Novocure Reports Fourth Quarter and Full Year 2019 Financial Results and Provides Company Update

Quarterly net revenues of $99.2 million, representing 42 percent growth versus the fourth quarter 2018 and 8 percent growth versus the third quarter 2019

Second quarter of positive net income with $0.04 in earnings per share

Four phase 3 pivotal clinical trials ongoing creating the potential for substantial market expansion

Novocure (NASDAQ: NVCR) today reported financial results for the quarter and year ended December 31, 2019, highlighting continued commercial execution, strengthening financial performance and clinical and product development programs intended to unlock future value. Novocure is a global oncology company working to extend survival in some of the most aggressive forms of cancer by developing and commercializing its innovative therapy, Tumor Treating Fields.

Fourth quarter and full year 2019 highlights include:

 

 

Three months ended

December 31,

 

Twelve months ended

December 31,

 

 

2019

 

2018

 

% Change

 

2019

 

2018

 

% Change

Financial, in millions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net revenues

 

$

 

99.2

 

$

 

69.7

 

42%

 

$

 

351.3

 

$

 

248.1

 

42%

 

Gross profit

 

$

 

74.4

 

$

 

46.6

 

60%

 

$

 

262.7

 

$

 

168.0

 

56%

 

Net income (loss)

 

$

 

4.3

 

$

 

(15.6

)

-

 

$

 

(7.2

)

$

 

(63.6

)

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash, cash equivalents and

short-term investments at end of period

 

$

 

326.1

 

$

 

245.9

 

33%

 

$

 

326.1

 

$

 

245.9

 

33%

 

Non-financial

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Active patients at period end(1)

 

 

 

2,909

 

 

 

2,383

 

22%

 

 

 

2,909

 

 

 

2,383

 

22%

 

Prescriptions received in period(2)

 

 

 

1,380

 

 

 

1,315

 

5%

 

 

 

5,371

 

 

 

5,060

 

6%

 

 

(1) An "active patient" is a patient who is receiving treatment under a commercial prescription order as of the measurement date, including patients who may be on a temporary break from treatment and who plan to resume treatment in less than 60 days.

(2) A "prescription received" is a commercial order for Optune or NovoTTF-100L that is received from a physician certified to treat patients for a patient not previously on Optune or NovoTTF-100L. Orders to renew or extend treatment are not included in this total.

"We start 2020 with substantial momentum from an exceptional 2019," said Asaf Danziger, Novocure’s Chief Executive Officer, "In 2019, we generated $351 million in net revenues and added over $80 million in cash on hand to our balance sheet. The financial strength derived from our existing indications allows us to fund significant investments in clinical and product innovation to advance our proprietary cancer therapy platform. Our focus on strengthening our foundation and executing our strategic plan to deliver value to our patients, employees, and shareholders is unwavering."

"In 20 years of preclinical research across a wide variety of tumor cell lines and cancer models, Tumor Treating Fields has demonstrated a consistent anti-mitotic effect. We are enrolling patients in six clinical programs, including four randomized, phase 3 pivotal trials, and are very optimistic about the potential application of Tumor Treating Fields beyond our currently approved indications," continued William Doyle, Novocure’s Executive Chairman. "Also, new research is pointing the way to further improving the efficacy of the Tumor Treating Fields platform, and we are advancing multiple product development programs to this end. We are excited about the potential to significantly improve patient outcomes as we work to extend survival in some of the most aggressive forms of cancer."

Fourth quarter 2019 operating statistics and financial update

For the quarter ended December 31, 2019, net revenues were $99.2 million, representing 42% growth compared to the fourth quarter 2018.

  • In the United States, net revenues totaled $65.9 million in the quarter ended December 31, 2019, representing 49% growth compared to the same period in 2018.
  • In Germany and other EMEA markets, net revenues totaled $25.8 million in the quarter ended December 31, 2019, representing 14% growth compared to the same period in 2018.
  • In Japan, net revenues totaled $5.6 million in the quarter ended December 31, 2019, representing 95% growth compared to the same period in 2018.
  • In Greater China, net revenues totaled $1.9 million in the quarter ended December 31, 2019, representing 138% growth compared to the same period in 2018.

There were 2,909 active patients at December 31, 2019, representing 22% growth compared to December 31, 2018, and six percent growth compared to September 30, 2019.

  • In the United States, there were 1,952 active patients at December 31, 2019, representing 19% growth compared to December 31, 2018.
  • In Germany and other EMEA markets, there were 765 active patients at December 31, 2019, representing 17% growth compared to December 31, 2018.
  • In Japan, there were 192 active patients at December 31, 2019, representing 109% growth compared to December 31, 2018.

Additionally, 1,380 prescriptions were received in the quarter ended December 31, 2019, representing five percent growth compared to the same period in 2018, and five percent growth compared to the quarter ended September 30, 2019. In the quarter ended December 31, 2019, 1,079 Optune prescriptions were written for patients with newly diagnosed glioblastoma.

  • In the United States, 1,002 prescriptions were received in the quarter ended December 31, 2019, representing six percent growth compared to the same period in 2018.
  • In Germany and other EMEA markets, 285 prescriptions were received in the quarter ended December 31, 2019, representing an 11% decrease compared to the same period in 2018.
  • In Japan, 93 prescriptions were received in the quarter ended December 31, 2019, representing 79% growth compared to the same period in 2018.

For the three months ended December 31, 2019, cost of revenues was $24.8 million compared to $23.0 million for the same period in 2018, representing an increase of 8%. The increase was primarily due to the cost of shipping transducer arrays to a higher volume of commercial patients. Gross margin was 75% for the three months ended December 31, 2019 and 67% for the three months ended December 31, 2018.

Research, development and clinical trials expenses for the three months ended December 31, 2019, were $23.7 million compared to $15.0 million for the same period in 2018, representing an increase of 58%. This was primarily due to an increase in clinical development expenses driven by our ongoing phase 3 pivotal trials and an increase in costs associated with product development and medical affairs.

Sales and marketing expenses for the three months ended December 31, 2019, were $26.8 million compared to $21.2 million for the same period in 2018, representing an increase of 26%. This was primarily due to increased marketing expenses related to the launch of NovoTTF-100L and an increase in personnel costs to support our growing commercial business.

General and administrative expenses for the three months ended December 31, 2019 were $23.8 million compared to $19.1 million for the same period in 2018, representing an increase of 25%. This was primarily due to an increase in personnel costs and an increase in professional services.

Net income for the three months ended December 31, 2019, was $4.3 million compared to net loss of $15.6 million for the same period in 2018.

At December 31, 2019, we had $177.3 million in cash and cash equivalents and $148.8 million in short-term investments, for a total balance of $326.1 million in cash, cash equivalents and short-term investments. This represents an increase of $13.5 million in cash and investments since September 30, 2019.

Fourth quarter 2019 non-U.S. GAAP measures

We also measure our performance based upon a non-U.S. GAAP measurement of earnings before interest, taxes, depreciation, amortization and shared-based compensation ("Adjusted EBITDA"). We believe Adjusted EBITDA is useful to investors in evaluating our operating performance because it helps investors evaluate and compare the results of our operations from period to period by removing the impact of earnings attributable to our capital structure, tax rate and material non-cash items, specifically share-based compensation.

Adjusted EBITDA increased by $13.1 million, or 314%, to $17.3 million for the three months ended December 31, 2019 from $4.2 million for the three months ended December 31, 2018. This improvement in fundamental financial performance was driven by top-line growth and disciplined execution.

Anticipated clinical milestones

  • Interim analysis of phase 3 pivotal LUNAR trial in non-small cell lung cancer (H2 2020)
  • Data from phase 2 pilot HEPANOVA trial in advanced liver cancer (2021)
  • Data from phase 3 pivotal METIS trial in brain metastases (2021)
  • Interim analysis of phase 3 pivotal PANOVA-3 trial in locally advanced pancreatic cancer (2021)
  • Final data from phase 3 pivotal LUNAR trial in non-small cell lung cancer (2022)
  • Interim analysis of phase 3 pivotal INNOVATE-3 trial in recurrent ovarian cancer (2022)
  • Final data from phase 3 pivotal PANOVA-3 trial in locally advanced pancreatic cancer (2022)
  • Final data from phase 3 pivotal INNOVATE-3 trial in recurrent ovarian cancer (2024)

Conference call details

Novocure will host a conference call and webcast to discuss fourth quarter and full year 2019 financial results at 8 a.m. EST today, Thursday, February 27, 2020. Analysts and investors can participate in the conference call by dialing 855-442-6895 for domestic callers and 509-960-9037 for international callers, using the conference ID 1769503.

The webcast, earnings slides presented during the webcast and the corporate presentation can be accessed live from the Investor Relations page of Novocure’s website, www.novocure.com/investor-relations, and will be available for at least 14 days following the call. Novocure has used, and intends to continue to use, its investor relations website, as a means of disclosing material non-public information and for complying with its disclosure obligations under Regulation FD.

About Novocure

Novocure is a global oncology company working to extend survival in some of the most aggressive forms of cancer through the development and commercialization of its innovative therapy, Tumor Treating Fields. Tumor Treating Fields is a cancer therapy that uses electric fields tuned to specific frequencies to disrupt solid tumor cancer cell division. Novocure’s commercialized products are approved in certain countries for the treatment of adult patients with glioblastoma and in the U.S. for the treatment of adult patients with malignant pleural mesothelioma. Novocure has ongoing or completed clinical trials investigating Tumor Treating Fields in brain metastases, non-small cell lung cancer, pancreatic cancer, ovarian cancer, liver cancer and gastric cancer.

Headquartered in Jersey, Novocure has U.S. operations in Portsmouth, New Hampshire, Malvern, Pennsylvania and New York City. Additionally, the company has offices in Germany, Switzerland, Japan and Israel. For additional information about the company, please visit www.novocure.com or follow us at www.twitter.com/novocure.

Forward-Looking Statements

In addition to historical facts or statements of current condition, this press release may contain forward-looking statements. Forward-looking statements provide Novocure’s current expectations or forecasts of future events. These may include statements regarding anticipated scientific progress on its research programs, clinical trial progress, development of potential products, interpretation of clinical results, prospects for regulatory approval, manufacturing development and capabilities, market prospects for its products, coverage, collections from third-party payers and other statements regarding matters that are not historical facts. You may identify some of these forward-looking statements by the use of words in the statements such as "anticipate," "estimate," "expect," "project," "intend," "plan," "believe" or other words and terms of similar meaning. Novocure’s performance and financial results could differ materially from those reflected in these forward-looking statements due to general financial, economic, regulatory and political conditions as well as more specific risks and uncertainties facing Novocure such as those set forth in its Report on Form 10-K filed on February 27, 2020, with the U.S. Securities and Exchange Commission. Given these risks and uncertainties, any or all of these forward-looking statements may prove to be incorrect. Therefore, you should not rely on any such factors or forward-looking statements. Furthermore, Novocure does not intend to update publicly any forward-looking statement, except as required by law. Any forward-looking statements herein speak only as of the date hereof. The Private Securities Litigation Reform Act of 1995 permits this discussion.

Consolidated Statements of Operations

USD in thousands (except share and per share data)

 

 

 

Three months ended

December 31,

 

Twelve months ended

December 31,

 

 

2019

 

2018

 

2019

 

2018

Net revenues

 

$

99,234

 

$

69,674

 

$

351,318

 

$

248,069

Cost of revenues

 

 

24,786

 

 

23,028

 

 

88,606

 

 

80,048

Gross profit

 

 

74,448

 

 

46,646

 

 

262,712

 

 

168,021

Operating costs and expenses:

 

 

 

 

 

 

 

 

Research, development and clinical trials

 

 

23,741

 

 

15,034

 

 

79,003

 

 

50,574

Sales and marketing

 

 

26,804

 

 

21,208

 

 

96,675

 

 

77,663

General and administrative

 

 

23,751

 

 

19,068

 

 

87,948

 

 

73,456

Total operating costs and expenses

 

 

74,296

 

 

55,310

 

 

263,626

 

 

201,693

Operating income (loss)

 

 

152

 

 

(8,664)

 

 

(914)

 

 

(33,672)

Financial expenses (income), net

 

 

1,744

 

 

2,160

 

 

7,910

 

 

12,270

Income (loss) before income tax

 

 

(1,592)

 

 

(10,824)

 

 

(8,824)

 

 

(45,942)

Income tax

 

 

(5,852)

 

 

4,807

 

 

(1,594)

 

 

17,617

Net income (loss)

 

$

4,260

 

$

(15,631)

 

$

(7,230)

 

$

(63,559)

 

 

 

 

 

 

 

 

 

Basic net income (loss) per ordinary share

 

$

0.04

 

$

(0.17)

 

$

(0.07)

 

$

(0.69)

 

 

 

 

 

 

 

 

 

Weighted average number of ordinary shares
used in computing basic net income (loss) per
ordinary share

 

 

99,226,445

 

 

93,083,298

 

 

97,237,549

 

 

91,828,043

 

Diluted net income (loss) per ordinary share

 

$

0.04

 

$

(0.17)

 

$

(0.07)

 

$

(0.69)

 

Weighted average number of ordinary shares
used in computing diluted net income (loss)
per ordinary share

 

 

107,911,519

 

 

93,083,298

 

 

97,237,549

 

 

91,828,043

 

Consolidated Balance Sheets

USD in thousands (except share data)

 

Year ended December 31,

 

2019

 

2018

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

177,321

 

 

$

140,622

 

Short-term investments

148,769

 

 

105,256

 

Restricted cash

2,095

 

 

2,134

 

Trade receivables, net

58,859

 

 

36,523

 

Receivables and prepaid expenses

29,202

 

 

14,279

 

Inventories

23,701

 

 

22,555

 

Total current assets

439,947

 

 

321,369

 

Long-term assets:

 

 

 

Property and equipment, net

9,342

 

 

8,442

 

Field equipment, net

7,684

 

 

6,924

 

Right-of-use assets, net

17,571

 

 

 

Other long-term assets

4,904

 

 

3,058

 

Total long-term assets

39,501

 

 

18,424

 

Total assets

$

479,448

 

 

$

339,793

 

 

Year ended December 31,

 

2019

 

2018

Liabilities and shareholders’ equity

 

 

 

Current liabilities:

 

 

 

Trade payables

$

36,925

 

 

$

26,708

 

Other payables and accrued expenses

49,386

 

 

37,852

 

Total current liabilities

86,311

 

 

64,560

 

Long-term liabilities:

 

 

 

Long-term loan, net of discount and issuance costs

149,424

 

 

149,268

 

Deferred revenues

7,807

 

 

9,929

 

Long term leases

14,140

 

 

 

Employee benefit liabilities

3,754

 

 

2,683

 

Other long-term liabilities

222

 

 

1,094

 

Total long-term liabilities

175,347

 

 

162,974

 

Total liabilities

261,658

 

 

227,534

 

Commitments and contingencies

 

 

 

Shareholders’ equity:

 

 

 

Share capital -

 

 

 

 

Ordinary shares - No par value, Unlimited shares authorized; Issued and
outstanding: 99,528,435 shares and 93,254,185 shares at December 31, 2019
and December 31, 2018 respectively;

 

 

 

Additional paid-in capital

871,442

 

 

757,314

 

Accumulated other comprehensive loss

(2,767)

 

 

(1,400)

 

Accumulated deficit

(650,885)

 

 

(643,655)

 

Total shareholders’ equity

217,790

 

 

112,259

 

Total liabilities and shareholders’ equity

$

479,448

 

 

$

339,793

 

 

Non-U.S. GAAP financial measures reconciliation

USD in thousands

 

 

Three months ended

December 31,

Adjusted EBITDA

 

2019

 

2018

Net income (loss)

 

$

 

4,260 

 

$

 

(15,631) 

Add: Income tax

 

$

 

(5,852)

 

$

 

 4,807

Add: Financial income (expenses), net

 

$

 

1,744

 

$

 

 2,160

Add: Depreciation and amortization

 

$

 

2,467

 

$

 

 2,205

EBITDA

 

$

 

 2,619

 

$

 

 (6,459)

Add: Share-based compensation

 

$

 

 14,699

 

$

 

 10,640

Adjusted EBITDA

 

$

 

 17,318

 

$

 

 4,181

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20200227005417/en/

Contacts

Media and Investor Contact:
Ashley Cordova
acordova@novocure.com
212-767-7558