the speaker's presentation there will be a question and answer session.
Speaker Change: To ask a question during the session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised that today's conference is being recorded.
Speaker Change: I would now like to hand the conference over to your speaker today, Ingrid Goldberg. Please go ahead.
Speaker Change: Good morning, and thank you for joining us to review Novakir's fourth quarter and full year 2024 performance. I am on the phone this morning with our executive chairman, Bill Doyle, CEO, Ashley Cordova, and our CFO, Christoph Brockman. Other members of our executive leadership team will be available for Q&A.
Speaker Change: For your reference, slides accompanying this earnings release can be found on our website www.novahere.com on the Investor Relations page under Quarterly Reports.
Speaker Change: These statements involve a number of risks and uncertainties, some of which are beyond our control and are described from time to time in our SEC filings.
Speaker Change: We do not intend to update publicly any forward-looking statement except as required by law.
Speaker Change: Where appropriate, we may refer to non-GAAP financial measures to evaluate our business, specifically adjusted EBITDA, a measure of earnings before interest, taxes, depreciation, amortization, and share-based compensation.
Speaker Change: We believe adjusted EBITDA is an important metric as it removes the impact of earnings attributable to our capital structure, tax rate, and material non-cash items and best reflects the financial value generated by our business.
Speaker Change: Reconciliations of non-GAAP-to-GAAP financial measures are included in our press release, earnings slides, and in our Form 10-K filed with the SEC today. These materials can also be accessed from the Investor Relations page of our website.
Speaker Change: Following our prepared remarks today, we will open the line for your questions. I will now turn the call over to our Executive Chairman, Bill Doyle.
Thank you, Ingrid, and good morning, everyone.
Bill Doyle: For 25 years, our mission at Novacure has been to extend survival for patients with some of the most aggressive forms of cancer by developing and commercializing our novel therapy tumor treating fields.
Speaker Change: Prior to 2025, our commercial efforts focused largely on the treatment of glioblastoma.
after achieving key milestones in 2024.
Speaker Change: FDA approval for the treatment of non-small cell lung cancer and successful phase 3 readouts in pancreatic cancer and brain mets from non-small cell lung cancer.
Speaker Change: 2025 is set to be a defining year for Novacure as we move beyond a single indication to become a multi-indication oncology company.
Speaker Change: Our focus now is on execution and bringing tp field therapy to many more patients in need.
Entering 2024, we define three clear objectives for our organization.
grow our core GBM business
Speaker Change: launch our non-small cell lung cancer indication, and deliver on the promise of our clinical pipeline.
Speaker Change: I am proud to report we achieved all of these objectives.
Speaker Change: In 2024, we generated $605 million in net revenue, growing our global active patient count to over 4,000.
Speaker Change: We received FDA PMA approval to treat second-line non-small cell lung cancer with a broad label and immediately began treating patients in the U.S.
Speaker Change: And we had two additional positive readouts from large, randomized phase three clinical trials.
Speaker Change: MEDIS and RAINMEDS from non-small cell lung cancer and PANOVA3 in locally advanced pancreatic cancer.
Speaker Change: 2024 was a year of strong achievement at Novicure and has set the stage for a pivotal year in 2025.
Speaker Change: In the 25 years since our founding, we have grown to a team of nearly 1,500 people.
Speaker Change: treated over 35,000 GBN patients and are now poised to reach tens of thousands more with other difficult-to-treat cancers in the years to come.
Speaker Change: Our organizational evolution has included preparing to scale our operations to effectively reach these patients while continuing to expand our approved indications.
Speaker Change: Last year, we announced that Ashley Cordova, our CFO, would succeed our founding CEO, Asaf Danziger, after his retirement in December.
Speaker Change: and the Christoph Brackman would be joining our team as our new CFO.
Speaker Change: 2025 marks the beginning of a new chapter for Novacure as we build upon our strong foundation treating patients with GBM to begin to realize the full potential of the tumor treating fields platform.
Speaker Change: I am pleased to turn the call to Ashley to provide more detail on our achievements in 2024 and our plans for 2025. Christoph will then review our fourth quarter and full year financial performance, after which we will take your questions.
Ashley
Ashley Cordova: Thank you, Bill. I am honored to step into the role of Chief Executive Officer at this pivotal moment in Novocure's history.
Ashley Cordova: Our mission has never felt more urgent as we expand our reach to patients facing some of the most challenging solid tumors with significant unmet need.
to provide more detail on Bill's opening remarks.
Ashley Cordova: Our first objective in 2024 was to grow our GVM business.
Ashley Cordova: GBM remains the foundation of our company, providing financial strength to invest in our pipeline and execute multiple launches.
Ashley Cordova: In 2024, we grew active patients by 10 percent, surpassing 4,000 active patients on therapy for the first time.
Ashley Cordova: Our growth was driven by strong performance in multiple markets, including France, now our third largest market, and Germany and Japan.
Ashley Cordova: Improved U.S. approval rates contributed to 2024 top-line growth as higher U.S. net pricing complemented the increase in global activation.
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Ashley Cordova: Our second goal in 2024 was to launch our newest indication, Atun Lua, in second-line non-squeltal lung cancer.
Ashley Cordova: Entering the year, we submitted a PMA application to the FDA based on the lunar phase 3 clinical trial data and began the process of building a thoracic sales force in anticipation of FDA approval.
Ashley Cordova: On October 15, we received FDA approval with a broad label, including both docetaxel and Physicians' Choice of Immune Checkpoint Inhibitor as concomitant therapy options.
Ashley Cordova: Our OptumLua sales team was immediately in the field, and between approval and year-end, we received 52 prescriptions, and we finished the year with 20 active patients on therapy.
Ashley Cordova: We are pleased with these initial results and the early feedback from patients and physicians is promising.
Ashley Cordova: Patients are eager to access a new, unique therapy in non-small cell lung cancer.
Ashley Cordova: We are seeing interest from thoracic oncologists, medical oncologists, and radiation oncologists in both concomitant chemotherapy and immunotherapy options.
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Ashley Cordova: While early demand is promising, we remind investors that we are currently in the process of securing reimbursement, and these negotiations take time. We expect payer coverage milestones in 2025, with material revenue ramping in 2026 as coverage expands.
Ashley Cordova: Our final 2024 objective was to deliver on the promise of our clinical pipeline in indications with extremely high unmet need.
Ashley Cordova: In March, we announced successful top-line results from our Phase 3 METIS trial investigating tumor-treating field therapy for the treatment of brain metastases from non-falsal lung cancer following stereotactic radiosurgery.
Metis met its primary endpoint.
Ashley Cordova: Patients treated with tumor treating field therapy exhibited 21.9 months median time to intracranial progression compared to 11.3 months for patients treated with supportive care.
Ashley Cordova: In December, we announced successful top-line results from our Phase 3 PANOVA3 trial, investigating tumor-treating field therapy together with gemcitabine and nabteclitaxel for the treatment of unrespectable locally-advanced pancreatic cancer.
Ashley Cordova: Panova 3 also met its primary endpoint as patients randomized to receive tumor treating field therapy demonstrated median overall survival of 16.2 months compared to 14.2 months in the control arm.
Ashley Cordova: PANOVA-3 is the first and only phase 3 trial to demonstrate a statistically significant survival benefit in this notoriously difficult-to-treat patient population.
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Ashley Cordova: Early reactions from key pancreatic physicians have been very supportive, and we look forward to presenting the full data set at a medical conference later this year.
Ashley Cordova: MEDIS and PNOVA 3 represent major opportunities to expand our market reach as each serves patient populations with extremely high unmet needs.
Ashley Cordova: Brain metastases from non-swell cell lung cancer and locally advanced pancreatic cancer together with our recent lung cancer launch have the potential to increase our eligible patient population to 7x our GBM opportunity.
Ashley Cordova: Beyond these near-term catalysts, we continue to invest in our pipeline in GBM, lung, and pancreatic cancers.
Ashley Cordova: To touch on these trials quickly, our Phase III trident trial in GBM is studying the addition of tumor-treating field therapy to chemoradiation rather than starting after chemoradiation, potentially increasing the duration and efficacy benefit of tumor-treating fields.
Ashley Cordova: Trident is fully enrolled and we expect data in the first half of 2026.
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Ashley Cordova: Our other pipeline trials are studying the concomitant use of tumor treating fields therapy and immune checkpoint inhibitors, a regimen that showed immense promise in the lunar data set.
Ashley Cordova: These trials include our Phase 3 Lunar 2, our Phase 2 Lunar 4, our Phase 3 Keynote D58, and our Phase 2 PANOVA 4 trial.
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The first three trials are open and enrolling.
Ashley Cordova: Panova IV is fully enrolled and we expect data in the first half of 2026.
Ashley Cordova: These trials represent the next wave of innovation in Novocure's clinical pipeline with the potential to significantly expand the use of tumor treating fields therapy and the cancers where we have already established clinical benefits.
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Ashley Cordova: Beyond the progress made advancing our clinical pipeline, we achieved key milestones in our product development program with the approval of our HFE arrays in the U.S. and Japan.
Ashley Cordova: We are rolling out the HFE arrays in all major markets and feedback has been very encouraging.
Ashley Cordova: We believe the rollout of our next generation HFE array is an important step in improving patient usage, reducing barriers to adoption, and ultimately expanding the market for tumor treating field therapy.
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Ashley Cordova: As we reflect on the progress achieved in 2024, the Novocure story has substantially evolved.
Ashley Cordova: With the binary clinical events of prior years behind us, we are now focused on execution.
Ashley Cordova: 2025 is off to a strong start, and we expect to reach multiple important milestones this year.
Ashley Cordova: In lung cancer, we will continue to provide insights into the progress of our OptumLua launch.
Ashley Cordova: We will pursue clinical guidelines and reimbursement in the U.S. and regulatory approvals in Europe and Japan.
Ashley Cordova: In BrainMEDS, we expect to publish the MEDIS trial results and are engaged with the FDA in pre-submission discussion in anticipation of submitting a PMA application later this year.
Ashley Cordova: In pancreatic cancer, we expect to present the PANOVA data at an upcoming medical conference.
Ashley Cordova: followed by publication in a peer-reviewed journal. And again, we are engaged with the FDA and pre-submission discussion in anticipation of submitting a PMA application later this year.
Ashley Cordova: With FDA breakthrough designation for both brain mets and pancreatic cancer, we have the potential for launches in both indications in 2026.
Ashley Cordova: 2025 marks the beginning of a new era in Novocure's journey as we evolve from one indication in GBM to a multi-indication platform therapy company.
Ashley Cordova: The vision is clear. We are working to extend survival for as many patients as possible as we build on an incredibly strong foundation.
Speaker Change: With that, I would like to turn the call over to our newest executive colleague, Christophe Brockman.
Christophe Brockman: Thank you, Ashley, and thank you all for joining us this morning. This is an incredibly exciting time for Novocure as we pivot from a single indication to a multi-indication company, and I feel very privileged to be joining Novocure at this unique time.
2024 was a year of successful execution and growth.
Christophe Brockman: We generated revenues of $161 million in the fourth quarter of 2024, an increase of 21% compared to the same period in 2023, and $605 million for the full year, an increase of 19% year-over-year.
Christophe Brockman: This growth was primarily driven by our continued launch success in France, strong active patient growth in Germany and Japan, and significantly improved approval rates in the U.S., which are now reflected in our revenue baseline.
Christophe Brockman: Improved approval rates in the U.S. resulted in 8.3 million dollars of revenue from prior period claims during the quarter and 22.3 million dollars for the full year.
Christophe Brockman: 2025 revenue growth is expected to closely reflect growth in option geoactive patients.
Christophe Brockman: As the GBM business reaches maturity, we expect to continue to grow at a low mid-single digit rate this year.
Ashley Cordova: On the lung side, as Ashley explained earlier, our focus this year is on educating physicians, generating demand, and negotiating payer coverage.
Ashley Cordova: We anticipate meaningful revenue contributions starting in 2026 as coverage expands.
Ashley Cordova: Looking further ahead, we believe we have a clear path to address the patient population in multiple indications, which taken together is seven times larger than our GBM opportunity, and we are very focused on execution to reach these patients.
Ashley Cordova: Our gross margin in the fourth quarter was 79% and 77% for the full year 2024 compared to 75% in 2023.
Ashley Cordova: The improvement in gross margin is due to the increase in net revenue per patient primarily attributed to our improved approval rates in the U.S.
Ashley Cordova: This year we expect the global launch of the HFE arrays and the non-small cell lung cancer launch to be headwinds to gross margins.
Ashley Cordova: Regarding the ongoing global trade discussions, our global manufacturing supply chain networks allow for flexibility and capacity optimization.
Ashley Cordova: Based on current estimates, we do not foresee a material impact to margins in the short term, but we will continue to monitor this fluid situation closely.
Thank you for watching!
Ashley Cordova: Sales and marketing expenses in the fourth quarter were $67 million and $239 million for the full year, reflecting increases of 14% and 5% respectively compared to prior year periods.
Ashley Cordova: G&A expenses in the fourth quarter were $72 million and $190 million for the full year, reflecting increases of 84% and 16% respectively, primarily driven by stock-based compensation expenses related to the Lung Approval.
Ashley Cordova: excluding stock-based compensation, G&A expenses for the full year were $10 million lower than 2023, driven by our 2023 restructuring efforts.
Ashley Cordova: Looking ahead, as our thoracic sales forces in the U.S. and Germany are now fully staffed, we would expect some incremental expense primarily for marketing and in preparation for launch in additional countries.
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Ashley Cordova: Research and development costs for the fourth quarter were $51 million, bringing the annual total to $210 million, decreases of 6% from both prior periods. We anticipate our R&D expenses to be roughly stable in 2025.
Ashley Cordova: Net loss for the fourth quarter was 66 million dollars, or 61 cents per share.
Ashley Cordova: Net loss for the year was $169 million or $1.56 per share.
Ashley Cordova: Adjusted EVTA for the fourth quarter was $3 million, an increase of $34 million from Q4 2023, and full-year adjusted EVTA was $1 million, an increase of $107 million compared to last year.
Ashley Cordova: This increase in adjusted EBTA was driven by growth in net revenue as well as disciplined management of operating expenses.
Ashley Cordova: While we continue to invest in growth opportunities, profitability remains an important goal at Novocure and something we are actively driving towards.
We anticipate generating positive adjusted EVTA on a sustainable basis.
once we generate more material revenue from new indications.
Ashley Cordova: Cash and cash equivalents were 960 million dollars as of December 31, 2024.
Ashley Cordova: As a reminder, we have a $561 million convertible note outstanding which comes due in the fourth quarter.
Ashley Cordova: We believe the combination of cash on hand and funds available via our credit facility provide us with the necessary capital to pay the convertible note in full and fund operations for the foreseeable future.
Ashley Cordova: I would like to turn the call now back to Ashley for closing comments.
Thank you, Christophe.
To close, our vision is clear.
Ashley Cordova: We are striving to extend survival in some of the most aggressive forms of cancer.
Ashley Cordova: With the binary clinical events of prior years behind us, we are now focused on execution.
Ashley Cordova: This year marks the beginning of a new era in Novocure's journey as we evolve from a single GBM indication into a multi-indication platform company.
Ashley Cordova: And if we look beyond the next two years, we are only scratching the surface of what tumor-treating field therapy could afford patients.
Ashley Cordova: I'll now turn the call back to the operator for questions.
Speaker Change: Thank you. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster.
Speaker Change: Our first question comes from the line of Jonathan Chang with Lerink Partners. Your line is now open.
Jonathan Chang: Hi guys, thanks for taking my questions. Can you provide any more granularity on when and where we might see the Panova full data presentation? And can you provide any color on what we could learn when we get the full presentation versus the top line disclosure at the end of last year? Thank you.
Jonathan Chang: Jonathan, this is Ashley. I'll start and then and then Nicholas can jump in with more granularity, but the short answer is, unfortunately, we can't provide soon as what we shared as soon as we can get this Panova 3 data out. We will we're targeting all of the obvious conferences in the spring, but we'll be able to share more once we.
We have conferred and accepted.
Jonathan Chang: Yeah, thank you Ashley. This is Nicholas. Thank you Jonathan for that question. I don't have much to add to this. I mean, these are really important data and we are thrilled to present them soon.
Speaker Change: Got it. Thanks. Thank you. Our next question comes from the line of Jason Bednar with Piper Sandler. Your line is now open.
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Hello, good morning.
Speaker Change: I wanted to start on the LUNG side. A lot of investor questions just around the trajectory of the LUNG launch after what was a pretty good start. I think a lot of us can agree in the fourth quarter. And I don't expect you to guide scripts or patience, but you know, do you have targets on these metrics you'd consider a success when we look at this year or next?
Speaker Change: You know, and also, what does the trajectory look like in the U.S. here as we think about, you know, the kind of the cadence of 25?
Speaker Change: And then if at all, I'm sorry to layer on a few here, but can you talk about just the early experience of like.
Speaker Change: patient compliance, doctors being repeat customers, the actual expansion of your doctor customer base and lung, anything there would be helpful.
Speaker Change: Hi Jason, this is Frank. Thank you for the questions. I'll start off, you know, in terms of talking about our objectives for the launch and how that maps out to to volume growth. You know, first what we've
Speaker Change: What we've said before, say it's true, that we're really focused on getting the right physician with the right patient at the right time as our initial launch objective. And that's to take the learnings from GBM. We want to ensure a really strong positive first experience for the physician and the patient.
Speaker Change: which then builds confidence for that next prescription and an expansion within that physician's practice.
Speaker Change: It also ensures that we have what I would say are really good cases to argue with the insurance companies as we move towards coverage. And that's really the second prong of our launch strategy, which is that we need to build up
Speaker Change: enough experience working with the payers that we eventually drive towards positive coverage policies with commercial payers and then turn that over into a positive Medicare coverage policy.
Speaker Change: So all that said, we don't, as you know, we don't guide, but we are looking to build on this strong start and to build up a sufficient volume of patients this year that we have those good relationships with practices and good interactions with payers.
Speaker Change: I think in terms of sort of I'll give just a couple of anecdotes yeah sort of how's the launch going you know I was at the ISLAC targeted therapies conference last week and I was really pleased to see that in the emerging therapy section they had included tumor treating fields along with all the other new targeted therapies that are that are in phase 2 and phase 3 programs
Speaker Change: And I think that's an early sign that the lung cancer community has gone from not knowing about tumor-treating fields to being skeptical of tumor-treating fields, perhaps at the first release, to now saying, okay, let's understand this data in the context of the emerging landscape of treatment of lung cancer.
Speaker Change: So we've been really really pleased on that front and happy to add additional color if there's different areas you'd like me to go into.
Thank you for watching!
That's helpful, Frank. I do appreciate it.
Speaker Change: How are those discussions going? Can you talk about maybe the pacing of when you expect we'll see these, what are these payers actually looking at besides just the data?
Speaker Change: And, you know, then within that context, can you also talk about whether you expect commercial payers Medicare to establish new codes or to utilize existing codes from GBM when adding non-small cell, non-small cell loans? Thank you.
Speaker Change: Yeah so I'd say so first it's too early to comment on on payer interactions just because it's we're talking about the initial 20 patient cohort but I would say that
Speaker Change: or to comment in detail. But what I can say at a high level is that it's above our expectations so far. So we feel like we're on a good path with the payers.
Speaker Change: They really are, it's a focus, you know, what are the payers looking at? I think first and foremost it's the same thing that physicians look at, which is that there's a complete unmet need for treatment in the second line, that second line for non-small cell lung cancer in stage four. So that's always a good place to start with payers.
Speaker Change: In terms of just the general trajectory with payers, what we've said consistently is that we think it will take us about one to two years with the commercial payers to build up coverage policies and that Medicare would lag about a year behind that. And that's still what we're thinking.
Speaker Change: The only other thing I would add is this is the beauty of having a multi-indication platform is we get to leverage our experience and the knowledge that we've built up in GBM directly into the lung cancer indication. So this is a process we know how to do and we're doing it with the same team that have so successfully executed in GBM.
Thanks. Sorry. Anything on the coding?
Speaker Change: That's right, sorry. I realized I didn't answer that part. Thanks, Jason. On the codes, we expect to utilize the same, we are utilizing the same codes and expect to continue to.
Thank you. Thank you.
Okay, thank you so much.
Speaker Change: Thank you. Our next question comes from the line of Larry Beagleson with Wells Fargo. Your line is now open.
Speaker Change: Good morning. It's Leigh calling in for Larry. Thanks for taking my questions. Just first, on this call so far, you mentioned several times about improved U.S.
approval rates that contribute to revenue in 2024.
Speaker Change: Can you give any more color on how much that improvement was as far as revenue or revenue growth?
Speaker Change: and if we could see that improve further in 2025. Related to that, in 2024, you had some benefit from collections in the US revenue, and any thoughts on how we should think about in 2025. I guess really looking at a bigger picture is, when you look at consensus, is there anything the street might be missing on either those points or any other factors? I have a follow-up.
Christophe Brockman: Yeah, thank you for the question. This is Christoph. So happy to provide some color on this.
Christophe Brockman: Growth in 2024 in total from improved approval rates was 42 million driven by the US. Now, 22 million of that was from prior periods, so sort of a one-off windfall that we had in the prior year.
Christophe Brockman: at a level where we believe, you know, there is not much room for improvement.
Christophe Brockman: and hence we do not expect similar impacts going forward and that's what what we said in the prepared remarks we expect the growth to be in line with option geoactive patients growth
Christophe Brockman: and I think that probably answers the question. And we do think I think this is fairly well reflected in the consensus model.
Speaker Change: Got it. Thank you. And just for my follow-up, you mentioned that
Speaker Change: You mentioned the Medicine Panova 3 publication, should we expect these to 25 or 26, can you share that? And related to that, you mentioned filings for both later this year, that's probably a little later than we expected, are you just being conservative there, or is there anything we should think about as far as the process? Thank you again for taking questions.
Speaker Change: No, I think I'll start there. So the short answer is yes, you should expect
Speaker Change: publication this year, you know, in process to finalizing the submissions we're finalizing the manuscript drafts and they'll go in.
Speaker Change: And, you know, we are in the process of having active pre-submission discussions with the FDA. We have breakthrough device designation on both of these indications.
Speaker Change: which provides us the opportunity to go back and forth with some interactive review questions prior to the formal filing and we're in that process right now. So I wouldn't read anything into timing other than the fact that we're in that kind of pre-sub process.
Speaker Change: Right now, and we'll move it through to filing as soon as possible, but this is an area that probably goes slow to go fast.
Speaker Change: and we're in the interactive review part of the process right now.
Speaker Change: I do think it's important, while we talk about these milestones, to ground everybody, though, in the data and the TAMs, right? These are both indications where we have a significant unmet need, where there is the first advance ever for these specific populations, reflected in the Breakthrough Device Designation, and both of these...
Speaker Change: provide a TAM expansion opportunity that is a multiple of what we have in GBM. And as you look at the three in aggregate, you've heard us say many times before, 7x.
Speaker Change: the GVM opportunity. So we are as eager to get these in market as you all are to have us have them in market because it is a real transformative opportunity for the company.
Thank you for watching!
Speaker Change: Thank you. Our next question comes from the line of Vijay Kumar with Evercore ISI. Your line is now open.
Vijay Kumar: Should we model a sequential step-up throughout the year when you look at that 50 blue starting point and 20 active patients? In any goal posts on what percentage of covered lives should we expect to have some sort of coverage by end of 25, end of 26, etc.?
Vijay Kumar: Yeah, it's probably too soon for us to give you specific numbers, Vijay. You'll see it track out. What we'll say is that certainly you should expect it to grow throughout the course of the year. This is a growth indicator.
Asaf Danziger, Ingrid Goldberg, William Doyle, Ashley Cordova
Vijay Kumar: We would expect to exit though 25 with substantial experience to drive revenue in 26 and then maybe Frank anything you can add on
Frank: Yeah, Vijay, thanks for the question. You know, I just add, in terms of color on the launch, you know, what we're really looking at right now is the interactions we're having with our physicians and the patient profiles that are coming in. And, you know, what we're really pleased with is that we're seeing
Frank: patients getting tumor treating fields plus immune checkpoint inhibitors which to us is a good sign because we know that's a that's a robust market.
Speaker Change: I'm sorry, just that when you make the comment substantial revenues in 2026
Frank: safe to assume at least, you know, a quarter of covered lives are under some sort of coverage exiting 25. Would that be a reasonable assumption?
Speaker Change: Unfortunately, we're not going to be able to give you an anchor number. What we have said in the past, Vijay, is that commercial will come first. We expect that to work through the system in 25, and commercial is about 25% of the non-social lung cancer opportunity. So, those are statements you can't anchor to.
Speaker Change: Understood. Then a couple of P&L questions. One on China. Q4 revenues declined sequentially. Was that a timing element? Maybe talk about what's happening in China?
Speaker Change: I'd say that has more to do with the ending of the amortization of the royalty.
Speaker Change: They are, let me remind everybody that that China number includes both their purchases for future product or royalty on sales and the amortization of other royalties in that agreement. And I would say it's largely driven by timing and purchases and the roll off of the amortization.
Speaker Change: or is that like flattish or should that be down? What I will say is you should look at Q4 as the baseline that doesn't include in the royalty, so that's a good baseline and then I would kick to buy to, you know, answer their expectations about growth.
Speaker Change: I think you mentioned gross margin should be down for fiscal 25 given the new launches. Can you quantify that? And I think related you said OPEX to a step up.
Speaker Change: Is the step up in OPEC, should that be in line with revenues, above revenues, and what are the implications for cash flows if gross margins are down and OPEC's are stepping up?
Yeah, Ivy James, Christopher, I can take that.
Speaker Change: So, on maybe gross margin first, the gross margin in the quarter, but also for the year.
was quarter was 79%, year was 77%.
Speaker Change: benefited from the increased approval rates and specifically also from the benefit that we had from prior period claims. So for the full year there was 22 million. If you adjust that on gross margin you would be looking at gross margins in the mid-70s and I think that's a good sort of anchor.
Speaker Change: Now, what we also said in 2025, we expect headwinds on gross margin from two sides. One is
The
rollout of the new head array.
Speaker Change: which is, you know, lighter and thinner and more flexible, so a significant benefit to our patients, but it comes at this point at a higher cost.
So as we roll this out in the U.S.
Speaker Change: That will be headwind on gross margin, and the second headwind on gross margin is...
on the launch of the, on the LUN side.
Speaker Change: As we go at risk, you know, and prepare for, or, you know, negotiate for payer coverage, that's an impact on gross margin. So, long story short, we expect the gross margin to
Speaker Change: get closer to the lower 70s, it's a temporary effect and we would then, you know, expect it to revert.
Speaker Change: On the expense side, you know, as we are in launch mode, we would expect some incremental expenses, particularly on the sales and marketing side, and on the G&A side it's very moderate.
to Flattishville.
Speaker Change: But I would just reiterate that we feel confident that we have the financial strength and the cash balance that we need to kind of get through these flow periods.
Thanks, guys.
Speaker Change: Thank you. Our next question comes from the line of Jessica Fye with J.P. Morgan. Your line is now open.
Jessica Fye: Could you talk about what's the current number of active patients on option Lua for lung cancer in the U.S. and how does it compare to 20 active patients who reported at the end of 2024? And also maybe a comment on what factors do you think are driving or hindering that patient adoption? Thank you.
Jessica Fye: Yeah, so I think, first off, we don't comment on progress interquarter, so I can't comment on additions from the 20 patients at year-end.
Jessica Fye: But what I, what I can, in terms of the concept of the, in terms of commenting on, you know, what we think is driving the adoption rate, I just highlight an anecdote or a story that.
Jessica Fye: I was able to interact last week with two different physicians who are now multi-indication physicians for Novocare and tumor treating fields. So they've treated patients with glioblastoma, had long-term success stories.
both then participated in
Jessica Fye: medical oncology trials for us with Panova and Wooner and these two physicians now both have patients being treated on prescription order for lung cancer as well as patients in clinical trials for GBM or for other other indications. And so
Jessica Fye: I think we're seeing the early benefits of being a multi-indication company and that's really exciting for us.
Speaker Change: Oh, great, and maybe if I can squeeze in one more, how do you think about the drivers for revenue growth in 2025? Maybe a comment on that would be really helpful, okay.
Speaker Change: that funds our investments in R&D, but that the real unlock in growth will come from the launch in launch. And then, you know, as we look ahead in 26, we'll layer on Metis and Panova there with those launches.
25 of the demand generation year.
Great, thank you.
Speaker Change: Thank you. Our next question comes from the line of Emily Bodner with H.C. Wainwright. Your line is now open.
Speaker Change: Hi, good morning. Thanks for taking the questions. I guess the first one on the long launch with the initial patients.
Speaker Change: have received prescriptions. Are they mainly like PD-1 naive patients, PD-1 experienced patients? And then are you seeing patients who have, or taking DoseTaxel and PD-1 inhibitors, or is it mostly one or the other?
Thank you for watching!
Speaker Change: Thank you for the question. This is Frank. What I'll comment on is to say that we are seeing patients receive both docetaxel and immune checkpoint inhibitors concurrent with tumor treating fields. So we're seeing both populations.
Speaker Change: We are also seeing re-treatment with ICI or continuation of treatment for patients who have had ICI in the front line.
Speaker Change: And overall, we're seeing what I would describe as a good demographic mix of patients. I wouldn't go much further than that right now and say that those key metrics that we look at all look balanced and in the right direction.
Okay, great, thank you.
Speaker Change: Thank you. And I'm currently showing no further questions at this time. I'd like to hand the call back over to Bill Doyle for closing remarks.
Bill Doyle: So I'd like to conclude this call, as I always do, by first thanking all of our Novocure colleagues.
Bill Doyle: for their hard work and their dedication to our patients. And I'd like to thank you for your continued interest in Noverture.
This is actually my 36th.
earnings call since our IPO in 2015.
And I believe it marks
Bill Doyle: A true pivot, a true moment in history of this company.
Bill Doyle: As I was reflecting on the script, as we were editing it and putting it together,
This next chapter
Bill Doyle: As we move and grow from our foundation in GBM to a...
Global Multi-Indication Cancer Company
Bill Doyle: is something I think that all of us should be proud of and excited for as we continue to pursue our mission.
Bill Doyle: to help patients extend their survival with some of the most aggressive forms of cancer.
Thank you.
Bill Doyle: This concludes today's conference call. Thank you for your participation. You may now disconnect.