NovoCure Ltd. Q3 FY2024 earnings call

• Lung Cancer Launch: FDA approved Optune Lua for post-platinum metastatic non-small cell lung cancer; launch is underway with sales team trained, physician certification completed, and first prescription received. Preparations for launch in Germany and Japan are ongoing, though Europe's MDR process has delayed regulatory review.
• Executive Team Changes: Asaf Danziger retiring as CEO; Ashley Cordova to take over as CEO, Christoph Brackmann joining as CFO on January 1, and Mukund Paravasthu as COO.
• GBM Business: Focus on prescription conversion and patient persistence led to 13% y-o-y active patient growth. Clinical programs advanced, including top-line data expected from PANOVA-3 later this year, enrollment completed in PANOVA-4, and ongoing TRIDENT and KEYNOTE D58 trials in GBM.
• Clinical Pipeline: METIS trial for brain metastases from non-small cell lung cancer granted breakthrough device designation, with PMA filing expected in early 2025. LUNAR trials (LUNAR-2, LUNAR-4) actively enrolling patients.
• Financials: Q3 net revenues $155M (+22% y-o-y); gross margin 77%; SG&A $100M (in line with Q3 2023); R&D $52M (-3% y-o-y); net loss $31M; adjusted EBITDA $2M (+$31M y-o-y).

In the third quarter, NovoCure's net revenues were $155 million, a 22% increase from the same period last year. This growth was driven by active patient growth in key markets and improved U.S. approval rates. Gross margin was 77% in Q3, up from 75% in Q3 2023, due to higher net revenue per patient from increased U.S. approval rates and strong performance in France. The GBM business saw global active patient growth of 13% year-over-year, ending the quarter with a record 4,113 active patients on therapy, contributing to 22% top-line growth in the GBM segment.

• Global launch of Next Generation Arrays for lung cancer expected to be a headwind to gross margin.
• Anticipate PANOVA-3 top-line data later this year.
• PMA for brain metastases from non-small cell lung cancer expected in early 2025.
• No incremental one-time benefit from prior periods as improved U.S. approval rates are in baseline revenue run rate.

• Delayed regulatory review in Europe due to the new MDR process.
• Challenges in reimbursement for lung cancer in the U.S.
• Dependence on successful uptake and launch of Optune Lua in lung cancer for financial performance.

Q: On LUNAR, what is the revenue per patient for Optune Lua and timing for Japan approval?

A: Ashley Cordova stated revenue per patient is in line with Optune Lua pricing, with a 4-5 months average treatment duration; for Japan, NovoCure is in productive discussions but no specific timeline given yet.

Q: On GBM active patients and treatment duration, any color on treatment duration consistency with EF-14?

A: Frank Leonard mentioned focus on end-to-end patient journey including prescription conversion and start, not just duration, and commitment to improving across the board.

Q: On PANOVA-3 potential approval timeline and magnitude of next-gen arrays headwind to gross margin?

A: Ashley Cordova said time from data to approval is 1-2 quarters prep plus 9-12 months review; gross margin headwind dependent on net revenue per active patient from lung launch, with next-gen array headwinds washing through in a couple of quarters.