On July 30, 2020 Novocure (NASDAQ: NVCR) reported financial results for the quarter ended June 30, 2020, highlighting revenue growth and financial strength as well as the advancement of the company’s clinical and product development programs (Press release, NovoCure, JUL 30, 2020, View Source [SID1234562604]). 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.

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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.

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

"Our track record of execution extended into the second quarter 2020 with sustained commercial momentum driving strong financial performance that allowed us to fund increased investments supporting the advancement of Tumor Treating Fields’ science and technology," said William Doyle, Novocure’s Executive Chairman. "There were several notable achievements since our last earnings call, including last patient enrollment in the HEPANOVA trial, announcement of a clinical collaboration with MSD (a tradename of Merck & Co., Inc., through a subsidiary) in first-line non-small cell lung cancer, and launch of the EF-33 trial to study Tumor Treating Fields delivered with a high-intensity array in recurrent GBM, and we remain determined to advance our strategic priorities to unlock the long-term potential of our proprietary platform."

"We further strengthened our foundation for growth in Q2," added Asaf Danziger, Novocure’s Chief Executive Officer. "Our GBM business delivered a record $116 million in global net revenues, we reported positive EPS of $0.02, and Optune received regulatory approval for the treatment of GBM in China. With nearly 3,300 active patients on therapy at the end of the quarter, we added to the more than 16,000 patients treated to-date, globally. We remain confident in our team, our strategy and in the potential of our therapy to extend survival in some of the most aggressive forms of cancer."

Second quarter 2020 operating statistics and financial update

For the quarter ended June 30, 2020, net revenues were $115.9 million, representing 34% growth compared to the second quarter 2019.

In the United States, net revenues totaled $81.2 million in the quarter ended June 30, 2020, representing 38% growth compared to the same period in 2019.
In Germany and other EMEA markets, net revenues totaled $25.4 million in the quarter ended June 30, 2020, representing 13% growth compared to the same period in 2019.
In Japan, net revenues totaled $7.2 million in the quarter ended June 30, 2020, representing 72% growth compared to the same period in 2019.
In Greater China, net revenues totaled $2.1 million in the quarter ended June 30, 2020, representing 97% growth compared to the same period in 2019.
There were 3,278 active patients at June 30, 2020, representing 20% growth compared to June 30, 2019, and six percent growth compared to March 31, 2020.

In the United States, there were 2,143 active patients at June 30, 2020, representing 16% growth compared to June 30, 2019.
In Germany and other EMEA markets, there were 900 active patients at June 30, 2020, representing 22% growth compared to June 30, 2019.
In Japan, there were 235 active patients at June 30, 2020, representing 64% growth compared to June 30, 2019.
Additionally, 1,422 prescriptions were received in the quarter ended June 30, 2020, representing four percent growth compared to the same period in 2019, and one percent growth compared to the quarter ended March 31, 2020. In the quarter ended June 30, 2020, 1,156 Optune prescriptions were written for patients with newly diagnosed glioblastoma.

In the United States, 968 prescriptions were received in the quarter ended June 30, 2020, representing a two percent decrease compared to the same period in 2019.
In Germany and other EMEA markets, 369 prescriptions were received in the quarter ended June 30, 2020, representing 23% growth compared to the same period in 2019.
In Japan, 85 prescriptions were received in the quarter ended June 30, 2020, representing 15% growth compared to the same period in 2019.
For the three months ended June 30, 2020, cost of revenues was $25.5 million compared to $21.1 million for the same period in 2019, representing an increase of 21%. The increase was primarily due to the cost of shipping transducer arrays to a higher volume of commercial patients, partially offset by benefits of ongoing efficiency initiatives and scale. Gross margin was 78% for the three months ended June 30, 2020 and 76% for the three months ended June 30, 2019.

Research, development and clinical trials expenses for the three months ended June 30, 2020, were $29.9 million compared to $19.5 million for the same period in 2019, representing an increase of 54%. This was primarily due to an increase in clinical trial and personnel expenses for our phase 3 pivotal and phase 4 post-marketing trials, an increase in development and personnel expenses to support our product development programs, increased investments in preclinical research and the expansion of our medical affairs activities.

Sales and marketing expenses for the three months ended June 30, 2020, were $28.5 million compared to $23.7 million for the same period in 2019, representing an increase of 20%. This was primarily due to an increase in personnel costs to support our growing commercial business and reimbursement efforts and an increase in marketing expenses related to the launch of Optune Lua for malignant pleural mesothelioma.

General and administrative expenses for the three months ended June 30, 2020 were $25.4 million compared to $21.2 million for the same period in 2019, representing an increase of 20%. This was primarily due to an increase in personnel costs, insurance premiums and professional services.

Net income for the three months ended June 30, 2020 was $1.7 million compared to a net loss of $1.3 million for the same period in 2019.

At June 30, 2020, we had $196.8 million in cash and cash equivalents and $149.9 million in short-term investments, for a total balance of $346.7 million in cash, cash equivalents and short-term investments. This represents an increase of $15.4 million in cash and investments since March 31, 2020.

Second quarter 2020 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 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 was $28.0 million for the three months ended June 30, 2020, an increase of $10.9 million, or 64%, from $17.1 million for the three months ended June 30, 2019. This improvement in fundamental financial performance was driven by net revenue growth coupled with an ongoing commitment to disciplined management of expenses.

Anticipated clinical milestones

Data from phase 2 pilot HEPANOVA trial in advanced liver cancer (2021)
Data from phase 2 pilot EF-31 trial in gastric cancer (2021)
Interim analysis of phase 3 pivotal LUNAR trial in non-small cell lung cancer (2021)
Interim analysis of phase 3 pivotal PANOVA-3 trial in locally advanced pancreatic cancer (2021)
Interim analysis of phase 3 pivotal INNOVATE-3 trial in recurrent ovarian cancer (2021)
Data from phase 3 pivotal METIS trial in brain metastases (2022)
Data from phase 2 pilot EF-33 trial with high-intensity arrays in recurrent glioblastoma (2022)
Final data from phase 3 pivotal LUNAR trial in non-small cell lung cancer (2023)
Final data from phase 3 pivotal PANOVA-3 trial in locally advanced pancreatic cancer (2023)
Final data from phase 3 pivotal INNOVATE-3 trial in recurrent ovarian cancer (2023)
Conference call details

Novocure will host a conference call and webcast to discuss second quarter 2020 financial results at 8 a.m. EDT today, Thursday, July 30, 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 1484689.

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.