NovoCure Limited

Good morning, everyone, and thank you for joining us to review Novocare's fourth quarter and full year 2020. I am joined on the phone by our executive chairman, Bill Doyle, our CEO, Asaf Donziger, and our CFO, Ashley Cordova. Other members of our executive leadership team are also on the call and available for Q&A. The slides presented today can be viewed on our website, www.Novocare.com, by clicking on the link for fourth quarter and full year 2020 financial results located in the event section of our investor relations page. Before we start, I would like to remind you that our discussions during this conference call will include forward-looking statements, and actual results could differ materially from those projected in these statements. These statements involve a number of risks and uncertainties, some of which are beyond our control, including those risks and uncertainties described from time to time in our SEC filing. We do not intend to update publicly any forward-looking statement except as required by law. Following our prepared remarks today, we will open the line for questions. Financials for the three and 12 months ended December 31st, 2020 are available in our press release and in our 10-K, both of which we released earlier this morning. Where appropriate, we will refer to non-GAAP financial measures to evaluate our business. Reconciliations of non-GAAP financial measures to GAAP financial measures are also included in our press release, in the appendix of the supplemental slides accompanying this presentation, and in our Form 8-K filed with the SEC today. These materials can be accessed from our investor relations page of our website, www.novacare.com. With that, I will now turn the call over to Bill Doyle.

Thank you, Gabby, and good morning, everyone. We started NovoCure with the novel insight that electric fields can be harnessed to disrupt cancer cell division. Two decades later, our mission remains clear. We strive to extend survival in some of the most aggressive forms of cancer through the development and commercialization of our innovative therapy tumor-treating fields. We believe we are in a virtuous cycle of innovation and execution as our commercial business generates the financial strength to invest in innovation that will fuel the future growth of our company. In 2020, our GBM business delivered nearly $500 million in annual net revenues and nearly $100 million in cash flow from operations. Our sustained commercial momentum allows us to continue to make significant investments in our clinical trial programs, product development initiatives, and ongoing research as we work to unlock the full potential of the Tumor Treating Fields platform. We continued our track record of execution throughout 2020 despite the unanticipated prolonged challenges of doing business during the COVID-19 pandemic. Tumor Treating Fields is an emerging cancer treatment modality that requires significant prescriber education to drive awareness and acceptance. For nearly a year, we have relied heavily upon virtual engagement to accomplish our educational objectives. Virtual engagement poses some challenges to effectively communicating and engaging with our healthcare providers and other partners around the world. Notwithstanding these challenges, we believe the fundamental value of the Tumor Treating Fields platform remains unchanged, and our teams are undeterred in their commitment to advance our patient-forward mission. Throughout 2020, we made notable progress to advance our three overarching priorities, to drive commercial adoption in glioblastoma and mesothelioma, to advance our clinical trials in new indications and combinations, and to deliver product innovation to optimize tumor-treating fields therapy. We broadened reimbursement coverage of Optune for GBM across our active markets. China's NMPA approved Optune for newly diagnosed and recurrent GBM, extending the reach of tumor treating fields therapy to the world's largest GBM market. Our clinical teams launched three new clinical trials, which expanded our clinical programs to seven actively enrolling studies involving more than 2,900 patients. We entered into two important clinical collaborations to expand the horizon of tumor treating fields research and development. We advanced multiple product innovations intended to optimize the delivery of tumor treating fields. Notably, we accomplished all of this while we grew net revenues by 41% year over year and added $516 million to our balance sheet. I'll come back to our clinical and product development programs later this morning But first, I want to turn to Asaf to share his perspective on the fourth quarter. Asaf?

Thank you, Bill. I'm grateful to the Novocure team who delivered yet another strong quarter. Global net revenues totaled $144 million, representing 45% growth versus the fourth quarter of 2019. Our net revenue growth was driven primarily by active patient growth and expanded reimbursement for opt-ins. We ended the quarter with more than 3,400 active patients on therapy, an increase of 17% year-over-year. We have now treated more than 18,000 patients globally. Beyond active patient growth, broadening reimbursement coverage also drove revenue growth. With national positive reimbursement decisions to cover Optune in Israel, Germany, and Switzerland last year, we have secured broad reimbursement for GBM in all of our active markets. Most recently, the Swiss Federal Office of Public Health added Optune in combination with hemazolamide for the treatment of newly diagnosed GBM to the list of remedies and equipment, which establishes national reimbursement for Optune effective April 1, 2021. This decision represents an incredible effort by our team to expand access to our therapy, as well as increasing recognition of Optune's benefits among health insurers. Our performance last year underscores the resilience and innovative capacity of the NovoQ team during what was a challenging year across our industry. We believe the prolonged disruption caused by COVID-19 continues to cause increased volatility across global healthcare systems. For example, we have seen fluctuations in the timing of surgeries and radiation therapy in certain regions, which have had some influence on the eligible patient population for Optium. Since last March, we have educated our physicians largely via Zoom and conference calls. Remote interaction has posed some challenges to our ability to engage healthcare providers and partners around the world, despite our efforts to minimize the impact of COVID-19 on our day-to-day operations. Looking forward, we see room for significant growth in our commercial business. Our current penetration rates for GBM range from 30% to 40% globally. We remain focused on driving further penetration through increased engagement with leading academic institutions and continued physician education efforts, particularly among radiation oncologists. We are also working to expand access to our approved indications in new markets. We plan to launch Optium for GBM in France next and recently submitted a full reimbursement package to the French Ministry of Health to establish reimbursement coverage. We are actively evaluating market access pathways to enter additional European markets for our currently marketed indications prior to the expected launch of future indications. We look forward to providing further updates on future calls. As part of our development strategy, we are committed to further extending survivals of patients in our approved indications. In December 2020, we enrolled the first patient in our randomized phase 4 TRIDENT trial in newly diagnosed GBM. TRIDENT tests the potential survival benefit of initiating optionplastimazolamide concurrent with radiation therapy versus following the completion of chemoradiation. TRIDENT is supported by preclinical work that showed TT fields increased sensitivity to radiation therapy and inhibited DNA damage repair. Trident is designed to detect an extension in overall survival of approximately six months. With nearly 100 leading institutions committed to participate in the study, Trident offers the opportunity to engage further with academic centers that conduct GBM research. I want to reiterate how proud I am of the progress made by the NovoQ team throughout the challenging year. To those colleagues listening on the call today, thank you for your commitment to our patient-forward mission. With that, I will turn the call back to Bill to provide more detail about our development pipeline.

Thank you, Asaf. Our belief that the tumor-treating field's mechanism of action is broadly applicable to solid tumor cancers is supported by a scientific rationale grounded in 20 years of research. As proud as we are of the scientific progress we have made, we believe we are only beginning our potential to improve outcomes in oncology. In 2020, we invested over $130 million in research and development, and we expect to continue to utilize our financial strength to advance our multi-pronged development strategy. This includes generating clinical data to establish the safety and efficacy of tumor treating fields and new indications, and in combination with other effective therapies. To identify tumor treating fields optimal use and approved indications, and to optimize our therapy through product innovation. Our teams are enrolling patients in seven ongoing clinical trials in ovarian cancer, brain metastases, non-small cell lung cancer, pancreatic cancer, gastric cancer, and glioblastoma. In all of our trials, we remain focused on driving enrollment by increasing site engagement at our active clinical trial sites and by expanding our global footprint with new sites. Although we continue to see persisting uncertainty and volatility across healthcare systems from COVID-19, we are confident in our globally aligned response plans and continue to monitor the situation closely. Advancing the clinical pipeline is among our highest priorities, and we will continue to refine our systems and processes as needed to realize the substantial growth opportunity that our current development programs offer. Our existing pipeline programs create the potential to extend the reach of tumor treating fields therapy to many more cancer patients. with multiple data readouts anticipated over the next few years. We expect news flow from our thoracic and abdominal cancer programs this year, beginning with final data from HEPA-NOVA, our phase two pilot trial in advanced liver cancer. We are currently finalizing data collection and plan to present the results of the study at an upcoming medical conference. Additionally, three of our phase three pivotal trials have enrollment-driven interim analyses all of which we expect to occur in the next 18 months. Beginning with our abdominal cancer program, our Innovate 3 trial tests the effectiveness of tumor-treating fields with weekly paclitaxel in 540 patients with platinum-resistant ovarian cancer. Ovarian cancer ranks fifth in cancer deaths among women in the U.S. Almost all patients with recurrent ovarian cancer ultimately develop platinum resistance. and the prognosis for this population remains poor. Innovate3 is designed to detect extension and overall survival of approximately four months, equating to a hazard ratio of 0.75. Given current enrollment trends, we now project that ovarian cancer will be the first indication from our current late stage pipeline to reach interim analysis. We continue to anticipate final data from Innovate3 in 2023, approximately 18 months after the last patient is enrolled in the study. The protocol specifies an enrollment-driven interim analysis at last patient in, which we expect will occur in the third quarter of 2021. The European Network for Gynecological Oncological Trial Groups and the GOG Foundation, third-party clinical trial networks, are collaborating with us to facilitate enrollment at leading cancer centers. These collaborations highlight the growing support for tumor-treating fields across the global clinical community. We continue to enroll patients in our Panova 3 trial in locally advanced pancreatic cancer, for which we anticipate final data in 2023. Moving to our thoracic cancer program, our LUNAR trial tests the effectiveness of tumor-treating fields with physicians' choice of immune checkpoint inhibitor or docetaxel to the second line treatment of patients with stage four non-small cell lung cancer who progressed during or after platinum-based therapy. Because of the evolving standard of care for second line treatment of non-small cell lung cancer, LUNR was designed to generate data that contemplate multiple outcomes, all of which we believe will be clinically meaningful for patients. The study is designed to detect an extension of overall survival of approximately four months, equating to a hazard ratio of 0.75. We anticipate final data from Lunar in 2023, approximately 18 months after the last patient is enrolled. The protocol specifies an enrollment-driven interim analysis at 432 patients, which we expect will occur in the fourth quarter of 2021. Tumor treating fields is intended for use principally in combination with other standard of care treatments, and we look forward to expanding our lung cancer program later this year. In 2020, we entered into a clinical trial collaboration with MSD, a trade name of Merck, to develop tumor treating fields together with the anti-PD-1 therapy, Catruda, for the treatment of first-line non-small cell lung cancer. This trial is an important expansion of our clinical development into stage three first line non-small cell lung cancer with a global leader in oncology. Keynote B36 is designed to enroll 66 patients in the U.S. and expected to launch in the second quarter of 2021. In addition to our clinical efforts, we've increased our investment in product development initiatives intended to extend survival and maintain pain quality of life for patients. Our product development teams make tremendous strides in 2020 and remain focused on delivering product innovations that prioritize initiatives to increase tumor treating fields dose and patient ease of use. Our teams continue to evaluate opportunities to optimize the tumor treating fields generator, design new arrays that are more flexible and can deliver higher tumor treating fields intensities, and create new patient-centered software intended to support larger populations in multiple indications. All of the research and development underway, both at NovoCure and within the global scientific community, build upon and enrich the tumor treating fields ecosystem. Translational research, clinical development, and product innovation programs propel our efforts to expand the approved indications for tumor treating fields therapy. Research grants support in a vivo, in vitro, and other preclinical projects conducted by scientists around the globe. And investigator-sponsored trials expand our understanding of tumor-treating fields' optimal use in the clinic. All of these efforts are in the service of patients as the ecosystem drives to extend survival in some of the most aggressive forms of cancer. I will now turn the call over to Ashley to discuss our financial results.

Thank you, Bill. Novocare further strengthened its financial position in 2020, driven by the disciplined execution of our team. We delivered annual net revenues of $494 million, representing a 41% increase versus 2019. This is the seventh consecutive year we have reported at least double-digit revenue growth. Our investments in R&D reached $132 million in 2020, increasing 67% year over year. We remain committed to supporting the continued advancement of tumor treating field science and technology and expect investments to increase as we advance our mission to extend survival in the cancer site we treat. In the fourth quarter, our financial strength enabled the repayment of an outstanding $150 million long-term loan, which we replaced with a three-year secured revolving credit facility at a significantly lower carrying cost. We also closed a $575 million 0% convertible senior note due in 2025. We ended the year with $843 million in cash on hand. The capital structure we have put in place and our improved profitability position us well for an anticipated period of significant innovation and growth over the next few years. We remain committed to making the investments needed to advance our development program intended to increase acceptance of tumor-treating fields and in our commercial infrastructure prior to future potential launches in multiple solid tumor indications. Specific to the fourth quarter, our GBM business delivered $144 million in net revenues for the quarter, representing a 45% year-over-year increase. Our growth in net revenues was driven by an increase in active patients in our active markets and an improvement in the net revenues booked per active patient, particularly in the U.S. Moving down the P&L, gross profit in the fourth quarter was $116 million. reflecting an 80% gross margin. Gross margin continues to benefit from ongoing efficiency initiatives and increasing scale. Gross margin is also improved with revenue resulting from the successful appeal of previously denied claims for Medicare fee-for-service beneficiaries and tempered by product sales design. Given the clear organic growth opportunity we have in hand, we remain committed to investing strategically to maximize the growth potential of the tumor-treating fields platform. Our continued commercial execution and actions to solidify the balance sheet allowed us to invest a record $44 million in research and development in the fourth quarter, bringing the total to $132 million for the full year. For the full year, this represents 67% growth versus 2019. We expect growth in our research and development investments to continue into 2021 as we work to advance our pipeline programs and increase acceptance of tumor treating fields across the global oncology community. Because of the scale and growth of our research and development program, let me spend a few moments highlighting where we are making investments. For the full year 2020, we invested $54 million to advance our clinical development program, including the launch of three new clinical trials. Our 2020 clinical development program's investment represents a 64% year-over-year increase versus 2019. Our medical affairs efforts to educate the clinical community about tumor treating fields accounted for $21 million of our total R&D expenses. reflecting a 36% year-over-year increase. We also invested $12 million, a 76% annual increase, to support preclinical and basic research to further refine our understanding of the tumor treating fields mechanism of action and its optimal use. Lastly, we nearly doubled our investments in product innovation intended to optimize the delivery of tumor treating fields therapy to a total of $10 million for the year. We remain committed to balancing our investments in research and development with our organizational capacity to effectively execute our strategic initiatives. Our net income for the fourth quarter was $5 million, with 5 cents in earnings per share, with $20 million in net income and 20 cents in earnings per share for the full year 2020. While optimizing R&D investments to drive long-term growth is of higher priority than short-term EPS generation, I am extremely proud of the profitable business we are building. Beyond EPS, we also evaluate our operating performance based on adjusted EBITDA, a non-GAAP measure of earnings before interest, taxes, depreciation, amortization, and share-based compensation. We believe this is an important metric as it removes the impact of earnings attributable to our capital structure, tax rate, and material non-cash items, specifically share-based compensation, and it best reflects the financial value generated by our business. In the fourth quarter, adjusted EBITDA increased by 101% to $35 million from $17 million for the same period in 2019. This improvement in fundamental financial performance was driven by net revenue growth, coupled with the discipline management of expenses, particularly within SG&A, where we remained focused on driving operating leverage. Moving forward, we are committed to balancing profitability with investments and future growth. Before I hand the call over to the operator for Q&A, I would like to thank everyone on the phone for their continued interest in NovoCure. Our team delivered another strong year of financial performance under difficult circumstances. We remain well positioned to continue investing in the advancement of our clinical and product development programs and in organizational readiness efforts geared to sustain long-term growth and maximize shareholder value. We believe that the fundamental prospects of our business are strong, and we remain confident in our team, our strategy, and the long-term potential of the tumor treating fields platform to extend survival in some of the most aggressive forms of cancer. Thank you for your time this morning. Now, I will turn the call back over to the operator for questions.

Thank you. As a reminder, to ask a question, you will need to press star 1 on your telephone. To withdraw your question, press the pound key. Please stand by while we compile the Q&A roster. Our first question comes from Jason Bednar with Piper Sandler. Your line is open.

Hey, good morning, everyone. Thanks for all the color here on the pipeline this morning. Bill, or I guess anyone, but you laid out new trial site targets for some of your phase three studies a year ago that would really help accelerate the enrollment process. COVID's clearly made that more challenging here, but what's the right way to think about the gating factors in the trial milestone updates you're making today? What are the variables you're considering that can shift that timing further forwards or backwards off of any of these updates today? Then I got one follow-up.

Good morning, Jason. Just checking. Can everyone hear me? We can hear you. Okay, terrific. As has been the case for the last couple of calls, I'm joined by my team from around the world. So I will be doing a little bit of emceeing as we answer the various questions. But I would say generally, and this is consistent with what we have described before, whenever we start a trial, we make a projection, which is essentially an educated guess about how that trial will recruit. We start opening centers. We constantly gauge and engage with those centers to to monitor enrollment in order to hit our targets. And inevitably, as we progress, for all kinds of reasons, investigators move from one site to another. We have some sites that overperform in terms of recruitment and other sites that underperform. And as we proceed, we're able to get a sense of exactly how many sites we need in order to achieve the targets. Sometimes it's more sites, sometimes it's fewer sites. In the COVID world, that has more often been a requirement for more sites just because of the challenges that particular sites have in engaging with their patients and opening new protocols. And some that's been specifically in the ovarian cancer trial, it's actually occurred faster than we projected. So we haven't changed, in terms of our late-stage pipeline, we haven't changed the targets for the completion of those trials. We are opening centers, notwithstanding the challenges of the pandemic, and we did open trial sites last quarter and the quarter before that. And so, you know, as I said, this is the highest priority in the company, or certainly among the highest priorities in the company, and we're determined, again, notwithstanding any challenges, to bring this therapy to the patients in these other cancers.

Okay, that's really helpful, Bill. Maybe just to follow up, maybe a bigger picture question here, wondering if you could offer maybe some high-level thoughts about how you and the team are prioritizing advancing the current trial work that's underway versus backfilling the pipeline with kind of the next wave of studies. And we obviously saw a lot come during 2020 in terms of new phase twos. But, you know, you do have a lot of preclinical data under your belt. I mean, is there a preference from the NovoCure team for expanding new indications versus, you know, doubling down on existing indications like we've seen with some of the recent efforts? I know breast cancers come up frequently as a possible option. where you've seen some good preclinical outcomes. So I guess just curious how you're thinking about that option, again, as more of a bigger picture item.

Yeah, I mean, we're quite fortunate at Novacure in that our platform, Tumor Treating Fields, offers so much opportunity. It offers the opportunity to treat virtually all solid tumor cancers, and it offers the opportunity to to be combined with all the emerging pharmacological therapies. And we know we can continue to improve it through technological innovation. And those are essentially our highest priorities. In response to your specific question, advancing our late stage pipeline is among the highest priorities in the company. There is no preference for new indications. The indications that we have in the late stage are large. The trials are based on science and phase two data that are extremely promising. And our goal is to get those trials done, evaluate the data, and get the therapies I said to patients. That said, and with different teams, we're also not going to stop there. We're going to backfill. I'm sure backfill is the right verb here, but we're going to continue to fill the pipeline. That is a different set of teams, and that's one of the things our financial strength has allowed, which is the ability to do both, but it's not as if, you know, one group is thinking on Monday about recruiting the late-stage trial, and then they have to switch on Tuesday to think about what's going to come next. The teams that are focused on the late-stage trials are dedicated to recruiting those trials.

All right. That's great. Thanks so much, Bill.

Thank you. Our next question comes from Greg Gilbert with Truist Securities. Your line is open.

Thank you. Good morning. First, maybe, Ashley, can you help us with any safety tips on how to model R&D on a quarterly basis going forward after that very strong fourth quarter? And then, Bill or team, since the first phase three data point investors will be highly focused on is the ovarian interim, can you give us a little backgrounder on the treatment options as they currently exist there and whether there's sort of any fluidity in those guidelines like we're seeing in lung, maybe just to set the stage on how patients are being treated in that setting. And then lastly, Bill, I realize you have so many leads to follow up on in the oncology setting, but are you directing any of your basic research efforts outside of oncology, or would you plan to leave that to academics and others over time? Thanks.

Sure. So, Ashley, why don't you... take up Greg's first question on our R&D investment, and then Ellie will discuss ovarian cancer and the standard of care and how we expect to complement it.

Great. Thanks, Greg. Thanks for the question, because this is an important one as we look at how the street is modeling us in the out years. As you guys know, we don't guide, but we have been clear in saying that we invested $132 million in R&D in 2020, and we expect an accelerated pace of investment in 2021. This is our clearest priority as a company to invest as effectively and as aggressively as possible to advance these pipeline activities. And so I would expect that $132 million certainly to grow, you know, honestly as quickly as we can effectively do it. And that is, you know, something that we'll need to do.

Ashley, we lost you.

Oh, can you hear me?

Now you're back.

Okay. Did you hear the answer to the question?

We heard half of it.

All right. Well, so the summary, Greg, was that we certainly want that $132 million should grow. This is our area of greatest focus at the company, and we want to be clear to everybody in this call that we're making every investment we can effectively make in the R&D pipeline.

Okay, great. And Eli, maybe you can pick up the question about ovarian cancer.

Certainly. Thank you. Thank you, Greg, for your call. This is quite a difficult disease. You know, ovarian cancer in general is the fifth cancer or cause of cancer in patients. I'm a woman in the U.S., and It's around 24,000 or so diagnosed each year. So this is, you know, around double of the GBM patient population. The majority of these patients are diagnosed in what we call advanced stage, so they're already metastatic. And usually when they're metastatic, the first place is around the ovaries into the abdomen. So they have what we call... peritoneal disease. So our therapy on the, on the torso and the abdomen is sort of like a, almost like a targeted therapy to, for this type of disease in general, you know, the therapies available for ovarian cancer are all based on platinum based chemotherapy. And in general, most of these patients were failed platinum chemotherapy. And, and then there, the, the prognosis is very poor, right? So the treatment options are very limited, and this is where we think that, you know, innovate makes a big, big difference. We, you know, our previous data, you know, was very promising, and that's what we're moving to. Into a phase three, you know, our phase two pilot study showed quite improvement in our PFS. So we hope that in this Phase III trial we'll show the same or even better PFS and overall survival. Just to make a point in how, in spite of the COVID times, we have been able to increase the involvement There's a lot of motivation in the field on the investigators. We have involved the two largest oncology or gynecological oncology groups in the world. One is the NCOP in Europe and GOG Foundation in the U.S. And in spite of not being able to open the U.S. sites because of COVID, last year when we won it, once we did this, You know, we have been a very – we're really encouraged by the enthusiasm from this investigative community. So I think we're all set up for success. We're just, you know, we're executing this trial faster than we have planned, and we hope to have the last patient in at some point in the Q3 of this year.

Thanks, Alex.

Thanks, Alex.

Ori, I'm just going to ask Ori if you have any additional comments on the early science and the preclinical or Phase II data to add.

Absolutely. I think that our earlier preclinical data in ovarian cancer is very compelling, and we have actually tested TTP fields in multiple different diseases, in multiple different malignancies, demonstrating the synergistic effect of TT-FILS when combined with different taxanes. Being an agent that targets the mitotic spindle similar to TT-FILS, this really has the potential to augment overall effect in ovarian cancer in particular. Due to the multiple chemotherapeutic options, which are extremely toxic and with similar performance in the disease, The addition of TTCLs at different phases of the disease in this patient population has really great potential to improve the outcome overall.

Okay, thanks Uri. And Greg, maybe to your third question. We are, as I said in my earlier comment, extremely fortunate in the organic potential of our platform therapy. Most med tech companies have hundreds, thousands, even 10,000 small products, and they have to acquire. They have to be constantly surveying the small company landscape in order to hopefully bring in companies at good prices and add them to this terrific bundle. We don't need to do that. We have a huge TAM in oncology in front of us. And most biotech companies have to go back to the bench. You know, even the successful ones, you know, and I have fantastic drugs, but then they have to go back to the same high-risk discovery enterprise in order to get the next one. We're taking the same mechanism of action, the same science and the same technology, and applying it to different cancers, all of which are much larger than our GBM opportunity. So that's a long way of saying why our priorities are so heavily focused in oncology. Our scientists, of course, are studying all sorts of different things, but our focus is undoubtedly on oncology simply because the opportunity is so large.

Thank you.

Thank you. Our next question comes from Larry Beagleson with Wells Fargo. Your line is open.

Good morning. Thanks for taking the question. First for me, Ashley or Bill, how much do you think on COVID, how much do you think it negatively impacted your GBM business in 2020? What impact do you expect it to have in early 2021? And Ashley, any reaction to consensus of $584 million on the top line? And what are you guys assuming about the Medicare backlog revenue in 2021? We've seen that a couple quarters now, and I had one follow-up.

Ashley, I'll let you start, and then I'll follow up.

All right, so maybe I'll start with the forward-looking view, and then I'll let Bill and Tash provide some more COVID color. But, you know, as everybody knows, we don't provide guidance, but what we have said consistently is that we do see room for incremental growth, both in terms of GVM penetration, particularly with the academic centers, and in the net revenues that we are able to book per active patient. So that will come from the remaining Medicare upside. You know, we're currently booking approximately two-thirds of the upside from that LCD coverage in 2019, as well as the full-year benefit from Israeli reimbursement post-ramp-up and the Switzerland reimbursement, which will come on in 2021. So I would point to those factors beyond just ongoing prescription growth and active patient growth coming from extended duration of therapy as, you know, contributing to our 2021 top-line forecast. I'll pause there maybe and ask Kesha if you want to provide any, yeah, I'm seeing here backlog questions. Specific to the backlog, this is, you know, really impossible to predict, Larry, and so I would not recommend you try to predict the contribution for these type of claims. You know, we are of course committed to receiving fair pay for all of the patients that we treated for Medicare in a backlog, and we will continue to work those claims through appeal, but there is no kind of path that is predictable that I can point you to, to forecasting revenue.

Yeah. And let me start on COVID and then I'm going to ask for cash to, uh, uh, to give you some specific color. Um, we had, uh, I won't say prescience, but we had early visibility as the pandemic unfolded. We're a global business. We have clinical trial sites in Italy. We have an active partnership in China. We have tentacles in the supply chain in China. And we're very global. So we made the transition to the virtual world, I think, very quickly. And Asaf, from the beginning, as the pandemic unfolded around the world, made it absolutely clear to everyone in the management team that COVID would not be an excuse for any failure to treat our patients and accomplish our mission. That said, you know, And we delivered a fantastic year and a fantastic Q4. That said, it has not made our lives easier. It's made the work in the clinical trials more difficult. It's made the commercial work more difficult. Because much of what we do depends on education. And education, as anybody with kids sitting in the living room in front of an iPad knows, is better performed face-to-face than over Zoom. although Zoom is possible. So I'm terrifically proud of what we have accomplished. We have not let COVID be an excuse. We've treated our patients. We've expanded our programs. But, you know, with that, Pritesh, maybe you can talk a little bit about what you've had to overcome in the field in order to deliver these numbers.

Sure. Bill, thank you. And Larry, thank you for the question. So this is our bread and butter on the commercial side. And what guides us and continues to guide us is our mission to help all eligible patients for GBM and NPM. And I will echo my pride here in how the entire Novocare team has flexed. to ensure that what we are dealing with, that we're not immune to COVID, but we can appropriately pivot and make sure that no patient is left behind. And we proved that in 2020, that we were able to successfully grow our business. Now we are at the mercy of what happens at these academic centers. We've seen over the course of 2020 across the globe that patient flow will tend to fluctuate because of what may be happening within that specific region. So we monitor those regions closely. And what we are focused on in 2021 to continue to drive our business is working with these academic centers in the U.S., in Germany, where our footprint is the largest, to make sure that we continue on with the educational efforts, both with patients when we can with providers and providing support to patients during this times where we may not be able to be in front of them and pivoting on this front, virtualizing our patient support services, being able to meet with physicians and providers over Zoom. And now what we're seeing is a glimmer of hope. In some areas, we're actually now able to meet with certain providers face to face. So we're mobilizing our teams in a safe manner to make sure that we can continue on the pathway and continue to support patients. So we remain optimistic. We remain confident. Our work with GBM and MPM does not stop because of COVID, and I'm confident the team will be able to deliver again in 2021. Thank you.

Larry, the only thing I just wanted to highlight, of course, here that we mentioned is that we have open triads. In the midst of the pandemic, there's tremendous interest in this trial. We continue to roll it out and expect to open it in 100 academic centers. And this was all done in the virtual world.

All right, perfect. All right, I'll let others jump in. Thanks for taking the questions, guys. Thanks, Larry.

Our next question comes from Vijay Kumar with Epicor ISI. Your line is open.

Hey guys, thanks for taking my question. I had a few questions back on Larry's question on CMS backlog. I guess, can you at least quantify or comment on the payments that you've received so far? It looks like it was about 11 million-ish of catch-up payments in Q4. When were these patients treated, right? So the payments that we've collected, were these patients treated in you know, 17, 18 timeframe, uh, any color would be helpful.

Yeah, certainly BJ. So these patients were all treated prior to the LCD in September, 2019. So there's a sampling there, but you are correct that they are dated multiple years aged, right? So these are all that 11 million all relates to patients treated prior to September, 2019. Gotcha.

And then, um, and then, um, I guess script volumes at a high level, actually, it's been around the mid-singles. I mean, last year was, I guess with the pandemic, it's really hard, you know, to figure out trends. Any comments on, you know, what should script volumes growth be for you guys? I know you had the record versus new GBM dynamic that Chef perhaps hampered. Is there a sense on what underlying script volume growth should be for the business in GBM?

Yeah, I'll let Tesh provide the color here. I mean, our message, I will keep clear, is that we do believe there's multiple levers which remain to drive growth. And, Tesh, maybe you can provide, you know, some context as to what we're doing there.

Yes, absolutely. So thank you for the question again. And I will emphasize what we talked about a bit earlier in terms of our educational efforts and engagement with the key academic centers. And on this front, I will take a moment to also talk about how we engage with the academic centers on the clinical front, because that's also important to think about how we build additional data in GBM to provide greater support. And our investigator-sponsored studies are a great opportunity for key academic centers to participate in generating additional signals and making sure that they are thinking about how to incorporate TT fields, often specifically in GBM moving forward, And one specific example here is if you participated in our R&D day was the To the Top IST by one of our key investigators. And here we're learning about how another therapy, so immunotherapies, are being explored in GBM. And we have preclinical data here to suggest that TT fields can have an impact here in helping the immune system create a greater response here. And adding here with pembrolizumab, again, shows that this could be a potential benefit through this IST. The reason why I flag this is as our product gets further and further entrenched in clinical practice, these types of questions are going to come up. Can I combine with the latest therapy du jour? And here we're showing that we can do that successfully, and we're trying it in a smaller study here. This, of course, is not commercially available yet, but this experience gives physicians confidence when they're in clinic. When they're evaluating a patient who is eligible for Optune as prescribed today, it gives them greater confidence to continue building on the penetrations that you heard Asaf talk about, anywhere from 30 to 40%. We believe, based on our existing data today, based on the guideline recommendation, the NCCN Category 1 and some of the other guidelines, across the globe that we have continued opportunity to provide support to the clinicians and to all the patients facing GBM and also now building up in the MPM space. So what we do commercially today in front of the education in terms of working with these key academic centers will have a significant impact on our path forward, which we've spent a lot of time on this call talking about. So we're sort of doing the work today to grow our business today, but also to bridge to the future whenever we can.

Just on that last point, Rakesh, mesothelioma, you know, what's been the trend in adoption? You know, did we see any strip new prescriptions coming in from mesothelioma in Q4?

Yeah, so again, thank you for that question. So mesothelioma, it continues to be an important business for us because, first of all, we're helping patients with another rare disease type, and this very squarely fits into our mission, we received 17 prescriptions for Optun-Lua. And at the end of quarter four, we had 16 active patients. If you go back to sort of where we started our journey with glioblastoma, recurrent glioblastoma, much of the work we had to do there was to educate the physicians, educate the patients, insert ourselves into the treatment algorithm. And that's the work that we're doing here, and we'll continue to support the mesothelioma franchise because it helps pave the path for us in what's to come in the future.

Yeah, that's helpful. And maybe, Bill, one for your apologies for the numerous questions, but I saw some language around MCIT in the care. Can that, I guess, is that a positive for your business, Bill?

So with respect to the MCIT impact, we do not expect an imminent material impact to our business. We're going to evaluate all the possibilities to leverage the MCIT rule for any future indications where necessary criteria are met. You know, in general, we think this is a positive rule and a positive ruling for the med tech industry, but it's too early for us to figure out exactly how it will affect us. Understood. Thanks, guys.

Thank you. Our next question comes from Desai Yang with Mizuho Securities.

Hi. Thank you. This is Dan Clark on for Desai. Could you just provide some more color on what drove the increase in active patients in Europe in the quarter?

Sure. Good morning, Dan. Pritesh, maybe you can talk about Europe?

Yes. Thank you for the question and the interest in our European market. Again, what drives our activation is demand and our ability to expand our business in Europe. So we have markets like Sweden, Israel, which also is part of our EMEA operations, and Germany being the sort of greatest footprint that we've built. So Austria, Germany, Sweden, Israel are key markets. And here all the things that we've been talking about in terms of educating the The prescribers, some of the reimbursement decisions, the expanded reimbursement, which gives providers greater confidence, those are the things that drive our active patients. And, yeah, that's where I would end my response there.

Yeah, and I'd just underline that 2020 was a big year for reimbursement decisions in EMEA with Germany, Israel, and Switzerland all making positive reimbursement decisions. That's real momentum, and it's clearly that's the momentum that we are now leveraging into France as we set the stage for expanding our French business.

Thank you. That's helpful. And then just as a follow-up, how should we think about R&D spend going forward, like as a percentage of revenue, and is this sort of the right way to think about that expense line?

So I'm going to let Ashley talk about the expense line, but let me just say, and I'm going to go back to a theme. I hate to say harp on a theme, but we have this tremendous opportunity, this tremendous organic opportunity that includes expanding into new indications and with tremendous TAM. And one thing we haven't talked about much on this call, but we have talked about on previous calls, really improving from what already is best in category efficacy, we think that we can dramatically improve that through product development. And that product development, of course, fuels what we described in the prepared remarks, this virtuous cycle of innovation, growth, innovation, growth, innovation, growth. And so we really are – we view our R&D investment as a badge of honor here, and Ashley can now describe the badge of honor.

Yeah, I'll try to be efficient here given the time, but I would say, Dan, don't yet think of it as a percentage of net revenue. We are looking to invest everywhere where we can make effective and appropriate investments. You heard us detail on the call that that spans multiple functions within R&D, clinical development to advance our K-3 pipeline, medical affairs to engage the clinical community, as well as the basic research and the product innovation. I would say, you know, five, ten years out, I would think about this as a percentage of net revenue. But in the near term, I would say we are investing as aggressively as we can in every opportunity we have to unlock future value.

Okay. Thank you. I'll pass the line.

Thank you. Our next question comes from Corey.

Corey, are you on the line?

Hi, this is Gavin on for Corey. Thanks for taking our questions today and thanks for the update. We just had two on Hepanova and liver cancer. Can you just talk about, you know, it seemed like this got pushed out slightly to Q2. versus Q1 and the original PR last summer kind of set the stage for like a January readout. So maybe you can discuss the dynamics going on there. And then secondly, sticking with HEPA-NOVA, the study is designed to show 20% ORR, top is serafinib. However, the treatment regimen has changed. So just curious your thoughts on the path forward there. It would be great. Thank you.

Ori, do you want to take the question about HEPA-NOVA?

Yeah, absolutely. So good morning again, everybody, and thank you for the question. So as everybody recalls, we enrolled the last patient in HEPA-NOVA in June. HEPA-NOVA is our phase two study in hepatocellular cancer, incorporating TTFILs into the systemic therapy with sorafenib. in advanced unresectable tatocellular carcinoma patients. Currently, we are working on finalizing the data collection at multiple centers in Europe. And anyone who has been involved in the operations of clinical studies knows how meticulous and careful this process is. It takes time to complete this on every trial. And given the COVID-19 situation in the countries where we conducted the study in Europe, It is taking even a bit longer. But our teams are doing an outstanding job completing this, basically as we speak. And despite of that slight delay, we expect to have visibility into the data in Q2 of 2021. We plan to present the results at an upcoming medical congress once the final results are available. So this is in terms of the HEPA-NOVA study timeline and plans. Now, regarding the other question concerning the changes in standard of care, so I believe that we have already demonstrated that TTP is a platform therapy, which on one hand exerts its own antimicrobic effects, and on the other hand has the potential to increase effects in other therapies, too. So that platform that we have, which allows us to combine TTP as a low toxicity therapy with other existing therapies is very relevant in the context of hepatocellular cancer as well. We always take into account changes in the standard of care of malignancies that we are targeting through our clinical program. And specifically in hepatocellular cancer, we have seen changes that involve immunotherapies, atezolizumab in the treatment of such patients. We are particularly excited about the potential of TTP fields in this malignancy, given the concomitant effect that we see when TTP fields are combined with immune checkpoint inhibitors as demonstrated preclinically. And as you recall, we also go in this direction in non-small cell lung cancer through our collaboration with MSD in the upcoming keynote study. So I believe that PT Field is posed in a very good place considering the existing Epanova study results, which are upcoming, but also looking forward into the future and changes, potential changes in the standard of care in the field.

Great. Thank you.

Thank you. Our next question comes from Jason Witts with Northland Securities. Your line is open.

Hi, thanks for the questions. Just on the timelines, some changes, some slippage, it sounds like most of that is COVID-related, but I think you've also discussed in the past how, I don't know if the policy has changed, but you're looking to start presenting some of this data at scientific meetings as opposed to press releases. Can you clarify some of that in terms of these timelines?

Yeah, so I think in this call, you know, we have not changed the timelines for our primary Phase III trials. We have seen our gastric cancer Phase II trials I'll use the word slip, but that trial was open in one center in Hong Kong, and we've just now started opening centers in mainland China. That had nothing to do with COVID. It just took a little bit longer to get regulatory approval in China. With respect to how we deliver the data, First we have to get the data and then we have to look at the data. Our goal is always to make sure that we don't do anything to jeopardize the presentation and publication of the data in scientific, appropriate scientific fora. And at each juncture we look at the appropriateness of press releasing any top line material results. And that we do, you know, sort of one by one. But again, we don't want to, and this is the same with any biotech company. You know, this is not specific to Novacure. Nobody wants to jeopardize the publication or the presentation of the data in the scientific community.

Understood. And that's a fair point. I think Penova 3 was originally, at least the last release I saw was 2021, and now I think its interim look is now 2022. Is that a change, or did I misread that?

Well, that's the interim look, Dan, which is enrollment-driven. We do think that's going to have the potential at least to push over, but we're not changing the timing for final data.

Understood. Okay. And also, I believe you mentioned in some of the developed markets, you're kind of for GBM, you're somewhere in the 30% to 40% range. Yes. Is that a good kind of way to think about the technology that stands now when you're filling in reverse, you're kind of in that 30% or 40% range? Or should we assume that will continue to increase?

So my view, and I think it's shared by everyone on the team, and Pritesh said this, that we can benefit. So, for instance, in the U.S., we're about 40% penetrated. The other 60% can absolutely benefit from the therapy. So this is not a case where there's some specific patient characteristics that make it only applicable to 40%. Getting that other 60% really involves this engagement at academic centers and bringing investigators, prescribers who are not currently confident to prescribe the therapy into the fold. This is what we're doing in our day-to-day engagement activities. It's also the reason that we're doing things like the Trident trial. We started our EF31 trial with high-intensity arrays and GBM last year. So everything that we're doing in the short term plus everything that we're doing in the medium term is all geared to driving those penetrations much higher than they are today.

Great. Thank you very much.

Thank you. And I'm currently showing no further questions. I'd like to turn the call back over to Bill Doyle for closing remarks.

All right. So thank you, everyone, on the call for your interest in NovoCure. Since we were founded by Professor Palti 20 years ago, we've been dedicated to advancing the science and technology of tumor-treating fields and bringing the platform to treat patients with these very, very difficult cancers. that's led to our three overarching priorities. One, to drive commercial adoption around the world in our approved indications. Two, to drive our clinical trial program to expand our indications and bring this therapy to patients with additional cancers. And then, as I just mentioned, to engage in product development to further improve the therapy, which is a tremendous opportunity for us to help patients and to build our intellectual property portfolio. 2020 was a great year, notwithstanding COVID. We grew 41%. We built tremendous financial strength through various balance sheet transactions. And we began the process of positioning our organization for significant expansion over the next few years as we anticipate these including in our opportunity to help patients expanding. So I want to echo the words of my colleagues to thank everyone within NovoCure. It's been a tremendous accomplishment under an unprecedented set of challenges. And as I said, I want to thank everybody on the call for your interest. See you next time.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now.