nvcr-20240331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_______________________________________________________

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2024


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 001-37565

NovoCure Limited

(Exact Name of Registrant as Specified in Its Charter)


Jersey						98-1057807
(State or Other Jurisdiction of						(I.R.S. Employer
Incorporation or Organization)						Identification No.)

No. 4 The Forum

Grenville Street

St. Helier, Jersey JE2 4UF

(Address of principal executive offices, including zip code)

+44 (0) 15 3475 6700

(Registrant’s Telephone Number, Including Area Code)

Not Applicable

(Former Name, Former Address and Former Fiscal Year, If Changed Since Last Report)

_______________________________________________________

Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Ordinary Shares, no par value	NVCR	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐.

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒.

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.


Class						Outstanding as of April 26, 2024
Ordinary shares, no par value						107,611,077 Shares

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

In addition to historical facts or statements of current condition, this report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements contained in this report are based on our current plans, expectations, hopes, beliefs, intentions or strategies concerning future developments and their impact on us. Forward-looking statements contained in this report constitute our expectations or forecasts of future events as of the date this report was filed with the Securities and Exchange Commission and are not statements of historical fact. You can identify these statements by the fact that they do not relate strictly to historical or current facts. Such statements may include words such as “anticipate,” “will,” “estimate,” “expect,” “project,” “intend,” “should,” “plan,” “believe,” “hope” and other words and terms of similar meaning in connection with any discussion of, among other things, future operating or financial performance, strategic initiatives and business strategies, regulatory or competitive environments, our intellectual property and research and development related to our Tumor Treating Fields ("TTFields") devices marketed under various brand names, including "Optune Gio" and "Optune Lua", and software, tools and other items to support and optimize the delivery of TTFields (collectively, the “Products”). In particular, these forward-looking statements include, among others, statements about:

•our research and development, clinical study and commercialization activities and projected expenditures;

•the further commercialization of our Products for current and future indications;

•our business strategies and the expansion of our sales and marketing efforts in the United States ("U.S.") and in other countries;

•the market acceptance of our Products for current and future indications by patients, physicians, third-party payers and others in the healthcare and scientific community;

•our plans to pursue the use of our Products for the treatment of indications other than glioblastoma (“GBM”) and malignant pleural mesothelioma (“MPM”);

•our estimates regarding revenues, expenses, capital requirements and needs for additional financing;

•our ability to obtain regulatory approvals for the use of our Products in indications other than GBM and MPM;

•our ability to acquire from third-party suppliers the supplies needed to manufacture our Products;

•our ability to manufacture adequate supply of our Products;

•our ability to secure and maintain adequate coverage from third-party payers to reimburse us for our Products for current and future indications;

•our ability to receive payment from third-party payers for use of our Products for current and future indications;

•our ability to maintain, develop protect, defend or enforce our intellectual property position;

•our ability to manage the risks associated with business disruptions caused by natural disasters, extreme weather events, pandemics such as COVID-19 (coronavirus), or international conflict or other disruptions outside of our control;

•our cash needs; and

•our prospects, financial condition and results of operations.

These forward-looking statements involve a number of risks and uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. Factors which may cause such differences to occur include those risks and uncertainties set forth under Part I, Item 1A., “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 filed on February 22, 2024, as well as other risks and uncertainties set forth from time to time in the reports we file with the Securities and Exchange Commission (the "SEC"). In our prior filings, references to Optune now refer to Optune Gio® and NovoTTF-100L refer to Optune Lua®. We do not intend

to update publicly any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by law.

TRADEMARKS

This Quarterly Report on Form 10-Q includes trademarks of NovoCure Limited and other persons. All trademarks or trade names referred to herein are the property of their respective owners.

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NovoCure Limited

Quarterly Report on Form 10-Q

TABLE OF CONTENTS


		Page
Cautionary Note Regarding Forward Looking Statements		i
Trademarks		ii

PART I—FINANCIAL INFORMATION

Item 1.	Financial Statements	2
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	26
Item 4.	Controls and Procedures	26

PART II—OTHER INFORMATION

Item 1.	Legal Proceedings	28
Item 1A.	Risk Factors	28
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	28
Item 3.	Defaults Upon Senior Securities	28
Item 4.	Mine Safety Disclosures	28
Item 5.	Other Information	28
Item 6.	Exhibits	30

	Signatures	31

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PART I—FINANCIAL INFORMATION

Item 1. Financial Statements


NOVOCURE LIMITED AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands (except share data)
	March 31, 2024		December 31, 2023
	Unaudited		Audited
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	453,763	$	240,821
Short-term investments	416,384		669,795
Restricted cash	3,600		1,743
Trade receivables, net	65,091		61,221
Receivables and prepaid expenses	21,479		22,677
Inventories	42,391		38,152
Total current assets	1,002,708		1,034,409
LONG-TERM ASSETS:
Property and equipment, net	58,917		51,479
Field equipment, net	11,911		11,384
Right-of-use assets	32,994		34,835
Other long-term assets	14,899		14,022
Total long-term assets	118,721		111,720
TOTAL ASSETS	$	1,121,429	$	1,146,129

The accompanying notes are an integral part of these unaudited consolidated financial statements.

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NOVOCURE LIMITED AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands (except share data)
	March 31, 2024		December 31, 2023
	Unaudited		Audited
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Trade payables	$	84,316	$	94,391
Other payables, lease liabilities and accrued expenses	75,914		84,724
Total current liabilities	160,230		179,115
LONG-TERM LIABILITIES:
Long-term debt, net	569,652		568,822
Long-term leases	25,608		27,420
Employee benefit liabilities	6,566		8,258
Other long-term liabilities	18		18
Total long-term liabilities	601,844		604,518
TOTAL LIABILITIES	762,074		783,633
COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY:
Share capital -
Ordinary shares no par value, unlimited shares authorized; issued and outstanding: 107,603,774 shares and 107,075,754 shares at March 31, 2024 (unaudited) and December 31, 2023, respectively	—		—
Additional paid-in capital	1,387,765		1,353,468
Accumulated other comprehensive income (loss)	(4,147)		(5,469)
Retained earnings (accumulated deficit)	(1,024,263)		(985,503)
TOTAL SHAREHOLDERS' EQUITY	359,355		362,496
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	1,121,429	$	1,146,129

The accompanying notes are an integral part of these unaudited consolidated financial statements.

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NOVOCURE LIMITED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS
U.S. dollars in thousands (except share and per share data)
	Three months ended March 31,			Year ended December 31,
		2024		2023		2023
	Unaudited			Audited
Net revenues		$	138,503	$	122,182	$	509,338
Cost of revenues		33,689		29,614		128,280
Gross profit		104,814		92,568		381,058

Operating costs and expenses:
Research, development and clinical studies		51,598		59,704		223,062
Sales and marketing		55,206		51,169		226,809
General and administrative		39,530		41,944		164,057
Total operating costs and expenses		146,334		152,817		613,928

Operating income (loss)		(41,520)		(60,249)		(232,870)
Financial income (expenses), net		9,878		9,169		41,130

Income (loss) before income tax		(31,642)		(51,080)		(191,740)
Income tax		7,118		1,981		15,303
Net income (loss)		$	(38,760)	$	(53,061)	$	(207,043)

Basic and diluted net income (loss) per ordinary share		$	(0.36)	$	(0.50)	$	(1.95)
Weighted average number of ordinary shares used in computing basic and diluted net income (loss) per share		107,266,198		105,667,072		106,391,178

The accompanying notes are an integral part of these unaudited consolidated financial statements.

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
U.S. dollars in thousands
	Three months ended March 31,			Year ended December 31,
		2024		2023		2023
	Unaudited			Audited
Net income (loss)		$	(38,760)	$	(53,061)	$	(207,043)
Other comprehensive income (loss), net of tax:
Change in foreign currency translation adjustments		(327)		300		1,473
Unrealized gain (loss) from debt securities		—		357		445
Pension benefit plan		1,649		(915)		(4,954)
Total comprehensive income (loss)		$	(37,438)	$	(53,319)	$	(210,079)


NOVOCURE LIMITED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
U.S. dollars in thousands (except share data)
	Ordinary shares	Additional paid-in capital		Accumulated other comprehensive loss		Retained earnings (accumulated deficit)		Total shareholders' equity

Balance as of December 31, 2023 (audited)	107,075,754	$	1,353,468	$	(5,469)	$	(985,503)	$	362,496

Share-based compensation to employees	—	34,084		—		—		34,084
Exercise of options and vested RSUs	528,020	213		—		—		213
Other comprehensive income (loss), net of tax benefit of $0	—	—		1,322		—		1,322
Net income (loss)	—	—		—		(38,760)		(38,760)
Balance as of March 31, 2024 (Unaudited)	107,603,774	$	1,387,765	$	(4,147)	$	(1,024,263)	$	359,355




	Ordinary shares	Additional paid-in capital		Accumulated other comprehensive loss		Retained earnings (accumulated deficit)		Total shareholders' equity

Balance as of December 31, 2022 (audited)	105,049,411	$	1,222,063	$	(2,433)	$	(778,460)	$	441,170

Share-based compensation to employees	—	39,084		—		—		39,084
Exercise of options and vested RSUs	1,137,751	5,211		—		—		5,211
Other comprehensive income (loss), net of tax benefit of $0	—	—		(258)		—		(258)
Net income (loss)	—	—		—		(53,061)		(53,061)
Balance as of March 31, 2023 (Unaudited)	106,187,162	$	1,266,358	$	(2,691)	$	(831,521)	$	432,146

The accompanying notes are an integral part of these unaudited consolidated financial statements.

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NOVOCURE LIMITED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. dollars in thousands
	Three months ended March 31,			Year ended December 31,
		2024		2023		2023
	Unaudited			Audited
Cash flows from operating activities:
Net income (loss)		$	(38,760)	$	(53,061)	$	(207,043)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization		2,815		2,722		10,969
Accrued Interest		1,622		(1,120)		(95)
Asset write-downs and impairment of field equipment		194		126		493
Share-based compensation		34,084		39,084		115,608
Foreign currency remeasurement loss (gain)		613		(127)		161
Decrease (increase) in accounts receivables and prepaid expenses		(3,275)		14,511		29,414
Amortization of discount (premium)		(5,381)		(4,056)		(23,084)
Decrease (increase) in inventories		(4,650)		(2,718)		(8,919)
Decrease (increase) in other long-term assets		1,174		1,534		4,072
Increase (decrease) in accounts payables and accrued expenses		(18,245)		(10,464)		14,869
Increase (decrease) in other long-term liabilities		(1,765)		(3,158)		(9,781)
Net cash provided by (used in) operating activities		(31,574)		(16,727)		(73,336)

Cash flows from investing activities:
Purchase of property, equipment and field equipment		(11,784)		(6,088)		(27,093)
Proceeds from maturity of short-term investments		258,000		326,287		1,214,982
Purchase of short-term investments		—		(237,912)		(1,003,741)
Net cash provided by (used in) investing activities		246,216		82,287		184,148

Cash flows from financing activities:
Proceeds from issuance of shares, net		—		—		4,416

Repayment of long-term debt		—		(7)		(10)
Exercise of options		213		5,211		11,381
Net cash provided by (used in) financing activities		213		5,204		15,787

Effect of exchange rate changes on cash, cash equivalents and restricted cash		(56)		41		131

Increase (decrease) in cash, cash equivalents and restricted cash		214,799		70,805		126,730
Cash, cash equivalents and restricted cash at the beginning of the period		242,564		115,834		115,834

Cash, cash equivalents and restricted cash at the end of the period		$	457,363	$	186,639	$	242,564





Supplemental cash flow activities:
Cash paid during the period for:
Income taxes paid (refunded), net		$	2,914	$	1,712	$	13,665
Interest paid		$	2	$	1	$	6
Reconciliation of cash, cash equivalents and restricted cash:
Cash and cash equivalents		$	453,763	$	185,963	$	240,821
Restricted cash		3,600		676		1,743
Total cash, cash equivalents and restricted cash		$	457,363	$	186,639	$	242,564

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NOVOCURE LIMITED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. dollars in thousands
Non-cash activities:
Right-of-use assets obtained in exchange for lease liabilities	$	282	$	3,451	$	18,063
Purchase of property incurred but unpaid at period end	$	1,062	$	—	$	1,714

The accompanying notes are an integral part of these unaudited consolidated financial statements.

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NOVOCURE LIMITED AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands (except share data)

NOTE 1: ORGANIZATION AND BASIS OF PRESENTATION

Organization. NovoCure Limited (including its consolidated subsidiaries, the "Company") was incorporated in the Bailiwick of Jersey and is principally engaged in the development, manufacture and commercialization of Tumor Treating Fields ("TTFields") devices, including Optune and Optune Lua (collectively, our "Products"), for the treatment of solid tumor cancers. The Company markets Optune and Optune Lua in multiple countries around the globe with the majority of revenues coming from the use of Optune in the U.S., Germany and Japan. The Company also has a License and Collaboration Agreement (the "Zai Agreement") with Zai Lab (Shanghai) Co., Ltd. ("Zai") to market Optune in China, Hong Kong, Macau and Taiwan ("Greater China").

Financial statement preparation. The accompanying unaudited consolidated financial statements include the accounts of the Company and intercompany accounts and transactions have been eliminated. In the opinion of the Company’s management, the unaudited consolidated financial statements reflect all adjustments, which are normal and recurring in nature, necessary for fair financial statement presentation for the periods presented. The preparation of these unaudited consolidated financial statements in conformity with U.S. generally accepted accounting principles ("GAAP") requires management to make estimates and assumptions that affect the amounts reported in these unaudited consolidated financial statements and accompanying notes. Actual results could differ materially from those estimates. These unaudited consolidated financial statements and accompanying notes should be read in conjunction with the Company’s annual consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023 (the "2023 10-K") filed with the Securities and Exchange Commission on February 22, 2024.

The significant accounting policies applied in the audited annual consolidated financial statements of the Company as disclosed in the 2023 10-K are applied consistently in these unaudited interim consolidated financial statements.

Concentration Risks. The Company's cash, cash equivalents, short-term investments and trade receivables are potentially subject to a concentration of risk. Cash, cash equivalents and short-term investments are invested at top tier financial institutions globally and the total value invested at any one institution is limited pursuant to the Company's investment policy. These investments may be in excess of insured limitations or not insured in certain jurisdictions. Generally, these investments may be redeemed upon demand according to the terms of the securities.

The Company's trade receivables are due from numerous governments and federal and state agencies that are paid from their respective budgets, and from hundreds of health insurance companies. The Company does not believe that there are significant default risks associated with these governments, agencies and health insurance companies based upon the Company's historical experience.

The Company has no off-balance sheet concentrations of credit risk such as foreign exchange contracts, option contracts or other foreign hedging arrangements.

Recently announced accounting pronouncements.

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires public entities to disclose information about their reportable segments’ significant expenses and other segment items on an interim and annual basis. Public entities with a single reportable segment are required to apply the disclosure requirements in ASU 2023-07, as well as all existing segment disclosures and reconciliation requirements in ASC 280 on an interim and annual basis. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact of adopting ASU 2023-07.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires public entities, on an annual basis, to provide disclosure of specific categories in the rate reconciliation, as well as disclosure of income taxes paid disaggregated by jurisdiction. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact of adopting ASU 2023-09.

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NOTE 2: CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS

Cash equivalents include items almost as liquid as cash, with maturity periods of three months or less when purchased, and short-term investments include items with maturity dates between three months and one year when purchased. As of March 31, 2024 and December 31, 2023, the Company’s cash and cash equivalents and short-term investments were composed of:


	March 31, 2024
	Unaudited
	Fair value level	Adjusted cost basis		Unrealized gains		Unrealized losses		Fair market value		Recorded basis		Cash and cash equivalents		Short-term investments (2)
Cash		$	17,626	$	—	$	—	$	17,626	$	17,626	$	17,626	$	—
Money market funds	Level 1	303,191		—		—		303,191		303,191		303,191		—
Certificate of deposits and term deposits	Level 2	116,052		—		—		116,052		116,052		23,204		92,848
HTM securities (1)
U.S. Treasury bills	Level 1	$	139,373	$	72	$	—	139,445		139,373		$	109,742	$	29,631

Corporate debt securities	Level 2	$	293,905	$	297	$	(5)	294,197		293,905		$	—	$	293,905

		$	433,278	$	369	$	(5)	$	433,642	$	433,278	$	109,742	$	323,536

Total		$	870,147	$	369	$	(5)	$	870,511	$	870,147	$	453,763	$	416,384


	December 31, 2023
	Audited
	Fair value level	Adjusted cost basis		Unrealized gains		Unrealized losses		Fair market value		Recorded basis		Cash and cash equivalents		Short-term investments (2)
Cash		$	9,955	$	—	$	—	$	9,955	$	9,955	$	9,955	$	—
Money market funds	Level 1	227,166		—		—		227,166		227,166		227,166		—
Certificate of deposits and term deposits	Level 2	153,169		—		—		153,169		153,169		3,700		149,469
HTM securities (1)
U.S. Treasury bills	Level 1	$	78,844	$	55	$	(110)	78,789		78,844		$	—	$	78,844
Government and governmental agencies	Level 2	$	24,940	$	13	$	—	24,953		24,940		$	—	$	24,940
Corporate debt securities	Level 2	$	416,542	$	486	$	(149)	416,879		416,542		$	—	$	416,542

		$	520,326	$	554	$	(259)	$	520,621	$	520,326	$	—	$	520,326

Total		$	910,616	$	554	$	(259)	$	910,911	$	910,616	$	240,821	$	669,795

(1) Changes in fair value of held-to-maturity ("HTM") securities are presented for disclosure purposes as required by ASC 320 "Investments — Debt Securities" and are recorded as finance expenses only if the unrealized loss is identified as a credit loss.

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(2) Pursuant to a bank guaranty agreement, $16,189 of short-term investments are pledged. See Note 4.

In accordance with ASC 820, "Fair Value Measurements and Disclosures," the Company measures its money market funds at fair value. The fair value of the money market funds and HTM securities, which is presented for disclosure purposes, is classified within Level 1 or Level 2. This is because these assets are valued using quoted market prices or alternative pricing sources and models utilizing market observable inputs.

As of March 31, 2024 and December 31, 2023, all investments mature in one year or less.

Unrealized losses from debt securities are primarily attributable to changes in interest rates. The Company does not believe any remaining unrealized losses represent impairments based on the evaluation of available evidence.

NOTE 3: INVENTORIES

Inventories are stated at the lower of cost or net realizable value. The weighted average methodology is applied to determine cost. As of March 31, 2024 and December 31, 2023, the Company’s inventories were composed of:


	March 31, 2024	December 31, 2023
	Unaudited	Audited
Raw materials

SEC Form 10-Q filed by NovoCure Limited