Good day. Thank you for standing by. Welcome to Novocure's Second Quarter 2025 Earnings Conference Call. [Operator Instructions] Please note that today's conference may be recorded. I will now hand the conference over to your speaker host, Ingrid Goldberg. Please go ahead.

Good morning, and thank you for joining us to review Novocure's second quarter 2025 performance. I'm on the phone this morning with our Executive Chairman, Bill Doyle; CEO, Ashley Cordova; and CFO, Christoph Brackmann. Other members of our executive leadership team will be available for Q&A. For your reference, slides accompanying this earnings release can be found on our website www.novocure.com on the Investor Relations page under Quarterly Reports. 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 and are described from time to time in our SEC filings. We do not intend to update publicly any forward-looking statements, except as required by law. Where appropriate, we will refer to non-GAAP financial measures to evaluate our business, specifically adjusted EBITDA, a measure of earnings before interest, taxes, depreciation, amortization and share-based compensation. We believe adjusted EBITDA is an important metric as it removes the impact of earnings attributable to our capital structure, tax rate and material noncash items and best reflects the financial value generated by our business. Reconciliations of non-GAAP to GAAP financial measures are included in our press release, earnings slides and our Form 10-Q filed with the SEC today. These materials can also be accessed from the Investor Relations page of our website. Following our prepared remarks today, we will open the line for your questions. I will now turn the call over to our Executive Chairman, Bill Doyle.

Thank you, Ingrid, and good morning. At Novocure, our mission is to extend survival for patients diagnosed with some of the most aggressive forms of cancer through the development of Tumor Treating Fields therapy. This quarter, we grew our commercial business and advanced our efforts to bring Tumor Treating Fields therapy to new patient populations. With the first half of 2025 complete, I am pleased to report we are making good progress on our clinical, regulatory and commercial milestones. This morning, we will provide detail concerning recent PANOVA-3 data presentations at 2 key medical conferences, and we will review the next steps for our upcoming regulatory submissions of PANOVA-3 and METIS. We will also discuss our commercial performance in the quarter. And to close, we will review our quarterly financials and open the line for Q&A. While our commercial teams pursue greater penetration and improved indications, we are working intensely to gain approvals in new indications. This quarter, we took important steps towards approval in pancreatic cancer. The 5-year survival rate for patients diagnosed with pancreatic cancer is only 13% and pancreatic cancer is often associated with debilitating pain for which patients are quickly escalated to high doses of pain medications. Addressing these needs sets a high threshold for success in pancreatic cancer trials. We are pleased the PANOVA-3 trial proved the benefit of TTFields therapy together with gemcitabine and nab-paclitaxel for both of these end points. In May, we had an exciting presence at the ASCO Annual Meeting, where data from PANOVA-3 were presented during the Saturday evening pancreatic cancer plenary session. The PANOVA-3 findings were concurrently published in the Journal of Clinical Oncology, or JCO, and earned inclusion in Best of ASCO, which will be highlighted at regional ASCO meetings throughout the year. As a reminder, the PANOVA-3…

Thank you, Bill. We are squarely focused on execution, and I am proud of what the team has delivered so far this year. We have reached multiple milestones on our path to bring Tumor Treating Fields to more patients and have additional catalysts on the horizon. One of our key areas of focus is the Optune Lua launch in non-small cell lung cancer. In the second quarter, we received 121 prescriptions for non-small cell lung cancer, 106 in the U.S. and 15 in Germany, which launched following receipt of the CE Mark on April 22 of this year. We ended the period with 137 Optune Lua patients globally, 94 from non-small cell lung cancer and 43 from MPM. Importantly, we are beginning to build reimbursement experience and recognized $2.4 million in net revenues from Optune Lua in the quarter, of which $1.1 million was from non-small cell lung cancer. We are pleased that many of the launch themes we described last quarter have continued in the U.S. In Q2, we had 75 unique prescribers of Optune Lua, 41 of those physicians were entirely new to Tumor Treating Fields therapy, while 34 had previously prescribed. This shows a healthy mix of physicians recognizing the clinical benefit and trying Tumor Treating Fields for the first time and repeat prescribers. Additionally, we continue to see the full label utilized with 58% of prescriptions written together with immune checkpoint inhibitors and 42% with docetaxel. Importantly, over 93% of the patients prescribed Optune Lua with an ICI had previous ICI exposure. Validating the strong demand and physician comfort with continued ICI use post platinum failure. One theme we have observed since launch is that prior physician experience to Tumor Treating Fields matters, whether that's firsthand prescribing Optune Gio and GBM or Optune Lua for MPM…

Thank you, Ashley. We continued our positive momentum this quarter with net revenues of $159 million, an increase of 6% from the second quarter of last year. This increase was primarily driven by year-over-year active patient growth of 7% in our GBM franchise including double-digit growth in all our international markets. The favorable year-over-year impact from exchange rates was $3.8 million in the quarter, offset by lower onetime benefits of prior period claims. We collected $2.4 million from Optune Lua claims in the quarter, including $1.1 million from non-small cell lung cancer collections in the period compared to $1.5 million and $0.7 million in Q1. As a reminder, we recognize revenue by applying estimated future collection rates at the time of billing per U.S. GAAP standard. It will take several quarters for us to build a track record of collections to support an estimated rate to recognize revenue at billing. In the meantime, non-small cell lung cancer collections reflect approvals and positive outcomes from appeals in the quarter. Gross margin for the second quarter was 74% compared to 77% in Q2 of 2024. This reduction was primarily driven by the rollout of our HFE array and the continued launch of non-small cell lung cancer prior to establishment of broad reimbursement. These headwinds are consistent with previous periods. And we expect them to decrease as we lower the production cost of the HFE array and establish reimbursement in non-small cell lung cancer. We only had a minor impact from tariffs in the quarter of $1.3 million driven by a reduction in pre-tariff inventory in Q2. While there is still considerable uncertainty around future tariffs for import into the U.S., we currently do not foresee major changes from our expectations of last quarter. Our most significant exposure remains the import of arrays…

[Operator Instructions] The first question is coming from the line of Larry Biegelsen with Wells Fargo.

So Ashley, the second quarter non-small cell lung cancer prescriptions and patients grew less quarter-over-quarter in the second quarter than Q1. And the number of prescribers actually went down. The U.S. prescriptions increased by only 14 sequentially. So why was that? And how should we think about the ramp the rest of the year? Should we be thinking about the low end of the $5 million to $10 million range that you -- that we -- that's been discussed before for 2025? And I had 1 follow-up.

Sure. Thanks for the question, Larry. I'll start off and then I'll ask Frank to add some additional color. So I think the theme you should take away is that the long launch is on track. We're pleased with the themes. What we're seeing is kind of a consistent ability to get into market and to educate these positions. And I would say we actually feel like the launch is progressing as we'd expected, and I'm quite comfortable with where expectations are on a full year basis. And with that, I'll ask Frank to add some additional color.

Yes, Larry, I would echo the note that we're pleased with the overall theme of the launch. And specifically, what I would say is that you're seeing repeat prescribers. And we've seen, in particular, prescribers who came on right at the launch are now really building volume with their own practice. And in some instances, we've even seen physicians, and this is common for devices have moved towards marketing access to the device in their practice in social media. And so I think we're consistent with the device launch, we're getting physicians comfortable with the device. We're getting into their practice, and we're building volume.

That's helpful. One follow-up on the METIS data. Bill, how different were the numbers that you disclosed this morning from what we saw at ASCO last year? And why was it another analysis required?

Sure. So let me just remind everybody what the METIS trial was studying. So in non-small cell lung cancer, brain metastases are one of the -- really significant markers of deterioration in the patients. About 25% of patients are actually diagnosed with brain mets when they're diagnosed with cancer, and at least another 25%. So this is a significant unmet need in non-small cell lung cancer. And in fact, the standard of care in stereotactic radio surgery followed by supportive care. So in METIS we studied the addition of tumor treating fields to supportive care after stereotactic radiosurgery. And the endpoint of this study was progression. All of our other trials, the endpoints are overall survival, where the endpoint is very specific and very binary. In this case -- and this is Larry common in other trials where radiographic review is part of the analysis that a first read is presented. And then through the standard cleaning of data, a final data set is provided. We're, of course, delighted that the data considered continued to be very statistically significant and very clinically meaningful.

And our next question coming from the line of Jason Bednar with Piper Sandler.

I'll double-click first on the response to Larry's question on lung. Anyway, feel free to answer, but do you think there's something that you can do that increases the slope and the adoption curve and helps take those scripts and active patients higher than where we're at today. I mean we now have a couple of full quarters of data points here to work with. I hear you on the physician experience in med tech like launch, but maybe just talk about how you're thinking about the progression of uptake and kind of maybe some of your own expectations as we look out balance this year and into future years and feel free to respond to the U.S. and Germany as well.

Yes. Jason, this is Frank. So thanks for the question. I would just start again with the baseline for this population, which is that there is a high clinical unmet need for second-line treatment in Stage IV non-small cell lung cancer. The physicians are not satisfied with the -- with what were the existing treatment options of docetaxel or docetaxel plus ramucirumab. And so we always start with the fact that we still feel very comfortable that we are going into a large market, and we see that in the numbers -- in our numbers where we see that 90% of our patients had been previously treated with immune checkpoint inhibitors. So physicians are comfortable using that full patient population with us, and they're accessing both sides of our label. So that's really where we really see the opportunity. To the point of steepening the curve and really driving this launch now that we have some experience, I'd point to our refinement of our marketing messages and our refinement of our targeting of the population in that there are a very large percentage of patients who start therapy, go on a platinum therapy and either because of side effects or adverse events, they're unable to continue the platinum therapy. Now their disease may not have gone into a full progression. It may be, in some cases, even just a clinical progression where the patient is not feeling as well as they used to. And we're going to really lean into that message of saying once the patient is off the platinum, they are now eligible for Tumor Treating Fields. And I think that's really going to be an area for success for us, and that's really where we've seen some strong -- that's where we've seen physicians really building up patient volume. And so we're going to lean into that, and we think we have the opportunity to grow faster.

All right. Helpful. And then one other one, looking ahead to TRIDENT. This is a bit of a different trial. You're trying to extend the wear for the indication where you already have approval. I don't want to put the cart before the horse here. But can you talk about maybe the regulatory and payer path that we should have in mind when we look ahead, if we make the assumption that this is a successful trial, is this a PMA supplement route you'd be pursuing? What kind of hoops do you think you'd have to jump through with payers? Anything like that would be helpful as we look ahead to early next year?

Thanks for the question, Jason. This is Ashley. I'll say -- I'll just remind everybody that TRIDENT into the trial in newly diagnosed GBM, which is studying the overall survival benefit of starting Tumor Treating Fields earlier in the treatment journey concurrent with radiation rather than waiting to post chemo radiation, which is the current label. The trial reads out in the first half of next year. And we're excited to see clearly the data here because, first of all, it provides a real benefit to extend survival even further, but also positions the therapy earlier in the treatment journey with a real potential upside in duration. It's too soon to get specifics on actually what that will mean from a regulatory and reimbursement perspective because it depends on the data. What I will say is that this will be easier than a De Novo PMA. It is an earlier start of our existing our existing label. And I would say that would extend to payer dynamics as well. The same coverage policies that apply newly diagnosed would need to incorporate this data, but I think it is -- it's an easier hurdle to cross than it is when you're starting with a new indication. So too soon to get specifics because the data will drive those discussions. But we're very hopeful and excited about this trial.

Okay. I will wait on that. And then maybe if I could squeeze in one more, just on the NCCN guidelines. I don't know if there's any way to handicap it, but just -- how do you think category [ 2A ] versus [ 2B ] versus 3 ultimately influences commercial coverage?

Yes. It's probably too soon to handicap other than to say anything is helpful and the higher in the category rating, you could go to more helpful, right? So I think anything -- even being on the guidelines in any calculation is a step-up from where we are today. With additional publications, we'll continue to work our way up those guidelines. So I think that's important that it's not kind of where you start is where you end. Certainly, publication volume matters here. And we're as eager as everybody is to see those updated guidelines published later this fall.

Next question coming from the line of Vijay Kumar with Evercore ISI.

I had 2 from my side. One maybe on ASCO PANOVA, Bill or Ashley, what was the reception at ASCO. If you could just elaborate on the physician feedback and compare -- contrast us with your prior podium presentations at ASCO?

Maybe I'll start is the longest-serving member of the team here. Vijay, our very first presentation at ASCO, which was the EF-11 data, no one came to the presentation. EF-14 was very well attended. But there was little understanding about the mechanism of action and just a lot of questions about what is this new therapy. This was by far the most exciting ASCO that have attended in 25 years. We were front and center on the podium in the plenary session. We were included with all of the latest presentations. Our discussion, we mentioned this in the script, who was unfamiliar previously with Tumor Treating Field therapy, Dana-Farber physician concluded that our therapy should be standard of care. And ours was the only presentation for which that conclusion was delivered. The others were more study of this, more study of that, the side effects don't seem to justify the benefit. And then we follow that with a discussion with our lead investigator, who was a very effective presenter and was a very effective advocate for the standard of care use of the therapy. And that was reflected in the, what I'll call, the talk on the floor. And maybe I'll turn it over to Frank and Ashley because we were all there but to reflect on some of that I'll call the hub up, but this is highly anticipated at this point.

And then the only other thing I would add, Vijay, is that we were front page of the ASCO daily news on Sunday, which is a lot of fun. And new for us. And I would also say that, that extended into the discussions. ASCO is 1 event. It's great to see that energy and excitement, but we really needed that to continue onto the ongoing physician dialogue, and we've seen that I was at ESMO GI in Barcelona last month when we were presenting the quality of life data. And I will say -- it's a lot of fun to go to these congresses. When physicians are walking up to you already aware of the data, excited about the data and talking about next steps and where we can go from here.

That's helpful. Then maybe 1 for Christoph. On the revenues here. I think your 10-Q had some details on revenues recognized from performance obligations for prior period service rendered. I know there is a CMS backlog payments one-offs, which comes in from time to time. What was CMS back there? Is that included as part of this performance obligation? Or how should we think about this CMS versus non-CMS. Is this more of a recurring feature? Or should we think of it as a one-off?

Yes. So I would think of it as a recurring feature. As I said also in the script, we recognized revenue by applying estimated future collection rates. And we do this by portfolio for our commercial portfolio for Medicare, for Medicaid. And we do this as best as we can. And so we would typically expect some revenue from prior periods as disclosed in the Q in the range of somewhere between 3 to 5 percentage points, and that's in line with the Q2 of this year. Last year, there was a higher percentage and hence, we called it out.

Understood. And sorry, just on CMS, is CMS back part of this? Or is that separate?

Yes. It's not really a key revenue driver of the prior period claims in this quarter.

Our next question coming from the line Jonathan Chang with Leerink Partners.

First question, how should we be thinking about your path to profitability? How are you tracking relative to your plans? And what are the key levers? And is there a timeframe that we should be modeling around. And then second question on the pancreatic cancer opportunity. Are there plans to pursue combinations with other chemo regimens beyond what's being evaluated in PANOVA-3 and 4?

Yes, Jonathan, it's Christoph. So on our path to profitability, I would first say, look, it's very important for us to get to profitability. And as we alluded too in the past, we have a path to probability. We are obviously very conscious of balancing investments in our launches as well as in future innovation. So basically R&D with our intent to become profitable. In the past, we gave some color around that at a revenue level of around $750 million, we would expect to break into profitability from an adjusted EBITDA perspective. And I think that's still a good anchor to think about. And I think we don't really want to give you a clear timeframe. But I think with the revenue growth that you have seen in the past that will probably give you some indications of when we think that's going to happen. I would say to your question of where are we relative to our expectations? We are in line with our expectations. To the second question, and thank you for that one. Allow me first to contextualize that PANOVA-3 was the first positive trial with OS. And on top of that, the quality of life was positive as well as we saw it at ESMO. On the top of it, the pain-free survival was very positive. And that led to a huge discussion and interest by the investigators. And interestingly, when you combine TTFields to GNP, standard of care, you don't have added adverse event, which means it's highly combination ball, if I may say. So we are actively discussing actively looking into new combinations, and there are a few to come with a number of groups out there.

And Jonathan, I'll just remind you that the next data set we'll have public with pancreatic cancer is our PANOVA-4 data, which comes out in the front half of next year, company sponsored looking at atezolizumab, gem/Abraxane, nab-paclitaxel in metastatic [ pink ], so we'll have that in hand, and I think that will also inform future directions.

Our next question coming from the line of Jessica Fye with JPMorgan.

Two questions for me sort of following up on some of the prior ones. First, can you just take us through why the METIS PMA in the back half of '25 could conceivably come after the PANOVA PMA in the third quarter of '25, given how much longer we've had the METIS data relative to PANOVA. And the second one is just to clarify the comment on revenue from prior period claims. I think you said it was 3% to 5% of revenue. Do we apply that to the $94 million of U.S. Optune Gio sales this quarter, so like 2.8% to 4.7%. Or should I apply that 3% to 5% range to some other revenue number?

Jessica, this is Ashley. I'll try to answer both of those. And then if we have follow up, I'll hand it off to Christoph. But the first it's an easy answer, it's actually the form factor of the submission. So I'll remind you that with METIS, we have a modular submission, so modules 1 and 2 went in April this year to the FDA. This was an important pathway because it's actually the first time this device is under review at the FDA. It is our Torso application, but at 150 kilohertz -- pardon me, yes, at 150 kilohertz which is our lung cancer frequency. So those 2 modules need to get through at the FDA to approval before we're able to submit module 3. So that's simply the gating reason. We're in productive discussions. In fact, later this quarter, we will have our pre-submission meeting with the FDA that's scheduled for the clinical module, but the pacing of it will actually be dependent on modules 1 and 2 getting 3 the review process. And then that final module will just see the clinical module. So that's -- it's a very straightforward and easy answer. To the second, I would just remind everybody that this is not new. So with this disclosure, you can actually go and look at over the prior kind of years. And I would -- we've always seen it in line of this 3% to 5%. And any time it bubbles up above that, we call it out in the script. So I would say I wouldn't try to model this anymore. This is well baked in and [ NRR rate ] it has been since the implementation of [ 606 ].

Our next question coming from the line of Kevin DeGeeter with Ladenburg Thalman.

I want to follow up on [ Optune Lua ] specifically the positioning as more of a post the platinum progression versus second line. Specifically for the NCCN guidelines, is there anything you're looking for potentially in the language there to help you support your positioning in the market discussions with payers. And I guess on a related point, have you had any feedback from payers as to whether they see the distinction as material when they consider potential coverage decisions?

Well, I'll start just on the -- to start at the end with the payer note. I will say, I think we've seen some initial progress with payers that -- what I'd really attributed to again is back to the point that this is an area of high clinical unmet need, and the doctors see it and the payers see it. Looking at in terms of the positioning and the link of the positioning to NCCN that -- we don't necessarily see a key link there. We have to fit into the guidelines as the NCCN has already published them. So we're not trying to influence the way in which they present their guidelines. That said, what we are doing and you'll begin to see soon is that we're publishing real-world evidence around the patient population that we have treated commercially and really using that to shape physician perception of where to use the device and ultimately, over time, to then push that deeper and deeper into the community, this idea once you're post platinum and you're thinking about what do I do at the first time the patient is not doing well, go to Optune.

Great. And then just as a follow-up. In your prior calls, you discussed the potential opportunity for U.S. commercial decisions on Optune Lua potentially in 2025 based on the -- I guess, potential timing of NCCN guideline release. Is that still the right way to think about the pace of dialogue with major U.S. payers or you'll perhaps enter 2026 a more realistic assessment.

Yes, Kevin, I mean, listen, it's not a binary switch. First of all, these ramp up over time. And what you've seen is that we're seeing early successes. So we had $1.1 million in this quarter, and I think we would expect each quarter to add a few sizable number to that target to get to where we would exit '25 with -- not in immaterial but not a significant amount of money from Optune Lua in the U.S. And we think we're on track for that, and we would expect really the full driver of top line growth appearing in 2026. So exiting with strength in '25 and really seeing material topline growth in 2026.

Our final question comes from the line of Emily Bodnar with H.C. Wainwright.

Could you clarify if the $94 million in U.S. sales includes the $2.4 million from Optune Lua? Or was that separate? And then in terms of revenues from Germany, would you expect any kind of one-off reimbursement cases similar to what you're now seeing in the U.S. in the second half of fiscal '25?

So Emily, the $94 million includes all of the revenue inclusive of the Optune Lua. So that's both Optune Gio and Optune Lua. And yes, we do -- I mean the U.S. and Germany are the 2 markets that we have the opportunity to go and see case-by-case reimbursement. So it will follow us similar trajectory in Germany, as we're seeing a follow in the U.S.

Got it. Okay. Makes sense. And then I know it's probably still pretty early, but are you able to comment at all about efficacy you're seeing in real-world cases for lung cancer and how that's kind of related to the LUNAR trial, particularly in the patients who had prior immune checkpoint inhibitors?

This is Frank. Thank you for the question. I would say we're not able to track to overall survival. So we can't comment on a hard clinical end point. But what we do see is that usage of the device is consistent with what we saw in the trial, which is our best proxy to say these patients are using it the same way. And we're -- and as I said, we're seeing physicians who have -- now had patients on from the launch quarter. So we're pretty far into it, and they're expressing a strong confidence in building a practice with more and more patients on the therapy.

And there are no further questions in queue. I will now turn the call back over to Mr. Bill Doyle for any closing remarks.

So thank you. As we've underlined during the last few quarterly calls, this is a very exciting time at Novocure. We are moving from a single indication company, treating patients with GBM to a multi-indication international cancer therapy company. We've made tremendous progress this year so far, all first on the foundation of a very strong and stable business in GBM. And one where, as Ashley and Christophe noted, we now have hit the 11th successive quarter of active patient growth. And from there, we're in the early days, but exciting days of our Optune Lua launch in non-small cell lung cancer, and we are furiously busy at the FDA with both our METIS and our PANOVA-3 filings with the potential for launches next year in pancreatic cancer and in brain mets from non-small cell lung cancer. We're busy. It's exciting and we look forward to keeping you up-to-date in future calls.

Ladies and gentlemen, that does conclude our conference for today. Thank you for your participation, and you may now disconnect.