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 ~~June~~September 30, 2022


☐			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)


Jersey						98-1057807
(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 class	Trading Symbol(s)	Name of each exchange on which registered
Ordinary Shares, no par value	NVCR	The 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 filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller 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.


Class						Outstanding as of ~~July 22,~~October 21, 2022
Ordinary shares, no par value						~~104,738,581~~104,950,082 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 (the “SEC”) 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 devices marketed under various brand names, including Optune and Optune Lua, and software and systems to support and optimize the delivery of Tumor Treating Fields (collectively, our “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 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 solid tumor cancers other than glioblastoma multiforme (“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 and develop our intellectual property position;

•our ability to manage the risks associated with business disruptions caused by natural disasters, extreme weather events, pandemics such as the COVID-19 pandemic, including the emergence of variant strains, or international conflict and 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, 2021 filed on February 24, 2022, as well as other risks and uncertainties set forth from time to time in the reports we file with the SEC. In our prior filings, references to NovoTTF-100L now refer

to Optune Lua. We do not intend 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.

Table of Contents

NovoCure Limited

Quarterly Report on Form 10-Q

Table of Contents

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements


NOVOCURE LIMITED AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS	NOVOCURE LIMITED AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS					NOVOCURE LIMITED AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands (except share data)	U.S. dollars in thousands (except share data)					U.S. dollars in thousands (except share data)
		June 30, 2022		December 31, 2021			September 30, 2022		December 31, 2021
		Unaudited		Audited			Unaudited		Audited
ASSETS	ASSETS					ASSETS
CURRENT ASSETS:	CURRENT ASSETS:					CURRENT ASSETS:
Cash and cash equivalents	Cash and cash equivalents	$	367,014	$	208,802	Cash and cash equivalents	$	243,805	$	208,802
Short-term investments	Short-term investments	581,503		728,898		Short-term investments	726,515		728,898
Restricted cash	Restricted cash	749		807		Restricted cash	231		807
Trade receivables, net	Trade receivables, net	97,563		93,567		Trade receivables, net	87,552		93,567
Receivables and prepaid expenses	Receivables and prepaid expenses	18,195		17,025		Receivables and prepaid expenses	17,478		17,025
Inventories	Inventories	29,531		24,427		Inventories	26,792		24,427
Total current assets	Total current assets	1,094,555		1,073,526		Total current assets	1,102,373		1,073,526
LONG-TERM ASSETS:	LONG-TERM ASSETS:					LONG-TERM ASSETS:
Property and equipment, net	Property and equipment, net	26,561		22,693		Property and equipment, net	29,745		22,693
Field equipment, net	Field equipment, net	12,377		12,923		Field equipment, net	11,985		12,923
Right-of-use assets	Right-of-use assets	18,281		18,267		Right-of-use assets	19,405		18,267
Other long-term assets	Other long-term assets	10,898		12,086		Other long-term assets	10,707		12,086
Total long-term assets	Total long-term assets	68,117		65,969		Total long-term assets	71,842		65,969
TOTAL ASSETS	TOTAL ASSETS	$	1,162,672	$	1,139,495	TOTAL ASSETS	$	1,174,215	$	1,139,495

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

Table of Contents


NOVOCURE LIMITED AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS	NOVOCURE LIMITED AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS					NOVOCURE LIMITED AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands (except share data)	U.S. dollars in thousands (except share data)					U.S. dollars in thousands (except share data)
		June 30, 2022		December 31, 2021			September 30, 2022		December 31, 2021
		Unaudited		Audited			Unaudited		Audited
LIABILITIES AND SHAREHOLDERS' EQUITY	LIABILITIES AND SHAREHOLDERS' EQUITY					LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:	CURRENT LIABILITIES:					CURRENT LIABILITIES:
Trade payables	Trade payables	$	79,910	$	72,600	Trade payables	$	77,026	$	72,600
Other payables, lease liabilities and accrued expenses	Other payables, lease liabilities and accrued expenses	55,489		70,002		Other payables, lease liabilities and accrued expenses	64,050		70,002
Total current liabilities	Total current liabilities	135,399		142,602		Total current liabilities	141,076		142,602
LONG-TERM LIABILITIES:	LONG-TERM LIABILITIES:					LONG-TERM LIABILITIES:
Long-term debt, net	Long-term debt, net	563,846		562,216		Long-term debt, net	564,677		562,216
Deferred revenue	Deferred revenue	4,541		6,477		Deferred revenue	3,924		6,477
Long-term leases	Long-term leases	13,377		12,997		Long-term leases	14,827		12,997
Employee benefit liabilities	Employee benefit liabilities	3,598		4,543		Employee benefit liabilities	4,088		4,543
Other long-term liabilities	Other long-term liabilities	239		166		Other long-term liabilities	222		166
Total long-term liabilities	Total long-term liabilities	585,601		586,399		Total long-term liabilities	587,738		586,399
TOTAL LIABILITIES	TOTAL LIABILITIES	721,000		729,001		TOTAL LIABILITIES	728,814		729,001
COMMITMENTS AND CONTINGENCIES	COMMITMENTS AND CONTINGENCIES	0		0		COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY:	SHAREHOLDERS' EQUITY:					SHAREHOLDERS' EQUITY:
Share capital -	Share capital -					Share capital -
Ordinary shares no par value, unlimited shares authorized; issued and outstanding: 104,727,685 shares and 103,971,263 shares at June 30, 2022 (unaudited) and December 31, 2021, respectively		—		—
Ordinary shares no par value, unlimited shares authorized; issued and outstanding: 104,942,941 shares and 103,971,263 shares at September 30, 2022 (unaudited) and December 31, 2021, respectively						Ordinary shares no par value, unlimited shares authorized; issued and outstanding: 104,942,941 shares and 103,971,263 shares at September 30, 2022 (unaudited) and December 31, 2021, respectively	—		—
Additional paid-in capital	Additional paid-in capital	1,158,348		1,099,589		Additional paid-in capital	1,188,864		1,099,589
Accumulated other comprehensive income (loss)	Accumulated other comprehensive income (loss)	(2,095)		(3,169)		Accumulated other comprehensive income (loss)	(2,306)		(3,169)
Retained earnings (accumulated deficit)	Retained earnings (accumulated deficit)	(714,581)		(685,926)		Retained earnings (accumulated deficit)	(741,157)		(685,926)
TOTAL SHAREHOLDERS' EQUITY	TOTAL SHAREHOLDERS' EQUITY	441,672		410,494		TOTAL SHAREHOLDERS' EQUITY	445,401		410,494
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	1,162,672	$	1,139,495	TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	1,174,215	$	1,139,495

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

Table of Contents


NOVOCURE LIMITED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS	NOVOCURE LIMITED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS											NOVOCURE LIMITED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS
U.S. dollars in thousands (except share and per share data)	U.S. dollars in thousands (except share and per share data)											U.S. dollars in thousands (except share and per share data)
		Three months ended June 30,				Six months ended June 30,				Year ended December 31,			Three months ended September 30,				Nine months ended September 30,				Year ended December 31,
		2022		2021		2022		2021		2021			2022		2021		2022		2021		2021
		Unaudited				Unaudited				Audited			Unaudited				Unaudited				Audited
Net revenues	Net revenues	$	140,866	$	133,517	$	278,413	$	268,212	$	535,031	Net revenues	$	130,998	$	133,606	$	409,411	$	401,818	$	535,031
Cost of revenues	Cost of revenues	28,503		28,599		56,230		54,984		114,877		Cost of revenues	29,749		30,206		85,979		85,190		114,877
Gross profit	Gross profit	112,363		104,918		222,183		213,228		420,154		Gross profit	101,249		103,400		323,432		316,628		420,154

Operating costs and expenses:	Operating costs and expenses:											Operating costs and expenses:
Research, development and clinical studies	Research, development and clinical studies	57,075		50,315		99,309		96,231		201,303		Research, development and clinical studies	51,956		48,141		151,265		144,372		201,303
Sales and marketing	Sales and marketing	44,750		34,138		82,634		65,495		137,057		Sales and marketing	41,395		32,580		124,029		98,075		137,057
General and administrative	General and administrative	31,666		32,760		62,174		63,885		126,127		General and administrative	32,509		31,231		94,683		95,116		126,127
Total operating costs and expenses	Total operating costs and expenses	133,491		117,213		244,117		225,611		464,487		Total operating costs and expenses	125,860		111,952		369,977		337,563		464,487

Operating income (loss)	Operating income (loss)	(21,128)		(12,295)		(21,934)		(12,383)		(44,333)		Operating income (loss)	(24,611)		(8,552)		(46,545)		(20,935)		(44,333)
Financial expenses (income), net	Financial expenses (income), net	2,228		940		3,937		3,586		7,742		Financial expenses (income), net	(1,194)		1,981		2,743		5,567		7,742

Income (loss) before income tax	Income (loss) before income tax	(23,356)		(13,235)		(25,871)		(15,969)		(52,075)		Income (loss) before income tax	(23,417)		(10,533)		(49,288)		(26,502)		(52,075)
Income tax	Income tax	652		1,406		2,784		2,800		6,276		Income tax	3,159		2,591		5,943		5,391		6,276
Net income (loss)	Net income (loss)	$	(24,008)	$	(14,641)	$	(28,655)	$	(18,769)	$	(58,351)	Net income (loss)	$	(26,576)	$	(13,124)	$	(55,231)	$	(31,893)	$	(58,351)

Basic net income (loss) per ordinary share	Basic net income (loss) per ordinary share	$	(0.23)	$	(0.14)	$	(0.27)	$	(0.18)	$	(0.56)	Basic net income (loss) per ordinary share	$	(0.25)	$	(0.13)	$	(0.53)	$	(0.31)	$	(0.56)
Weighted average number of ordinary shares used in computing basic net income (loss) per share	Weighted average number of ordinary shares used in computing basic net income (loss) per share	104,627,789		103,484,866		104,408,164		103,061,557		103,433,274		Weighted average number of ordinary shares used in computing basic net income (loss) per share	104,884,583		103,731,147		104,552,803		103,281,380		103,433,274

Diluted net income (loss) per ordinary share	Diluted net income (loss) per ordinary share	$	(0.23)	$	(0.14)	$	(0.27)	$	(0.18)	$	(0.56)	Diluted net income (loss) per ordinary share	$	(0.25)	$	(0.13)	$	(0.53)	$	(0.31)	$	(0.56)
Weighted average number of ordinary shares used in computing diluted net income (loss) per share	Weighted average number of ordinary shares used in computing diluted net income (loss) per share	104,627,789		103,484,866		104,408,164		103,061,557		103,433,274		Weighted average number of ordinary shares used in computing diluted net income (loss) per share	104,884,583		103,731,147		104,552,803		103,281,380		103,433,274

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

Table of Contents


CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)	CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)											CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
U.S. dollars in thousands	U.S. dollars in thousands											U.S. dollars in thousands
		Three months ended June 30,				Six months ended June 30,				Year ended December 31,			Three months ended September 30,				Nine months ended September 30,				Year ended December 31,
		2022		2021		2022		2021		2021			2022		2021		2022		2021		2021
		Unaudited				Unaudited				Audited			Unaudited				Unaudited				Audited
Net income (loss)	Net income (loss)	$	(24,008)	$	(14,641)	$	(28,655)	$	(18,769)	$	(58,351)	Net income (loss)	$	(26,576)	$	(13,124)	$	(55,231)	$	(31,893)	$	(58,351)
Other comprehensive income (loss), net of tax:	Other comprehensive income (loss), net of tax:											Other comprehensive income (loss), net of tax:
Change in foreign currency translation adjustments	Change in foreign currency translation adjustments	680		413		1,010		145		302		Change in foreign currency translation adjustments	541		(202)		1,550		(57)		302
Unrealized gain (loss) from debt securities	Unrealized gain (loss) from debt securities	(769)		—		(769)		—		—		Unrealized gain (loss) from debt securities	(127)		—		(896)		—		—
Pension benefit plan	Pension benefit plan	(678)		416		833		2,568		361		Pension benefit plan	(625)		421		209		2,989		361
Total comprehensive income (loss)	Total comprehensive income (loss)	$	(24,775)	$	(13,812)	$	(27,581)	$	(16,056)	$	(57,688)	Total comprehensive income (loss)	$	(26,787)	$	(12,905)	$	(54,368)	$	(28,961)	$	(57,688)

NOVOCURE LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
U.S. dollars in thousands (except share data)
Ordinary shares Additional
paid-in
capital Accumulated
other
comprehensive
loss Retained earnings (accumulated
deficit) Total shareholders'
equity
Balance as of December 31, 2021 (audited) 103,971,263 $ 1,099,589 $ (3,169) $ (685,926) $ 410,494
Share-based compensation to employees — 25,045 — — 25,045
Exercise of options and vested RSUs 587,825 3,148 — — 3,148
Other comprehensive income (loss), net of tax benefit of $0 — — 1,841 — 1,841
Net income (loss) — — — (4,647) (4,647)
Balance as of March 31, 2022 (Unaudited) 104,559,088 $ 1,127,782 $ (1,328) $ (690,573) $ 435,881
Share-based compensation to employees — 25,823 — — 25,823
Proceeds from issuance of shares 46,709 2,759 — — 2,759
Exercise of options and vested RSUs 121,888 1,984 — — 1,984
Other comprehensive income (loss), net of tax benefit of $0 — — (767) — (767)
Net income (loss) — — — (24,008) (24,008)
Balance as of June 30, 2022 (Unaudited) 104,727,685 $ 1,158,348 $ (2,095) $ (714,581) $ 441,672


NOVOCURE LIMITED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
U.S. dollars in thousands (except share data)
	Ordinary shares	Additional paid-in capital		Accumulated other comprehensive loss		Retained earnings (accumulated deficit)		Total shareholders' equity

Balance as of December 31, 2021 (audited)	103,971,263	$	1,099,589	$	(3,169)	$	(685,926)	$	410,494

Share-based compensation to employees	—	25,045		—		—		25,045
Exercise of options and vested RSUs	587,825	3,148		—		—		3,148
Other comprehensive income (loss), net of tax benefit of $0	—	—		1,841		—		1,841
Net income (loss)	—	—		—		(4,647)		(4,647)
Balance as of March 31, 2022 (Unaudited)	104,559,088	$	1,127,782	$	(1,328)	$	(690,573)	$	435,881

Share-based compensation to employees	—	25,823		—		—		25,823
Proceeds from issuance of shares	46,709	2,759		—		—		2,759
Exercise of options and vested RSUs	121,888	1,984		—		—		1,984
Other comprehensive income (loss), net of tax benefit of $0	—	—		(767)		—		(767)
Net income (loss)	—	—		—		(24,008)		(24,008)
Balance as of June 30, 2022 (Unaudited)	104,727,685	$	1,158,348	$	(2,095)	$	(714,581)	$	441,672

Share-based compensation to employees	—	26,305		—		—		26,305
Exercise of options and vested RSUs	215,256	4,211		—		—		4,211
Other comprehensive income (loss), net of tax benefit of $0	—	—		(211)		—		(211)
Net income (loss)	—	—		—		(26,576)		(26,576)
Balance as of September 30, 2022 (Unaudited)	104,942,941	$	1,188,864	$	(2,306)	$	(741,157)	$	445,401

Table of Contents

Ordinary shares Additional
paid-in
capital Accumulated
other
comprehensive
loss Retained earnings (accumulated
deficit) Total shareholders'
equity
Balance as of December 31, 2020 (audited) 102,334,276 $ 1,111,435 $ (3,832) $ (631,077) $ 476,526
Share-based compensation to employees — 18,863 — — 18,863
Exercise of options and vested RSUs 853,184 7,961 — — 7,961
Cumulative effect adjustment resulting from ASU 2020-06 early adoption — (132,474) — 3,502 (128,972)
Other comprehensive income (loss), net of tax benefit of $0 — — 1,884 — 1,884
Net income (loss) — — — (4,128) (4,128)
Balance as of March 31, 2021 (Unaudited) 103,187,460 $ 1,005,785 $ (1,948) $ (631,703) $ 372,134
Share-based compensation to employees — 27,881 — — 27,881
Proceeds from issuance of shares 17,291 2,371 — — 2,371
Exercise of options and vested RSUs 436,487 8,695 — — 8,695
Other comprehensive income (loss), net of tax benefit of $0 — — 829 — 829
Net income (loss) — — — (14,641) (14,641)
Balance as of June 30, 2021 (Unaudited) 103,641,238 $ 1,044,732 $ (1,119) $ (646,344) $ 397,269




	Ordinary shares	Additional paid-in capital		Accumulated other comprehensive loss		Retained earnings (accumulated deficit)		Total shareholders' equity

Balance as of December 31, 2020 (audited)	102,334,276	$	1,111,435	$	(3,832)	$	(631,077)	$	476,526

Share-based compensation to employees	—	18,863		—		—		18,863
Exercise of options and vested RSUs	853,184	7,961		—		—		7,961
Cumulative effect adjustment resulting from ASU 2020-06 early adoption	—	(132,474)		—		3,502		(128,972)
Other comprehensive income (loss), net of tax benefit of $0	—	—		1,884		—		1,884
Net income (loss)	—	—		—		(4,128)		(4,128)
Balance as of March 31, 2021 (Unaudited)	103,187,460	$	1,005,785	$	(1,948)	$	(631,703)	$	372,134

Share-based compensation to employees	—	27,881		—		—		27,881
Proceeds from issuance of shares	17,291	2,371		—		—		2,371
Exercise of options and vested RSUs	436,487	8,695		—		—		8,695
Other comprehensive income (loss), net of tax benefit of $0	—	—		829		—		829
Net income (loss)	—	—		—		(14,641)		(14,641)
Balance as of June 30, 2021 (Unaudited)	103,641,238	$	1,044,732	$	(1,119)	$	(646,344)	$	397,269

Share-based compensation to employees	—	25,758		—		—		25,758
Exercise of options and vested RSUs	176,328	3,042		—		—		3,042
Other comprehensive income (loss), net of tax benefit of $0	—	—		219		—		219
Net income (loss)	—	—		—		(13,124)		(13,124)
Balance as of September 30, 2021 (Unaudited)	103,817,566	$	1,073,532	$	(900)	$	(659,468)	$	413,164

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

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NOVOCURE LIMITED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS	NOVOCURE LIMITED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS											NOVOCURE LIMITED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. dollars in thousands	U.S. dollars in thousands											U.S. dollars in thousands
		Three months ended June 30,				Six months ended June 30,				Year ended December 31,			Three months ended September 30,				Nine months ended September 30,				Year ended December 31,
		2022		2021		2022		2021		2021			2022		2021		2022		2021		2021
		Unaudited				Unaudited				Audited			Unaudited				Unaudited				Audited
Cash flows from operating activities:	Cash flows from operating activities:											Cash flows from operating activities:
Net income (loss)	Net income (loss)	$	(24,008)	$	(14,641)	$	(28,655)	$	(18,769)	$	(58,351)	Net income (loss)	$	(26,576)	$	(13,124)	$	(55,231)	$	(31,893)	$	(58,351)
Adjustments to reconcile net income (loss) to net cash used in operating activities:	Adjustments to reconcile net income (loss) to net cash used in operating activities:											Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation and amortization	Depreciation and amortization	2,654		2,480		5,264		4,850		10,251		Depreciation and amortization	2,659		2,734		7,924		7,584		10,251
Accrued Interest	Accrued Interest	(602)		—		(823)		—		(94)		Accrued Interest	1		—		(822)		—		(94)
Asset write-downs and impairment of field equipment	Asset write-downs and impairment of field equipment	216		178		351		354		649		Asset write-downs and impairment of field equipment	163		113		514		467		649
Share-based compensation	Share-based compensation	25,823		27,881		50,868		46,744		94,900		Share-based compensation	26,305		25,758		77,173		72,502		94,900
Foreign currency remeasurement loss (gain)	Foreign currency remeasurement loss (gain)	943		372		1,192		2,529		3,231		Foreign currency remeasurement loss (gain)	(141)		495		1,051		3,024		3,231
Decrease (increase) in accounts receivables	Decrease (increase) in accounts receivables	2,257		3,026		(5,204)		7,649		5,270		Decrease (increase) in accounts receivables	11,522		(3,726)		6,318		3,923		5,270
Amortization of discount (premium)	Amortization of discount (premium)	827		925		1,511		1,528		3,101		Amortization of discount (premium)	232		785		1,743		2,313		3,101
Decrease (increase) in inventories	Decrease (increase) in inventories	(209)		1,663		(5,013)		367		2,483		Decrease (increase) in inventories	2,952		3,818		(2,061)		4,185		2,483
Decrease (increase) in other long-term assets	Decrease (increase) in other long-term assets	2,356		1,584		4,219		3,016		4,519		Decrease (increase) in other long-term assets	1,665		1,367		5,885		4,383		4,519
Increase (decrease) in accounts payables and accrued expenses	Increase (decrease) in accounts payables and accrued expenses	7,649		5,122		(7,160)		2,496		27,777		Increase (decrease) in accounts payables and accrued expenses	5,265		8,126		(1,895)		10,622		27,777
Increase (decrease) in other long-term liabilities	Increase (decrease) in other long-term liabilities	(2,144)		(2,418)		(4,475)		(6,812)		(10,980)		Increase (decrease) in other long-term liabilities	(1,627)		(1,946)		(6,104)		(8,758)		(10,980)
Net cash provided by (used in) operating activities	Net cash provided by (used in) operating activities	$	15,762	$	26,172	$	12,075	$	43,952	$	82,756	Net cash provided by (used in) operating activities	$	22,420	$	24,400	$	34,495	$	68,352	$	82,756

Cash flows from investing activities:	Cash flows from investing activities:											Cash flows from investing activities:
Purchase of property, equipment and field equipment	Purchase of property, equipment and field equipment	$	(4,131)	$	(2,618)	$	(9,224)	$	(6,599)	$	(24,170)	Purchase of property, equipment and field equipment	$	(5,703)	$	(3,297)	$	(14,927)	$	(9,896)	$	(24,170)
Proceeds from maturity of short-term investments	Proceeds from maturity of short-term investments	437,034		—		716,034		608,000		958,000		Proceeds from maturity of short-term investments	358,729		350,000		1,074,763		958,000		958,000
Purchase of short-term investments	Purchase of short-term investments	(277,146)		—		(568,463)		(549,848)		(1,078,664)		Purchase of short-term investments	(503,270)		(44,000)		(1,071,733)		(593,848)		(1,078,664)
Net cash provided by (used in) investing activities	Net cash provided by (used in) investing activities	$	155,757	$	(2,618)	$	138,347	$	51,553	$	(144,834)	Net cash provided by (used in) investing activities	$	(150,244)	$	302,703	$	(11,897)	$	354,256	$	(144,834)

Cash flows from financing activities:	Cash flows from financing activities:											Cash flows from financing activities:
Proceeds from issuance of shares, net	Proceeds from issuance of shares, net	$	2,759	$	2,371	$	2,759	$	2,371	$	4,546	Proceeds from issuance of shares, net	$	—	$	—	$	2,759	$	2,371	$	4,546

Repayment of long-term debt	Repayment of long-term debt	(7)		(7)		(14)		(13)		(26)		Repayment of long-term debt	(7)		(6)		(21)		(19)		(26)
Exercise of options	Exercise of options	1,984		8,695		5,132		16,656		21,182		Exercise of options	4,211		3,042		9,343		19,698		21,182
Net cash provided by (used in) financing activities	Net cash provided by (used in) financing activities	$	4,736	$	11,059	$	7,877	$	19,014	$	25,702	Net cash provided by (used in) financing activities	$	4,204	$	3,036	$	12,081	$	22,050	$	25,702

Effect of exchange rate changes on cash, cash equivalents and restricted cash	Effect of exchange rate changes on cash, cash equivalents and restricted cash	$	(120)	$	(3)	$	(145)	$	(105)	$	(188)	Effect of exchange rate changes on cash, cash equivalents and restricted cash	$	(107)	$	(34)	$	(252)	$	(139)	$	(188)

Increase (decrease) in cash, cash equivalents and restricted cash	Increase (decrease) in cash, cash equivalents and restricted cash	176,135		34,610		158,154		114,414		(36,564)		Increase (decrease) in cash, cash equivalents and restricted cash	(123,727)		330,105		34,427		444,519		(36,564)
Cash, cash equivalents and restricted cash at the beginning of the period	Cash, cash equivalents and restricted cash at the beginning of the period	191,628		325,977		209,609		246,173		246,173		Cash, cash equivalents and restricted cash at the beginning of the period	367,763		360,587		209,609		246,173		246,173

Cash, cash equivalents and restricted cash at the end of the period	Cash, cash equivalents and restricted cash at the end of the period	$	367,763	$	360,587	$	367,763	$	360,587	$	209,609	Cash, cash equivalents and restricted cash at the end of the period	$	244,036	$	690,692	$	244,036	$	690,692	$	209,609

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NOVOCURE LIMITED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS	NOVOCURE LIMITED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS											NOVOCURE LIMITED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. dollars in thousands	U.S. dollars in thousands											U.S. dollars in thousands

Supplemental cash flow activities:	Supplemental cash flow activities:											Supplemental cash flow activities:
Cash paid during the period for:	Cash paid during the period for:											Cash paid during the period for:
Income taxes paid (refunded), net	Income taxes paid (refunded), net	$	1,854	$	2,490	$	3,027	$	85	$	3,110	Income taxes paid (refunded), net	$	907	$	991	$	3,933	$	1,075	$	3,110
Interest paid	Interest paid	$	1	$	1	$	2	$	2	$	101	Interest paid	$	1	$	1	$	3	$	3	$	101
Non-cash activities:	Non-cash activities:											Non-cash activities:
Right-of-use assets obtained in exchange for lease liabilities	Right-of-use assets obtained in exchange for lease liabilities	$	279	$	665	$	3,859	$	949	$	5,387	Right-of-use assets obtained in exchange for lease liabilities	$	2,828	$	1,023	$	6,687	$	1,972	$	5,387

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

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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 currently markets Optune in the United States ("U.S."), Germany, Japan and certain other countries. The Company currently markets Optune Lua in the U.S. and European Union. 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").

During the year ended December 31, 2019, the Company implemented changes to its corporate entity operating structure, including transferring certain intellectual property to its Swiss subsidiary, primarily to align corporate entities with the Company’s evolving operations and business model. As of January 1, 2022, the effective place of daily management and control of the Company moved to Switzerland and the Company has become a Swiss tax resident.

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 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 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 consolidated financial statements and accompanying notes. Actual results could differ materially from those estimates. These 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, 2021 filed with the Securities and Exchange Commission on February 24, 2022 (the "2021 10-K").

The significant accounting policies applied in the audited annual consolidated financial statements of the Company as disclosed in the 2021 10-K are applied consistently in these unaudited interim consolidated financial statements, except as noted below:

Short-term investments

The Company accounts for investments in debt securities in accordance with ASC 320, "Investments—Debt and Equity Securities."

Management determines the appropriate classification of its investments at the time of purchase and reevaluates such determinations at each balance sheet date. The Company classifies part of its debt securities as available-for-sale ("AFS") and the rest of the balance as held-to-maturity ("HTM") when the Company has the intent and ability to hold the securities to maturity.

Available-for-sale debt securities are carried at fair value, with the unrealized gains and losses, net of tax, reported in accumulated other comprehensive income (loss) in shareholders’ equity. Realized gains and losses on sale of investments are included in financial income, net and are derived using the specific identification method for determining the cost of securities sold.

The amortized cost of debt securities is adjusted for amortization of premiums and accretion of discounts to maturity. Such amortization together with interest on securities is included in financial income, net.

Each reporting period, the Company evaluates whether declines in fair value below amortized cost are due to expected credit losses, as well as the Company’s ability and intent to hold the investment until a forecasted recovery occurs. Allowance for credit losses on available-for-sale debt securities are recognized in the Company’s consolidated statements of income, and any remaining unrealized losses, net of taxes, are included in accumulated other comprehensive income (loss) in stockholders’ equity.

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Held-to-maturity debt securities are stated at amortized cost of which is adjusted for amortization of premiums and accretion of discounts to maturity and any credit losses. Such amortization and interest are included in the consolidated statement of operations as financial income or expenses, as appropriate.

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 ~~June~~September 30, 2022 and December 31, 2021, the Company’s cash and cash equivalents and short-term investments were composed of:


		June 30, 2022																September 30, 2022
		Fair value level	Adjusted cost basis		Unrealized gains		Unrealized losses		Fair market value		Recorded basis		Cash and cash equivalents		Short-term investments			Fair value level	Adjusted cost basis		Unrealized gains		Unrealized losses		Fair market value		Recorded basis		Cash and cash equivalents		Short-term investments
Cash	Cash		$	7,173	$	—	$	—	$	7,173	$	7,173	$	7,173	$	—	Cash		$	35,113	$	—	$	—	$	35,113	$	35,113	$	35,113	$	—
Money market funds	Money market funds	Level 1	217,498		—		—		217,498		217,498		217,498		—		Money market funds	Level 1	117,400		—		—		117,400		117,400		117,400		—
Certificate of deposits and term deposits	Certificate of deposits and term deposits	Level 2	486,770		—		—		486,770		486,770		140,829		345,941		Certificate of deposits and term deposits	Level 2	337,447		—		—		337,447		337,447		75,857		261,590
AFS securities (1)	AFS securities (1)																AFS securities (1)
U.S. Treasury bills	U.S. Treasury bills	Level 1	547		—		(10)		537		537		—		537		U.S. Treasury bills	Level 1	487		—		(4)		483		483		—		483
Government and governmental agencies	Government and governmental agencies	Level 2	7,786		—		(32)		7,754		7,754		—		7,754		Government and governmental agencies	Level 2	8,264		—		(48)		8,216		8,216		503		7,713
Corporate debt securities	Corporate debt securities	Level 2	139,567		11		(738)		138,840		138,840		1,514		137,326		Corporate debt securities	Level 2	137,850		8		(852)		137,006		137,006				137,006

			$	147,900	$	11	$	(780)	$	147,131	$	147,131	$	1,514	$	145,617			$	146,601	$	8	$	(904)	$	145,705	$	145,705	$	503	$	145,202
HTM securities (2)	HTM securities (2)																HTM securities (2)
U.S. Treasury bills																	U.S. Treasury bills	Level 1	$	147,936	$	—	$	(279)	$	147,657	$	147,936	$	—	$	147,936
Government and governmental agencies																	Government and governmental agencies	Level 2	$	34,582	$	—	$	(14)	$	34,568	$	34,582	$	—	$	34,582
Corporate debt securities	Corporate debt securities	Level 2	$	89,945	$	—	$	(213)	$	89,732	$	89,945	$	—	$	89,945	Corporate debt securities	Level 2	152,137		—		(464)		151,673		152,137		14,932		137,205
																			$	334,655	$	—	$	(757)	$	333,898	$	334,655	$	14,932	$	319,723
			$	89,945	$	—	$	(213)	$	89,732	$	89,945	$	—	$	89,945

Total	Total		$	949,286	$	11	$	(993)	$	948,304	$	948,517	$	367,014	$	581,503	Total		$	971,216	$	8	$	(1,661)	$	969,563	$	970,320	$	243,805	$	726,515

December 31, 2021
Fair value level Adjusted cost basis Unrealized gains Unrealized losses Fair market value Recorded basis Cash and cash equivalents Short-term investments
Cash $ 3,139 $ — $ — $ 3,139 $ 3,139 $ 3,139 $ —
Money market funds Level 1 64,668 — — 64,668 64,668 64,668 —
Certificate of deposits, notes and term deposits Level 2 565,089 — — 565,089 565,089 140,995 424,094
HTM securities (2)
U.S. Treasury bills Level 1 199,981 8 — 199,989 199,981 — 199,981
Corporate debt securities Level 2 104,823 — — 104,823 104,823 — 104,823
$ 304,804 $ 8 $ — $ 304,812 $ 304,804 $ — $ 304,804
Total $ 937,700 937700408.11 $ 8 $ — $ 937,708 $ 937,700 $ 208,802 $ 728,898

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	December 31, 2021
	Fair value level	Adjusted cost basis		Unrealized gains		Unrealized losses		Fair market value		Recorded basis		Cash and cash equivalents		Short-term investments
Cash		$	3,139	$	—	$	—	$	3,139	$	3,139	$	3,139	$	—
Money market funds	Level 1	64,668		—		—		64,668		64,668		64,668		—
Certificate of deposits, notes and term deposits	Level 2	565,089		—		—		565,089		565,089		140,995		424,094
HTM securities (2)
U.S. Treasury bills	Level 1	199,981		8		—		199,989		199,981		—		199,981
Corporate debt securities	Level 2	104,823		—		—		104,823		104,823		—		104,823

		$	304,804	$	8	$	—	$	304,812	$	304,804	$	—	$	304,804

Total		$	937,700	$	8	$	—	$	937,708	$	937,700	$	208,802	$	728,898

(1) Changes in fair value of AFS securities are recorded in other comprehensive income. If unrealized loss is identified as credit loss, this loss will be recorded as finance expenses.

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(2) Changes in fair value of HTM securities are presented for disclosure purposes as required by ASC 320 and are recorded as finance expenses only if the unrealized loss is identified as a credit loss.

As of ~~June~~September 30, 2022 and December 31, 2021, all investments and equivalents 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.

Debt securities with continuous unrealized losses for less than 12 months and their related fair values were as follows:


		June 30, 2022					September 30, 2022
		Less than 12 months					Less than 12 months
		Fair value		Unrealized loss			Fair value		Unrealized loss
U.S. Treasury bills	U.S. Treasury bills	$	537	$	(10)	U.S. Treasury bills	$	483	$	(4)
Government and governmental agencies	Government and governmental agencies	7,754		(32)		Government and governmental agencies	6,703		(48)
Corporate debt securities	Corporate debt securities	132,264		(738)		Corporate debt securities	132,242		(852)
Total	Total	$	140,555	$	(780)	Total	$	139,428	$	(904)

As of ~~June~~September 30, 2022, no continuous unrealized losses for 12 months or greater was identified.

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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 ~~June~~September 30, 2022 and December 31, 2021, the Company’s inventories were composed of:


		June 30, 2022		December 31, 2021			September 30, 2022		December 31, 2021
		Unaudited		Audited			Unaudited		Audited
Raw materials	Raw materials	$	2,545	$	1,485	Raw materials	$	3,138	$	1,485
Work in progress	Work in progress	11,573		8,274		Work in progress	8,992		8,274
Finished products	Finished products	15,413		14,668		Finished products	14,662		14,668
Total	Total	$	29,531	$	24,427	Total	$	26,792	$	24,427

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 2025.

Pledged deposits and bank guarantees. As of ~~June~~September 30, 2022 and December 31, 2021, the Company pledged bank deposits of ~~$2,319~~$2,296 and $2,350, 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 ~~$2,642~~$2,616 and $2,698, respectively.

Senior secured revolving credit facility. On November 6, 2020, the Company entered into a three-year $150,000 senior secured revolving credit facility with a syndicate of relationship banks. For additional information, see Note 12(c) to the Consolidated Financial Statements in the 2021 10-K. As of ~~June~~September 30, 2022, the Company had no outstanding balance borrowed under the facility.

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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 ~~June~~September 30, 2022, the conditions allowing holders of the Notes to convert were not met. The Notes are therefore not convertible as of ~~June~~September 30, 2022 and are classified as long-term liability.

For additional information, see Note 10(a) to the Consolidated Financial Statements in the 2021 10-K.

The net carrying amounts of the liability of the Notes as of ~~June~~September 30, 2022 and December 31, 2021 are as follows:


		June 30, 2022		December 31, 2021			September 30, 2022		December 31, 2021
		Unaudited		Audited			Unaudited		Audited
Liability component, net:	Liability component, net:					Liability component, net:
Principal amount	Principal amount	$	575,000	$	575,000	Principal amount	$	575,000	$	575,000
Unamortized issuance costs	Unamortized issuance costs	(11,154)		(12,784)		Unamortized issuance costs	(10,323)		(12,784)
Net carrying amount of liability component (1)	Net carrying amount of liability component (1)	$	563,846	$	562,216	Net carrying amount of liability component (1)	$	564,677	$	562,216

(1) An effective market interest rate determines the fair value of the Notes, therefore they are categorized as Level 3 in accordance with ASC 820, "Fair Value Measurements and Disclosures." The estimated fair values of the net carrying amount of liability component of the Notes as of ~~June~~September 30, 2022 and December 31, 2021 were ~~$430,776~~$413,385 and $467,469, respectively.

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Finance expense related to the Notes was as follows:


		Three months ended June 30,				Six months ended June 30,				Year ended December 31, 2021			Three months ended September 30,				Nine months ended September 30,				Year ended December 31, 2021
		2022		2021		2022		2021					2022		2021		2022		2021
		Unaudited				Unaudited				Audited			Unaudited				Unaudited				Audited
Amortization of debt issuance costs	Amortization of debt issuance costs	820		976		1,630		1,685		3,339		Amortization of debt issuance costs	831		826		2,461		2,511		3,339
Total finance expense recognized	Total finance expense recognized	$	820	$	976	$	1,630	$	1,685	$	3,339	Total finance expense recognized	$	831	$	826	$	2,461	$	2,511	$	3,339

NOTE 6: 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 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 ~~June~~September 30, 2022 ~~16,945,169~~, 16,836,815 ordinary shares were available for grant under the 2015 Plan.

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A summary of the status of the Company’s option plans as of ~~June~~September 30, 2022 and changes during the period then ended is presented below:


		Six months ended June 30, 2022				Nine months ended September 30, 2022
		Unaudited				Unaudited
		Number of options	Weighted average exercise price			Number of options	Weighted average exercise price
Outstanding at beginning of year	Outstanding at beginning of year	8,549,322	$	33.09	Outstanding at beginning of year	8,549,322	$	33.09
Granted	Granted	665,007	80.67		Granted	751,854	79.46
Exercised	Exercised	(269,961)	18.78		Exercised	(436,289)	21.22
Forfeited and canceled	Forfeited and canceled	(68,591)	79.17		Forfeited and canceled	(108,517)	83.57
Outstanding as of June 30, 2022		8,875,777	$	36.74
Outstanding as of September 30, 2022					Outstanding as of September 30, 2022	8,756,370	$	37.04

Exercisable options	Exercisable options	7,189,164	$	24.86	Exercisable options	7,104,809	$	25.32

For the ~~six~~nine months ended ~~June~~September 30, 2022, options to purchase ~~269,961~~436,289 ordinary shares were exercised, resulting in the issuance of ~~269,961~~436,289 ordinary shares.

A summary of the status of the Company’s RSUs and PSUs as of ~~June~~September 30, 2022 and changes during the period then ended is presented below.

Six months ended June 30, 2022
Unaudited
Number
of RSU/PSUs Weighted
average
grant date fair value
Unvested at beginning of year 4,459,107 $ 65.56
Granted 1,104,033 81.04
Vested (439,752) 84.86
Forfeited and cancelled (64,844) 95.64
Unvested as of June 30, 2022 (1) 5,058,544 66.88

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	Nine months ended September 30, 2022
	Unaudited
	Number of RSU/PSUs	Weighted average grant date fair value
Unvested at beginning of year	4,459,107	$	65.56
Granted	1,195,654	80.21
Vested	(488,680)	85.74
Forfeited and cancelled	(98,579)	95.45
Unvested as of September 30, 2022 (1)	5,067,502	66.49

(1) Includes PSUs that have a mix of service, market and other milestone performance vesting conditions which are vested upon achievements of performance milestones which are not probable, as of ~~June~~September 30, 2022, in accordance with ASC 718 as follows:

June 30, 2022
Number of
PSUs Fair value at grant date per PSU Total fair value at grant date
2,703,852 $ 48.16 $ 130,218
108,113 69.37 7,500
124,701 $ 80.59 10,050
17,712 84.68 1,500
7,605 $ 87.66 667
10,532 94.94 1,000
189,626 $ 114.26 21,667
3,162,141 $ 172,602


September 30, 2022
Number of PSUs	Fair value at grant date per PSU		Total fair value at grant date
2,703,852	$	48.16	$	130,218
108,113	69.37		7,500
124,701	$	80.59	10,050
17,712	84.68		1,500
7,605	$	87.66	667
10,532	94.94		1,000
189,626	$	114.26	21,667
3,162,141			$	172,602

These PSUs will be expensed over the performance period when the vesting conditions become probable in accordance with ASC 718.

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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 ~~June~~September 30, 2022, 4,908,288 ordinary shares were available to be purchased by eligible employees under the ESPP.

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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. We assessed fair value using the following underlying assumptions:


		Six months ended June 30,				Year ended December 31, 2021			Nine months ended September 30,				Year ended December 31, 2021
		2022		2021					2022		2021
		Unaudited				Audited			Unaudited				Audited
Stock Option Plans	Stock Option Plans							Stock Option Plans
Expected term (years)	Expected term (years)	5.33-5.83		5.50-6.00		5.50-6.00		Expected term (years)	5.33-5.83		5.50-6.00		5.50-6.00
Expected volatility	Expected volatility	60%-62%		60%-62%		60%-63%		Expected volatility	60%-62%		60%-63%		60%-63%
Risk-free interest rate	Risk-free interest rate	1.58%-3.04%		0.85%-1.02%		0.78%-1.27%		Risk-free interest rate	1.58%-3.04%		0.78%-1.02%		0.78%-1.27%

Dividend yield	Dividend yield	0.00	%	0.00	%	0.00	%	Dividend yield	0.00	%	0.00	%	0.00	%
ESPP	ESPP							ESPP
Expected term (years)	Expected term (years)	0.50		0.50		0.50		Expected term (years)	0.50		0.50		0.50

Expected volatility	Expected volatility	51.00	%	54.00	%	54%-81%		Expected volatility	51%-77%		54%-81%		54%-81%
Risk-free interest rate	Risk-free interest rate	0.19	%	0.09	%	0.05%-0.09%		Risk-free interest rate	0.19%-2.52%		0.05%-0.09%		0.05%-0.09%

Dividend yield	Dividend yield	0.00	%	0.00	%	0.00	%	Dividend yield	0.00	%	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 and ~~six~~nine months ended ~~June~~September 30, 2022 and 2021 and the year ended December 31, 2021 was:


		Three months ended June 30,				Six months ended June 30,				Year ended December 31, 2021			Three months ended September 30,				Nine months ended September 30,				Year ended December 31, 2021
		2022		2021		2022		2021					2022		2021		2022		2021
		Unaudited				Unaudited				Audited			Unaudited				Unaudited				Audited
Cost of revenues	Cost of revenues	$	1,029	$	827	$	1,981	$	1,560	$	3,471	Cost of revenues	$	1,013	$	808	$	2,994	$	2,368	$	3,471
Research, development and clinical studies	Research, development and clinical studies	7,624		8,505		14,425		13,629		27,597		Research, development and clinical studies	7,430		7,761		21,855		21,390		27,597
Sales and marketing	Sales and marketing	6,802		6,429		13,457		10,900		22,673		Sales and marketing	7,686		5,806		21,143		16,706		22,673
General and administrative	General and administrative	10,368		12,120		21,005		20,655		41,159		General and administrative	10,176		11,383		31,181		32,038		41,159
Total share-based compensation expense	Total share-based compensation expense	$	25,823	$	27,881	$	50,868	$	46,744	$	94,900	Total share-based compensation expense	$	26,305	$	25,758	$	77,173	$	72,502	$	94,900

NOTE 7: 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, as determined under the if-converted method.

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The following table sets forth the computation of the Company’s basic and diluted net income (loss) per ordinary share:


		Three months ended June 30,				Six months ended June 30,				Year ended December 31, 2021			Three months ended September 30,				Nine months ended September 30,				Year ended December 31, 2021
		2022		2021		2022		2021					2022		2021		2022		2021
		Unaudited				Unaudited				Audited			Unaudited				Unaudited				Audited
Net income (loss) attributable to ordinary shares as reported used in computing basic and diluted net income (loss) per share	Net income (loss) attributable to ordinary shares as reported used in computing basic and diluted net income (loss) per share	$	(24,008)	$	(14,641)	$	(28,655)	$	(18,769)	$	(58,351)	Net income (loss) attributable to ordinary shares as reported used in computing basic and diluted net income (loss) per share	$	(26,576)	$	(13,124)	$	(55,231)	$	(31,893)	$	(58,351)

Weighted average number of ordinary shares used in computing basic net income (loss) per share	Weighted average number of ordinary shares used in computing basic net income (loss) per share	104,627,789		103,484,866		104,408,164		103,061,557		103,433,274		Weighted average number of ordinary shares used in computing basic net income (loss) per share	104,884,583		103,731,147		104,552,803		103,281,380		103,433,274

Weighted average number of ordinary shares used in computing diluted net income (loss) per share	Weighted average number of ordinary shares used in computing diluted net income (loss) per share	104,627,789		103,484,866		104,408,164		103,061,557		103,433,274		Weighted average number of ordinary shares used in computing diluted net income (loss) per share	104,884,583		103,731,147		104,552,803		103,281,380		103,433,274

Weighted anti-dilutive shares outstanding which were not included in the diluted calculation	Weighted anti-dilutive shares outstanding which were not included in the diluted calculation	7,746,398		9,098,788		7,790,467		9,363,037		8,524,922		Weighted anti-dilutive shares outstanding which were not included in the diluted calculation	7,289,441		8,084,045		7,668,684		8,827,739		8,524,922

Basic net income (loss) per ordinary share	Basic net income (loss) per ordinary share	$	(0.23)	$	(0.14)	$	(0.27)	$	(0.18)	$	(0.56)	Basic net income (loss) per ordinary share	$	(0.25)	$	(0.13)	$	(0.53)	$	(0.31)	$	(0.56)

Diluted net income (loss) per ordinary share	Diluted net income (loss) per ordinary share	$	(0.23)	$	(0.14)	$	(0.27)	$	(0.18)	$	(0.56)	Diluted net income (loss) per ordinary share	$	(0.25)	$	(0.13)	$	(0.53)	$	(0.31)	$	(0.56)

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NOTE 8: SUPPLEMENTAL INFORMATION

The Company operates in a single reportable segment.

The following table presents long-lived assets by location:


		June 30, 2022		December 31, 2021			September 30, 2022		December 31, 2021
		Unaudited		Audited			Unaudited		Audited
United States	United States	$	25,754	$	23,263	United States	$	28,459	$	23,263
Israel	Israel	6,094		5,297		Israel	6,579		5,297
Switzerland	Switzerland	4,316		4,085		Switzerland	4,201		4,085
Japan	Japan	975		799		Japan	878		799
Germany	Germany	697		1,020		Germany	669		1,020
Others	Others	1,102		1,152		Others	944		1,152
Total	Total	$	38,938	$	35,616	Total	$	41,730	$	35,616

The Company’s revenues by geographic region, based on the customer’s location, are summarized as follows:


		Three months ended June 30,				Six months ended June 30,				Year ended December 31, 2021			Three months ended September 30,				Nine months ended September 30,				Year ended December 31, 2021
		2022		2021		2022		2021					2022		2021		2022		2021
		Unaudited				Unaudited				Audited			Unaudited				Unaudited				Audited
United States	United States	$	108,203	$	87,139	$	205,619	$	173,047	$	353,110	United States	$	102,651	$	88,032	$	308,270	$	261,079	$	353,110
EMEA:	EMEA:											EMEA:
Germany	Germany	10,347		25,362		29,585		51,726		93,939		Germany	6,780		23,208		36,366		74,934		93,939
Other EMEA	Other EMEA	8,111		7,335		15,886		15,954		30,577		Other EMEA	7,538		7,081		23,423		23,035		30,577
Japan	Japan	8,272		8,750		17,022		17,028		34,640		Japan	7,865		8,778		24,887		25,806		34,640
Greater China (1)	Greater China (1)	5,933		4,931		10,301		10,457		22,765		Greater China (1)	6,164		6,507		16,465		16,964		22,765
Total net revenues	Total net revenues	$	140,866	$	133,517	$	278,413	$	268,212	$	535,031	Total net revenues	$	130,998	$	133,606	$	409,411	$	401,818	$	535,031

(1) For additional information, see Note 12 to the Consolidated Financial Statements in the 2021 10-K.

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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 ~~June~~September 30, 2022 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 2021 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 2021 10-K.

Overview

We are a global oncology company with a proprietary platform technology called Tumor Treating Fields ("TTFields"), which are electric fields ~~tuned~~that exert physical forces to ~~specific frequencies that disrupt~~kill cancer ~~cell division.~~cells via a variety of mechanisms. Our key priorities are to drive commercial adoption of Optune and Optune Lua, our commercial TTFields devices, and to advance clinical and product development programs intended to extend overall survival in some of the most aggressive forms of cancer.

Optune 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 for the treatment of GBM in the European Union ("EU"), as well as approval or local registration in the United Kingdom ("UK"), Japan and certain other countries. Optune Lua is approved by the FDA under the Humanitarian Device Exemption ("HDE") pathway for the treatment of adult patients with malignant pleural mesothelioma ("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 and Optune Lua in multiple countries around the globe with the majority of our revenues coming from the use of Optune in the U.S., Germany and Japan. We are actively evaluating opportunities to expand our international footprint.

~~We believe the physical mechanism of action behind~~As a highly versatile first-in-class modality, TTFields therapy ~~may be broadly applicable to~~has significant potential for broad applicability across solid tumor ~~cancers.~~types and lines of therapy. Currently, we are conducting phase 3 pivotal studies evaluating the use of TTFields in non-small cell lung cancer ("NSCLC"), ovarian cancer, brain metastases from NSCLC, and pancreatic cancer. ~~In 2021, we completed patient enrollment in our phase 3 pivotal NSCLC and ovarian cancer studies.~~ Additionally, we have multiple ongoing or recently completed phase 2 pilot studies evaluating the use of TTFields. These studies are in gastric cancer and stage 3 NSCLC, as well as testing the potential incremental survival benefit of TTFields delivered using high-intensity arrays versus standard arrays. We are also currently conducting a global phase 4 post-marketing study testing the potential survival benefit of initiating Optune concurrent with radiation therapy versus following radiation therapy in patients with newly diagnosed GBM. We anticipate expanding our clinical pipeline over time to study the safety and efficacy of TTFields for additional solid tumor indications and combinations with other cancer treatment modalities.

We completed enrollment of the phase 3 pivotal LUNAR trial in November 2021, which began the final patient’s 12-month follow-up ~~period and our~~period. Our clinical operations and data collection efforts remain on ~~track. Given feedback~~track and, we ~~received from all interested parties, we recognized a pivotal data release the final week of the year is not ideal for~~expect to announce top-line results in early Q1 2023.

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~~investigators, clinicians, investors, or potential patients. For that reason, we are moving the top-line data announcement to early Q1 2023.~~

In March 2022, we announced that an independent data monitoring committee ("DMC") conducted a pre-specified interim analysis for the phase 3 pivotal INNOVATE-3 study for the treatment of platinum-resistant ovarian cancer. As part of the interim analysis, the DMC reviewed the safety data for all enrolled patients and completed an analysis of overall survival on the first 540 patients randomized in the study. The interim analysis did not indicate a need to increase the patient sample size and the DMC recommended that the study should continue to final analysis as planned. The INNOVATE-3 study accrued 540 patients as of October 2021 and data will be reviewed in 2023, following an 18 month follow-up period.

In May 2022, we entered into a clinical trial collaboration agreement with MSD, a tradename of Merck & Co., Inc., ("MSD") to conduct a double-blind, placebo-controlled study of TTFields concomitant with pembrolizumab and maintenance temozolomide for the treatment of newly diagnosed GBM. ~~We intend to engage the FDA in pre-submission discussions in the near-term regarding the parameters of the KEYNOTE D58 trial protocol design.~~

In June 2022, we announced results of the phase 2 pilot EF-31 study evaluating the use of TTFields together with standard-of-care (chemotherapy alone or in combination with trastuzumab for HER2-positive patients) as first-line treatment for gastric cancer. Initial analysis was conducted with a median follow-up period of 8.6 months. The primary endpoint, confirmed objective response rate, was 50%. Median progression-free survival was 7.8 months. Duration of response was 10.3 months. Median overall survival had not yet been reached with a one-year survival rate of 72%. We look forward to further exploration of these potential benefits as we look ahead to a randomized phase 3 clinical study.

In June 2022, we announced the first patient has been enrolled in the phase 2 pilot KEYNOTE B36 study, conducted in collaboration with MSD. KEYNOTE B36 is designed to evaluate the safety and effectiveness of TTFields together with pembrolizumab for the treatment of locally advanced or metastatic intrathoracic NSCLC that expresses PD-L1.

~~In June 2022, by mutual agreement with GT Medical Technologies, Inc.,~~Today, we ~~suspended indefinitely our joint plans to conduct a phase 2~~announced data from the EF-33 pilot study ~~to test~~evaluating the safety and ~~effectiveness~~preliminary efficacy of ~~neo-adjuvant TTFields followed by resection, GammaTile Therapy,~~a higher intensity array design in 25 patients diagnosed with recurrent GBM. Among those patients who used Optune as directed with higher intensity arrays for at least one month, median progression-free survival was 4.5 months. This compares to 2.2 months from our pivotal EF-11 study in recurrent GBM. Further, alongside the increased dosage, EF-33 patients reported no TTFields-related toxicity.

We now expect to complete enrollment in our phase 3 pivotal METIS study for the treatment of brain metastases from NSCLC in the first quarter of 2023. This will begin the final patient's 12-month follow-up period and ~~adjuvant TTFields for recurrent GBM.~~we anticipate top-line data in the first quarter of 2024.

The table below presents the current status of the ongoing clinical studies in our oncology pipeline and anticipated timing of data readout.

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. Our intellectual

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property portfolio contains hundreds of issued patents and numerous patent applications pending worldwide. We believe we possess global commercialization rights to our Products in oncology and are well-positioned to extend those rights into the future as we continue to find innovative ways to improve our Products.

In 2018, we granted Zai Lab (Shanghai) Co., Ltd. ("Zai") a license to commercialize Optune 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 in multiple solid tumor cancer indications. For additional information, see Note 12 to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021 (the "2021 10-K").

We view our operations and manage our business in one operating segment. For the three and ~~six~~nine months ended ~~June~~September 30, 2022, our net revenues were ~~$140.9~~$131.0 million and ~~$278.4~~$409.4 million, respectively. Our net loss for the three and ~~six~~nine months ended ~~June~~September 30, 2022 were ~~$24.0~~$26.6 million and ~~$28.7~~$55.2 million, respectively. As of ~~June~~September 30, 2022, we had an accumulated deficit of ~~$714.6~~$741.2 million. Our net loss resulted primarily from net revenue growth which was more than offset by increasing investments in research, development and clinical trial initiatives and sales and marketing initiatives that support our ongoing exploration of the benefits of TTFields across numerous cancer indications, as well as geographic expansion and pre-commercial activities associated with potential future indication launches.

Impact of COVID-19

In March 2020, the World Health Organization (“WHO”) declared COVID-19 a global pandemic. Since the pandemic began, we have been following the guidance of the WHO, the U.S. Centers for Disease Control and Prevention, and local health authorities in all of our active markets and we have adjusted the way we conduct business to adapt to the evolving situation. The COVID-19 pandemic did not have a material impact on our financial results through the ~~second~~third quarter of 2022. The pandemic has had and is having an impact on our day-to-day operations, which varies by region based on factors such as geographical spread, stage of containment and recurrence of the pandemic in each region. We believe the prolonged disruption caused by COVID-19 is resulting in increased volatility across global health care systems, such as fluctuations in patient volumes and changes in patterns of care in certain regions, which is currently impacting and might continue to impact our business and clinical studies in the future. For example, outside the U.S., localized lockdowns are causing disruptions in the ability to monitor clinical studies. TTFields is an emerging modality in cancer care and requires significant educational effort to drive awareness and acceptance of our therapy. We have relied heavily on virtual engagement to manage these educational efforts since the onset of the pandemic, which poses challenges to our ability to effectively communicate and engage with our customers and partners around the world.

Given the aggressive nature of the cancers that we treat, we believe that the fundamental value proposition of the TTFields platform remains unchanged. We continue to evaluate and plan for the potential effects of COVID-19 on our business moving forward. The extent to which the COVID-19 pandemic may impact our business and clinical studies in the future will depend on further developments, which are highly uncertain and cannot be predicted with confidence. The COVID-19 pandemic may also have the effect of heightening many of the other risks described in our risk factors disclosed in our 2021 10-K.

Impact of Medical Device Regulation Implementation

As a result of the implementation of the Medical Device Regulation ("MDR"), our notified body (as well as many other notified bodies throughout the European Economic Area ("EEA") has suffered a significant backlog in issuing CE Certificate renewals. That may affect our ability to obtain a renewal of our CE Certificate for Optune before the current CE Certificate expires in October 2022. In the event of a gap between expiration of the current CE Certificate and issuance of the renewal, we are able to continue to sell and market CE marked Optune from current inventories in the EEA and Switzerland under the expired CE Certificate. We have been assured in writing from the notified body that our renewal application has passed technical review and no issues are expected while the certification team completes the renewal. We are proactively procuring an adequate supply of Optune to ensure the avoidance of any material disruption in the event that there is a gap between expiration of the current CE Certificate and issuance of the renewal.

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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 12 to the Consolidated Financial Statements in our 2021 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; and

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•personnel 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 expenses, net. Financial expenses, net primarily consists of debt issuance costs, interest income from cash balances and short-term investments 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 and ~~six~~nine months ended ~~June~~September 30, 2022 as compared to the three and ~~six~~nine months ended ~~June~~September 30, 2021. 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:

Three months ended June 30, Six months ended June 30,
2022 2021 2022 2021
Unaudited Unaudited
Net revenues $ 140,866 $ 133,517 $ 278,413 $ 268,212
Cost of revenues 28,503 28,599 56,230 54,984
Gross profit 112,363 104,918 222,183 213,228
Operating costs and expenses:
Research, development and clinical studies 57,075 50,315 99,309 96,231
Sales and marketing 44,750 34,138 82,634 65,495
General and administrative 31,666 32,760 62,174 63,885
Total operating costs and expenses 133,491 117,213 244,117 225,611
Operating income (loss) (21,128) (12,295) (21,934) (12,383)
Financial expenses (income), net 2,228 940 3,937 3,586
Income (loss) before income taxes (23,356) (13,235) (25,871) (15,969)
Income taxes 652 1,406 2,784 2,800
Net income (loss) $ (24,008) $ (14,641) $ (28,655) $ (18,769)
Basic net income (loss) per ordinary share $ (0.23) $ (0.14) $ (0.27) $ (0.18)
Weighted average number of ordinary shares used in computing basic net income (loss) per share 104,627,789 103,484,866 104,408,164 103,061,557
Diluted net income (loss) per ordinary share $ (0.23) $ (0.14) $ (0.27) $ (0.18)
Weighted average number of ordinary shares used in computing diluted net income (loss) per share 104,627,789 103,484,866 104,408,164 103,061,557

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	Three months ended September 30,				Nine months ended September 30,
	2022		2021		2022		2021
	Unaudited				Unaudited
Net revenues	$	130,998	$	133,606	$	409,411	$	401,818
Cost of revenues	29,749		30,206		85,979		85,190
Gross profit	101,249		103,400		323,432		316,628

Operating costs and expenses:
Research, development and clinical studies	51,956		48,141		151,265		144,372
Sales and marketing	41,395		32,580		124,029		98,075
General and administrative	32,509		31,231		94,683		95,116
Total operating costs and expenses	125,860		111,952		369,977		337,563

Operating income (loss)	(24,611)		(8,552)		(46,545)		(20,935)
Financial expenses (income), net	(1,194)		1,981		2,743		5,567

Income (loss) before income taxes	(23,417)		(10,533)		(49,288)		(26,502)
Income taxes	3,159		2,591		5,943		5,391
Net income (loss)	$	(26,576)	$	(13,124)	$	(55,231)	$	(31,893)

Basic net income (loss) per ordinary share	$	(0.25)	$	(0.13)	$	(0.53)	$	(0.31)
Weighted average number of ordinary shares used in computing basic net income (loss) per share	104,884,583		103,731,147		104,552,803		103,281,380
Diluted net income (loss) per ordinary share	$	(0.25)	$	(0.13)	$	(0.53)	$	(0.31)
Weighted average number of ordinary shares used in computing diluted net income (loss) per share	104,884,583		103,731,147		104,552,803		103,281,380

The following table details the share-based compensation expense included in costs and expenses:


		Three months ended June 30,				Six months ended June 30,					Three months ended September 30,				Nine months ended September 30,
		2022		2021		2022		2021			2022		2021		2022		2021
		Unaudited				Unaudited					Unaudited				Unaudited
Cost of revenues	Cost of revenues	$	1,029	$	827	$	1,981	$	1,560	Cost of revenues	$	1,013	$	808	$	2,994	$	2,368
Research, development and clinical studies	Research, development and clinical studies	7,624		8,505		14,425		13,629		Research, development and clinical studies	7,430		7,761		21,855		21,390
Sales and marketing	Sales and marketing	6,802		6,429		13,457		10,900		Sales and marketing	7,686		5,806		21,143		16,706
General and administrative	General and administrative	10,368		12,120		21,005		20,655		General and administrative	10,176		11,383		31,181		32,038
Total share-based compensation expense	Total share-based compensation expense	$	25,823	$	27,881	$	50,868	$	46,744	Total share-based compensation expense	$	26,305	$	25,758	$	77,173	$	72,502

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

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are a leading indicator of demand. A "prescription received" is a commercial order for Optune or Optune Lua that is received from a physician certified to treat patients with our Products for a patient not previously on Optune or Optune Lua. Orders to renew or extend treatment are not included in this total.

The following table includes certain commercial operating statistics for and as of the end of the periods presented.


		June 30,			September 30,
Operating statistics	Operating statistics	2022	2021	Operating statistics	2022	2021
Active patients at period end	Active patients at period end			Active patients at period end
North America (1)	North America (1)	2,229	2,206	North America (1)	2,181	2,223
EMEA:	EMEA:			EMEA:
Germany	Germany	458	571	Germany	468	562
Other EMEA	Other EMEA	421	419	Other EMEA	417	425
Japan	Japan	346	291	Japan	354	292
Total	Total	3,454	3,487	Total	3,420	3,502


		Three months ended June 30,		Six months ended June 30,			Three months ended September 30,		Nine months ended September 30,
		2022	2021	2022	2021		2022	2021	2022	2021
Prescriptions received in period	Prescriptions received in period					Prescriptions received in period
North America (1)	North America (1)	954	967	1,889	1,884	North America (1)	978	931	2,867	2,815
EMEA:	EMEA:					EMEA:
Germany	Germany	216	237	436	485	Germany	214	220	650	705
Other EMEA	Other EMEA	118	138	245	272	Other EMEA	118	119	363	391
Japan	Japan	95	108	197	211	Japan	79	110	276	321
Total	Total	1,383	1,450	2,767	2,852	Total	1,389	1,380	4,156	4,232

(1) North America includes data for the United States and Canada for the second half of 2021 and all of 2022, and the United States only for the first half of 2021.

There were 812 active MPM patients on therapy as of ~~June~~September 30, 2022 and 118 MPM prescriptions were received in the three months ended ~~June~~September 30, 2022.

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Three and ~~six~~nine months ended ~~June~~September 30, 2022 compared to three and ~~six~~nine months ended ~~June~~September 30, 2021

Three months ended June 30, Six months ended June 30,
2022 2021 % Change 2022 2021 % Change
Net revenues $ 140,866 $ 133,517 6 % $ 278,413 $ 268,212 4 %


	Three months ended September 30,						Nine months ended September 30,
	2022		2021		% Change		2022		2021		% Change
Net revenues	$	130,998	$	133,606	(2)	%	$	409,411	$	401,818	2	%

Net revenues. Net revenues ~~increased 6%~~decreased 2% to ~~$140.9~~$131.0 million for the three month period ending ~~June~~September 30, 2022 from ~~$133.5~~$133.6 million for the same period in 2021, and increased 4%2% to ~~$278.4~~$409.4 million for the ~~six~~nine month period ended ~~June~~September 30, 2022 from ~~$268.2~~$401.8 million for the same period in 2021. ~~The increase~~For the three month period ending September 30, 2022, the decrease resulted primarily from ~~an increase in active patients in the U.S. and Japan and increased collections for previously denied and appealed claims in the U.S. The increase was partially offset by~~ a reduction in German ~~active patient numbers and~~ approval rates as a result of updated coverage criteria and the impact of foreign exchange rate fluctuations. For the nine month period ending September 30, 2022, the increase in net revenues resulted primarily from an increase in collections from previously denied and appealed claims in the U.S. offset by a reduction in current period German net revenues and prior period accounts receivable to reflect updated coverage criteria.

We continue to actively appeal and pursue previously denied claims, but the cadence and size of these collections are impossible to predict. We believe the claims which are most accessible will largely be exhausted this year and the remaining outstanding claims will take a greater level of time and effort to collect in the future.

Three months ended June 30, Six months ended June 30,
2022 2021 % Change 2022 2021 % Change
Cost of revenues $ 28,503 $ 28,599 — % $ 56,230 $ 54,984 2 %

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	Three months ended September 30,						Nine months ended September 30,
	2022		2021		% Change		2022		2021		% Change
Cost of revenues	$	29,749	$	30,206	(2)	%	$	85,979	$	85,190	1	%

Cost of revenues. Our cost of revenues for the three month period ended ~~June~~September 30, 2022 ~~was $28.5~~decreased 2% to $29.7 million, ~~virtually unchanged~~ from ~~$28.6~~$30.2 million for the same period in 2021. Cost of revenues for the ~~six~~nine months ended ~~June~~September 30, 2022 increased by 2%1% to ~~$56.2~~$86.0 million from ~~$55.0~~$85.2 million for the same period in 2021. For the ~~six~~three month period ended ~~June~~September 30, 2022, the decrease in cost of revenues was primarily driven by decreased shipments to Zai. For the nine month period ended September 30, 2022, the increase in cost of revenues was primarily ~~driven by~~a result of increased shipments to ~~Zai and the cost of shipping arrays to a higher average volume of commercial patients, offset by lower manufacturing costs per array.~~Zai. 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.

Gross margin was ~~80%~~77% for the three months ended ~~June~~September 30, 2022 compared to ~~79%~~77% for the three months ended ~~June~~September 30, ~~2021.Gross~~2021. Gross margin was ~~80%~~79% for the ~~six~~nine months ended ~~June~~September 30, 2022 and 79% for the ~~six~~nine months ended ~~June~~September 30, 2021. Excluding sales to Zai, cost of revenues per active patient per month was ~~$2,391~~$2,543 for the three months ended ~~June~~September 30, 2022, ~~a decrease~~an increase of 5%2% from ~~$2,520~~$2,485 for the same period in 2021, ~~with increasing supply chain optimization and cost reduction initiatives more than offsetting the impact~~due to increased investments intended to expand capacity in advance of ~~broader economic challenges.~~future potential launches in new indications. 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 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 ~~$3.4~~$3.5 million and ~~$5.3~~$8.8 million for the three and ~~six~~nine months ended ~~June~~September 30, 2022 compared to ~~$2.4~~$4.2 million and ~~$3.9~~$8.0 million for the three and ~~six~~nine months ended ~~June~~September 30, 2021.

Operating Expenses.


		Three months ended June 30,						Six months ended June 30,							Three months ended September 30,						Nine months ended September 30,
		2022		2021		% Change		2022		2021		% Change			2022		2021		% Change		2022		2021		% Change
Research, development and clinical studies	Research, development and clinical studies	$	57,075	$	50,315	13	%	$	99,309	$	96,231	3	%	Research, development and clinical studies	$	51,956	$	48,141	8	%	$	151,265	$	144,372	5	%
Sales and marketing	Sales and marketing	44,750		34,138		31	%	82,634		65,495		26	%	Sales and marketing	41,395		32,580		27	%	124,029		98,075		26	%
General and administrative	General and administrative	31,666		32,760		(3)	%	62,174		63,885		(3)	%	General and administrative	32,509		31,231		4	%	94,683		95,116		—	%
Total operating expenses	Total operating expenses	$	133,491	$	117,213	14	%	$	244,117	$	225,611	8	%	Total operating expenses	$	125,860	$	111,952	12	%	$	369,977	$	337,563	10	%

Research, development and clinical study expenses. Research, development and clinical study expenses increased ~~13%~~8% to ~~$57.1~~$52.0 million for the three month period ended ~~June~~September 30, 2022 from ~~$50.3~~$48.1 million for the same period in 2021, and increased 3%5% to ~~$99.3~~$151.3 million for the ~~six~~nine month period ended ~~June~~September 30, 2022 from ~~$96.2~~$144.4 million in the same period in ~~2021,~~2021. For both the three and nine month periods, the change was primarily driven by an increase in direct clinical study costs, ~~for both~~preclinical costs associated with the ~~three~~design of future trials, and ~~six month~~

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~~periods. Direct clinical study~~ costs ~~can fluctuate quarter-to-quarter, dependent on the amount of clinical research organization services delivered and clinical materials procured within a given quarter.~~associated with regulatory affairs.

Sales and marketing expenses. Sales and marketing expenses increased ~~31%~~27% to ~~$44.7~~$41.4 million for the three months ended ~~June~~September 30, 2022 from ~~$34.1~~$32.6 million for the same period in 2021, and increased 26% to ~~$82.6~~$124.0 million for the ~~six~~nine month period ended ~~June~~September 30, 2022 from ~~$65.5~~$98.1 million for the same period in 2021. For the three and ~~six~~nine month period ended ~~June~~September 30, 2022, the change was primarily due to an increase in market research and strategic planning activities intended to enhance our commercial capabilities in anticipation of potential future approvals in new indications, including NSCLC and ovarian cancer. Additionally, we are investing in market access capabilities in order to evaluate opportunities, identify optimal access pathways, and successfully gain reimbursement in new geographies.

General and administrative expenses. General and administrative expenses ~~decreased 3%~~increased 4% to ~~$31.7~~$32.5 million for the three months ended ~~June~~September 30, 2022 from ~~$32.8~~$31.2 million for the same period in 2021, and ~~decreased 3% to $62.2~~totaled $94.7 million for the ~~six months~~nine month period ended ~~June~~September 30, 2022, virtually unchanged from ~~$63.9~~$95.1 million for the same period in 2021. For the three ~~and six~~ month ~~periods,~~period, the change was primarily due to ~~a decrease~~an increase in ~~personnel costs.~~information technology and

Three months ended June 30, Six months ended June 30,
2022 2021 % Change 2022 2021 % Change
Financial expenses (income), net $ 2,228 $ 940 137 % $ 3,937 $ 3,586 10 %

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supply chain investments to enhance operational capabilities in advance of potential future launches in new indications.


	Three months ended September 30,						Nine months ended September 30,
	2022		2021		% Change		2022		2021		% Change
Financial expenses (income), net	$	(1,194)	$	1,981	(160)	%	$	2,743	$	5,567	(51)	%

Financial expenses, net. Financial expenses ~~increased 137%~~decreased 160% to ~~$2.2~~financial income of $1.2 million for the three months ended ~~June~~September 30, 2022 from ~~$0.9~~$2.0 million for the same period in 2021, and ~~increased 10%~~decreased 51% to ~~$3.9~~$2.7 for the ~~six~~nine months ended ~~June~~September 30, 2022 from ~~$3.6~~$5.6 for the same period in 2021. For the three and ~~six~~nine month periods, the ~~increase~~decrease was primarily due to increased interest income partially offset by increased foreign exchange rate ~~fluctuations offset by interest income.~~fluctuations. Foreign exchange rate expenses increased to ~~$3.4~~$2.5 million for the three months ended ~~June~~September 30, 2022 from ~~income of $0.3~~$0.9 million expenses for the same period in 2021, and increased ~~166%~~272% to ~~$4.8~~$7.7 million for the ~~six~~nine months ended ~~June~~September 30, 2022 from ~~$1.8~~$2.8 million for the same period in 2021.

Three months ended June 30, Six months ended June 30,
2022 2021 % Change 2022 2021 % Change
Income taxes $ 652 $ 1,406 (54) % $ 2,784 $ 2,800 (1) %


	Three months ended September 30,						Nine months ended September 30,
	2022		2021		% Change		2022		2021		% Change
Income taxes	$	3,159	$	2,591	22	%	$	5,943	$	5,391	10	%

Income taxes. Income taxes ~~decreased 54%~~increased 22% to ~~$0.7~~$3.2 million for the three months ended ~~June~~September 30, 2022 from ~~$1.4~~$2.6 million for the same period in 2021, and was ~~unchanged at $2.8~~increased by 10% to $5.9 million from $5.4 million for the ~~six~~nine months ended ~~June~~September 30, 2022 compared to the same period in 2021. For the three and nine months ended ~~June~~September 30, 2022 the increase reflects a change in the mix of applicable statutory tax rates in active jurisdictions.

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.

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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 June 30,						Six months ended June 30,							Three months ended September 30,						Nine months ended September 30,
		2022		2021		% Change		2022		2021		% Change			2022		2021		% Change		2022		2021		% Change
Net income (loss)	Net income (loss)	$	(24,008)	$	(14,641)	64	%	$	(28,655)	$	(18,769)	53	%	Net income (loss)	$	(26,576)	$	(13,124)	102	%	$	(55,231)	$	(31,893)	73	%
Add: Income tax	Add: Income tax	652		1,406		(54)	%	2,784		2,800		(1)	%	Add: Income tax	3,159		2,591		22	%	5,943		5,391		10	%
Add: Financial expenses (income), net	Add: Financial expenses (income), net	2,228		940		137	%	3,937		3,586		10	%	Add: Financial expenses (income), net	(1,194)		1,981		(160)	%	2,743		5,567		(51)	%
Add: Depreciation and amortization	Add: Depreciation and amortization	2,654		2,480		7	%	5,264		4,850		9	%	Add: Depreciation and amortization	2,659		2,734		(3)	%	7,924		7,584		4	%
EBITDA	EBITDA	$	(18,474)	$	(9,815)	88	%	$	(16,670)	$	(7,533)	121	%	EBITDA	$	(21,952)	$	(5,818)	277	%	$	(38,621)	$	(13,351)	189	%
Add: Share-based compensation	Add: Share-based compensation	25,823		27,881		(7)	%	50,868		46,744		9	%	Add: Share-based compensation	26,305		25,758		2	%	77,173		72,502		6	%
Adjusted EBITDA	Adjusted EBITDA	$	7,349	$	18,066	(59)	%	$	34,198	$	39,211	(13)	%	Adjusted EBITDA	$	4,353	$	19,940	(78)	%	$	38,552	$	59,151	(35)	%

Adjusted EBITDA decreased by ~~59%~~78% to ~~$7.3~~$4.4 million for the three months ended ~~June~~September 30, 2022 from ~~$18.1~~$19.9 million for the same period in 2021, and decreased by ~~13%~~35% to ~~$34.2~~$38.6 million for the ~~six~~nine months ended ~~June~~September 30, 2022 from ~~$39.2~~$59.2 million for the same period in 2021. The changes in both periods were primarily due to a decrease in net income driven by increased investment in research, development and clinical studies and sales and marketing intended to maximize future growth opportunities.

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Liquidity and Capital Resources

We have incurred significant losses and cumulative negative cash flows from operations since our founding in 2000. As of ~~June~~September 30, 2022, we had an accumulated deficit of ~~$714.6~~$741.2 million. To date, we have primarily financed our operations through the issuance and sale of equity and the proceeds from long-term loans.

At ~~June~~September 30, 2022, we had ~~$948.5~~$970.3 million in cash, cash equivalents and short-term investments, an increase of ~~$10.8~~$32.6 million compared to $937.7 million at December 31, 2021. We believe our cash, cash equivalents and short-term investments as of ~~June~~September 30, 2022 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 research, development and clinical study expenses, sales and marketing expenses and general and administrative expenses will continue to increase over the next several years and may outpace our gross profit. As a result, we may need to raise additional capital to fund our operations.

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:


		Six months ended June 30,									Nine months ended September 30,
		2022		2021		Change		% Change			2022		2021		Change		% Change
Net cash provided by (used in) operating activities	Net cash provided by (used in) operating activities	$	12,075	$	43,952	$	(31,877)	(73)	%	Net cash provided by (used in) operating activities	$	34,495	$	68,352	$	(33,857)	(50)	%
Net cash provided by (used in) investing activities	Net cash provided by (used in) investing activities	138,347		51,553		86,794		168	%	Net cash provided by (used in) investing activities	(11,897)		354,256		(366,153)		(103)	%
Net cash provided by financing activities	Net cash provided by financing activities	7,877		19,014		(11,137)		(59)	%	Net cash provided by financing activities	12,081		22,050		(9,969)		(45)	%
Effect of exchange rate changes on cash and cash equivalents	Effect of exchange rate changes on cash and cash equivalents	(145)		(105)		(40)		38	%	Effect of exchange rate changes on cash and cash equivalents	(252)		(139)		(113)		81	%
Net increase (decrease) in cash, cash equivalents and restricted cash	Net increase (decrease) in cash, cash equivalents and restricted cash	$	158,154	$	114,414	$	43,740	38	%	Net increase (decrease) in cash, cash equivalents and restricted cash	$	34,427	$	444,519	$	(410,092)	(92)	%

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.

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Net cash provided by operating activities decreased by ~~$31.9~~$33.9 million from ~~$44.0~~$68.4 million net cash provided by operating activities for the ~~six~~nine months ended ~~June~~September 30, 2021 to ~~$12.1~~$34.5 million net cash provided by operating activities for the ~~six~~nine months ended ~~June~~September 30, 2022. This decrease was a result of net income decreasing by ~~$9.9~~$23.3 million compared to the same period in 2021 ~~with~~and a ~~$24.4~~$12.2 million ~~increase~~decrease in net cash provided by working capital, including a ~~$9.7~~$14.3 million decrease in accounts payables and accrued expenses, ~~$12.9 million increase in accounts receivables and $5.4~~a $6.2 million increase in inventories and a $4.2 million decrease in accounts receivables, partially offset by a ~~$2.4~~$1.6 million change in the mix from cash to non-cash based expenses.

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~~used in investing activities was ~~$138.3~~$11.9 million for the ~~six~~nine months ended ~~June~~September 30, 2022, compared to ~~$51.6~~$354.3 million provided by investing activities for the ~~six~~nine months ended ~~June~~September 30, 2021. The net cash ~~provided by~~used in investing activities for the ~~six~~nine months ended ~~June~~September 30, 2022 was primarily attributable to ~~$147.6~~$3.0 million of net proceeds from maturity of short-term investments, offset by the purchase of ~~$9.2~~$14.9 million of property and equipment. The net cash provided by investing activities for the ~~six~~nine months ended ~~June~~September 30, 2021 was primarily attributable to ~~$58.2~~$364.2 million of net proceeds from maturity of short-term investments, partially offset by the purchase of ~~$6.6~~$9.9 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 ~~$7.9~~$12.1 million for the ~~six~~nine months ended ~~June~~September 30, 2022, as compared to ~~$19.0~~$22.1 million provided by financing activities for the ~~six~~nine months ended ~~June~~September 30, 2021. The net cash provided by financing activities for the ~~six~~nine months ended ~~June~~September 30, 2022 and ~~June~~September 30, 2021 included proceeds from the issuance of shares as well as proceeds from the exercise of options under the Company's employee stock purchase plan and stock option plan.

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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 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 2021 10-K.

Term loan credit facility

On November 6, 2020, we entered into a new three-year $150.0 million senior secured revolving credit facility with a syndicate of relationship banks (the "2020 Credit Facility"). We may, subject to certain conditions and limitations, increase the revolving credit commitments outstanding under the 2020 Credit Facility or incur new incremental term loans in an aggregate principal amount not to exceed an additional $100.0 million.

The commitments under the 2020 Credit Facility are guaranteed by certain of our subsidiaries and secured by a first lien on our and certain of our subsidiaries’ assets. Outstanding loans bear interest per annum at a sliding scale based on the our secured leverage ratio from 2.75% to 3.25% above the applicable interbank borrowing reference rate for the currency in which the loan is denominated. Additionally, the 2020 Credit Facility contains a fee for the unused revolving credit commitments at a sliding scale based on our secured leverage ratio from 0.35% to 0.45%. The 2020 Credit Facility contains financial covenants requiring maintenance of a minimum fixed charge coverage

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ratio and specifying a maximum senior secured net leverage ratio, as well as customary events of default which include a change of control. As of ~~June~~September 30, 2022, we were in compliance with such covenants.

As of ~~June~~September 30, 2022, we had no outstanding balance borrowed under the 2020 Credit Facility.

Contractual Obligations and Commitments

There have been no material changes from the information disclosed in our 2021 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 2021 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 Officer, has evaluated the effectiveness of our disclosure controls and procedures as of ~~June~~September 30, 2022. 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

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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 ~~June~~September 30, 2022, our Chief Executive Officer and Chief Financial Officer have concluded that, as of ~~June~~September 30, 2022, 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 ~~June~~September 30, 2022 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

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 2021 ~~10-K.~~10-K, except as follows.

In the EU member states where we market our Products and operate, we were subject to, inter alia, the Medical Device Directive ("MDD") as implemented into national legislation by the EU member states. On May 26, 2021, the MDD was replaced and repealed by the Medical Device Regulation ("MDR"), which applies directly in all EU member states. In Switzerland, our Products and operations are subject to, inter alia, the Medical Devices Ordinance, which implements the MDR into Swiss law.

In the European Economic Area (“EEA”), we are required to obtain a CE Certificate and to affix a CE mark to our Products. In the EEA, our devices must be subject to conformity assessment procedure involving an EEA notified body, a private organization accredited by an EEA member state to conduct conformity assessment procedures under the MDR. The notified body typically audits and examines the device’s technical documentation, including the clinical evaluation, and the quality system for the manufacture, design and final inspection of our devices before issuing a CE Certificate demonstrating compliance with the relevant requirements or the quality system requirements laid down in the relevant Annexes to the MDR. The MDR imposed new, stricter requirements that we must comply with in order to renew the CE Certificates for our Products when they expire. As a result of the implementation of the MDR, our notified body (as well as many other notified bodies throughout the EEA) has suffered a significant backlog in issuing CE Certificate renewals. While we expect to receive the CE Certificate renewal from our notified body, there can be no assurance that we will receive the renewal prior to the depletion of existing inventories.

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

None.

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Item 6. Exhibits

EXHIBIT INDEX
Exhibit
Number Incorporated by Reference Filed
Herewith
Exhibit Description Form Date Number
3.1
Amended and Restated Articles of Association of NovoCure Limited adopted 8 June 2022
8-K June 14, 2022 3.1
10.1
Clinical Trial Collaboration and Supply Agreement dated May 18, 2022 by and among Novocure GmbH, Merck International GmbH and MSD International Business GmbH*
8-K May 18, 2022 10.1
10.2
Non-Employee Director Compensation Program effec tive April 26, 2022#
X
31.1
Certification of Principal Executive Officer Required Under Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as amended
X
31.2
Certification of Principal Financial Officer Required Under Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as amended
X
32.1**
Certification of Principal Executive Officer Required Under Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended, and 18 U.S.C. §1350
X
32.2**
Certification of Principal Financial Officer Required Under Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended, and 18 U.S.C. §1350
X
101.INS Inline XBRL Instance Document X
101.SCH Inline XBRL Taxonomy Extension Schema Document X
101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document X
101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document X
101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document X
101.PRE Inline XBRL Extension Presentation Linkbase Document X
104 Cover Page Interactive Date File (formatted as Inline XBRL and contained in Exhibit 101) X

Exhibit
Number

Incorporated by Reference

Filed
Herewith

Exhibit Description

Form

Date

Number

31.1

Certification of Principal Executive Officer Required Under Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as amended

31.2

Certification of Principal Financial Officer Required Under Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as amended

32.1*

Certification of Principal Executive Officer Required Under Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended, and 18 U.S.C. §1350

32.2*

Certification of Principal Financial Officer Required Under Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended, and 18 U.S.C. §1350

101.INS

Inline XBRL Instance Document

101.SCH

Inline XBRL Taxonomy Extension Schema Document

101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF

Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB

Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE

Inline XBRL Extension Presentation Linkbase Document

104

Cover Page Interactive Date File (formatted as Inline XBRL and contained in Exhibit 101)

* Certain identified information has been excluded from this exhibit because it is both (I) not material and (II) would likely cause competitive harm to the Company if publicly disclosed. Omitted information is marked with brackets. Additionally, certain exhibits and schedules have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company agrees to furnish supplementally to the SEC a copy of any omitted information, exhibits or schedules 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.

~~# Compensation plans and arrangements for executive officers and others.~~

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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: ~~July 28,~~October 27, 2022						/s/ Ashley Cordova
						Ashley Cordova Chief Financial Officer (principal financial and accounting officer and duly authorized officer)

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		Page
Cautionary Note Regarding Forward Looking Statements		i
Trademarks		ii

PART I—FINANCIAL INFORMATION

Item 1.	Financial Statements	2
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1718
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2627
Item 4.	Controls and Procedures	2627

PART II—OTHER INFORMATION

Item 1.	Legal Proceedings	2729
Item 1A.	Risk Factors	2729
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	2729
Item 3.	Defaults Upon Senior Securities	2729
Item 4.	Mine Safety Disclosures	2729
Item 5.	Other Information	2729
Item 6.	Exhibits	2830

	Signatures	2931