NovoCure Ltd. Q1 FY2025 earnings call

Management Statement and Operational Highlights

• News and Milestones:
  • OptuneLua received European CE Mark approval for metastatic non-small cell lung cancer, with a broad label allowing concomitant use with immune checkpoint inhibitors or docetaxel.
  • Results of the Panova three phase three trial in unresectable locally advanced pancreatic cancer were accepted for presentation at ASCO, being the first phase three trial to demonstrate a survival benefit in this indication.
• NSCLC Launch Details:
  • Received 92 prescriptions, ended Q1 with 62 active NSCLC patients. There are 93 unique prescribers, with 60% of these prescribers new to Tumor Treating Fields therapy. General medical oncologists are the largest prescriber group, with radiation oncologists emerging as important users. Target patient populations include smoldering progressors, non-responders to first-line immune checkpoint inhibitors (ICI), and low/non-PD L1 expressors who received platinum-based chemo as monotherapy and progressed.
  • Regulatory progress: PMA submissions for METIS and Panova three are on track for 2025. The modular PMA shell for the Metis application has been approved by the FDA, with modules 1 and 2 submitted for review.
• GBM Performance:
  • Achieved 4,162 active patients globally, with continued year-over-year growth in France and Japan. Rolled out the HFE array for all new GBM patients in active markets and launched a patient app allowing patients to track usage, order supplies, and troubleshoot device issues.
• Pipeline Updates: Focus on the concomitant use of tumor treating fields and immune checkpoint inhibitors. Enrolling patients in phase three KEYNOTE d 58, LUNAR two, and phase two LUNAR four trials. Phase three TRIDENT and phase two PANOVA IV are fully enrolled, with top-line data expected in the first half of 2026.

Segment Performance

• Non-small cell lung cancer (NSCLC): In the first quarter, NovoCure received 92 NSCLC prescriptions and ended the period with 62 active patients. Collected $1.5 million from OptuneLua claims, split roughly 50-50 between malignant pleural mesothelioma (MPM) and NSCLC. There are approximately 30,000 eligible annual patients in the US for NSCLC.
• GBM (Bedrock): Had a strong first quarter with 4,162 active patients globally, showing continued year-over-year growth in France and Japan.

Guidance

• Financial: Q1 net revenue was $155 million, a 12% increase from Q1 2024, driven by 11% growth in active patients and reimbursement improvements. Gross margin for the quarter was 75% vs. 76% in the prior year period, impacted by the rollout of HFE arrays and the NSCLC launch. Expect gross margins in the low seventies for 2025, with cost reductions expected to offset tariff impacts.
• Regulatory/Clinical: PMA submissions for METIS and Panova three remain on track for 2025. Anticipate launches in additional countries, including Japan later in 2025, with ongoing regulatory review in Japan.

Risks

• Tariffs: Potential impact of tariffs on import duties, with an estimated $11 million impact if tariffs return after the 90-day pause and $8 million if the pause is extended through year-end. The primary exposure is from importing arrays into the US from Israel.
• Reimbursement: Case-by-case reimbursement in Germany and the US for NSCLC, requiring building a collection track record for revenue recognition.

Question and Answer

• **Q: Benchmark NSCLC launch to GBM launch.

A: Ashley notes it's a different setting, better to focus on the 30,000 annual eligible patients, 93 prescribers, and the Salesforce in place. Frank adds about the high unmet need and quick adoption in electronic medical records.**

• **Q: ASCO presentation for Panova three.

A: Ashley mentions the presentation will include the full data set, survival extension of two months, and engagement with scientific committees. Nicolas talks about pancreatic cancer being a hard-to-treat space and positive outlook for the Panova four trial.**

• **Q: Growth of prescribers in NSCLC.

A: Frank says focus on the right physician, patient, and time. 60% of prescribers are new to Tumor Treating Fields, targeting the right patients and first experiences.**

• **Q: Tariffs and gross margins.

A: Christoph explains the tariff impact on array imports from Israel and notes gross margin assumption for 2025 remains in the low seventies, offsetting with cost reductions.**

• **Q: NSCLC patient retention and LUNAR trials.

A: Frank says treatment duration in US NSCLC launch is in line with LUNAR expectations. Ashley notes LUNAR two and four are in early enrollment phase.