10-Q 1 nvcr-20240331.htm 10-Q nvcr-20240331
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________________________________________
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2024
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                       to
Commission File Number 001-37565
NovoCure Limited
(Exact Name of Registrant as Specified in Its Charter)
Jersey98-1057807
(State or Other Jurisdiction of(I.R.S. Employer
Incorporation or Organization)Identification No.)
No. 4 The Forum
Grenville Street
St. Helier, Jersey JE2 4UF
(Address of principal executive offices, including zip code)
+44 (0) 15 3475 6700
(Registrant’s Telephone Number, Including Area Code)
Not Applicable
(Former Name, Former Address and Former Fiscal Year, If Changed Since Last Report)
_______________________________________________________
Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Ordinary Shares, no par valueNVCRThe Nasdaq Stock Market LLC
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes ☒    No  ☐.
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐    
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  .
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
ClassOutstanding as of April 26, 2024
Ordinary shares, no par value 
107,611,077 Shares




CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
In addition to historical facts or statements of current condition, this report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements contained in this report are based on our current plans, expectations, hopes, beliefs, intentions or strategies concerning future developments and their impact on us. Forward-looking statements contained in this report constitute our expectations or forecasts of future events as of the date this report was filed with the Securities and Exchange Commission and are not statements of historical fact. You can identify these statements by the fact that they do not relate strictly to historical or current facts. Such statements may include words such as “anticipate,” “will,” “estimate,” “expect,” “project,” “intend,” “should,” “plan,” “believe,” “hope” and other words and terms of similar meaning in connection with any discussion of, among other things, future operating or financial performance, strategic initiatives and business strategies, regulatory or competitive environments, our intellectual property and research and development related to our Tumor Treating Fields ("TTFields") devices marketed under various brand names, including "Optune Gio" and "Optune Lua", and software, tools and other items to support and optimize the delivery of TTFields (collectively, the “Products”). In particular, these forward-looking statements include, among others, statements about:
our research and development, clinical study and commercialization activities and projected expenditures;
the further commercialization of our Products for current and future indications;
our business strategies and the expansion of our sales and marketing efforts in the United States ("U.S.") and in other countries;
the market acceptance of our Products for current and future indications by patients, physicians, third-party payers and others in the healthcare and scientific community;
our plans to pursue the use of our Products for the treatment of indications other than glioblastoma (“GBM”) and malignant pleural mesothelioma (“MPM”);
our estimates regarding revenues, expenses, capital requirements and needs for additional financing;
our ability to obtain regulatory approvals for the use of our Products in indications other than GBM and MPM;
our ability to acquire from third-party suppliers the supplies needed to manufacture our Products;
our ability to manufacture adequate supply of our Products;
our ability to secure and maintain adequate coverage from third-party payers to reimburse us for our Products for current and future indications;
our ability to receive payment from third-party payers for use of our Products for current and future indications;
our ability to maintain, develop protect, defend or enforce our intellectual property position;
our ability to manage the risks associated with business disruptions caused by natural disasters, extreme weather events, pandemics such as COVID-19 (coronavirus), or international conflict or other disruptions outside of our control;
our cash needs; and
our prospects, financial condition and results of operations.
These forward-looking statements involve a number of risks and uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. Factors which may cause such differences to occur include those risks and uncertainties set forth under Part I, Item 1A., “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 filed on February 22, 2024, as well as other risks and uncertainties set forth from time to time in the reports we file with the Securities and Exchange Commission (the "SEC"). In our prior filings, references to Optune now refer to Optune Gio® and NovoTTF-100L refer to Optune Lua®. We do not intend
i


to update publicly any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by law.
TRADEMARKS
This Quarterly Report on Form 10-Q includes trademarks of NovoCure Limited and other persons. All trademarks or trade names referred to herein are the property of their respective owners.
ii

NovoCure Limited
Quarterly Report on Form 10-Q

1

PART I—FINANCIAL INFORMATION
Item 1.  Financial Statements
NOVOCURE LIMITED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands (except share data)
March 31,
2024
December 31, 2023
UnauditedAudited
ASSETS
CURRENT ASSETS:
Cash and cash equivalents$453,763 $240,821 
Short-term investments416,384 669,795 
Restricted cash3,600 1,743 
Trade receivables, net65,091 61,221 
Receivables and prepaid expenses21,479 22,677 
Inventories42,391 38,152 
Total current assets1,002,708 1,034,409 
LONG-TERM ASSETS:
Property and equipment, net58,917 51,479 
Field equipment, net11,911 11,384 
Right-of-use assets32,994 34,835 
Other long-term assets14,899 14,022 
Total long-term assets118,721 111,720 
TOTAL ASSETS$1,121,429 $1,146,129 
The accompanying notes are an integral part of these unaudited consolidated financial statements.
2

NOVOCURE LIMITED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands (except share data)
March 31,
2024
December 31, 2023
UnauditedAudited
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Trade payables$84,316 $94,391 
Other payables, lease liabilities and accrued expenses75,914 84,724 
Total current liabilities160,230 179,115 
LONG-TERM LIABILITIES:
Long-term debt, net569,652 568,822 
Long-term leases25,608 27,420 
Employee benefit liabilities6,566 8,258 
Other long-term liabilities18 18 
Total long-term liabilities601,844 604,518 
TOTAL LIABILITIES762,074 783,633 
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Share capital -
Ordinary shares no par value, unlimited shares authorized; issued and outstanding:
107,603,774 shares and 107,075,754 shares at March 31, 2024 (unaudited) and December 31, 2023, respectively
  
Additional paid-in capital1,387,765 1,353,468 
Accumulated other comprehensive income (loss)(4,147)(5,469)
Retained earnings (accumulated deficit)(1,024,263)(985,503)
TOTAL SHAREHOLDERS' EQUITY359,355 362,496 
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY$1,121,429 $1,146,129 
The accompanying notes are an integral part of these unaudited consolidated financial statements.
3

NOVOCURE LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
U.S. dollars in thousands (except share and per share data)
Three months ended March 31,Year ended December 31,
202420232023
UnauditedAudited
Net revenues$138,503 $122,182 $509,338 
Cost of revenues33,689 29,614 128,280 
Gross profit104,814 92,568 381,058 
Operating costs and expenses:
Research, development and clinical studies51,598 59,704 223,062 
Sales and marketing55,206 51,169 226,809 
General and administrative39,530 41,944 164,057 
Total operating costs and expenses146,334 152,817 613,928 
Operating income (loss)(41,520)(60,249)(232,870)
Financial income (expenses), net9,878 9,169 41,130 
Income (loss) before income tax(31,642)(51,080)(191,740)
Income tax7,118 1,981 15,303 
Net income (loss)$(38,760)$(53,061)$(207,043)
Basic and diluted net income (loss) per ordinary share$(0.36)$(0.50)$(1.95)
Weighted average number of ordinary shares used in computing basic and diluted net income (loss) per share107,266,198 105,667,072 106,391,178 
The accompanying notes are an integral part of these unaudited consolidated financial statements.
4

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
U.S. dollars in thousands
Three months ended March 31,Year ended December 31,
202420232023
UnauditedAudited
Net income (loss)$(38,760)$(53,061)$(207,043)
Other comprehensive income (loss), net of tax:
Change in foreign currency translation adjustments(327)300 1,473 
Unrealized gain (loss) from debt securities 357 445 
Pension benefit plan1,649 (915)(4,954)
Total comprehensive income (loss)$(37,438)$(53,319)$(210,079)

NOVOCURE LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
U.S. dollars in thousands (except share data)
Ordinary sharesAdditional
paid-in
capital
Accumulated
other
comprehensive
loss
Retained earnings (accumulated
deficit)
Total shareholders'
equity
Balance as of December 31, 2023 (audited)107,075,754 $1,353,468 $(5,469)$(985,503)$362,496 
Share-based compensation to employees— 34,084 — — 34,084 
Exercise of options and vested RSUs528,020 213 — — 213 
Other comprehensive income (loss), net of tax benefit of $0
— — 1,322 — 1,322 
Net income (loss)— — — (38,760)(38,760)
Balance as of March 31, 2024 (Unaudited)107,603,774 $1,387,765 $(4,147)$(1,024,263)$359,355 



Ordinary sharesAdditional
paid-in
capital
Accumulated
other
comprehensive
loss
Retained earnings (accumulated
deficit)
Total shareholders'
equity
Balance as of December 31, 2022 (audited)105,049,411 $1,222,063 $(2,433)$(778,460)$441,170 
Share-based compensation to employees— 39,084 — — 39,084 
Exercise of options and vested RSUs1,137,751 5,211 — — 5,211 
Other comprehensive income (loss), net of tax benefit of $0
— — (258)— (258)
Net income (loss)— — — (53,061)(53,061)
Balance as of March 31, 2023 (Unaudited)106,187,162 $1,266,358 $(2,691)$(831,521)$432,146 

The accompanying notes are an integral part of these unaudited consolidated financial statements.
5

NOVOCURE LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. dollars in thousands
 Three months ended March 31,Year ended December 31,
202420232023
UnauditedAudited
Cash flows from operating activities:
Net income (loss)$(38,760)$(53,061)$(207,043)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization2,815 2,722 10,969 
Accrued Interest1,622 (1,120)(95)
Asset write-downs and impairment of field equipment194 126 493 
Share-based compensation34,084 39,084 115,608 
Foreign currency remeasurement loss (gain)613 (127)161 
Decrease (increase) in accounts receivables and prepaid expenses
(3,275)14,511 29,414 
Amortization of discount (premium)(5,381)(4,056)(23,084)
Decrease (increase) in inventories(4,650)(2,718)(8,919)
Decrease (increase) in other long-term assets1,174 1,534 4,072 
Increase (decrease) in accounts payables and accrued expenses(18,245)(10,464)14,869 
Increase (decrease) in other long-term liabilities(1,765)(3,158)(9,781)
Net cash provided by (used in) operating activities(31,574)(16,727)(73,336)
Cash flows from investing activities:
Purchase of property, equipment and field equipment(11,784)(6,088)(27,093)
Proceeds from maturity of short-term investments258,000 326,287 1,214,982 
Purchase of short-term investments (237,912)(1,003,741)
Net cash provided by (used in) investing activities246,216 82,287 184,148 
Cash flows from financing activities:
Proceeds from issuance of shares, net  4,416 
Repayment of long-term debt (7)(10)
Exercise of options213 5,211 11,381 
Net cash provided by (used in) financing activities213 5,204 15,787 
Effect of exchange rate changes on cash, cash equivalents and restricted cash(56)41 131 
Increase (decrease) in cash, cash equivalents and restricted cash214,799 70,805 126,730 
Cash, cash equivalents and restricted cash at the beginning of the period242,564 115,834 115,834 
Cash, cash equivalents and restricted cash at the end of the period$457,363 $186,639 $242,564 
Supplemental cash flow activities:
Cash paid during the period for:
Income taxes paid (refunded), net$2,914 $1,712 $13,665 
Interest paid$2 $1 $6 
Reconciliation of cash, cash equivalents and restricted cash:
Cash and cash equivalents$453,763 $185,963 $240,821 
Restricted cash3,600 676 1,743 
Total cash, cash equivalents and restricted cash$457,363 $186,639 $242,564 
6

NOVOCURE LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. dollars in thousands
Non-cash activities:
Right-of-use assets obtained in exchange for lease liabilities$282 $3,451 $18,063 
Purchase of property incurred but unpaid at period end $1,062 $ $1,714 
The accompanying notes are an integral part of these unaudited consolidated financial statements.
7

NOVOCURE LIMITED AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share data)
NOTE 1: ORGANIZATION AND BASIS OF PRESENTATION
Organization. NovoCure Limited (including its consolidated subsidiaries, the "Company") was incorporated in the Bailiwick of Jersey and is principally engaged in the development, manufacture and commercialization of Tumor Treating Fields ("TTFields") devices, including Optune and Optune Lua (collectively, our "Products"), for the treatment of solid tumor cancers. The Company markets Optune and Optune Lua in multiple countries around the globe with the majority of revenues coming from the use of Optune in the U.S., Germany and Japan. The Company also has a License and Collaboration Agreement (the "Zai Agreement") with Zai Lab (Shanghai) Co., Ltd. ("Zai") to market Optune in China, Hong Kong, Macau and Taiwan ("Greater China").
Financial statement preparation. The accompanying unaudited consolidated financial statements include the accounts of the Company and intercompany accounts and transactions have been eliminated. In the opinion of the Company’s management, the unaudited consolidated financial statements reflect all adjustments, which are normal and recurring in nature, necessary for fair financial statement presentation for the periods presented. The preparation of these unaudited consolidated financial statements in conformity with U.S. generally accepted accounting principles ("GAAP") requires management to make estimates and assumptions that affect the amounts reported in these unaudited consolidated financial statements and accompanying notes. Actual results could differ materially from those estimates. These unaudited consolidated financial statements and accompanying notes should be read in conjunction with the Company’s annual consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023 (the "2023 10-K") filed with the Securities and Exchange Commission on February 22, 2024.
The significant accounting policies applied in the audited annual consolidated financial statements of the Company as disclosed in the 2023 10-K are applied consistently in these unaudited interim consolidated financial statements.
Concentration Risks. The Company's cash, cash equivalents, short-term investments and trade receivables are potentially subject to a concentration of risk. Cash, cash equivalents and short-term investments are invested at top tier financial institutions globally and the total value invested at any one institution is limited pursuant to the Company's investment policy. These investments may be in excess of insured limitations or not insured in certain jurisdictions. Generally, these investments may be redeemed upon demand according to the terms of the securities.

The Company's trade receivables are due from numerous governments and federal and state agencies that are paid from their respective budgets, and from hundreds of health insurance companies. The Company does not believe that there are significant default risks associated with these governments, agencies and health insurance companies based upon the Company's historical experience.

The Company has no off-balance sheet concentrations of credit risk such as foreign exchange contracts, option contracts or other foreign hedging arrangements.
Recently announced accounting pronouncements.

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires public entities to disclose information about their reportable segments’ significant expenses and other segment items on an interim and annual basis. Public entities with a single reportable segment are required to apply the disclosure requirements in ASU 2023-07, as well as all existing segment disclosures and reconciliation requirements in ASC 280 on an interim and annual basis. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact of adopting ASU 2023-07.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires public entities, on an annual basis, to provide disclosure of specific categories in the rate reconciliation, as well as disclosure of income taxes paid disaggregated by jurisdiction. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact of adopting ASU 2023-09.

8

NOTE 2: CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS
Cash equivalents include items almost as liquid as cash, with maturity periods of three months or less when purchased, and short-term investments include items with maturity dates between three months and one year when purchased. As of March 31, 2024 and December 31, 2023, the Company’s cash and cash equivalents and short-term investments were composed of:
March 31, 2024
Unaudited
Fair value levelAdjusted cost basisUnrealized gainsUnrealized lossesFair market valueRecorded basisCash and cash equivalentsShort-term investments (2)
Cash$17,626 $— $— $17,626 $17,626 $17,626 $— 
Money market fundsLevel 1303,191 — — 303,191 303,191 303,191 — 
Certificate of deposits and term depositsLevel 2116,052 — — 116,052 116,052 23,204 92,848 
HTM securities (1)
U.S. Treasury billsLevel 1$139,373 $72 $ 139,445 139,373 $109,742 $29,631 
Corporate debt securitiesLevel 2$293,905 $297 $(5)294,197 293,905 $ $293,905 
$433,278 $369 $(5)$433,642 $433,278 $109,742 $323,536 
Total$870,147 $369 $(5)$870,511 $870,147 $453,763 $416,384 

December 31, 2023
Audited
Fair value levelAdjusted cost basisUnrealized gainsUnrealized lossesFair market valueRecorded basisCash and cash equivalentsShort-term investments (2)
Cash$9,955 $— $— $9,955 $9,955 $9,955 $— 
Money market fundsLevel 1227,166 — — 227,166 227,166 227,166 — 
Certificate of deposits and term depositsLevel 2153,169 — — 153,169 153,169 3,700 149,469 
HTM securities (1)
U.S. Treasury billsLevel 1$78,844 $55 $(110)78,789 78,844 $— $78,844 
Government and governmental agenciesLevel 2$24,940 $13 $ 24,953 24,940 $— $24,940 
Corporate debt securitiesLevel 2$416,542 $486 $(149)416,879 416,542 $ $416,542 
$520,326 $554 $(259)$520,621 $520,326 $ $520,326 
Total$910,616 $554 $(259)$910,911 $910,616 $240,821 $669,795 
(1)    Changes in fair value of held-to-maturity ("HTM") securities are presented for disclosure purposes as required by ASC 320 "Investments — Debt Securities" and are recorded as finance expenses only if the unrealized loss is identified as a credit loss.
9

(2)    Pursuant to a bank guaranty agreement, $16,189 of short-term investments are pledged. See Note 4.
In accordance with ASC 820, "Fair Value Measurements and Disclosures," the Company measures its money market funds at fair value. The fair value of the money market funds and HTM securities, which is presented for disclosure purposes, is classified within Level 1 or Level 2. This is because these assets are valued using quoted market prices or alternative pricing sources and models utilizing market observable inputs.
As of March 31, 2024 and December 31, 2023, all investments mature in one year or less.
Unrealized losses from debt securities are primarily attributable to changes in interest rates. The Company does not believe any remaining unrealized losses represent impairments based on the evaluation of available evidence.

NOTE 3: INVENTORIES
Inventories are stated at the lower of cost or net realizable value. The weighted average methodology is applied to determine cost. As of March 31, 2024 and December 31, 2023, the Company’s inventories were composed of:
March 31,
2024
December 31,
2023
 UnauditedAudited
Raw materials$10,174 $10,265 
Work in progress11,934 9,796 
Finished products20,283 18,091 
Total$42,391 $38,152 

NOTE 4: COMMITMENTS AND CONTINGENT LIABILITIES
Operating Leases. The facilities of the Company are leased under various operating lease agreements for periods, including options for extensions, ending no later than 2044. The Company also leases motor vehicles under various operating leases, which expire on various dates, the latest of which is in 2027.
Pledged deposits and bank guarantees. As of March 31, 2024 and December 31, 2023, the Company pledged bank deposits of $2,798 and $2,848, respectively, to cover bank guarantees in respect of its leases of operating facilities and obtained bank guarantees for the fulfillment of the Company’s lease and other contractual commitments of $3,157 and $3,216, respectively. In addition, €15,000 ($16,189) of the Company's short term investments are pledged to a bank as guarantee for the Company's due execution of cash concentration agreements.
Legal Proceedings. In June 2023, a putative class action lawsuit was filed against the Company, its Executive Chairman and its Chief Executive Officer. The complaint, later amended to add our Chief Financial Officer as a defendant, which purports to be brought on behalf of a class of persons and/or entities who purchased or otherwise acquired ordinary shares of the Company from January 5, 2023 through June 5, 2023, alleges material misstatements and/or omissions in the Company’s public statements with respect to the results from its phase 3 LUNAR clinical trial. The Company believes that the action is without merit and plans to defend the lawsuit vigorously. As of March 31, 2024, the Company has not accrued any amounts in respect of this claim, as it believes liability is not probable and the amount of any potential liability cannot be reasonably estimated.
NOTE 5: CONVERTIBLE NOTE
On November 5, 2020, the Company issued $575,000 aggregate principal amount of 0% Convertible Senior Notes due 2025 (the “Notes”).
The Notes mature on November 1, 2025, unless earlier repurchased, redeemed or converted as set forth in the Notes. As of March 31, 2024, the conditions allowing holders of the Notes to convert were not met. The Notes are therefore not convertible as of March 31, 2024 and are classified as long-term liability.
10

The net carrying amount of the liability of the Notes as of March 31, 2024 and December 31, 2023 are as follows:
March 31,
2024
December 31,
2023
UnauditedAudited
Liability component, net:
Principal amount$575,000 $575,000 
Unamortized issuance costs (5,348)(6,178)
Net carrying amount of liability component (1)$569,652 $568,822 
(1) An effective interest rate determines the fair value of the Notes, therefore they are categorized as Level 3 in accordance with ASC 820. The estimated fair value of the net carrying amount of liability component of the Notes as of March 31, 2024 and December 31, 2023 were $525,865 and $515,962, respectively.
The net carrying amount of the liability is represented by the principal amount of the Notes, less total issuance costs plus any amortization of issuance costs. The total issuance costs upon issuance of the Notes were $16,561 and are amortized to interest expense using the effective interest rate method over the contractual term of the Notes. Interest expense is recognized at an annual effective interest rate of 0.59% over the contractual term of the Notes.

Finance expense related to the Notes was as follows:
Three months ended March 31,Year ended December 31,
2023
20242023
UnauditedAudited
Amortization of debt issuance costs
830 815 3,313 
Total finance expense recognized
$830 $815 $3,313 
11

NOTE 6: REVENUE RECOGNITION
a.     Net revenues
The Company’s net revenues by geographic region, based on the patient’s location are summarized as follows:
Three months ended March 31,Year ended December 31,
 20242023
2023
United States$90,543 $85,228 $349,743 
International markets:
Germany15,747 15,120 60,210 
Japan7,817 8,669 31,668 
Other international markets19,459 7,850 44,493 
International markets - Total43,023 31,639 136,371 
Greater China (1)4,937 5,315 23,224 
Total net revenues$138,503 $122,182 $509,338 
(1) For additional information, see Notes 12 and 13 to the Consolidated Financial Statements in the 2023 10-K.

The Company's net revenues by performance period are as follows:
Three months ended March 31,Year ended December 31,
 202420232023
Net revenues recognized in the reporting period from performance obligations satisfied in:
Reporting period$129,256 $117,338 $492,089 
Previous periods9,247 4,844 17,249 
Total net revenues$138,503 $122,182 $509,338 
b.     Contract balances
The following table provides information about trade receivables, unbilled receivables and contract liabilities from contracts with customers:
March 31,
2024
December 31,
2023
 UnauditedAudited
Trade receivables$60,401 $56,970 
Unbilled receivables$4,690 $4,251 
Deferred revenues (short-term contract liabilities)(15,870)(16,224)
During the three months ended March 31, 2024 and 2023 and the year ended December 31, 2023 the Company recognized $16,224, $18,028 and $18,028, respectively, which were included in the deferred revenues (short-term contract liability) balance at January 1, 2024 and 2023.

NOTE 7: SHARE OPTION PLANS AND ESPP
In September 2015, the Company adopted the 2015 Omnibus Incentive Plan (the “2015 Plan”). Under the 2015 Plan, the Company can issue various types of equity compensation awards such as share options, restricted shares, performance shares, restricted share units (“RSUs”), performance-based share units (“PSUs”), long-term cash awards and other share-based awards.
Options granted under the 2015 Plan generally have a two-year or four-year vesting period and expire ten years after the date of grant. Options granted under the 2015 Plan that are canceled or forfeited before expiration become available for future grants. RSUs granted under the 2015 Plan generally vest over a three-year period. PSUs
12

granted under the 2015 Plan generally vest between a three- and six-year period as performance targets are attained. RSUs and PSUs granted under the 2015 Plan that are canceled before expiration become available for future grants. As of March 31, 2024, 11,027,556 ordinary shares were available for grant under the 2015 Plan.
A summary of the status of the Company’s option plans as of March 31, 2024 and changes during the period then ended is presented below:
Three months ended March 31, 2024
Unaudited
Number
of options
Weighted
average
exercise
price
Outstanding at beginning of year8,539,507 $40.07 
Granted3,456,485 15.35 
Exercised(26,547)8.70 
Forfeited and canceled(180,377)58.72 
Outstanding as of March 31, 202411,789,068 $32.61 
Exercisable options6,990,097 $34.67 
A summary of the status of the Company’s RSUs and PSUs as of March 31, 2024 and changes during the period then ended is presented below.
Three months ended March 31, 2024
Unaudited
Number
of RSU/PSUs
Weighted
average
grant date fair value
Unvested at beginning of year5,813,066 $60.52 
Granted8,930,183 15.17 
Vested(501,473)90.19 
Forfeited and cancelled(337,925)74.50 
Unvested as of March 31, 2024 (1)13,903,851 29.98 

(1) Includes PSUs that have a mix of service, market and other milestone performance vesting conditions which are vested upon achievements of performance milestones that are not probable as of March 31, 2024, in accordance with ASC 718 "Compensation — Stock Compensation" as follows:
 March 31, 2024
Number of
PSUs
Fair value at grant date per PSUTotal fair value at grant date
588,952 $16.30 $9,600 
2,703,852 $48.16 $130,218 
220,533 76.97 16,974 
249,402 80.59 20,099 
15,210 87.66 1,333 
3,777,949 $178,226 
These PSUs will be expensed over the performance period when the vesting conditions become probable in accordance with ASC 718.
13

In September 2015, the Company adopted an employee share purchase plan (“ESPP”) to encourage and enable eligible employees to acquire ownership of the Company’s ordinary shares purchased through accumulated payroll deductions on an after-tax basis. In the United States, the ESPP is intended to be an “employee stock purchase plan” within the meaning of Section 423 of the Internal Revenue Code and the provisions of the ESPP are construed in a manner consistent with the requirements of such section. As of March 31, 2024, 5,735,791 ordinary shares were available to be purchased by eligible employees under the ESPP.
The fair value of share-based awards was estimated using the Black-Scholes model for all equity grants. For market condition awards, the Company also applied the Monte-Carlo simulation model. The Company assessed fair value using the following underlying assumptions: 
Three months ended March 31,Year ended December 31,
2023
20242023
UnauditedAudited
Stock Option Plans
Expected term (years)
5.73-5.73
5.75-6.00
5.50-6.00
Expected volatility
71%-72%
63%-64%
63%-70%
Risk-free interest rate
3.88%-4.28%
4.08%-4.10%
3.48%-4.79%
Dividend yield0.00 %0.00 %0.00 %
ESPP
Expected term (years)0.500.500.50
Expected volatility90 %56 %
56%-122%
Risk-free interest rate5.13 %4.76 %
4.76%-5.38%
Dividend yield0.00 %0.00 %0.00 %
The total non-cash share-based compensation expense related to all of the Company’s equity-based awards recognized for the three months ended March 31, 2024 and 2023, and the year ended December 31, 2023 was:
Three months ended March 31,Year ended December 31,
2023
20242023
UnauditedAudited
Cost of revenues$1,747 $2,006 $6,587 
Research, development and clinical studies8,610 11,779 31,827 
Sales and marketing11,048 11,644 35,968 
General and administrative12,679 13,655 41,226 
Total share-based compensation expense$34,084 $39,084 $115,608 

NOTE 8: Basic and diluted net income (loss) per ordinary share
Basic net income (loss) per share is computed based on the weighted average number of ordinary shares outstanding during each period. Diluted net income per share is computed based on the weighted average number of ordinary shares outstanding during the period, plus potential dilutive shares (deriving from options, RSUs, PSUs, convertible notes and the ESPP) considered outstanding during the period, in accordance with ASC 260-10 "Earnings Per Share", as determined under the treasury stock or if-converted method, as applicable.
14

The following table sets forth the computation of the Company’s basic and diluted net income (loss) per ordinary share:
 Three months ended March 31,Year ended December 31,
2023
 20242023
UnauditedAudited
Net income (loss) attributable to ordinary shares as reported used in computing basic and diluted net income (loss) per share$(38,760)$(53,061)$(207,043)
Weighted average number of ordinary shares used in computing diluted net income (loss) per share107,266,198 105,667,072 106,391,178 
Potentially anti-dilutive shares that were excluded from the computation of basic net income (loss) per share:
Options8,246,017 6,337,929 6,950,781 
RSUs and PSUs
4,375,948 1,178,521 1,423,377 
ESPP99,055 27,207 161,627 
Weighted anti-dilutive shares outstanding which were not included in the diluted calculation12,721,020 7,543,657 8,535,785 
Basic and diluted net income (loss) per ordinary share$(0.36)$(0.50)$(1.95)


NOTE 9: SUPPLEMENTAL INFORMATION
The Company operates in a single reportable segment.
The following table presents long-lived assets by location:
March 31,
2024
December 31,
2023
 UnauditedAudited
United States$45,358 $41,634 
Israel8,290 8,317 
Switzerland10,940 7,733 
Others6,240 5,179 
Total long lived assets$70,828 $62,863 

Restructuring
In November 2023, the Company announced a series of actions to strengthen and optimize its business operations to support near-term growth drivers and long-term value creation. The plan included a reduction in headcount of approximately 200 employees or 13% of the Company's then current workforce. The Company incurred restructuring costs (including severance pay, garden leave payments, etc.) in the amount of $2,031 and $6,231 for the three months ended March 31, 2024 and the year ended December 31, 2023, respectively, as follows:
15

Three months ended March 31,Year ended December 31,
2023
2024
UnauditedAudited
Cost of revenues$52 $262 
Research, development and clinical studies275 2,070 
Sales and marketing1,539 2,404 
General and administrative164 1,495 
Total restructuring cost
$2,031 $6,231 
Restructuring costs paid during the period
$5,128 $2,753 

These restructuring costs were offset by accrual reversals for the three months ended March 31, 2024 and the year ended December 31, 2023 in the amount of $369 and $3,041, respectively, which relate to the terminated employees' exits from the Company’s cash incentive plans. These restructuring costs were further offset by forfeited equity-based compensation expense reversals for the three months ended March 31, 2024 and the year ended December 31, 2023 in the amount of $1,661 and $9,313, respectively, which relate to the terminated employees' exits from the Company’s equity incentive plan.











NOTE 10: SUBSEQUENT EVENT

On May 1, 2024 Novocure Luxembourg S.a.r.l. ("Borrower"), a wholly-owned subsidiary of the Company, entered into a new five-year senior secured credit facility of up to $400.0 million (the "Facility") with BPCR Limited Partnership and BioPharma Credit Investments V (Master) LP (collectively, the "Lenders"), BioPharma Credit PLC, as collateral agent for the Lenders, and the guarantors party to such agreement (the "Loan Agreement"). The Facility may be drawn in up to four drawings. The Loan Agreement provides for an initial term loan in the principal amount of $100.0 million (the "Tranche A Loan"), which was funded to the Borrower on May 1, 2024 (the "Tranche A Funding Date"). Under the Loan Agreement, the Borrower is required to draw $100.0 million on the Facility on or before June 30, 2025 (the "Tranche B Loan"), subject to customary conditions precedent as set forth in the Loan Agreement. Not later than December 31, 2025, the Borrower has the option to draw an additional $100.0 million of the Facility (the "Tranche C Loan") if (i) (A) the Company has received positive results from its PANOVA-3 phase 3 clinical trial or (B) the Company's trailing net revenues for the most recently completed four quarters as reported by the Company in its financial statements filed with the U.S. Securities and Exchange Commission ("Trailing Four Quarters of Net Revenue") are greater than $575.0 million and (ii) the Company's Convertible Notes due 2025 are extinguished in full and are no longer outstanding. Not later than March 31, 2026, the Borrower has the option to draw an additional $100.0 million of the Facility (the "Tranche D Loan") if (i) the Company receives an approval or clearance from the U.S. Food and Drug Administration for the Company's Tumor Treating Fields device for a pancreatic cancer indication or (ii) Trailing Four Quarters of Net Revenue is greater than $625.0 million. The obligations under the Loan Agreement are guaranteed by certain of the Company's subsidiaries and secured by a first lien on the Borrower's and certain of the Company's other subsidiaries’ assets. Outstanding term loans under the Loan Agreement will bear interest at an annual rate equal to 6.25% plus the three-month SOFR (subject to a 3.25% floor), payable quarterly in arrears and calculated on the basis of actual days elapsed in a 360-day year. The Borrower must pay 2.5% of additional consideration on each principal draw, with payment for the Tranche A Loan and the Tranche B Loan paid on the Tranche A Funding Date, and payments for the Tranche C Loan and the
16

Tranche D Loan on their respective funding dates. Principal under the Facility will be repaid in eight equal quarterly repayments commencing with the third quarter of 2027 and continuing each quarter thereafter, with the final payment of outstanding principal due on the fifth anniversary of the Tranche A Funding Date. Voluntary prepayment of all, but not less than all, of the term loans outstanding is permitted at any time, subject to make-whole and prepayment premiums as set forth in the Loan Agreement. Prepayment of all term loans outstanding, subject to make-whole and prepayment premiums, is due and payable upon a change-in-control as defined in the Loan Agreement. Make-whole and prepayment premiums are due and payable for the Tranche B Loans for any voluntary prepayment of the term loans outstanding, upon a change-in-control (as defined in the Loan Agreement), and upon any acceleration of the maturity date, in each case regardless of whether the Tranche B Loan is drawn. The Loan Agreement contains a financial covenant only if the Tranche C Loan and/or Tranche D Loan are funded, in which case the Company is required to maintain at least Trailing Four Quarters of Net Revenue of at least $500.0 million, calculated on a trailing twelve-month basis as of the end of each fiscal quarter, beginning with the first quarter of 2027 based on year-end 2026 audited financial statements.
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Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations
Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to provide information to assist you in better understanding and evaluating our financial condition and results of operations. We encourage you to read this MD&A in conjunction with our unaudited consolidated financial statements and the notes thereto for the period ended March 31, 2024 included in Part I, Item 1 of this Quarterly Report on Form 10-Q. This discussion contains forward-looking statements that involve risks and uncertainties. Please refer to the information under the heading “Cautionary Note Regarding Forward-Looking Statements” elsewhere in this report. References to the words “we,” “our,” “us,” and the “Company” in this report refer to NovoCure Limited, including its consolidated subsidiaries.
Critical Accounting Policies and Estimates
In accordance with U.S. generally accepted accounting principles (“GAAP”), in preparing our financial statements, we must make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of net revenues and expenses during the reporting period. We develop and periodically change these estimates and assumptions based on historical experience and on various other factors that we believe are reasonable under the circumstances. Actual results may differ from these estimates.
The critical accounting policies requiring estimates, assumptions and judgments that we believe have the most significant impact on our consolidated financial statements can be found in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 (the "2023 10-K"). For additional information, see Note 1 to our unaudited consolidated financial statements in Part I, Item 1 of this Quarterly Report. There were no other material changes to our critical accounting policies and estimates as compared to the critical accounting policies and estimates described in our 2023 10-K.
Overview
We are a global oncology company with a proprietary platform technology called Tumor Treating Fields ("TTFields"), which are electric fields that exert physical forces to kill cancer cells via a variety of mechanisms. Our key priorities are to drive commercial adoption of Optune Gio® and Optune Lua®, our commercial TTFields therapy devices, and to advance clinical and product development programs intended to extend overall survival in some of the most aggressive forms of cancer.
Optune Gio is approved by the U.S. Food and Drug Administration ("FDA") under the Premarket Approval ("PMA") pathway for the treatment of adult patients with newly diagnosed glioblastoma ("GBM") together with temozolomide, a chemotherapy drug, and for adult patients with GBM following confirmed recurrence after chemotherapy as monotherapy treatment. We also have a CE certificate to market Optune Gio for the treatment of GBM in the European Union ("EU"), as well as approval or local registration in the United Kingdom ("UK"), Japan, Canada and certain other countries. Optune Lua is approved by the FDA under the Humanitarian Device Exemption ("HDE") pathway to treat malignant pleural mesothelioma and pleural mesothelioma (together, "MPM") together with standard chemotherapies. We have also received CE certification in the EU and approval or local registration to market Optune Lua in certain other countries. We market Optune Gio and Optune Lua in multiple countries around the globe with the majority of our revenues coming from the use of Optune Gio in the U.S., Germany and Japan. We are actively evaluating opportunities to expand our international footprint.
We believe the physical mechanisms of action behind TTFields therapy may be broadly applicable to solid tumor cancers. We are focusing our research and development activities in areas of greatest anticipated value creation. This includes non-small cell lung cancer, brain cancers, and pancreatic cancer.
In 2023, we announced results from our phase 3 LUNAR study evaluating the use of TTFields together with standard therapies following platinum-based treatment failure in the treatment of patients with metastatic non-small cell lung cancer ("NSCLC"). Patients treated with TTFields therapy and standard therapies demonstrated a statistically significant and clinically meaningful improvement in overall survival over standard therapies alone. The LUNAR study also showed a statistically significant and clinically meaningful improvement in overall survival when patients were treated with TTFields therapy and immune checkpoint inhibitors, as compared to those treated with immune checkpoint inhibitors alone, and a positive trend in overall survival when patients were treated with TTFields therapy and docetaxel versus docetaxel alone. In December 2023, we filed a PMA application with the FDA seeking approval for the use of TTFields therapy together with standard systemic therapies for the treatment of NSCLC following progression on or after platinum-based therapy. In January 2024, we announced the FDA had accepted this submission for filing. We completed the Day 100 meeting with the U.S. FDA regarding the PMA
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application submission for Optune Lua in NSCLC based off of the LUNAR phase 3 clinical study. The FDA Day 100 meeting conversation was productive with no indication that the LUNAR PMA is tracking for an advisory panel. We anticipate the PMA decision in the second half of 2024. We have also filed applications for use to the necessary regulatory bodies in Europe and Japan.
In March 2024, we announced the topline results of the phase 3 METIS trial, evaluating the use of TTFields therapy and supportive care for the treatment of patients with 1-10 brain metastases from NSCLC following stereotactic radiosurgery (“METIS”). The METIS trial met its primary endpoint, demonstrating a statistically significant improvement in time to intracranial progression for adult patients treated with Tumor Treating Fields (TTFields) therapy and supportive care compared to patients treated with supportive care alone. Patients treated with TTFields therapy and supportive care exhibited a median time to intracranial progression of 21.9 months compared to 11.3 months in patients treated with supportive care alone for brain metastasis (n=298; hazard ratio=0.67; P=0.016). Consistent with previous studies, TTFields therapy was well-tolerated with sustained quality of life and neurocognitive function. Baseline characteristics were well balanced between arms. Preliminary analyses of key secondary endpoints (time to neurocognitive failure, overall survival, and radiological response rate) did not demonstrate statistical significance. We plan to share the full analysis of the METIS trial data at the upcoming American Society of Clinical Oncology scientific congress in June.
In March 2024, an exploratory subgroup analysis of the phase 3 INNOVATE-3 clinical trial was presented at the European Society of Gynaecological Oncology 2024 Congress. The randomized, phase 3 INNOVATE-3 trial evaluated the use of TTFields therapy together with paclitaxel in platinum-resistant ovarian cancer in patients with a maximum of five total prior lines of systemic therapy. While the INNOVATE-3 trial did not meet its primary overall survival endpoint in the intent-to-treat population, the exploratory subgroup analysis found that pegylated liposomal doxorubicin (PLD) -naïve patients randomized to receive TTFields therapy and paclitaxel demonstrated significant improvement in median overall survival compared to PLD-naïve patients treated with paclitaxel alone. These data provide valuable insights into the use of TTFields therapy in the treatment of solid tumors and will be informative in the design of future clinical trials. Novocure and investigators will continue to analyze the data from the INNOVATE-3 trial.
We have several ongoing or planned trials which will further explore the use of TTFields therapy in the treatment of NSCLC, including the phase 3 LUNAR-2 trial, as well as the phase 2 KEYNOTE B36 and LUNAR-4 trials. In addition to our trials in NSCLC, we have multiple ongoing trials in our brain and pancreatic cancer programs, including the phase 3 TRIDENT, and PANOVA-3 trials, and the phase 2 PANOVA-4 trial. In March 2024, the FDA approved the Investigational New Drug application for the randomized, phase 3 KEYNOTE D58 clinical trial. This trial will evaluate the use of TTFields therapy together with temozolomide and pembrolizumab for the treatment of newly diagnosed GBM. We anticipate launching this trial in 2024. We anticipate expanding our clinical pipeline over time to study the safety and efficacy of TTFields therapy for additional solid tumor indications and combinations with other cancer treatment modalities.
The table below presents the current status of the ongoing clinical trials in our pipeline and anticipated timing of data.
chart v4.jpg

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Our therapy is delivered through a medical device and we continue to advance our Products with the intention to extend survival and maintain quality of life for patients. We have several product development programs underway that are designed to optimize TTFields delivery to the target tumor and enhance patient ease of use. One of these initiatives is the launch of new arrays, which are thinner, lighter and more flexible. We have obtained a CE Mark and have begun rolling out our new arrays in multiple European countries. We submitted the new arrays for regulatory approval in the U.S. via a PMA supplement in 2023 and are awaiting a regulatory decision.
In 2018, we granted Zai Lab (Shanghai) Co., Ltd. ("Zai") a license to commercialize our Products in China, Hong Kong, Macau and Taiwan ("Greater China") under a License and Collaboration Agreement (the "Zai Agreement"). The Zai Agreement also establishes a development partnership intended to accelerate the development of TTFields therapy in multiple solid tumor cancer indications. For additional information, see Note 13 to the 2023 10-K.
We view our operations and manage our business in one operating segment. For the three months ended March 31, 2024, our net revenues were $138.5 million. Our net loss for the three months ended March 31, 2024 was $38.8 million. As of March 31, 2024, we had an accumulated deficit of $1,024.3 million.
Impact of Current Events
On October 7, 2023, the State of Israel was attacked by and subsequently declared war on Hamas. As of the date of this filing, we believe that there is no immediate risk to our business facilities or operations. Our supply chain teams are working to increase stock levels to mitigate distribution and service risks from our suppliers in Israel.
Commentary on Results of Operations
Net revenues. Our revenues are primarily derived from patients using our Products in our active markets. We charge for treatment with our Products on a monthly basis. Our potential net revenues per patient are determined by our ability to secure payment, the monthly fee we collect and the number of months that the patient remains on therapy.
We also receive revenues pursuant to the Zai Agreement. For additional information regarding the Zai Agreement, see Note 13 to the Consolidated Financial Statements in our 2023 10-K.
Cost of revenues. We contract with third parties to manufacture our Products. Our cost of revenues is primarily comprised of the following:

disposable arrays;
depreciation expense for the field equipment, including the electric field generator used by patients;
patient support and other personnel costs; and
overhead costs, such as facilities, freight and depreciation of property, plant and equipment associated with managing our inventory, warehousing and order fulfillment functions.
Operating expenses. Our operating expenses consist of research, development and clinical studies, sales and marketing and general and administrative expenses. Personnel costs are a significant component for each category of operating expenses and consist of wages, benefits and bonuses. Personnel costs also include share-based compensation.
Financial income (expenses), net. Financial income (expenses), net primarily consists of interest income from cash balances and short-term investments, credit facility interest expense and related debt issuance costs, and gains (losses) from foreign currency transactions. Our reporting currency is the U.S. dollar. We have historically held substantially all of our cash balances in U.S. dollar denominated accounts to minimize the risk of translational currency exposure.

Results of Operations
The following discussion provides an analysis of our results of operations and reasons for material changes therein for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023. The tables contained in this section report U.S. dollars in thousands (except share, patient, and prescription data). The following table sets forth our consolidated statements of operations data:
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Three months ended March 31,
20242023
Unaudited
Net revenues$138,503 $122,182 
Cost of revenues33,689 29,614 
Gross profit104,814 92,568 
Operating costs and expenses:
Research, development and clinical studies51,598 59,704 
Sales and marketing55,206 51,169 
General and administrative39,530 41,944 
Total operating costs and expenses146,334 152,817 
Operating income (loss)(41,520)(60,249)
Financial income (expenses), net9,878 9,169 
Income (loss) before income taxes(31,642)(51,080)
Income taxes7,118 1,981 
Net income (loss)$(38,760)$(53,061)
Basic and diluted net income (loss) per ordinary share$(0.36)$(0.50)
Weighted average number of ordinary shares used in computing basic and diluted net income (loss) per share107,266,198 105,667,072 
The following table details the share-based compensation expense included in costs and expenses:
Three months ended March 31,
20242023
Unaudited
Cost of revenues$1,747 $2,006 
Research, development and clinical studies8,610 11,779 
Sales and marketing11,048 11,644 
General and administrative12,679 13,655 
Total share-based compensation expense$34,084 $39,084 

Key performance indicators
We believe certain commercial operating statistics are useful to investors in evaluating our commercial business as they help our management team and investors evaluate and compare the adoption of our Products from period to period. The number of active patients on therapy is our principal revenue driver. 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. Prescriptions are a leading indicator of demand. A "prescription received" is a commercial order for Optune Gio or Optune Lua that is received from a physician certified to treat patients with our Products for a patient not previously on Optune Gio or Optune Lua. Orders to renew or extend treatment are not included in this total.

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The following table includes certain commercial operating statistics for and as of the end of the periods presented.
March 31,
Operating statistics20242023
Active patients at period end
United States2,137 2,168 
International markets:
Germany540 477 
Japan379 382 
Other international789 440 
International markets - Total1,708 1,299 
Total3,845 3,467 
Three months ended March 31,
 20242023
Prescriptions received in period
United States990 1,051 
International markets:
Germany206 208 
Japan91 72 
Other international356 165 
International markets - Total653 445 
Total1,643 1,496 
Three months ended March 31, 2024 compared to three months ended March 31, 2023
Three months ended March 31,
20242023% Change
Net revenues$138,503 $122,182 13 %
Net revenues. Net revenues increased 13% to $138.5 million for the three months ending March 31, 2024 from $122.2 million for the same period in 2023. For the three months ended March 31, 2024, the increase primarily resulted from $10.5 million of revenues from the successful launch in France and $5.3 million of revenues in the US due to improved approval rates. The improved approval rates in the U.S. resulted in $4.2 million of increased revenue from prior period claims, primarily from 2023.
Three months ended March 31,
20242023% Change
Cost of revenues$33,689 $29,614 14 %
Cost of revenues. Our cost of revenues for the three months ended March 31, 2024 was $33.7 million, an increase of 14% from $29.6 million for the same period in 2023. For the three months ended March 31, 2024, the increase in cost of revenues was primarily due to 11% growth in active patients and increased costs related to the ongoing launch of our next generation array.
Excluding sales to Zai, cost of revenues per active patient per month was $2,715 for the three months ended March 31, 2024, an increase of 4% from $2,608 for the same period in 2023, primarily due to the ongoing launch of next generation arrays. Cost of revenues per active patient is calculated by dividing the cost of revenues for the quarter less equipment sales to Zai for the quarter by the average of the active patients at the end of the prior quarter and the ending active patients in the current quarter. This quarterly figure is then divided by three to estimate the monthly cost of revenues per active patient. Sales to Zai are deducted because they are sold at cost
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and in anticipation of future royalties from Zai, and Zai patient counts are not included in our active patient population. Product sales to Zai totaled $2.7 million for the three months ended March 31, 2024 compared to $2.6 million million for the three months ended March 31, 2023.
Gross margin was 76% for the three months ended March 31, 2024 compared to 76% for the three months ended March 31, 2023. We expect that our gross margins will continue to be impacted by current and future product enhancements, such as the ongoing launch of next generation arrays in the U.S. and our potential launch in NSCLC. We continue to focus on opportunities to increase efficiencies and scale within our supply chain. This includes evaluating new materials, manufacturers, and processes that could lead to lower costs.
Operating Expenses.
Three months ended March 31,
20242023% Change
Research, development and clinical studies$51,598 $59,704 (14)%
Sales and marketing55,206 51,169 %
General and administrative39,530 41,944 (6)%
Total operating expenses$146,334 $152,817 (4)%
Research, development and clinical study expenses. Research, development and clinical study expenses decreased 14% to $51.6 million for the three months ended March 31, 2024 from $59.7 million for the same period in 2023. For the three months ended March 31, 2024, the change resulted primarily from $5.5 million in decreased personnel expenses and $1.0 million in reduced direct clinical trial expenses driven by the timing of activities within the ongoing clinical trial portfolio. Total research and development expenses can fluctuate quarter-to-quarter dependent upon the amount of clinical research organization services delivered, clinical materials procured and the number of trials actively underway within a given quarter.
Sales and marketing expenses. Sales and marketing expenses increased 8% to $55.2 million for the three months ended March 31, 2024 from $51.2 million for the same period in 2023. For the three months ended March 31, 2024, these changes were primarily driven by $1.7 million in sales force expansion and $1.7 million in increased marketing activities in anticipation of a potential launch in NSCLC.
General and administrative expenses. General and administrative expenses decreased 6% to $39.5 million for the three-month period ended March 31, 2024 from $41.9 million for the same period in 2023. For the three months ended March 31, 2024, these changes were primarily due to lower personnel expenses.
Three months ended March 31,
20242023% Change
Financial income (expenses), net$9,878 $9,169 %
Financial income (expenses), net. Financial income increased $0.7 million or 8%, to $9.9 million for the three months ended March 31, 2024 from $9.2 million in income for the same period in 2023. For the three-month period ending March 31, 2024, the change from 2023 was primarily due to $2.1 million in increased interest income offset by a $1.3 million negative impact from foreign exchange.
Three months ended March 31,
20242023% Change
Income taxes$7,118 $1,981 259 %
Income taxes. Income taxes increased 259% to $7.1 million for the three months ended March 31, 2024 from $2.0 million for the same period in 2023. The change is driven by a decrease in tax benefits from share-based compensation and the utilization of tax credits in 2023 related to prior years. The increase also reflects a change in the mix of applicable statutory tax rates in active jurisdictions.
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Non-GAAP financial measures
We also measure our performance using a non-GAAP measurement of earnings before interest, taxes, depreciation, amortization and shared-based compensation (“Adjusted EBITDA”). We believe Adjusted EBITDA is useful to investors in evaluating our operating performance because it helps investors evaluate and compare the results of our operations from period to period by removing the impact of earnings attributable to our capital structure, tax rate and material non-cash items, specifically share-based compensation.
We calculate Adjusted EBITDA as operating income before financial expenses and income taxes, net of depreciation, amortization and share-based compensation. The following table reconciles net income (loss), which is the most directly comparable GAAP operating performance measure, to Adjusted EBITDA.
Three months ended March 31,
20242023% Change
Net income (loss)$(38,760)$(53,061)(27)%
Add: Income tax7,118 1,981 259 %
Add: Financial expenses (income), net(9,878)(9,169)%
Add: Depreciation and amortization2,815 2,722 %
EBITDA$(38,705)$(57,527)(33)%
Add: Share-based compensation34,084 39,084 (13)%
Adjusted EBITDA$(4,621)$(18,443)(75)%
Adjusted EBITDA increased by $13.8 million to $(4.6) million for the three months ended March 31, 2024 from $(18.4) million for the same period in 2023. This increase was primarily driven by revenue growth and an associated $12.2 million increase in gross margin. Actions taken during the November 2023 restructuring and a heightened focus on driving operational efficiencies reduced total operating expenses, excluding share-based compensation, by $2.1 million year-over-year. We intend to take actions that prioritize growth and maintain financial health and flexibility as we position our company for future profitability.

Liquidity and Capital Resources
We have incurred significant losses and cumulative negative cash flows from operations since our founding in 2000. As of March 31, 2024, we had an accumulated deficit of $1,024.3 million. To date, we have primarily financed our operations through the issuance and sale of equity and the proceeds from long-term loans.
At March 31, 2024, we had $870.1 million in cash, cash equivalents and short-term investments, a decrease of $40.5 million compared to $910.6 million at December 31, 2023. We believe our cash, cash equivalents and short-term investments as of March 31, 2024 are sufficient for our operations for at least the next 12 months based on our existing business plan and our ability to control the timing of significant expense commitments. We expect that our operating expenses will continue to increase over the next several years and may outpace our gross profit as we prepare to expand into additional indications beyond GBM. As a result, we may need to raise additional capital to fund our operations.
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The following summary of our cash flows for the periods indicated has been derived from our unaudited consolidated financial statements, which are included elsewhere in this Quarterly Report:
Three months ended March 31,
20242023Change% Change
Net cash provided by (used in) operating activities$(31,574)$(16,727)$(14,847)89 %
Net cash provided by (used in) investing activities246,216 82,287 163,929 199 %
Net cash provided by financing activities213 5,204 (4,991)(96)%
Effect of exchange rate changes on cash and cash equivalents(56)41 (97)(237)%
Net increase (decrease) in cash, cash equivalents and restricted cash$214,799 $70,805 $143,994 203 %
Operating activities. Net cash used in or provided by operating activities represents our net income (loss) for the periods presented, share-based compensation and depreciation and amortization. Operating cash flows are also impacted by changes in working capital.
Net cash used in operating activities increased by $14.8 million from $16.7 million net cash used in operating activities for the three months ended March 31, 2023 to $31.6 million net cash used in operating activities for the three months ended March 31, 2024. This increase was a result of net loss decreasing by $14.3 million, offset by a $27.5 million increase in working capital, a decrease of $2.7 million in cash to non-cash based expenses primarily consisting of shared-based compensation, and an increase of $1.1 million in other long term assets and liabilities. The $27.5 million increase in working capital includes a $17.8 million increase in accounts receivable, a decrease of $7.8 million in accounts payable and accrued expenses as well as an increase of $ 1.9 million in inventories.
Investing activities. Our investing activities consist primarily of investments in and redemptions of our short-term investments as well as investments in property and equipment.
Net cash provided by investing activities was $246.2 million for the three months ended March 31, 2024, compared to $82.3 million used in investing activities for the three months ended March 31, 2023. The $246.2 million net cash provided by investing activities for the three months ended March 31, 2024 was primarily attributable to $258.0 million of net proceeds from the maturity of short-term investments and the purchase of $11.8 million of property and equipment. The $82.3 million net cash provided by investing activities for the three months ended March 31, 2023 was primarily attributable to $88.4 million of net proceeds in short-term investments and by the purchase of $6.1 million of property and equipment.
Financing activities. To date, our primary financing activities have been the sale of equity and the proceeds from long-term loans. Net cash provided by financing activities was $0.2 million for the three months ended March 31, 2024, as compared to $5.2 million provided by financing activities for the three months ended March 31, 2023. The net cash provided by financing activities for the three months ended March 31, 2024 and March 31, 2023 included proceeds from the exercise of options under the Company's stock option plan.
Convertible Notes
On November 5, 2020, we issued $575.0 million aggregate principal amount of 0% Convertible Senior Notes due 2025 (the “Notes”). The Notes are senior unsecured obligations. The Notes do not bear regular interest, and the principal amount of the Notes will not accrete. The Notes are convertible at an initial conversion rate of 5.9439 ordinary shares per $1,000 principal amount of the Notes, which is equivalent to an initial conversion price of approximately $168.24 per ordinary share. The Notes are convertible at the option of the holders upon the satisfaction of certain other conditions and during certain periods, and if the Company exercises its right to redeem the Notes as permitted or required by the indenture. On or after August 1, 2025 until the close of the business on the business day immediately preceding the maturity date, holders may convert all or any portion of their Notes at the conversion rate at any time irrespective of the foregoing conditions.
In January 2021, we irrevocably elected to settle all conversions of Notes by a combination of cash and our ordinary shares and that the cash portion per $1,000 principal amount of Notes for all conversion settlements shall be $1,000. Accordingly, from and after the date of the election, upon conversion of any Notes, holders of Notes will
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receive, with respect to each $1,000 principal amount of Notes converted, cash in an amount up to $1,000 and the balance of the conversion value, if any, in our ordinary shares.
For more information, see Note 10a. to the Consolidated Financial Statements in the 2023 10-K.
Term loan credit facility
On May 1, 2024 Novocure Luxembourg S.a.r.l. ("Borrower"), our wholly-owned subsidiary, entered into a new five-year senior secured credit facility of up to $400.0 million (the "Facility") with BPCR Limited Partnership and BioPharma Credit Investments V (Master) LP (collectively, the "Lenders"), BioPharma Credit PLC, as collateral agent for the Lenders, and the guarantors party to such agreement (the "Loan Agreement"). The Facility may be drawn in up to four drawings. The Loan Agreement provides for an initial term loan in the principal amount of $100.0 million (the "Tranche A Loan"), which was funded to the Borrower on May 1, 2024 (the "Tranche A Funding Date"). Under the Loan Agreement, the Borrower is required to draw $100.0 million on the Facility on or before June 30, 2025 (the "Tranche B Loan"), subject to customary conditions precedent as set forth in the Loan Agreement. Not later than December 31, 2025, the Borrower has the option to draw an additional $100.0 million of the Facility (the "Tranche C Loan") if (i) (A) we have received positive results from our PANOVA-3 phase 3 clinical trial or (B) our trailing net revenues for the most recently completed four quarters as reported in our financial statements filed with the U.S. Securities and Exchange Commission ("Trailing Four Quarters of Net Revenue") are greater than $575.0 million and (ii) our Convertible Notes due 2025 are extinguished in full and are no longer outstanding. Not later than March 31, 2026, the Borrower has the option to draw an additional $100.0 million of the Facility (the "Tranche D Loan") if (i) we receive an approval or clearance from the U.S. Food and Drug Administration for our Tumor Treating Fields device for a pancreatic cancer indication or (ii) Trailing Four Quarters of Net Revenue is greater than $625.0 million. The obligations under the Loan Agreement are guaranteed by certain of our subsidiaries and secured by a first lien on the Borrower's and certain of our other subsidiaries’ assets. Outstanding term loans under the Loan Agreement will bear interest at an annual rate equal to 6.25% plus the three-month SOFR (subject to a 3.25% floor), payable quarterly in arrears and calculated on the basis of actual days elapsed in a 360-day year. The Borrower must pay 2.5% of additional consideration on each principal draw, with payment for the Tranche A Loan and the Tranche B Loan paid on the Tranche A Funding Date, and payments for the Tranche C Loan and the Tranche D Loan on their respective funding dates. Principal under the Facility will be repaid in eight equal quarterly repayments commencing with the third quarter of 2027 and continuing each quarter thereafter, with the final payment of outstanding principal due on the fifth anniversary of the Tranche A Funding Date. Voluntary prepayment of all, but not less than all, of the term loans outstanding is permitted at any time, subject to make-whole and prepayment premiums as set forth in the Loan Agreement. Prepayment of all term loans outstanding, subject to make-whole and prepayment premiums, is due and payable upon a change-in-control as defined in the Loan Agreement. Make-whole and prepayment premiums are due and payable for the Tranche B Loans for any voluntary prepayment of the term loans outstanding, upon a change-in-control (as defined in the Loan Agreement), and upon any acceleration of the maturity date, in each case regardless of whether the Tranche B Loan is drawn. The Loan Agreement contains a financial covenant only if the Tranche C Loan and/or Tranche D Loan are funded, in which case we are required to maintain at least Trailing Four Quarters of Net Revenue of at least $500.0 million, calculated on a trailing twelve-month basis as of the end of each fiscal quarter, beginning with the first quarter of 2027 based on year-end 2026 audited financial statements.
Contractual Obligations and Commitments
There have been no material changes from the information disclosed in our 2023 10-K.
Off-Balance Sheet Arrangements
We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements as defined under U.S. Securities and Exchange Commission (“SEC”) rules.
Item 3.  Quantitative and Qualitative Disclosures About Market Risk
There have been no material changes from the information disclosed in our 2023 10-K.
Item 4.  Controls and Procedures
Evaluation of Disclosure Controls and Procedures
As required by Rule 13a-15(b) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), our management, under the supervision and with the participation of our Chief Executive Officer and Chief Financial
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Officer, has evaluated the effectiveness of our disclosure controls and procedures as of March 31, 2024. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate, to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of March 31, 2024, our Chief Executive Officer and Chief Financial Officer have concluded that, as of March 31, 2024, our disclosure controls and procedures were effective at the reasonable assurance level.
Changes in Internal Control over Financial Reporting
There has been no change in our internal control over financial reporting during the quarter ended March 31, 2024 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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PART II—OTHER INFORMATION
Item 1.  Legal Proceedings
In June 2023, a putative class action lawsuit was filed against the Company, its Executive Chairman and its Chief Executive Officer. The complaint, later amended to add our Chief Financial Officer as a defendant, which purports to be brought on behalf of a class of persons and/or entities who purchased or otherwise acquired ordinary shares of the Company from January 5, 2023 through June 5, 2023, alleges material misstatements and/or omissions in the Company’s public statements with respect to the results from its phase 3 LUNAR clinical trial. The Company believes that the action is without merit and plans to defend the lawsuit vigorously.
In addition, from time to time, we are involved in various legal proceedings, claims, investigations and litigation that arise in the ordinary course of our business. Litigation is inherently uncertain. Accordingly, we cannot predict with certainty the outcome of these matters. After considering a number of factors, including (but not limited to) the views of legal counsel, the nature of contingencies to which the Company is subject and prior experience, management believes that the ultimate disposition of these legal actions will not materially affect its consolidated financial position or results of operations.
Item 1A.  Risk Factors
There have been no material changes to our risk factors disclosed in Part I, Item 1A “Risk Factors” in the 2023 10-K.
Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3.  Defaults Upon Senior Securities
None.
Item 4.  Mine Safety Disclosures
Not applicable.
Item 5.  Other Information
Entry Into a Material Definitive Agreement; Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement
On May 1, 2024, Novocure Luxembourg S.a.r.l. ("Borrower"), a wholly-owned subsidiary of the Company, entered into a new five-year senior secured credit facility of up to $400.0 million (the "Facility") with BPCR Limited Partnership and BioPharma Credit Investments V (Master) LP, (collectively, the "Lenders"), BioPharma Credit PLC, as collateral agent for the Lenders, and the guarantors party to such agreement (the “Loan Agreement”). The Facility may be funded in up to four drawings. The Loan Agreement provides for an initial term loan in the principal amount of $100 million (the “Tranche A Loan”), which was funded to the Borrower on May 1, 2024 (the "Tranche A Funding Date"). Under the Loan Agreement, the Borrower is required to draw $100.0 million of the Facility on or before June 30, 2025 (the "Tranche B Loan"), subject to customary conditions precedent as set forth in the Loan Agreement. Not later than December 31, 2025, the Borrower has the option to draw an additional $100.0 million of the Facility (the "Tranche C Loan") if (i) (A) the Company has received positive results from its PANOVA-3 phase 3 clinical trial or (B) the Company's trailing net revenues for the most recently completed four quarters as reported by the Company in its financial statements filed with the U.S. Securities and Exchange Commission ("Trailing Four Quarters of Net Revenue") are greater than $575.0 million and (ii) the Company's Convertible Notes due 2025 are extinguished in full and are no longer outstanding. Not later than March 31, 2026, the Borrower has the option to draw an additional $100.0 million of the Facility (the "Tranche D Loan") if (i) the Company receives an approval or clearance from the U.S. Food and Drug Administration for the Company's Tumor Treating Fields device for a pancreatic cancer indication or (ii) Trailing Four Quarters of Net Revenue is greater than $625.0 million. The obligations under the Loan Agreement are guaranteed by certain of the Company's subsidiaries and secured by a first lien on the Borrower's and certain of the Company's other subsidiaries’ assets. Outstanding term loans under the Loan Agreement will bear interest at an annual rate equal to 6.25% plus the three-month SOFR (subject to a 3.25% floor), payable quarterly in arrears and calculated on the basis of actual days elapsed in a 360-day year. The Borrower must pay 2.5% of additional consideration on each principal draw, with payment for the Tranche A Loan and the Tranche B Loan paid on the Tranche A Funding Date, and payments for the Tranche C Loan and the Tranche D Loan on their respective funding dates. Principal under the Facility will be repaid in eight equal quarterly
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repayments commencing with the third quarter in 2027 and continuing each quarter thereafter, with the final payment of outstanding principal due on the fifth anniversary of the Tranche A Funding Date. Voluntary prepayment of all, but not less than all, of the term loans outstanding is permitted at any time, subject to make-whole and prepayment premiums as set forth in the Loan Agreement. Prepayment of all term loans outstanding, subject to make-whole and prepayment premiums, is due and payable upon a change-in-control as defined in the Loan Agreement. Make-whole and prepayment premiums are due and payable for the Tranche B Loans for any voluntary prepayment of the term loans outstanding, upon a change-in-control (as defined in the Loan Agreement), and upon any acceleration of the maturity date, in each case regardless of whether the Tranche B Loans are drawn. The Loan Agreement contains a financial covenant only if the Tranche C Loan and/or the Tranche D Loan are funded, in which case the Company is required to maintain at least Trailing Four Quarters of Net Revenue of at least $500.0 million, calculated on a trailing twelve-month basis as of the end of each fiscal quarter, beginning with the first quarter of 2027 based on year-end 2026 audited financial statements.
Securities Trading Plans of Executive Officers and Directors
Rule 10b5-1 under the Exchange Act provides an affirmative defense that enables prearranged transactions in securities in a manner that avoids concerns about initiating transactions at a future date while possibly in possession of material nonpublic information. Our Insider Trading Policy permits our executive officers and directors to enter into trading plans designed to comply with Rule 10b5-1.
During the three-month period ending March 31, 2024, neither we nor any of our executive officers or directors adopted or terminated any contract, instruction or written plan for the purchase or sale of our securities that are intended to satisfy the affirmative defense conditions of Rule 10b5–1(c) promulgated under the Securities Exchange Act of 1934, as amended or adopted or terminated a non-Rule 10b5-1 trading arrangement (as defined in Item 408(c) of Regulation S-K).
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Item 6.  Exhibits
EXHIBIT INDEX
Exhibit
Number
Incorporated by ReferenceFiled
Herewith
Exhibit DescriptionFormDateNumber
10.1
X
31.1X
31.2X
32.1*X
32.2*X
101.INSInline XBRL Instance DocumentX
101.SCHInline XBRL Taxonomy Extension Schema DocumentX
101.CALInline XBRL Taxonomy Extension Calculation Linkbase DocumentX
101.DEFInline XBRL Taxonomy Extension Definition Linkbase DocumentX
101.LABInline XBRL Taxonomy Extension Label Linkbase DocumentX
101.PREInline XBRL Extension Presentation Linkbase DocumentX
104Cover Page Interactive Date File (formatted as Inline XBRL and contained in Exhibit 101)X
____________________________________________
1    Schedules and exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company agrees to furnish supplementally a copy of any omitted schedules or exhibits to the SEC upon request.

*    The certifications attached as Exhibits 32.1 and 32.2 that accompany this Quarterly Report on Form 10-Q are not deemed filed with the Securities and Exchange Commission and are not to be incorporated by reference into any filing of NovoCure Limited under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Form 10-Q, irrespective of any general incorporation language contained in such filing.




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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
NovoCure Limited
 
Date: May 2, 2024/s/ Ashley Cordova
Ashley Cordova
Chief Financial Officer
(principal financial and accounting officer
and duly authorized officer)


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