On October 31, 2019 Novocure (NASDAQ: NVCR) reported financial results for the three and nine months ended September 30, 2019, highlighting strengthening financial performance, multiple levers to drive near-term growth and building momentum for the Tumor Treating Fields platform (Press release, NovoCure, OCT 31, 2019, View Source [SID1234550139]). 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.

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(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.

"The third quarter 2019 was another strong quarter for Novocure," said Asaf Danziger, Novocure’s CEO. "Marked by the third consecutive quarter of greater than 40 percent year-over-year revenue growth, commercial execution drove a record $92 million in net revenues and our first quarter ever of positive net income. With multiple levers to deliver continued near-term revenue growth, cash flow from the GBM business provides the financial flexibility and stability needed to ensure we can make the appropriate investments in our clinical pipeline and further technology development."

"We are determined to unlock the value of Tumor Treating Fields therapy across a variety of solid tumor indications," said Bill Doyle, Novocure’s Executive Chairman. "Our teams continue to make progress enrolling patients in randomized, phase 3, pivotal trials in brain metastases, lung cancer, pancreatic cancer and ovarian cancer, and in our phase 2 pilot study in liver cancer. If approved, the indications in our late-stage pipeline will create a more than 20-fold increase in our U.S. addressable market."

Third quarter 2019 operating statistics and financial update

There were 2,751 active patients at September 30, 2019, representing 22% growth versus September 30, 2018, and one percent growth versus June 30, 2019. The increase in active patients was driven primarily by the ongoing benefit from continued growth in Optune prescriptions for patients with newly diagnosed GBM and by prescription growth in EMEA and Japan.

In the United States, there were 1,860 active patients at September 30, 2019, representing 16% growth versus September 30, 2018.
In Germany and other EMEA markets, there were 731 active patients at September 30, 2019, representing 26% growth versus September 30, 2018.
In Japan, there were 160 active patients at September 30, 2019, representing 132% growth versus September 30, 2018.
Additionally, 1,319 prescriptions were received in the three months ended September 30, 2019, representing six percent growth compared to the same period in 2018, and a three percent decrease compared to the three months ended June 30, 2019. The number of prescriptions for patients with newly diagnosed GBM continued to grow. In the three months ended September 30, 2019, 1,076 prescriptions were received for patients with newly diagnosed GBM, 82% of the total.

In the United States, 917 prescriptions were received in the three months ended September 30, 2019, representing one percent growth to the same period in 2018.
In Germany and other EMEA markets, 318 prescriptions were received in the three months ended September 30, 2019, representing ten percent growth compared to the same period in 2018.
In Japan, 84 prescriptions were received in the three months ended September 30, 2019, representing 75% growth compared to the same period in 2018.
For the three months ended September 30, 2019, net revenues were $92.1 million, representing 42% growth versus the same period in 2018. Revenue growth was primarily driven by an increase of 499 active patients in our currently active markets, representing 22% growth, and a sustained improvement in the net revenues booked per active patient.

Cost of revenues was $22.9 million compared to $18.9 million for the same period in 2018, representing an increase of 21%. The increase in cost of revenues was primarily due to the cost of shipping transducer arrays to a higher volume of commercial patients partially offset by a reduction in the cost of goods per active patient driven by ongoing efficiency initiatives and scale. Gross margin was 75% compared to 71% for the same period in 2018.

Research, development and clinical trials expenses were $18.8 million compared to $13.1 million for the same period in 2018, representing an increase of 44%. This was primarily due to an increase in clinical trial and personnel expenses for our phase 3 pivotal trials and an increase in costs associated with medical affairs, regulatory matters and engineering.

Sales and marketing expenses 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 increased marketing expenses and personnel costs to support our growing commercial business.

General and administrative expenses were $22.7 million compared to $18.9 million for the same period in 2018, representing an increase of 20%. This was primarily due to an increase in personnel costs and an increase in professional services.

Net income was $1.9 million, or $0.02 per share, compared to net loss of $11.7 million for the same period in 2018, or $0.13 per share.

At September 30, 2019, we had $208.0 million in cash and cash equivalents and $104.6 million in short-term investments, for a total balance of $312.6 million in cash, cash equivalents and short-term investments.

Anticipated clinical and regulatory milestones

Zai Lab initiation of phase 2 pilot trial in gastric cancer (2019)
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 third quarter 2019 financial results at 8 a.m. EDT today, Thursday, October 31, 2019. 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 1178711.

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 (www.novocure.com/investor-relations), as a means of disclosing material non-public information and for complying with its disclosure obligations under Regulation FD.