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What changed in NovoCure Ltd's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of NovoCure Ltd's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+359 added−373 removedSource: 10-K (2024-02-22) vs 10-K (2023-02-23)

Top changes in NovoCure Ltd's 2023 10-K

359 paragraphs added · 373 removed · 294 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

125 edited+33 added−47 removed105 unchanged
Biggest changeFor patients in the 2-THE-TOP study, median progression-free survival was 12.1 months, compared with 7.9 months for the matched-control patients in EF-14 (hazard ratio=0.46, p=0.033). Patients in 2-THE-TOP had a median overall survival of 25.2 months, compared with 15.9 months for the matched-control patients in EF-14 (hazard ratio=0.38, p=0.020).
Biggest changeThe primary endpoint was progression-free survival, as compared to a case-matched cohort of 56 patients from the EF-14 study. Secondary endpoints included overall survival and toxicity. A total of 26 patients were recruited to the study with a median age of 60.5 years. Median progression-free survival was 12.0 months versus 5.8 months (hazard ratio=0.377, P=0.0026).
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. 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 anticipate expanding our clinical pipeline over time to study the safety and efficacy of TTFields therapy for additional solid tumor indications and combinations with other cancer treatment modalities. 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 property portfolio contains hundreds of issued patents and numerous patent applications pending worldwide.
We have several product development programs underway that are designed to optimize the delivery of TTFields to the target tumor and enhance patient ease of use. Our intellectual property portfolio contains hundreds of issued patents and numerous patent applications pending worldwide.
In our clinical research and commercial experience to date, TTFields has exhibited no systemic toxicity, with mild to moderate skin irritation being the most common side effect. Our technology TTFields therapy is delivered through a portable medical device.
In our clinical research and commercial experience to date, TTFields therapy has exhibited no systemic toxicity, with mild to moderate skin irritation being the most common side effect. Our technology TTFields therapy is delivered through a portable medical device.
Failure by us or by our suppliers to comply with applicable regulatory requirements can result in enforcement action by the FDA or other applicable regulatory authorities, which may result in sanctions, including, but not limited to: • untitled letters, warning letters, fines, injunctions, consent decrees and civil penalties; • unanticipated expenditures to address or defend such actions; • customer notifications for repair, replacement and/or refunds; • recall, detention or seizure of our devices; • operating restrictions or partial suspension or total shutdown of production; • refusing or delaying our requests for approval of device candidates or a modified version of Optune; • withdrawal of PMA/HDE approvals or suspension, variation or withdrawal of CE Certificates that have already been granted; • refusal to grant export approval for our devices; or • civil and/or criminal prosecution by the U.S.
Failure by us or by our suppliers to comply with applicable regulatory requirements can result in enforcement action by the FDA or other applicable regulatory authorities, which may result in sanctions, including, but not limited to: • untitled letters, warning letters, fines, injunctions, consent decrees and civil penalties; • unanticipated expenditures to address or defend such actions; • customer notifications for repair, replacement and/or refunds; • recall, detention or seizure of our devices; • operating restrictions or partial suspension or total shutdown of production; • refusing or delaying our requests for approval of device candidates or a modified version of Optune Gio; • withdrawal of PMA/HDE approvals or suspension, variation or withdrawal of CE Certificates that have already been granted; • refusal to grant export approval for our devices; or • civil and/or criminal prosecution by the U.S.
These may include: • product listing and establishment registration, which helps facilitate FDA inspections and other regulatory action; • QSR, which requires manufacturers, including third-party manufacturers, to follow stringent design, testing, control, documentation and other quality assurance procedures during all aspects of the manufacturing process for products marketed in the U.S.; 16 • labeling regulations and FDA and equivalent competent authority in other jurisdictions requiring promotion be truthful and non-misleading and prohibiting the promotion of products for uncleared, unapproved or off-label uses; • approval of product modifications that affect the safety or effectiveness of one of our devices that has been approved or is the subject of a CE Certificate; • Medical Device Reporting regulations of the FDCA and medical device vigilance, which require that manufacturers comply with FDA or equivalent competent authority requirements in other jurisdictions to report if their device may have caused or contributed to a death or serious injury, or has malfunctioned in a way that would likely cause or contribute to a death or serious injury if the malfunction of the device or a similar device were to recur; • post-approval restrictions or conditions, including post-approval study commitments; • post-market surveillance regulations, which apply when necessary to protect the public health or to provide additional safety and effectiveness data for the device; • the FDA’s and equivalent competent authority’s recall authority, whereby they can ask, or under certain conditions order, device manufacturers to recall from the market a product that is in violation of governing laws and regulations; • regulations pertaining to voluntary recalls; and • notices of corrections or removals.
These may include: • product listing and establishment registration, which helps facilitate FDA inspections and other regulatory action; • QSR, which requires manufacturers, including third-party manufacturers, to follow stringent design, testing, control, documentation and other quality assurance procedures during all aspects of the manufacturing process for products marketed in the U.S.; • labeling regulations and FDA and equivalent competent authority in other jurisdictions requiring promotion be truthful and non-misleading and prohibiting the promotion of products for uncleared, unapproved or off-label uses; • approval of product modifications that affect the safety or effectiveness of one of our devices that has been approved or is the subject of a CE Certificate; • Medical Device Reporting regulations of the FDCA and medical device vigilance, which require that manufacturers comply with FDA or equivalent competent authority requirements in other jurisdictions to report if their device may have caused or contributed to a death or serious injury, or has malfunctioned in a 15 way that would likely cause or contribute to a death or serious injury if the malfunction of the device or a similar device were to recur; • post-approval restrictions or conditions, including post-approval study commitments; • post-market surveillance regulations, which apply when necessary to protect the public health or to provide additional safety and effectiveness data for the device; • the FDA’s and equivalent competent authority’s recall authority, whereby they can ask, or under certain conditions order, device manufacturers to recall from the market a product that is in violation of governing laws and regulations; • regulations pertaining to voluntary recalls; and • notices of corrections or removals.
Of the 15 patients with available CT scans, 6 (40%) had a partial response (compared to 23% with the nab-paclitaxel plus gemcitabine alone), 7 (47%) had stable disease and 2 (13%) had progressive disease. Safety results from both cohorts suggested that TTFields plus first-line chemotherapies nab-paclitaxel and/or gemcitabine may be tolerable and safe in patients with advanced pancreatic cancer.
Of the 15 patients with available CT scans, 6 (40%) had a partial response (compared to 23% with the nab-paclitaxel plus gemcitabine alone), 7 (47%) had stable disease and 2 (13%) had progressive disease. Safety results from both cohorts suggested that TTFields therapy plus first-line chemotherapies nab-paclitaxel and/or gemcitabine may be tolerable and safe in patients with advanced pancreatic cancer.
Recent preclinical work suggests that the well-established impairment created by the physical effect of TTFields to tumor cells results in a series of changes to cell processes that downregulate DNA damage response, interfere with cell movement and migration, and increase anti-tumor immunity. Research is ongoing to further refine and build upon our understanding of TTFields' several mechanisms of action.
Preclinical work suggests that the well-established impairment created by the physical effect of TTFields to tumor cells results in a series of changes to cell processes that downregulate DNA damage response, interfere with cell movement and migration, and increase anti-tumor immunity. Research is ongoing to further refine and build upon our understanding of TTFields' several mechanisms of action.
We plan to specifically target individual solid tumor types by optimizing field generator parameters such as frequency and power output. Our arrays have been developed and are in use, either commercially or clinically, for application on the head, thorax and abdomen. Through engineering efforts, we plan to continue to advance our Products to optimize TTFields therapy for patients.
We plan to specifically target individual solid tumor types by optimizing field generator parameters such as frequency and power output. Our arrays have been developed and are in use, either commercially or clinically, for application on the head, thorax and abdomen. 2 Through engineering efforts, we plan to continue to advance our Products to optimize TTFields therapy for patients.
Pursuant to our strategic collaboration with Zai, we granted Zai a license to commercialize TTFields in Greater China. For additional information, see Note 12 to the Consolidated Financial Statements. Competition The market for cancer treatments is intensely competitive, subject to rapid change and significantly affected by new product and treatment introductions and other activities of industry participants.
Pursuant to our strategic collaboration with Zai, we granted Zai a license to commercialize TTFields therapy in Greater China. For additional information, see Note 12 to the Consolidated Financial Statements. Competition The market for cancer treatments is intensely competitive, subject to rapid change and significantly affected by new product and treatment introductions and other activities of industry participants.
Our ultimate goal is to optimize the energy delivered to patients' tumors, potentially improving efficacy. Any enhancements will be subject to applicable regulatory reviews and approvals. Our commercial business Optune is currently marketed for the treatment of GBM, the most common form of primary brain cancer and an aggressive disease for which there are few effective treatment options.
Our ultimate goal is to optimize the energy delivered to patients' tumors, potentially improving efficacy. Any enhancements will be subject to applicable regulatory reviews and approvals. Our commercial business Optune Gio is currently marketed for the treatment of GBM, the most common form of primary brain cancer and an aggressive disease for which there are few effective treatment options.
Although we believe we are in compliance with all applicable federal and state regulations regarding accreditation and licensure requirements and similar requirements in other jurisdictions, if we are found to be noncompliant, we could lose our accreditation or licensure in such states or our supplier rights under such federal healthcare programs, which could prohibit us from selling our current or future devices to patients in such state or to that federal healthcare program.
Although we believe we are in compliance with all applicable federal and state regulations regarding accreditation and licensure requirements and similar requirements in other jurisdictions, if we are found to be noncompliant, we could lose our accreditation or 16 licensure in such states or our supplier rights under such federal healthcare programs, which could prohibit us from selling our current or future devices to patients in such state or to that federal healthcare program.
In these analyses, both time on therapy and higher intensity were associated with improved overall survival, independent of each other. In addition, patients who used Optune at least 18 hours per day at higher intensity levels (n=78) had a median overall survival of 25.1 months (95% CI 20.8-39.4).
In these analyses, both time on therapy and higher intensity were associated with improved overall survival, independent of each other. In addition, patients who used Optune Gio at least 18 hours per day at higher intensity levels (n=78) had a median overall survival of 25.1 months (95% CI 20.8-39.4).
The study included 40 patients with locally advanced or metastatic pancreatic cancer whose tumors could not be removed surgically and who had not received chemotherapy or radiation therapy prior to the clinical study. Patients were enrolled between 2014 and 2016 in two cohorts: The first cohort of 20 patients received TTFields with standard doses of gemcitabine alone.
The study included 40 patients with locally advanced or metastatic pancreatic cancer whose tumors could not be removed surgically and who had not received chemotherapy or radiation therapy prior to the clinical study. Patients were enrolled between 2014 and 2016 in two 9 cohorts: The first cohort of 20 patients received TTFields therapy with standard doses of gemcitabine alone.
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 mechanisms of action behind TTFields therapy may be broadly applicable to solid tumor cancers.
We market Optune Gio and Optune Lua in multiple countries around the globe with the majority of our revenues coming from the use of Optune Gio in the U.S., Germany and Japan. We are actively evaluating opportunities to expand our international footprint. We believe the physical mechanisms of action behind TTFields therapy may be broadly applicable to solid tumor cancers.
These agreements also generally provide that we own, or the individual is required to assign to us, all inventions conceived by the individual in the course of rendering services to us. Despite measures taken to protect our intellectual property, unauthorized parties may copy certain aspects of our products or obtain and use information that we believe is proprietary.
These 11 agreements also generally provide that we own, or the individual is required to assign to us, all inventions conceived by the individual in the course of rendering services to us. Despite measures taken to protect our intellectual property, unauthorized parties may copy certain aspects of our products or obtain and use information that we believe is proprietary.
Even if a study is completed, the results of clinical testing may not adequately demonstrate the safety and efficacy of the device or may otherwise not be sufficient to obtain FDA approval to market the product in the U.S. 15 Post-approval studies are also typically required as a condition of PMA to reinforce the reasonable assurance of safety and effectiveness.
Even if a study is completed, the results of clinical testing may not adequately demonstrate the safety and efficacy of the device or may otherwise not be sufficient to obtain FDA approval to market the product in the U.S. Post-approval studies are also typically required as a condition of PMA to reinforce the reasonable assurance of safety and effectiveness.
Beyond our internal research efforts, we provide independent researchers with preclinical laboratory bench systems, known as inovitro™ and inovivo™, and we grant funding to support basic and translational research on TTFields. We also support independent research through our Investigator-Sponsored Trials and Preclinical Material Transfer Agreement programs in order to enhance our understanding of the optimal use of TTFields.
Beyond our internal research efforts, we provide independent researchers with preclinical laboratory bench systems, known as inovitro™ and inovivo™, and we grant funding to support basic and translational research on TTFields therapy. We also support independent research through our Investigator-Sponsored Trials and Preclinical Material Transfer Agreement programs in order to enhance our understanding of the optimal use of TTFields therapy.
IND clinical studies can be suspended at any time by us, the FDA or an IRB for various reasons, including a belief that the risks to study subjects outweigh the anticipated benefits. Even if an IND study is completed, the results of clinical testing may not be sufficient to obtain FDA approval to market the product.
IND clinical studies can be 14 suspended at any time by us, the FDA or an IRB for various reasons, including a belief that the risks to study subjects outweigh the anticipated benefits. Even if an IND study is completed, the results of clinical testing may not be sufficient to obtain FDA approval to market the product.
We have also filed several hundred additional patent applications worldwide, that, if issued, may protect aspects of our platform beyond the current last-to-expire patent in the relevant market. These pending applications cover innovations relating to our arrays, field generators and software platform, in addition to other topics related to TTFields.
We have also filed several hundred additional patent applications worldwide, that, if issued, may protect aspects of our platform beyond the current last-to-expire patent in the relevant market. These pending applications cover innovations relating to our arrays, field generators and software platform, in addition to other topics related to TTFields therapy.
Of this population, we estimate that approximately 8,200 patients who are candidates for treatment with Optune based upon the rate of disease progression and medical eligibility will actively seek treatment. • 4,600 people will be diagnosed with GBM or tumors that typically progress to GBM in Germany.
Of this population, we estimate that approximately 8,200 patients who are candidates for treatment with Optune Gio based upon the rate of disease progression and medical eligibility will actively seek treatment. • 4,600 people will be diagnosed with GBM or tumors that typically progress to GBM in Germany.
In addition to our studies in tumors of the head, thorax and abdomen, we continue to conduct 6 research in our approved indications to further advance the scientific evidence supporting the use of TTFields in GBM and to gather additional information about our therapy's optimal use. Glioblastoma GBM is the most common and aggressive form of primary brain cancer.
In addition to our studies in tumors of the head, thorax and abdomen, we continue 6 to conduct research in our approved indications to further advance the scientific evidence supporting the use of TTFields therapy in GBM and to gather additional information about our therapy's optimal use. Glioblastoma GBM is the most common and aggressive form of primary brain cancer.
Treatment of MPM In 2019, we received FDA approval via the HDE pathway to market Optune Lua (then known as NovoTTF-100L) for the treatment of adult patients with unresectable, locally advanced or metastatic MPM concurrent with pemetrexed and platinum-based chemotherapy. The FDA approved Optune Lua for MPM based on the STELLAR study ("STELLAR").
Treatment of MPM In 2019, we received FDA approval via the HDE pathway to market Optune Lua (then known as NovoTTF-100L) for the treatment of adult patients with unresectable, locally advanced or metastatic MPM concurrent with pemetrexed 4 and platinum-based chemotherapy. The FDA approved Optune Lua for MPM based on the STELLAR study ("STELLAR").
Of this population, we estimate that approximately 2,500 patients who are candidates for treatment with Optune based upon the rate of disease progression and medical eligibility will actively seek treatment. • 2,200 people will be diagnosed with GBM or tumors that typically progress to GBM in Japan.
Of this population, we estimate that approximately 2,500 patients who are candidates for treatment with Optune Gio based upon the rate of disease progression and medical eligibility will actively seek treatment. • 2,200 people will be diagnosed with GBM or tumors that typically progress to GBM in Japan.
Optune Lua is currently marketed for the treatment of MPM, a rare cancer that has been strongly linked to asbestos exposure. 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.
Optune Lua is currently marketed for the treatment of MPM, a rare cancer that has been strongly linked to asbestos exposure. We market Optune Gio and Optune Lua in multiple countries around the globe with the majority of our revenues coming from the use of Optune Gio in the U.S., Germany and Japan.
The median overall survival was 21.2 months for patients with epithelioid MPM (n=53) and 12.1 months for patients with non-epithelioid MPM (n=27). 62% of patients enrolled in STELLAR who used Optune Lua plus chemotherapy were still alive at one year, with 42% of patients alive at two 4 years.
The median overall survival was 21.2 months for patients with epithelioid MPM (n=53) and 12.1 months for patients with non-epithelioid MPM (n=27). 62% of patients enrolled in STELLAR who used Optune Lua plus chemotherapy were still alive at one year, with 42% of patients alive at two years.
In addition, our Products must meet the requirements of a large and growing body of national, regional and international standards that govern the preclinical and clinical testing, manufacturing, labeling, 13 certification, storage, recordkeeping, advertising, promotion, export and marketing and distribution, among other things, of our Products for current and future indications.
In addition, our Products must meet the requirements of a large and growing body of national, regional and international standards that govern the preclinical and clinical testing, manufacturing, labeling, certification, storage, recordkeeping, advertising, promotion, export and marketing and distribution, among other things, of our Products for current and future indications.
Department of Justice or other enforcement authorities outside of the U.S. 17 To date, our facilities and those of our critical suppliers have been inspected by several relevant regulatory authorities in order to obtain regulatory approval of our Products. No inspectional observations were identified were issued following these inspections.
Department of Justice or other enforcement authorities outside of the U.S. To date, our facilities and those of our critical suppliers have been inspected by several relevant regulatory authorities in order to obtain regulatory approval of our Products. No inspectional observations were identified were issued following these inspections.
Quality of life data from a pre-specified analysis of EF-14 demonstrated that patients treated with Optune and temozolomide maintained quality of life over time and across predefined daily-functioning domains. Both healthcare professionals and patients reported stable quality of life evaluation scores up to one year of Optune use.
Quality of life data from a pre-specified analysis of EF-14 demonstrated that patients treated with Optune Gio and temozolomide maintained quality of life over time and across predefined daily-functioning domains. Both healthcare professionals and patients reported stable quality of life evaluation scores up to one year of Optune Gio use.
Accordingly, we were required to receive PMA for Optune, which the FDA granted in April 2011 and October 2015 for the treatment of recurrent and newly diagnosed supratentorial GBM, respectively, in adult patients. We expect that we will be required to receive PMA for the use of our Products for future indications.
Accordingly, we were required to receive PMA for Optune Gio, which the FDA granted in April 2011 and October 2015 for the treatment of recurrent and newly diagnosed supratentorial GBM, respectively, in adult patients. We expect that we will be required to receive PMA for the use of our Products for future indications.
In addition, the FDA will generally conduct a pre-approval inspection of the manufacturing facility or facilities to ensure compliance with the QSR. Prior to approval of the Optune PMA for the treatment of recurrent GBM, we and our critical component suppliers were each inspected by the FDA.
In addition, the FDA will generally conduct a pre-approval inspection of the manufacturing facility or facilities to ensure compliance with the QSR. Prior to approval of the Optune Gio PMA for the treatment of recurrent GBM, we and our critical component suppliers were each inspected by the FDA.
The EF-19 study studied Optune as a monotherapy for the treatment of recurrent GBM in 192 patients compared to the 117 recurrent GBM patients who received best standard of care chemotherapy in Novocure’s EF-11 registration study. Optune as monotherapy reduced the risk of death with fewer adverse events compared to best standard of care chemotherapy.
The EF-19 study studied Optune Gio as a monotherapy for the treatment of recurrent GBM in 192 patients compared to the 117 recurrent GBM patients who received best standard of care chemotherapy in Novocure’s EF-11 registration study. Optune Gio as monotherapy reduced the risk of death with fewer adverse events compared to best standard of care chemotherapy.
Our reliance on intellectual property involves certain risks, as described under the heading "Risk factors—Risks relating to intellectual property." 12 In addition to our patent portfolio, we further protect our intellectual property by maintaining the confidentiality of our trade secrets, know-how and other confidential information.
Our reliance on intellectual property involves certain risks, as described under the heading "Risk factors—Risks relating to intellectual property." In addition to our patent portfolio, we further protect our intellectual property by maintaining the confidentiality of our trade secrets, know-how and other confidential information.
In EF-14, Optune plus temozolomide demonstrated unprecedented five-year survival results. Median overall survival was extended by nearly five months (median overall survival of 20.9 months versus 16.0 months for temozolomide alone). Median progression-free survival was extended by 2.7 months to 6.7 months for Optune plus temozolomide from 4.0 months for temozolomide alone.
In EF-14, Optune Gio plus temozolomide demonstrated unprecedented five-year survival results. Median overall survival was extended by nearly five months (median overall survival of 20.9 months versus 16.0 months for temozolomide alone). Median progression-free survival was extended by 2.7 months to 6.7 months for Optune Gio plus temozolomide from 4.0 months for temozolomide alone.
We believe we have the experience and expertise to scale our sales and marketing efforts. Billing and reimbursement We provide our Products directly to patients following receipt of a prescription order and a signed patient service agreement (except in Japan as described above).
We believe we have the experience and expertise to scale our sales and marketing efforts. 5 Billing and reimbursement We provide our Products directly to patients following receipt of a prescription order and a signed patient service agreement (except in Japan as described above).
A combination of radiation, platinum-based chemotherapies, and immune checkpoint inhibitors, or targeted therapies, are the first line standard of care treatment for locally advanced or metastatic NSCLC. Today, the standard of care for second line treatment is evolving and often includes immune checkpoint inhibitors, docetaxel, platinum-based chemotherapy or pemetrexed.
A combination of radiation, platinum-based chemotherapies, and immune checkpoint inhibitors, or targeted therapies, are the first line standard of care treatment for locally advanced or metastatic 7 NSCLC. Today, the standard of care for second line treatment is evolving and often includes immune checkpoint inhibitors, docetaxel, platinum-based chemotherapy or pemetrexed.
The second cohort of 20 patients received TTFields with standard doses of nab-paclitaxel plus gemcitabine. In the first cohort, efficacy results showed that progression-free survival and overall survival of patients treated with TTFields combined with gemcitabine were more than double those of gemcitabine-treated historical controls.
The second cohort of 20 patients received TTFields therapy with standard doses of nab-paclitaxel plus gemcitabine. In the first cohort, efficacy results showed that progression-free survival and overall survival of patients treated with TTFields therapy combined with gemcitabine were more than double those of gemcitabine-treated historical controls.
Patients treated with Optune at higher intensities (greater than or equal to 1.06 V/cm; n=119) had a median overall survival of 24.3 months compared to a median overall survival of 21.6 months for patients treated with Optune at lower intensities (less than 1.06 V/cm; n=221).
Patients treated with Optune Gio at higher intensities (greater than or equal to 1.06 V/cm; n=119) had a median overall survival of 24.3 months compared to a median overall survival of 21.6 months for patients treated with Optune Gio at lower intensities (less than 1.06 V/cm; n=221).
Numerous federal and state laws and regulations, including the Health Insurance Portability and Accountability Act of 1996 as amended by the Health Information Technology for Economic and Clinical Health Act ("HITECH" and collectively "HIPAA"), govern the collection, dissemination, use, security and privacy of individually identifiable 18 health information.
Numerous federal and state laws and regulations, including the Health Insurance Portability and Accountability Act of 1996 as amended by the Health Information Technology for Economic and Clinical Health Act ("HITECH" and collectively "HIPAA"), govern the collection, dissemination, use, security and privacy of individually identifiable health information.
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, Canada and certain other countries.
We also have a CE certificate to market Optune Gio for the treatment of GBM in the European Union ("EU"), as well as approval or local registration in the United Kingdom ("UK"), Japan, Canada and certain other countries.
The LUNAR study also showed a statistically significant and clinically meaningful improvement in overall survival when patients were treated with TTFields and immune checkpoint inhibitors, as compared to those treated with immune checkpoint inhibitors alone, and a positive trend in overall survival when patients were treated with TTFields and docetaxel versus docetaxel alone.
The LUNAR study also showed a statistically significant and clinically meaningful improvement in overall survival when patients were treated with TTFields therapy and immune checkpoint inhibitors, as compared to those treated with immune checkpoint inhibitors alone, and a positive trend in overall survival when patients were treated with TTFields therapy and docetaxel versus docetaxel alone.
We typically negotiate discounts from our list price with healthcare payers, and in certain cases we accept government-mandated discounts from our list prices in order to secure reimbursement for our Products. We continue to work with payers to expand access to Optune for patients with GBM.
We typically negotiate discounts from our list price with healthcare payers, and in certain cases we accept government-mandated discounts from our list prices in order to secure reimbursement for our Products. We continue to work with payers to expand access to Optune Gio for patients with GBM.
Median progression-free survival in the TTFields-treated group was 12.7 months (compared to 5.5 months in the nab-paclitaxel plus gemcitabine historical control) and median overall survival was not yet reached. The one-year survival rate was 72% (compared to 35% in nab-paclitaxel plus gemcitabine historical control).
Median progression-free survival in the TTFields therapy-treated group was 12.7 months (compared to 5.5 months in the nab-paclitaxel plus gemcitabine historical control) and median overall survival was not yet reached. The one-year survival rate was 72% (compared to 35% in nab-paclitaxel plus gemcitabine historical control).
Median progression-free survival in the TTFields-treated group was 8.3 months (compared to 3.7 months in the gemcitabine historical control), with locally advanced patients reaching a median progression-free survival of 10.3 10 months and patients with metastatic disease reaching a median progression-free survival of 5.7 months.
Median progression-free survival in the TTFields therapy-treated group was 8.3 months (compared to 3.7 months in the gemcitabine historical control), with locally advanced patients reaching a median progression-free survival of 10.3 months and patients with metastatic disease reaching a median progression-free survival of 5.7 months.
In the second cohort, efficacy results showed that progression-free survival and overall survival of patients treated with TTFields combined with nab-paclitaxel plus gemcitabine were more than double those of nab-paclitaxel plus gemcitabine-treated historical controls.
In the second cohort, efficacy results showed that progression-free survival and overall survival of patients treated with TTFields therapy combined with nab-paclitaxel plus gemcitabine were more than double those of nab-paclitaxel plus gemcitabine-treated historical controls.
In the UK, advertising and promotion is subject to the UK Regulations, general guidance and enforcement of the Medicines and Healthcare products Regulatory Agency (MHRA), and adherence to the Association of British HealthTech Industries (ABHI) Code of Ethical Business Practices.
In the UK, advertising and promotion is subject to the UK Regulations, general guidance and enforcement of the Medicines and Healthcare products Regulatory Agency (MHRA), and adherence to the Association of British HealthTech Industries (ABHI) Code of Ethical Business 12 Practices.
Also, an advisory panel of experts from outside the FDA may be convened to review and evaluate the application and provide recommendations to the FDA as to the approvability of the device. The FDA may or may not accept the panel’s recommendation.
Also, an advisory panel of experts from outside the FDA may be convened to review and evaluate the application and provide recommendations to the FDA 13 as to the approvability of the device. The FDA may or may not accept the panel’s recommendation.
Optune was safely combined with temozolomide with no significant increase in serious adverse events compared with temozolomide alone. The most common side effect related to Optune was mild to moderate skin irritation.
Optune Gio was safely combined with temozolomide with no significant increase in serious adverse events compared with temozolomide alone. The most common side effect related to Optune Gio was mild to moderate skin irritation.
The exact incidence of brain metastases is unknown because no national cancer registry documents brain metastases, and estimates from scientific literature vary greatly based on the study methodology applied.
The exact incidence of brain metastases is unknown because no national cancer registry documents brain metastases, and estimates from 8 scientific literature vary greatly based on the study methodology applied.
The following graph presents the overall survival data in the intent-to-treat population from our five-year analysis: The extension of progression-free and overall survival in patients receiving Optune in combination with temozolomide in EF-14 was not specific to any prognostic subgroup or tumor genetic marker and was consistent regardless of MGMT methylation status, extent of resection, age, performance status or gender.
The following graph presents the overall survival data in the intent-to-treat population from our five-year analysis: 3 The extension of progression-free and overall survival in patients receiving Optune Gio in combination with temozolomide in EF-14 was not specific to any prognostic subgroup or tumor genetic marker and was consistent regardless of MGMT methylation status, extent of resection, age, performance status or gender.
For patients who received at least one course of therapy, Optune prolonged survival by a median 1.7 months. No new safety signals were noted.
For patients who received at least one course of therapy, Optune Gio prolonged survival by a median 1.7 months. No new safety signals were noted.
Mild-to-moderate skin irritation was the only device-related side effect with Optune Lua. The STELLAR data were published in The Lancet Oncology in 2019. Our commercial markets We have built a commercial organization and market Optune and Optune Lua for the treatment of GBM and MPM in multiple countries in North America, Europe and Asia.
Mild-to-moderate skin irritation was the only device-related side effect with Optune Lua. The STELLAR data were published in The Lancet Oncology in 2019. Our commercial markets We have built a commercial organization and market Optune Gio for the treatment of GBM in multiple countries in North America, Europe and Asia.
It is estimated that approximately 53,000 patients are diagnosed with pancreatic cancer each year in the U.S. Pancreatic cancer has a five-year relative survival rate of just 10 percent. Physicians use different combinations of surgery, radiation and pharmacological therapies to treat pancreatic cancer, depending on the stage of the disease.
It is estimated that approximately 60,000 patients are diagnosed with pancreatic cancer each year in the U.S. Pancreatic cancer has a five-year relative survival rate of just 10 percent. Physicians use different combinations of surgery, radiation and pharmacological therapies to treat pancreatic cancer, depending on the stage of the disease.
The collaboration agreement grants Zai a license to commercialize our Products in Greater China and establishes a development partnership intended to accelerate the development of TTFields in multiple solid tumor cancer indications. Zai has launched Optune for the treatment of newly diagnosed GBM in Hong Kong and mainland China and is seeking marketing authorization for GBM in Taiwan.
The collaboration agreement grants Zai a license to commercialize our Products in Greater China and establishes a development partnership intended to accelerate the development of TTFields therapy in multiple solid tumor cancer indications. Zai has launched Optune Gio for the treatment of newly diagnosed GBM in Hong Kong and mainland China and is seeking marketing authorization for GBM in Taiwan.
Optune Lua is approved by the FDA under the Humanitarian Device Exemption ("HDE") pathway to treatment 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.
Optune Lua is approved by the FDA under the Humanitarian Device Exemption ("HDE") pathway to treat malignant pleural mesothelioma and pleural mesothelioma (together, "MPM") together with standard chemotherapies. We have also received CE certification in the EU and approval or local registration to market Optune Lua in certain other countries.
The number of active patients on therapy and the amount of net 5 revenue recognized per active patient are our principal revenue drivers.
The number of active patients on therapy and the amount of net revenue recognized per active patient are our principal revenue drivers.
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.
Our key priorities are to drive commercial adoption of Optune Gio ® and Optune Lua ® , our commercial TTFields therapy devices, and to advance clinical and product development programs intended to extend overall survival in some of the most aggressive forms of cancer. Optune Gio is approved by the U.S.
Approval basis for an HDE is a "reasonable assurance of safety" and that the probable benefit to health outweighs risk of injury from its use, which means a traditional pivotal study usually is not required to support approval. In 2019, the FDA approved Optune Lua (then known as "NovoTTF-100L") for the treatment of MPM under the HDE pathway.
Approval basis for an HDE is a "reasonable assurance of safety" and that the probable benefit to health outweighs risk of injury from its use, which means a traditional phase 3 study usually is not required to support approval. In 2019, the FDA approved Optune Lua (then known as "NovoTTF-100L") for the treatment of MPM under the HDE pathway.
TTFields is intended principally for use together with other standard-of-care cancer treatments. There is a growing body of evidence that supports TTFields' broad applicability with certain other cancer therapies, including radiation therapy, certain chemotherapies and certain immunotherapies.
TTFields therapy is intended principally for use together with other standard-of-care cancer treatments. There is a growing body of evidence that supports TTFields therapy's broad applicability with certain other cancer therapies, including radiation therapy, certain chemotherapies and certain immunotherapies.
Our robust global patent and intellectual property portfolio consists of hundreds of issued patents in multiple jurisdictions covering various aspects of our devices and related technology. In the U.S., our patents have expected expiration dates between 2023 and 2041.
Our robust global patent and intellectual property portfolio consists of hundreds of issued patents in multiple jurisdictions covering various aspects of our devices and related technology. In the U.S., our patents have expected expiration dates between 2024 and 2041.
The FDA may review a company’s decisions when reviewing the PMA Annual Report and require the filing of an application. As is typical with medical device companies, we have received approval for a number of post-approval PMA supplements for GBM, including for modifications to Optune’s electric field generator, arrays, software, manufacturing processes and labeling.
The FDA may review a company’s decisions when reviewing the PMA Annual Report and require the filing of an application. As is typical with medical device companies, we have received approval for a number of post-approval PMA supplements for GBM, including for modifications to Optune Gio’s electric field generator, arrays, software, manufacturing processes and labeling.
Our product development initiatives include, but are not limited to: next generation arrays that 2 are thinner, lighter and more flexible, next generation array layout mapping software, development of a third generation device that optimizes the use of electric fields to treat tumors, and patient-centered software that enables scaled patient support as we prepare to treat larger patient populations across multiple indications.
Our product development initiatives include, but are not limited to: continually improving our arrays to be thinner, lighter and more flexible, next generation array layout mapping software, development of a third generation device that optimizes the use of electric fields to treat tumors, and patient-centered software that enables scaled patient support as we prepare to treat larger patient populations across multiple indications.
David Tran, Chief of the Division of Neuro-Oncology at the University of Southern California Keck School of Medicine and co-Director of the USC Keck Brain Tumor Center, presented updated data from the pilot 2-THE-TOP study testing the safety and efficacy of TTFields together with pembrolizumab and temozolomide for the treatment of adult patients with newly diagnosed GBM.
David Tran, Chief of the Division of Neuro-Oncology at the University of Southern California Keck School of Medicine and co-Director of the USC Keck Brain Tumor Center, presented updated data from the phase 2 2-THE-TOP study testing the safety and efficacy of TTFields therapy together with pembrolizumab and maintenance temozolomide for the treatment of adult patients with newly diagnosed GBM.
Accordingly, investors should monitor our website, in addition to following our press releases, SEC filings, public conference calls, webcasts and our social media accounts. 20
Accordingly, investors should monitor our website, in addition to following our press releases, SEC filings, public conference calls, webcasts and our social media accounts. 19
In 2023, we estimate that approximately: • 15,000 people will be diagnosed with GBM or tumors that typically progress to GBM in the U.S.
In 2024, we estimate that approximately: • 15,000 people will be diagnosed with GBM or tumors that typically progress to GBM in the U.S.
In the future, we anticipate strategically expanding into additional geographic markets and additional indications, pending regulatory approval. Commercial execution As of December 31, 2022, we had 102 sales force colleagues globally. Healthcare providers must undergo a certification training in order to prescribe our Products.
In the future, we anticipate strategically expanding into additional geographic markets and additional indications, pending regulatory approval. Commercial execution As of December 31, 2023, we had 126 sales force colleagues globally. Healthcare providers must undergo a certification training in order to prescribe our Products.
In 2020, the EF-19 post-approval registry, which was a post-approval study required as a condition of FDA approval, confirmed the effectiveness and safety of Optune as monotherapy and further strengthened Optune's clinical profile in recurrent GBM.
In 2020, the EF-19 post-approval registry, which was a post-approval study required as a condition of FDA approval, confirmed the effectiveness and safety of Optune Gio as monotherapy and further strengthened Optune Gio's clinical profile in recurrent GBM.
Legislation similar to the FCPA has been adopted in foreign countries, including a number of EU member states. Human Capital Resources As of December 31, 2022, we had 1,320 employees, compared to 1,167 employees as of December 31, 2021. We believe relations with our employees are good.
Legislation similar to the FCPA has been adopted in foreign countries, including a number of EU member states. Human Capital Resources As of December 31, 2023, we had 1,453 employees, compared to 1,320 employees as of December 31, 2022. We believe relations with our employees are good.
The FDA approved Optune for newly diagnosed GBM based on the EF-14 study ("EF-14"), which was a randomized pivotal clinical study which compared, post radiation, Optune plus temozolomide versus temozolomide alone for the treatment of newly diagnosed GBM. The primary endpoint of the study was progression-free survival and a powered secondary endpoint was overall survival.
The FDA approved Optune Gio for newly diagnosed GBM based on the EF-14 study ("EF-14"), which was a randomized phase 3 clinical study which compared, post radiation, Optune Gio plus temozolomide versus temozolomide alone for the treatment of newly diagnosed GBM. The primary endpoint of the study was progression-free survival and a powered secondary endpoint was overall survival.
The complete devices, called Optune and Optune Lua (for GBM and MPM treatment, respectively), include a portable electric field generator, arrays, rechargeable batteries and accessories. Sterile, single-use arrays are placed directly on the skin in the region surrounding the tumor and connected to the electric field generator to deliver therapy.
The complete devices, called Optune Gio and Optune Lua (for head and thoracic treatment, respectively), include a portable electric field generator, arrays, rechargeable batteries and accessories. Sterile, single-use arrays are placed directly on the skin in the region surrounding the tumor and connected to the electric field generator to deliver therapy.
Treatment of newly diagnosed GBM In 2015, we received FDA approval to market Optune for the treatment of adult patients with newly diagnosed supratentorial GBM in combination with temozolomide.
Treatment of newly diagnosed GBM In 2015, we received FDA approval to market Optune Gio (then known as Optune) for the treatment of adult patients with newly diagnosed supratentorial GBM in combination with temozolomide.
PANOVA pilot study In 2018, we published the results of our pilot study in advanced pancreatic adenocarcinoma, the PANOVA study ("PANOVA"), examining TTFields in combination with standard of care chemotherapy. PANOVA was a multicenter, non-randomized, open-label study.
PANOVA phase 2 trial In 2018, we published the results of our phase 2 study in advanced pancreatic adenocarcinoma, the PANOVA study ("PANOVA"), examining TTFields therapy in combination with standard of care chemotherapy. PANOVA was a multicenter, non-randomized, open-label study.
Of this population, we estimate that approximately 1,600 patients are candidates for treatment with Optune Lua based upon the rate of disease progression and medical eligibility. We believe there are many more patients who could benefit from treatment with TTFields than are currently on therapy. We continue to focus on increasing penetration for GBM and MPM.
Of this population, we estimate that approximately 1,200 patients who are candidates for treatment with Optune Gio based upon the rate of disease progression and medical eligibility will actively seek treatment. We believe there are many more patients who could benefit from treatment with TTFields therapy than are currently on therapy. We continue to focus on increasing penetration for GBM.
EF-31 pilot study In June 2022, we announced the results from our EF-31 pilot study, a single-arm study evaluating the safety and efficacy of TTFields together with XELOX chemotherapy (and trastuzumab for HER2-positive patients) as first-line treatment for patients with unresectable gastric adenocarcinoma or gastroesophageal junction adenocarcinoma in partnership with Zai.
Gastric cancer EF-31 phase 2 trial In 2022, we announced the final results from our EF-31 phase 2 study, a single-arm study evaluating the safety and efficacy of TTFields therapy together with XELOX chemotherapy (and trastuzumab for HER2-positive patients) as first-line treatment for patients with unresectable gastric adenocarcinoma or gastroesophageal junction adenocarcinoma in partnership with Zai.
A post-hoc analysis of EF-14 showed that more time on Optune predicted increased survival in GBM patients. An Optune monthly usage threshold as low as 50 percent correlated with significantly improved outcomes in patients treated with Optune together with temozolomide compared to patients treated with temozolomide alone. The greater the patients’ monthly usage of Optune, the better their outcomes.
A post-hoc analysis of EF-14 showed that more time on Optune Gio predicted increased survival in newly diagnosed GBM patients. An Optune Gio monthly usage threshold as low as 50 percent correlated with significantly improved outcomes in patients treated with Optune Gio together with temozolomide compared to patients treated with temozolomide alone.
Electrically charged proteins within the cell are critical for cell division, making the rapidly dividing cancer cells vulnerable to electrical interference. TTFields therapy is a treatment that uses electric fields which exert physical forces to kill cancer via a variety of mechanisms.
Our therapy When cancer develops, rapid and uncontrolled division of unhealthy cells occurs. Electrically charged proteins within the cell are critical for cell division, making the rapidly dividing cancer cells vulnerable to electrical interference. TTFields therapy is a treatment that uses electric fields which exert physical forces to kill cancer via a variety of mechanisms.
In 26 evaluable patients, the primary endpoint, confirmed objective response rate, was 50%, median progression-free survival was 7.8 months, duration of response was 10.3 months and median overall survival had not yet been reached with a one-year survival rate of 72%. Zai License and Collaboration Agreement In 2018, we announced a strategic collaboration with Zai.
In 26 evaluable patients, the primary endpoint, confirmed objective response rate, was 50%, median progression-free survival was 7.8 months, duration of response was 10.3 months and median overall survival had not yet been reached with a one-year survival rate of 72%.
It is estimated that approximate 15,000 patients are diagnosed with GBM or tumors that typically progress to GBM each year in the U.S. Following diagnosis, standard of care treatment includes surgical resection, followed by radiotherapy with concomitant chemotherapy, followed TTFields together with maintenance chemotherapy. 2-THE-TOP pilot study In 2021, Dr.
It is estimated that approximately 15,000 patients are diagnosed with GBM or tumors that typically progress to GBM each year in the U.S. Following diagnosis, standard of care treatment includes surgical resection, followed by radiotherapy with concomitant chemotherapy, followed by TTFields therapy together with maintenance chemotherapy.
LUNAR pivotal study In 2017, we enrolled the first patient in our LUNAR study ("LUNAR"), a pivotal study testing the effectiveness of TTFields in combination with immune checkpoint inhibitors or docetaxel versus immune checkpoint inhibitors or docetaxel alone for patients with stage 4 NSCLC who progressed during or after platinum-based therapy.
LUNAR phase 3 trial In 2021, we enrolled the last patient in our LUNAR trial ("LUNAR"), a phase 3 study testing the effectiveness of TTFields therapy in combination with immune checkpoint inhibitors or docetaxel versus immune checkpoint inhibitors or docetaxel alone for patients with stage 4 NSCLC who progressed during or after platinum-based therapy.
We currently operate as a direct-to-patient distributor of our Products, except for Japan. In Japan, we distribute Optune through hospitals and provide patient support services under a contractual arrangement with the hospital. Once an eligible patient is identified by a certified prescriber, the healthcare provider’s office submits a prescription order form and supporting documentation to us.
In Japan, we distribute Optune Gio through hospitals and provide patient support services under a contractual arrangement with the hospital. Once an eligible patient is identified by a certified prescriber, the healthcare provider’s office submits a prescription order form and supporting documentation to us.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeWe may make modifications in the future that we believe do not or will not require additional approvals. If the FDA disagrees, and requires new PMAs, HDEs, or PMA/HDE supplements for the modifications, we may be required to recall and to stop marketing the modified versions of our Products.
Biggest changeIf the FDA disagrees, and requires new PMAs, HDEs, or PMA/HDE supplements for the modifications, we may be required to recall and to stop marketing the modified versions of our Products. In addition, before our Products can be marketed in the EU, our Products must obtain a CE Certificate from a notified body.
The laws that affect our ability to operate our business in addition to the Federal Food, Drug, and Cosmetic Act and FDA regulations include, but are not limited to, the following: • the Federal Anti-Kickback Statute, an intent-based federal criminal statute which prohibits knowingly and willfully offering, providing, soliciting or receiving remuneration of any kind to induce or reward, or in return for, referrals or the purchase, lease, order or recommendation or arranging of any items or services reimbursable by a federal healthcare program; • the Federal Civil False Claims Act, which imposes civil penalties, including through civil whistleblower or " qui tam" actions, for knowingly submitting or causing the submission of false or fraudulent claims of payment to the federal government, knowingly making, using or causing to be made or used a false statement or record material to payment of a false claim or avoiding, decreasing or concealing an obligation to pay money to the federal government; • the Federal Criminal False Claims Act, which is similar to the Federal Civil False Claims Act and imposes criminal liability on those that make or present a false, fictitious or fraudulent claim to the federal government; • Medicare laws and regulations that prescribe requirements for coverage and reimbursement, including the conditions of participation for DME suppliers, and laws prohibiting false claims or unduly influencing selection of products for reimbursement under Medicare and Medicaid; • healthcare fraud statutes that prohibit false statements and improper claims to any third-party payer; • the Federal Physician Self-Referral Law, commonly known as the Stark law, which, absent an applicable exception, prohibits physicians from referring Medicare and Medicaid patients to an entity for the provision of certain designated health services (“DHS”), including DME, if the physician (or a member of the physician’s immediate family) has an impermissible financial relationship with that entity and prohibits the DHS entity from billing for such improperly referred services; • the Federal Beneficiary Anti-Inducement Statute, which prohibits the offering of any remuneration to a beneficiary of Medicare or Medicaid that is likely to influence that beneficiary’s choice of provider or supplier.
The laws that affect our ability to operate our business in addition to the Federal Food, Drug, and Cosmetic Act and FDA regulations include, but are not limited to, the following: • the Federal Anti-Kickback Statute, an intent-based federal criminal statute which prohibits knowingly and willfully offering, providing, soliciting or receiving remuneration of any kind to induce or reward, or in return for, referrals or the purchase, lease, order or recommendation or arranging of any items or services reimbursable by a federal healthcare program; • the Federal Civil False Claims Act, which imposes civil penalties, including through civil whistleblower or " qui tam" actions, for knowingly submitting or causing the submission of false or fraudulent claims of payment to the federal government, knowingly making, using or causing to be made or used a false statement or record material to payment of a false claim or avoiding, decreasing or concealing an obligation to pay money to the federal government; • the Federal Criminal False Claims Act, which is similar to the Federal Civil False Claims Act and imposes criminal liability on those that make or present a false, fictitious or fraudulent claim to the federal government; • Medicare laws and regulations that prescribe requirements for coverage and reimbursement, including the conditions of participation for DME suppliers, and laws prohibiting false claims or unduly influencing selection of products for reimbursement under Medicare and Medicaid; • healthcare fraud statutes that prohibit false statements and improper claims to any third-party payer; • the Federal Physician Self-Referral Law, commonly known as the Stark law, which, absent an applicable exception, prohibits physicians from referring Medicare and Medicaid patients to an entity for the provision of certain designated health services (“DHS”), including DME, if the physician (or a member of the physician’s immediate family) has an impermissible financial relationship with that entity and prohibits the DHS entity from billing for such improperly referred services; 38 • the Federal Beneficiary Anti-Inducement Statute, which prohibits the offering of any remuneration to a beneficiary of Medicare or Medicaid that is likely to influence that beneficiary’s choice of provider or supplier.
Any alternative interpretations of applicable tax laws asserted by a tax authority or changes in tax laws, regulations or accounting principles that limit our ability to take advantage of tax treaties between jurisdictions, modify or eliminate the deductibility of various currently deductible payments, increase the tax burden of operating or being resident in a particular country, result in transfer pricing adjustments or otherwise require the payment of additional taxes, may have a material adverse effect on our cash flows, financial condition and results of operations.
Any alternative interpretations of applicable tax laws asserted by a tax authority or changes in tax laws, regulations or accounting principles that limit our ability to take advantage of tax treaties between jurisdictions, modify or eliminate the deductibility of various currently deductible payments, increase the tax burden of operating or being resident in a particular country, result in transfer pricing adjustments or otherwise require the payment of additional taxes, may 41 have a material adverse effect on our cash flows, financial condition and results of operations.
The commercial success of our Products and our ability to generate and maintain revenues from the sale of our Products will depend on a number of factors, including: • our ability to develop and obtain additional regulatory approvals and further commercialize our Products for additional indications; • our ability to expand into new markets and future indications; • the acceptance of our Products by patients and the healthcare community, including physicians and third-party payers (both private and governmental), as therapeutically effective and safe; • the accomplishment of various scientific, engineering, clinical, regulatory and other goals, which we sometimes refer to as milestones, on our anticipated timeline; • the relative cost, safety and efficacy of alternative therapies; • our ability to obtain and maintain sufficient coverage or reimbursement by private and governmental third-party payers and to comply with applicable health care laws and regulations; • the ability of our third-party manufacturers to manufacture our Products in sufficient quantities with acceptable quality; • our ability to provide marketing, distribution and customer support for our Products; • the presence of competitive products in our active indications; • results of future clinical studies relating to our Products or other competitor products for similar indications; • compliance with applicable laws and regulatory requirements, in particular in the EU; • the maintenance of our existing regulatory approvals; and • the consequences of any reportable adverse events involving our Products. 21 In addition, the promotion of our Products is limited to approved indications, which vary by geography.
The commercial success of our Products and our ability to generate and maintain revenues from the sale of our Products will depend on a number of factors, including: • our ability to develop and obtain additional regulatory approvals and further commercialize our Products for additional indications; • our ability to expand into new markets and future indications; • the acceptance of our Products by patients and the healthcare community, including physicians and third-party payers (both private and governmental), as therapeutically effective and safe; • the accomplishment of various scientific, engineering, clinical, regulatory and other goals, which we sometimes refer to as milestones, on our anticipated timeline; • the relative cost, safety and efficacy of alternative therapies; • our ability to obtain and maintain sufficient coverage or reimbursement by private and governmental third-party payers and to comply with applicable health care coverage laws and regulations; • the ability of our third-party manufacturers to manufacture our Products in sufficient quantities with acceptable quality; • our ability to provide marketing, distribution and customer support for our Products; • the presence of competitive products in our active indications; • results of future clinical studies relating to our Products or other competitor products for similar indications; • compliance with applicable laws and regulatory requirements, in particular in the EU; • the maintenance of our existing regulatory approvals; and • the consequences of any reportable adverse events involving our Products. 20 In addition, the promotion of our Products is limited to approved indications, which vary by geography.
If we fail to comply with present or future regulatory requirements that are applicable to us, we may be subject to enforcement action by the FDA or comparable regulatory authorities in other jurisdictions and notified bodies, which may include any of the following sanctions: • untitled letters, warning letters, fines, injunctions, consent decrees and civil penalties; • unanticipated expenditures to address or defend such actions; • patient notification, or orders for repair, replacement or refunds; • voluntary or mandatory recall, withdrawal or seizure of our current or future devices; 37 • administrative detention by the FDA or other regulatory authority in another jurisdiction of medical devices believed to be adulterated or misbranded; • operating restrictions, suspension or shutdown of production; • refusal or delay of our requests for PMA or analogous approval for new intended uses for or modifications to our Products or for approval of new devices; • refusal or delay in obtaining CE Certificates for new intended uses for or modifications to our Products; • suspension, variation or withdrawal of the CE Certificates granted by our notified body in the EU; • prohibition or restriction of Products being placed on the market; • operating restrictions; • suspension or withdrawal of PMA or analogous approvals that have already been granted; • refusal to grant export approval for our Products or any device candidates; or • criminal prosecution.
If we fail to comply with present or future regulatory requirements that are applicable to us, we may be subject to enforcement action by the FDA or comparable regulatory authorities in other jurisdictions and notified bodies, which may include any of the following sanctions: • untitled letters, warning letters, fines, injunctions, consent decrees and civil penalties; • unanticipated expenditures to address or defend such actions; 36 • patient notification, or orders for repair, replacement or refunds; • voluntary or mandatory recall, withdrawal or seizure of our current or future devices; • administrative detention by the FDA or other regulatory authority in another jurisdiction of medical devices believed to be adulterated or misbranded; • operating restrictions, suspension or shutdown of production; • refusal or delay of our requests for PMA or analogous approval for new intended uses for or modifications to our Products or for approval of new devices; • refusal or delay in obtaining CE Certificates for new intended uses for or modifications to our Products; • suspension, variation or withdrawal of the CE Certificates granted by our notified body in the EU; • prohibition or restriction of Products being placed on the market; • operating restrictions; • suspension or withdrawal of PMA or analogous approvals that have already been granted; • refusal to grant export approval for our Products or any device candidates; or • criminal prosecution.
If we experience any deficiency in the quality of, delay in or loss of availability of any components supplied to us by third-party suppliers, or if we switch suppliers or components, we may face additional regulatory delays and the manufacture and delivery of our Products would be interrupted for an extended period of time, which could materially adversely affect our business, prospects, financial condition and results of operations.
If we experience any deficiency in the quality of, delay in or loss of availability of any components supplied to or manufactured for us by third-party suppliers, or if we switch suppliers or components, we may face additional regulatory delays and the manufacture and delivery of our Products would be interrupted for an extended period of time, which could materially adversely affect our business, prospects, financial condition and results of operations.
The labelling for Optune in the U.S. is limited in certain respects (for example, it is approved specifically for glioblastomas of the supratentorial region of the brain, is indicated for use in the treatment of newly diagnosed GBM only when used together with temozolomide, and limited to use by adults ages 22 and older), which may limit the number of patients to whom it is prescribed.
The labelling for Optune Gio in the U.S. is limited in certain respects (for example, it is approved specifically for glioblastomas of the supratentorial region of the brain, is indicated for use in the treatment of newly diagnosed GBM only when used together with temozolomide, and limited to use by adults ages 22 and older), which may limit the number of patients to whom it is prescribed.
We may not have insight into economic and political trends that could emerge and negatively affect our business. In addition, significant or volatile changes in exchange rates between the U.S. dollar and other currencies may have a material adverse impact upon our liquidity, revenues, costs and operating results.
We may not have insight into economic and political trends that could emerge and negatively affect our business. In addition, significant or volatile changes in interest rates or exchange rates between the U.S. dollar and other currencies may have a material adverse impact upon our liquidity, revenues, costs and operating results.
In addition, due to the extensive time needed to develop, test and obtain regulatory approval for our treatment therapies, any patents 43 that protect our Product candidates may expire early during commercialization. This may reduce or eliminate any market advantages that such patents may give us and harm our financial position.
In addition, due to the extensive time needed to develop, test and obtain regulatory approval for our treatment therapies, any patents that protect our Product candidates may expire early during commercialization. This may reduce or eliminate any market advantages that such patents may give us and harm our financial position.
We could also experience a business interruption, information theft of confidential information, or reputational damage from industrial espionage attacks, malware or other cyber incidents, which may 33 compromise our system infrastructure or lead to data leakage, either internally or at our third-party service providers or other business partners.
We could also experience a business interruption, information theft of confidential information, or reputational damage from industrial espionage attacks, malware or other cyber incidents, which may compromise our system infrastructure or lead to data leakage, either internally or at our third-party service providers or other business partners.
Any intellectual property dispute, even a meritless or unsuccessful one, would be time consuming and expensive to defend and could result in the diversion of our management’s attention from our business and result in adverse publicity, the disruption of research and development and marketing efforts, injury to our reputation and loss of revenues.
Any intellectual property dispute, even a meritless or unsuccessful one, would be time consuming and expensive to defend and could result in the diversion of our management’s attention from our business and result in adverse publicity, the disruption of research and 43 development and marketing efforts, injury to our reputation and loss of revenues.
Additionally, some third-party payers may decline to cover and reimburse our Products for a particular patient even if the payer has a favorable coverage policy addressing our Products or previously approved reimbursement for our Products. Additionally, private and government payers may consider the cost of a treatment in approving coverage or in setting reimbursement for the treatment.
Additionally, some third-party payers may decline to cover and reimburse our Products for a particular patient even if the payer has a favorable coverage policy addressing our Products or previously approved reimbursement for our Products. 24 Additionally, private and government payers may consider the cost of a treatment in approving coverage or in setting reimbursement for the treatment.
Patent expiration could adversely affect our ability to protect our Products and future product development and our competitors may develop and market competing products. We have also filed additional patent applications in several countries that may never be issued. Consequently, our operating results and financial position could be materially adversely affected.
Patent expiration could 42 adversely affect our ability to protect our Products and future product development and our competitors may develop and market competing products. We have also filed additional patent applications in several countries that may never be issued. Consequently, our operating results and financial position could be materially adversely affected.
In the United Kingdom, our Products and operation are subject to, inter alia, the Medical Devices Regulations 2002 and the Medical Devices (Amendment etc.) (EU Exit) Regulations 2020 (the "UK Re, which implements the MDR and MDR like provisions into UK law. We are regulated by comparable authorities in other countries.
In the United Kingdom, our Products and operation are subject to, inter alia, the Medical Devices Regulations 2002 and the Medical Devices (Amendment etc.) (EU Exit) Regulations 2020 (the "UK Regulations"), which implements the MDR and MDR like provisions into UK law. We are regulated by comparable authorities in other countries.
Although we have received FDA approval to market Optune in the U.S. for the treatment of adult patients with newly diagnosed GBM (together with temozolomide) and recurrent GBM and approval to market Optune Lua for adults patients with MPM, we will require additional FDA approval to market our Products for other indications.
Although we have received FDA approval to market Optune Gio in the U.S. for the treatment of adult patients with newly diagnosed GBM (together with temozolomide) and recurrent GBM and approval to market Optune Lua for adults patients with MPM, we will require additional FDA approval to market our Products for other indications.
For example, we have exclusively licensed rights to commercialize our Products in the field of oncology in Greater China to Zai pursuant to an agreement that also establishes a development partnership for Tumor Treating Fields (“TTFields”) in multiple solid tumor indications.
For example, we have exclusively licensed rights to commercialize our Products in the field of oncology in Greater China to Zai pursuant to an agreement that also establishes a development partnership for Tumor Treating Fields (“TTFields”) therapy in multiple solid tumor indications.
To ensure compliance with Medicare, Medicaid and other regulations, federal and state governmental agencies and their agents, including DME MACs, may conduct audits of our operations to support our claims submitted for reimbursement of items furnished to beneficiaries and health care providers.
To ensure compliance with Medicare, Medicaid and other regulations, federal and state governmental agencies and their agents, including DME MACs, may conduct audits of our operations to support our claims submitted for 39 reimbursement of items furnished to beneficiaries and health care providers.
Regulations promulgated by the regulatory authorities in our applicable jurisdictions are wide-ranging and govern, among other things: • the conduct of preclinical and clinical studies; • product design, development, manufacturing, testing, storage and shipping; • product labeling, advertising and promotion; • premarket clearance, approval and conformity assessment procedures, as well as for modifications introduced in marketed products; 34 • post-market surveillance and monitoring; • reporting of adverse events or incidents and implementation of corrective actions, including product recalls; • interactions with healthcare professionals and patients; and • product sales and distribution.
Regulations promulgated by the regulatory authorities in our applicable jurisdictions are wide-ranging and govern, among other things: • the conduct of preclinical and clinical studies; • product design, development, manufacturing, testing, storage and shipping; • product labeling, advertising and promotion; 33 • premarket clearance, approval and conformity assessment procedures, as well as for modifications introduced in marketed products; • post-market surveillance and monitoring; • reporting of adverse events or incidents and implementation of corrective actions, including product recalls; • interactions with healthcare professionals and patients; and • product sales and distribution.
The increasing use and evolution of technology, including cloud-based computing, creates additional opportunities for the unintentional dissemination of information, intentional destruction of confidential information stored in our systems or in non-encrypted portable media or storage devices.
The increasing use and evolution of technology, including cloud-based computing, creates additional opportunities for the unintentional dissemination 32 of information, intentional destruction of confidential information stored in our systems or in non-encrypted portable media or storage devices.
There can be no assurance that the UK Regulations will be interpreted by UK regulators in the same manner as the MDR in the future, which may prevent or delay the UK CE certification of our device candidates or impact our ability to modify our Products on a timely basis 35 We may choose to, or may be required to, suspend, repeat or terminate our clinical studies if they are not conducted in accordance with regulatory requirements, the results are negative or inconclusive or the studies are not well designed.
There can be no assurance that the UK Regulations will be interpreted by UK regulators in the same manner as the MDR in the 34 future, which may prevent or delay the UK CE certification of our device candidates or impact our ability to modify our Products on a timely basis We may choose to, or may be required to, suspend, repeat or terminate our clinical studies if they are not conducted in accordance with regulatory requirements, the results are negative or inconclusive or the studies are not well designed.
The loss of these suppliers could prevent or delay shipments of our Products, delay our clinical studies or otherwise adversely affect our business. In certain jurisdictions, we source some of the components of our Products from only a single vendor.
The loss of these suppliers could prevent or delay shipments of our Products, delay our clinical studies or otherwise adversely affect our business. In certain jurisdictions, we source some of the components of our Products from only a single vendor or manufacturer.
We cannot, therefore, guarantee that the treatment of patients with our Products would be 36 reimbursed in any particular country or, if successfully included on reimbursement lists, whether we will remain on such lists.
We cannot, therefore, guarantee that the treatment of patients with our Products would be reimbursed in any particular country or, if successfully included on reimbursement lists, whether we will remain on such lists.
In the EU and Switzerland, we have CE marked the Optune for the treatment of newly diagnosed GBM (together with temozolomide), recurrent GBM, and advanced NSCLC (together with standard-of-care chemotherapy). Optune is also approved in Israel and in Australia for the treatment of recurrent GBM and newly diagnosed GBM (together with temozolomide).
In the EU and Switzerland, we have CE marked Optune Gio for the treatment of newly diagnosed GBM (together with temozolomide), recurrent GBM, and advanced NSCLC (together with standard-of-care chemotherapy). Optune Gio is also approved in Israel and in Australia for the treatment of recurrent GBM and newly diagnosed GBM (together with temozolomide).
We may not achieve market acceptance of our Products for current or future indications within the timeframes we have anticipated, or at all, for a number of different reasons, including the following factors: • it may be difficult to gain broad acceptance of our Products because they are new technologies and involve a novel mechanism of action and, as such, physicians may be reluctant to prescribe our Products without prior experience or additional data or training; • physicians may be reluctant to prescribe our Products due to their perception that the supporting clinical study designs have limitations, as they are, for example, unblinded; • physicians at large academic universities and medical centers may prefer to enroll patients into clinical studies instead of prescribing our Products; • it may be difficult to gain broad acceptance at community hospitals where the number of patients seeking treatment may be more limited than at larger medical centers, and such community hospitals may not be willing to invest in the resources necessary for their physicians to become trained to use our Products, which could lead to reluctance to prescribe our Products; • patients may be reluctant to use our Products for various reasons, including a perception that the treatment is untested or difficult to use (for example, they will need to shave the areas on their bodies where the arrays are applied) or a perception that our software is not secure; 24 • our Products may have side effects (for example, dermatitis where the arrays are placed) and our Products cannot be worn in all circumstances (for example, they cannot get wet and are difficult to wear in high temperatures); and • the price of our Products includes a monthly fee for use of the device and therefore, as the duration of the treatment course increases, the overall price will increase correspondingly and, when used in combination with other treatments, the overall cost of treatment will be greater than using a single type of treatment.
We may not achieve market acceptance of our Products for current or future indications within the timeframes we have anticipated, or at all, for a number of different reasons, including the following factors: • it may be difficult to gain or maintain broad acceptance of our Products because they are new technologies and involve a novel mechanism of action and, as such, physicians may be reluctant to prescribe our Products without prior experience or additional data or training; • physicians may be reluctant to prescribe our Products due to their perception that the supporting clinical study designs have limitations, as they are, for example, unblinded; • physicians at large academic universities and medical centers may prefer to enroll patients into clinical studies instead of prescribing our Products; • it may be difficult to gain broad acceptance at community hospitals where the number of patients seeking treatment may be more limited than at larger medical centers, and such community hospitals may not be willing to invest in the resources necessary for their physicians to become trained to use our Products, which could lead to reluctance to prescribe our Products; • patients may be reluctant to use our Products for various reasons, including a perception that the treatment is untested or difficult to use (for example, they will need to shave the areas on their bodies where the arrays are applied) or a perception that our software is not secure; 23 • our Products may have side effects (for example, dermatitis where the arrays are placed) and our Products cannot be worn in all circumstances (for example, they cannot get wet and are difficult to wear in high temperatures); and • the price of our Products includes a monthly fee for use of the device and therefore, as the duration of the treatment course increases, the overall price will increase correspondingly and, when used together with other treatments, the overall cost of treatment will be greater than using a single type of treatment.
In addition, we may become subject to additional regulation in other jurisdictions as we increase our efforts to market and sell Optune or Optune Lua and future Products outside of the U.S.
In addition, we may become subject to additional regulation in other jurisdictions as we increase our efforts to market and sell Optune Gio or Optune Lua and future Products outside of the U.S.
Additionally, natural disasters and public health emergencies, such as extreme weather events and the COVID-19 pandemic, could have a significant adverse effect on our business, including interruption of our commercial and clinical operations, supply chain disruption, endangerment of our personnel, fewer patient visits, increased patient drop-out rates, delays in recruitment of new patients, and other delays or losses of materials and results.
Additionally, natural disasters and public health emergencies, such as extreme weather events and the COVID-19 or other pandemics, could have a significant adverse effect on our business, including interruption of our commercial and clinical operations, supply chain disruption, endangerment of our personnel, fewer patient visits, increased patient drop-out rates, delays in recruitment of new patients, and other delays or losses of materials and results.
With respect to our current Products, the risk of infringement claims is exacerbated by the fact that there are numerous 44 issued and pending patents relating to the treatment of cancer.
With respect to our current Products, the risk of infringement claims is exacerbated by the fact that there are numerous issued and pending patents relating to the treatment of cancer.
Any of these events could have a material adverse effect on our business, prospects, financial condition and results of operations and cause our stock price to decline. 29 We face competition from numerous competitors, which may make it more difficult for us to achieve significant market penetration and which may allow our competitors to develop additional oncology treatments to compete with our Products.
Any of these events could have a material adverse effect on our business, prospects, financial condition and results of operations and cause our stock price to decline. 28 We face competition from numerous competitors, which may make it more difficult for us to achieve significant market penetration and which may allow our competitors to develop additional oncology treatments to compete with our Products.
This can include, but is not limited to, inappropriate provision of patient services including financial 39 assistance. Recent government investigations have focused on this particular prohibition.
This can include, but is not limited to, inappropriate provision of patient services including financial assistance. Recent government investigations have focused on this particular prohibition.
As the COVID-19 pandemic continues around the globe, we have experienced and will likely continue to experience disruptions that could severely impact our business and clinical studies, which could include: • delays and/or difficulties in onboarding active patients and enrolling patients in our clinical studies; • delays and/or difficulties in clinical site initiation, including difficulties in recruiting clinical site investigators and clinical site staff; • declines in prescriptions written due to a perception that our Products are difficult to administer remotely or if patients are unwilling to travel to treatment sites or receive in-home treatment assistance from us or other caregivers; • reductions in third-party reimbursements, which could materially affect our revenue, as most of our patients rely on third-party payers to cover the cost of our Products and a material number of our patients could lose access to their private health insurance plan if they or someone in their family lose their job; • diversion of healthcare resources away from conducting clinical studies, including the diversion of hospitals serving as our clinical study sites and hospital staff supporting the conduct of our clinical studies; • interruption of key clinical study activities, such as clinical study site monitoring, due to limitations on travel imposed or recommended by federal or state governments, employers and others; 32 • staff disruptions and turnover internally and at treatment sites and third-party providers who provide support, either directly as a result of illness or indirectly as a result of vaccine mandates and other changes in terms of employment; • delays in receiving approval from local regulatory authorities or IRBs to initiate our planned clinical studies; • delays in clinical sites receiving the supplies and materials needed to conduct our clinical studies; • interruption in global shipping that may affect the transport of active patient and clinical study materials; • changes in local regulations as part of a response to the COVID-19 outbreak that may require us to change the ways in which our clinical studies are conducted, which may result in unexpected costs, or to discontinue the clinical studies altogether; • delays in necessary interactions with local regulators, ethics committees and other important agencies and contractors due to limitations in employee resources or forced furlough of government employees; • disruption of our supply chain as our suppliers and common carriers are unable to meet our requirements to provide us the materials we need for clinical study and active patient care needs; • indirect consequences of the COVID-19 pandemic on the global economy in general, such as an increase in bankruptcies of our key suppliers, or the inability of our third-party payers to meet their obligations reimburse us in a timely fashion or at all; • postponements and cancellations of key conferences and meetings and travel restrictions could interfere with our ability to interact with key thought leaders in the field, leading to a disruption in the rate of adoption of our technology; • access restrictions at offices, hospitals, and treatment centers, and stakeholder illness could interfere with the ability of our sales force to engage in face-to-face visits with providers, leading to a disruption in the rate of adoption of our technology; • increases in expenditures for technology and other tools necessary to provide patient care in an environment where both patient and care-giver travel is restricted and access to in-person interaction is limited; • refusal of the FDA to accept data from clinical studies in affected geographies outside the United States; and • patient delays in seeking or receiving treatment, either due to fear of infection or lack of access to treatment and study sites, leading to fewer diagnoses of the indications our Products are approved to treat or more advanced procession of the disease, which may contraindicate the use of our Products or disqualify the patient from participating in a given study.
While the threat COVID-19 pandemic continues around the globe, we have experienced and, if a similar pandemic or outbreak were to occur, would experience disruptions that could severely impact our business and clinical studies, which could include: • delays and/or difficulties in onboarding active patients and enrolling patients in our clinical studies; • delays and/or difficulties in clinical site initiation, including difficulties in recruiting clinical site investigators and clinical site staff; • declines in prescriptions written due to a perception that our Products are difficult to administer remotely or if patients are unwilling to travel to treatment sites or receive in-home treatment assistance from us or other caregivers; • reductions in third-party reimbursements, which could materially affect our revenue, as most of our patients rely on third-party payers to cover the cost of our Products and a material number of our patients could lose access to their private health insurance plan if they or someone in their family lose their job; 31 • diversion of healthcare resources away from conducting clinical studies, including the diversion of hospitals serving as our clinical study sites and hospital staff supporting the conduct of our clinical studies; • interruption of key clinical study activities, such as clinical study site monitoring, due to limitations on travel imposed or recommended by federal or state governments, employers and others; • staff disruptions and turnover internally and at treatment sites and third-party providers who provide support, either directly as a result of illness or indirectly as a result of vaccine mandates and other changes in terms of employment; • delays in receiving approval from local regulatory authorities or IRBs to initiate our planned clinical studies; • delays in clinical sites receiving the supplies and materials needed to conduct our clinical studies; • interruption in global shipping that may affect the transport of active patient and clinical study materials; • changes in local regulations as part of a response to a pandemic or outbreak that may require us to change the ways in which our clinical studies are conducted, which may result in unexpected costs, or to discontinue the clinical studies altogether; • delays in necessary interactions with local regulators, ethics committees and other important agencies and contractors due to limitations in employee resources or forced furlough of government employees; • disruption of our supply chain as our suppliers and common carriers are unable to meet our requirements to provide us the materials we need for clinical study and active patient care needs; • indirect consequences of a pandemic or outbreak on the global economy in general, such as an increase in bankruptcies of our key suppliers, or the inability of our third-party payers to meet their obligations reimburse us in a timely fashion or at all; • postponements and cancellations of key conferences and meetings and travel restrictions could interfere with our ability to interact with key thought leaders in the field, leading to a disruption in the rate of adoption of our technology; • access restrictions at offices, hospitals, and treatment centers, and stakeholder illness could interfere with the ability of our sales force to engage in face-to-face visits with providers, leading to a disruption in the rate of adoption of our technology; • increases in expenditures for technology and other tools necessary to provide patient care in an environment where both patient and care-giver travel is restricted and access to in-person interaction is limited; • refusal of the FDA to accept data from clinical studies in affected geographies outside the United States; and • patient delays in seeking or receiving treatment, either due to fear of infection or lack of access to treatment and study sites, leading to fewer diagnoses of the indications our Products are approved to treat or more advanced procession of the disease, which may contraindicate the use of our Products or disqualify the patient from participating in a given study.
In addition, even if we are successful in achieving market acceptance of our Products for GBM or MPM, we may be unsuccessful in achieving market acceptance of our Products for other indications, such as brain metastases, NSCLC, pancreatic cancer, ovarian cancer and other solid tumor cancers, because certain radiation, chemotherapies and/or systemic medical therapies may become or remain the preferred standard of care for these indications.
In addition, even if we are successful in achieving market acceptance of our Products for GBM or MPM, we may be unsuccessful in achieving market acceptance of our Products for other indications, such as brain metastases from NSCLC, NSCLC, pancreatic cancer and other solid tumor cancers, because certain radiation, chemotherapies and/or systemic medical therapies may become or remain the preferred standard of care for these indications.
The Medicare fee-for-service program has denied coverage for all claims prior to the September 1, 2019 effective date for the DME MAC LCD, which provides coverage for Optune for the treatment of newly diagnosed GBM subject to certain conditions and restrictions. We expect that Medicare will continue to deny essentially all claims that do not meet the coverage policy terms.
The Medicare fee-for-service program denied coverage for all claims prior to the September 1, 2019 effective date for the DME MAC LCD, which provides coverage for Optune Gio for the treatment of newly diagnosed GBM subject to certain conditions and restrictions. We expect that Medicare will continue to deny essentially all claims that do not meet the coverage policy terms.
Currently, Optune is approved for treatment of adult patients with newly diagnosed GBM (together with temozolomide) and recurrent GBM in the U.S. and is approved for treatment of adult patients with GBM in Japan.
Currently, Optune Gio is approved for treatment of adult patients with newly diagnosed GBM (together with temozolomide) and recurrent GBM in the U.S. and is approved for treatment of adult patients with GBM in Japan.
In addition, importation into Japan of medical devices is subject to "Quality Management System (QMS) Ordinance," which includes the equivalent of "Good Import" regulations in the U.S. As with any highly regulated market, significant changes in the regulatory environment could adversely affect our ability to commercialize Optune in Japan.
In addition, importation into Japan of medical devices is subject to "Quality Management System (QMS) Ordinance," which includes the equivalent of "Good Import" regulations in the U.S. As with any highly regulated market, significant changes in the regulatory environment could adversely affect our ability to commercialize our Products in Japan.
Additionally, any third parties conducting our preclinical, clinical and other development programs are not and will not be our employees and, except for remedies available to us under our agreements with such third parties, we 28 cannot control whether or not they devote sufficient time and resources to our ongoing preclinical, clinical and other development programs.
Additionally, any third parties conducting our preclinical, clinical and other development programs are not and will not be our employees and, except for remedies available to us under our agreements with such third parties, we 27 cannot control whether or not they devote sufficient time and resources to our ongoing preclinical, clinical and other development programs.
The loss of the services of one or more of our current employees might impede the achievement of our business objectives. 30 The competition for qualified personnel in the oncology and medical device fields is intense, and we rely heavily on our ability to attract and retain qualified scientific, technical and managerial personnel.
The loss of the services of one or more of our current employees might impede the achievement of our business objectives. 29 The competition for qualified personnel in the oncology and medical device fields is intense, and we rely heavily on our ability to attract and retain qualified scientific, technical and managerial personnel.
From time to time, we may be subject to litigation and other legal and regulatory proceedings relating to our business or investigations or other actions by governmental agencies, including as described in Part I, Item 3 "Legal 31 Proceedings" of this Annual Report on Form 10-K.
From time to time, we may be subject to litigation and other legal and regulatory proceedings relating to our business or investigations or other actions by governmental agencies, including as described in Part I, Item 3 "Legal 30 Proceedings" of this Annual Report on Form 10-K.
In addition, the existence of our Convertible Notes may encourage short selling by market participants because the conversion of such notes could be used to satisfy short positions, or anticipated conversion of such notes into our ordinary shares could depress the price of our ordinary shares. 47 ITEM 1B. UNRESOLVED STAFF COMMENTS None.
In addition, the existence of our Convertible Notes may encourage short selling by market participants because the conversion of such notes could be used to satisfy short positions, or anticipated conversion of such notes into our ordinary shares could depress the price of our ordinary shares. 46 ITEM 1B. UNRESOLVED STAFF COMMENTS None.
Failure to secure or maintain coverage or maintain adequate reimbursement from Medicare would reduce our revenues and may also affect the coverage and reimbursement decisions of other third-party payers in the U.S. and elsewhere. Medicare classifies Optune as durable medical equipment ("DME").
Failure to secure or maintain coverage or maintain adequate reimbursement from Medicare would reduce our revenues and may also affect the coverage and reimbursement decisions of other third-party payers in the U.S. and elsewhere. Medicare classifies Optune Gio and Optune Lua as durable medical equipment ("DME").
Similarly, the label for Optune Lua also contains certain limitations that may adversely affect adoption, including the requirement in the United States (applicable to all HDE-approved devices) to display on all marketing materials that the efficacy of the Product has not been established, as well as a limitation for use by adults ages 22 and older, and the absence of pivotal clinical data.
Similarly, the label for Optune Lua also contains certain limitations that may adversely affect adoption, including the requirement in the United States (applicable to all HDE-approved devices) to display on all marketing materials that the efficacy of the Product has not been established, as well as a limitation for use by adults ages 22 and older, and the absence of phase 3 clinical data.
In particular, our Products may not achieve market acceptance for current or future indications because of the following additional factors: • achieving patient acceptance could be difficult because we are targeting devastating diseases with poor prognoses, and not all patients with potentially short lifespans are willing to comply with requirements of treatment with our Products, such as the need to use our Products for at least 18 hours per day, carrying around a device and shaving the area where the arrays are worn, and other patients may forego our Products for financial, privacy, cosmetic, visibility or mobility reasons; • achieving patient compliance is difficult because the recommended use of our currently marketed Products is throughout the day, requiring patients to wear the device nearly continuously, which to some extent restricts physical mobility because the battery must be frequently exchanged and recharged, and the patient or a caregiver must ensure that it remains continuously operable and this may also impact the pool of patients to whom physicians may be willing to prescribe our Products; • certain patients are contraindicated to using our Products due to a variety of factors, including, but not limited to, those who have an active implanted medical device, those who have a skull defect, and those who are sensitive to conductive hydrogels; • there are certain perceived limitations to our study designs or data obtained from our clinical studies; • efficacy may also be limited in instances where patients take a break from the device when experiencing skin rashes, while bathing or swimming (because our Products should not get wet), or while traveling; and • patients may decline therapy or prescribers may be unwilling to prescribe our Products due to certain adverse events reported in clinical studies by patients treated with our Products as monotherapy include medical device site reaction, headache, malaise, muscle twitching, fall and skin ulcer; additional adverse events reported in clinical studies by patients treated with our Products in combination with chemotherapies in addition to the above, were thrombocytopenia, nausea, constipation, vomiting, fatigue and other side effects consistent with treatment with chemotherapies.
In particular, our Products may not achieve market acceptance for current or future indications because of the following additional factors: • achieving patient acceptance could be difficult because we are targeting devastating diseases with poor prognoses, and not all patients with potentially short lifespans are willing to comply with requirements of treatment with our Products, such as the need to use our Products for a certain amount of time per day, carrying around a device and shaving the area where the arrays are worn, and other patients may forego our Products for financial, privacy, cosmetic, visibility or mobility reasons; • achieving patient compliance is difficult because the recommended use of our currently marketed Products is throughout the day, requiring patients to wear the device nearly continuously, which to some extent restricts physical mobility because the battery must be frequently exchanged and recharged, and the patient or a caregiver must ensure that it remains continuously operable and this may also impact the pool of patients to whom physicians may be willing to prescribe our Products; • certain patients are contraindicated to using our Products due to a variety of factors, including, but not limited to, those who have an active implanted medical device, those who have a skull defect, and those who are sensitive to conductive hydrogels; • there are certain perceived limitations to our study designs or data obtained from our clinical studies; • efficacy may also be limited in instances where patients take a break from the device, for example when experiencing skin rashes or while bathing or swimming (because our Products should not get wet); and • patients may decline therapy or prescribers may be unwilling to prescribe our Products due to certain adverse events reported in clinical studies by patients treated with our Products as monotherapy include medical device site reaction, headache, malaise, muscle twitching, fall and skin ulcer; additional adverse events reported in clinical studies by patients treated with our Products when used together with chemotherapies in addition to the above, were thrombocytopenia, nausea, constipation, vomiting, fatigue and other side effects consistent with treatment with chemotherapies.
Our revenues are dependent, in part, upon the size of the markets in the jurisdictions in which we receive regulatory approval, the accepted price for our Products and the ability to obtain reimbursement at the accepted applicable price.
Our revenues are dependent, in part, upon the size of the markets in the jurisdictions in which we receive regulatory approval, the accepted price for our Products and the ability to obtain coverage for our Products and thereafter reimbursement at the accepted applicable price.
If third-party payers do not consider our Products or the combination of our Products with additional treatments to be cost-justified under a required cost-testing model, they may not cover our Products for their populations or, if they do, the level of reimbursement may not be sufficient to allow us to sell our Products on a profitable basis.
If third-party payers do not consider our Products or the use of our Products together with additional treatments to be cost-justified under a required cost-testing model, they may not cover our Products for their populations or, if they do, the level of reimbursement may not be sufficient to allow us to sell our Products on a profitable basis.
CMS is responsible for issuing the HCPCS Level II codes. The American Medical Association issues HCPCS Level I codes. We have secured unique HCPCS Level II codes that describe Optune and we are able to use these codes in the U.S. to bill third-party payers.
CMS is responsible for issuing the HCPCS Level II codes. The American Medical Association issues HCPCS Level I codes. We have secured unique HCPCS Level II codes that describe our Products and we are able to use these codes in the U.S. to bill third-party payers.
Further, until we receive FDA and analogous approval in other jurisdictions for the use of our Products for other indications, almost all of our revenues will derive from sales and royalties from sales of Optune for the treatment of newly diagnosed and recurrent GBM and Optune Lua for MPM.
Further, until we receive FDA and analogous approval in other jurisdictions for the use of our Products for other indications, almost all of our revenues will derive from sales and royalties from sales of Optune Gio for the treatment of newly diagnosed and recurrent GBM.
We may experience difficulties in patient enrollment in our clinical studies for a variety of reasons, including: • the severity of the disease under investigation; • the limited size and nature of the patient population; • the patient eligibility criteria defined in our protocol and other clinical study protocols; 22 • the nature of the study protocol, including the attractiveness of, or the discomforts and risks associated with, the treatments received by enrolled subjects; • difficulties and delays in clinical studies that may occur as a result of the COVID-19 pandemic; • the ability to obtain IRB approval at clinical study locations; • clinicians’ and patients’ perceptions as to the potential advantages, disadvantages and side effects of our Products in relation to other available therapies, including any new drugs or treatments that may be approved for the indications we are pursuing; • availability of other clinical studies that exclude use of our Products; • the possibility or perception that enrolling in a Product’s clinical study may limit the patient’s ability to enroll in future clinical studies for other therapies due to protocol restrictions; • the possibility or perception that our software is not secure enough to maintain patient privacy; • patient referral practices of physicians; • the ability to monitor patients adequately during and after treatment; • the availability of appropriate clinical study investigators, support staff, drugs and other therapeutic supplies and proximity of patients to clinical sites; • physicians’ or our ability to obtain and maintain patient consents; and • the risk that patients enrolled in clinical studies will choose to withdraw from or otherwise not be able to complete a clinical study.
We may experience difficulties in patient enrollment in our clinical studies for a variety of reasons, including: • the severity of the disease under investigation; 21 • the limited size and nature of the patient population; • the patient eligibility criteria defined in our protocol and other clinical study protocols; • standards of care may vary by geographic region, affecting whether our protocols may be valid in a given region; • the nature of the study protocol, including the attractiveness of, or the discomforts and risks associated with, the treatments received by enrolled subjects; • difficulties and delays in clinical studies that may occur as a result of the COVID-19 or similar pandemic; • the ability to obtain IRB approval at clinical study locations; • clinicians’ and patients’ perceptions as to the potential advantages, disadvantages and side effects of our Products in relation to other available therapies, including any new drugs or treatments that may be approved for the indications we are pursuing; • availability of other clinical studies that exclude use of our Products; • the possibility or perception that enrolling in a Product’s clinical study may limit the patient’s ability to enroll in future clinical studies for other therapies due to protocol restrictions; • the possibility or perception that our software is not secure enough to maintain patient privacy; • patient referral practices of physicians; • the ability to monitor patients adequately during and after treatment; • the availability of appropriate clinical study investigators, support staff, drugs and other therapeutic supplies and proximity of patients to clinical sites; • physicians’ or our ability to obtain and maintain patient consents; and • the risk that patients enrolled in clinical studies will choose to withdraw from or otherwise not be able to complete a clinical study.
Our patent position is generally uncertain and involves complex legal and factual questions. In the U.S., our patents have expected expiration dates between 2023 and 2041. In 2021, several patents covering technology included in our Products expired in the U.S. and elsewhere.
Our patent position is generally uncertain and involves complex legal and factual questions. In the U.S., our patents have expected expiration dates between 2024 and 2041. Starting in 2021, several patents covering technology included in our Products have expired in the U.S. and elsewhere.
Further, 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. In the UK, we may continue to market and sell our Products under the CE mark until June 2023.
Further, 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. In the UK, we were able to market and sell our Products under the CE mark until June 2023.
Our business model is predicated on achieving market acceptance of our Products as a monotherapy or in combination with well-established cancer treatment modalities like surgery, radiation, pharmacological and immunocologic therapies.
Our business model is predicated on achieving market acceptance of our Products as a monotherapy or together with well-established cancer treatment modalities like surgery, radiation, pharmacological and immunocologic therapies.
Optune has a CE mark affixed for the treatment of GBM in the EU and Switzerland. We have also received FDA approval under the HDE pathway to market Optune Lua for unresectable, locally advanced or metastatic, MPM in combination with standard chemotherapies. Optune Lua is also CE Certified for the same indication in the EU and Switzerland .
Optune Gio has a CE mark affixed for the treatment of GBM in the EU and Switzerland. We have also received FDA approval under the HDE pathway to market Optune Lua for unresectable, locally advanced or metastatic, MPM when used together with standard chemotherapies. Optune Lua is also CE Certified for the same indication in the EU and Switzerland .
The fact that a substantial portion of our cash flow from operations could be needed to make payments on our indebtedness could have important consequences, including the following: • increasing our vulnerability to general adverse economic and industry conditions or increased interests rates; • limiting the availability of our cash flow for other purposes and our flexibility in planning for or reacting to changes in our business and the markets in which we operate, which would place us at a competitive disadvantage compared to our competitors that may have less exposure to debt; • limiting our ability to borrow additional funds for working capital, capital expenditures and other investments; and • failing to comply with the covenants in our debt agreements could result in all of our indebtedness becoming immediately due and payable. 46 Our ability to obtain necessary funds through borrowing, as well as our ability to service our indebtedness, will depend on our ability to generate cash flow from operations.
The fact that a substantial portion of our cash flow from operations could be needed to make payments on our indebtedness could have important consequences, including the following: • increasing our vulnerability to general adverse economic and industry conditions or increased interests rates; 45 • limiting the availability of our cash flow for other purposes and our flexibility in planning for or reacting to changes in our business and the markets in which we operate, which would place us at a competitive disadvantage compared to our competitors that may have less exposure to debt; • limiting our ability to borrow additional funds for working capital, capital expenditures and other investments; and • failing to comply with the covenants in our debt agreements could result in all of our indebtedness becoming immediately due and payable.
To date we have received FDA regulatory approval under the PMA pathway and certain approvals in other jurisdictions for the use of Optune for the treatment of adult patients with newly diagnosed GBM in combination with certain forms of chemotherapy and for the treatment of adult patients with recurrent GBM as monotherapy.
To date we have received FDA regulatory approval under the PMA pathway and certain approvals in other jurisdictions for the use of Optune Gio for the treatment of adult patients with newly diagnosed GBM when used together with certain forms of chemotherapy and for the treatment of adult patients with recurrent GBM as monotherapy.
The extent to which the pandemic may impact our business and clinical studies will depend on future developments, which are highly uncertain and cannot be predicted with confidence, such as the ultimate geographic spread of the disease, the duration of the pandemic, travel restrictions and social distancing guidelines, business closures or business disruptions and the effectiveness of actions taken to contain and treat the disease.
The extent to which a pandemic or outbreak may impact our business and clinical studies will depend on the specific issues surrounding such event, which are highly uncertain and cannot be predicted with confidence, such as the ultimate geographic spread of the disease, the duration of the pandemic, travel restrictions and social distancing guidelines, business closures or business disruptions and the effectiveness of actions taken to contain and treat the disease.
The market price for our ordinary shares may be volatile and subject to wide fluctuations in response to factors such as publication of clinical studies relating to our Products, our system candidates or a competitor’s product, actual or anticipated fluctuations in our quarterly results of operations, changes in financial estimates by securities research analysts, negative publicity, studies or reports, changes in the economic performance or market valuations of other companies that operate in our industry, changes in the availability of third-party reimbursement in the U.S. or other countries, changes in governmental regulations or in the status of our regulatory approvals or applications, announcements by us or our competitors of material acquisitions, strategic partnerships, joint ventures or capital commitments, intellectual property litigation, release of transfer restrictions on our outstanding ordinary shares, and economic or political conditions in the U.S. or elsewhere. 45 Our ordinary shares are issued under the laws of Jersey, which may not provide the level of legal certainty and transparency afforded by incorporation in a U.S. state.
The market price for our ordinary shares may be volatile and subject to wide fluctuations in response to factors such as publication of clinical studies relating to our Products, our system candidates or a competitor’s product, actual or anticipated fluctuations in our quarterly results of operations, changes in financial estimates by securities research 44 analysts, negative publicity, studies or reports, changes in the economic performance or market valuations of other companies that operate in our industry, changes in the availability of third-party reimbursement in the U.S. or other countries, changes in governmental regulations or in the status of our regulatory approvals or applications, announcements by us or our competitors of material acquisitions, strategic partnerships, joint ventures or capital commitments, intellectual property litigation, release of transfer restrictions on our outstanding ordinary shares, and economic or political conditions in the U.S. or elsewhere.
Claims for such items that did not receive prior authorization before they were furnished to a beneficiary will be automatically denied.
CMS requires prior authorization for certain DME items. Claims for such items that did not receive prior authorization before they were furnished to a beneficiary will be automatically denied.
In our current and future sales and distribution agreements with other companies, we generally do not and may not have control over the resources or degree of effort that any of these third parties may devote to our Products, and if they fail to devote sufficient time and resources to the marketing of our Products, or if their performance is substandard, our revenues may be adversely affected. 23 The success of our business may be dependent on the actions of our collaborative partners.
In our current and future sales and distribution agreements with other companies, we generally do not and may not have control over the resources or degree of effort that any of these third parties may devote to our 22 Products, and if they fail to devote sufficient time and resources to the marketing of our Products, or if their performance is substandard, our revenues may be adversely affected.
Risks relating to our business and our Products Our business and prospects depend heavily on Optune, which is currently approved only for the treatment of GBM, and Optune Lua, which is currently approved only for the treatment of MPM.
Risks relating to our business and our Products Our business and prospects depend heavily on Optune Gio, which is currently approved only for the treatment of GBM, and Optune Lua, which is currently approved only for the treatment of MPM, with approvals pending for NSCLC.
Risks relating to intellectual property If we fail to protect, sustain, further build and enforce our intellectual property rights, including to our proprietary technology, trade secrets or know how, competitors may be able to develop competing therapies.
Risks relating to intellectual property If we fail to maintain, develop, protect, defend or enforce our intellectual property rights, including to our proprietary technology, trade secrets or know how, competitors may be able to develop competing therapies.
Further, we anticipate that, even if we are successful in winning our appeals, we will experience a significant delay in securing reimbursement for Medicare patients when Medicare’s DME MACs deny coverage for patients who start therapy.
We cannot provide any assurance that our outstanding ALJ appeals will be favorably decided. Further, we anticipate that, even if we are successful in winning our appeals, we will experience a significant delay in securing reimbursement for Medicare patients when Medicare’s DME MACs deny coverage for patients who start therapy.
The competent authorities of the EU member states or our notified body also may come to a different conclusion than the FDA on any given product modification. 38 In addition, "legacy" medical devices that have obtained a CE Certification under the MDD may in principle continue to be marketed under such CE Certificate until the CE Certificate expires but at the latest by December 31, 2027 or 2028, depending on device class, under transitional provisions as amended in February 2023, provided that the manufacturer complies with the MDR’s additional requirements related to post-marketing surveillance, market surveillance, vigilance, and registration of economic operators and of devices.
In addition, "legacy" medical devices that have obtained a CE Certification under the MDD may in principle continue to be marketed under such CE Certificate until the CE Certificate expires but at the latest by December 31, 2027 or 2028, depending on device class, under transitional provisions as amended in February 2023, provided that the manufacturer complies with the MDR’s additional requirements related to post-marketing surveillance, market surveillance, vigilance, and registration of economic operators and of devices.
Our global business strategy includes, in part, the consummation of collaborative arrangements with companies who will support the development and commercialization of our Products and technology.
The success of our business may be dependent on the actions of our collaborative partners. Our global business strategy includes, in part, the consummation of collaborative arrangements with companies who will support the development and commercialization of our Products and technology.
To date, we have generated only limited and intermittent operating profits, and we have a history of incurring substantial operating losses. We were founded in 2000 and have only recently and intermittently started generating limited operating profits. We have otherwise had a history of incurring substantial operating losses.
To date, we have generated only occasional and intermittent operating profits, and we have a history of incurring substantial operating losses. We were founded in 2000 and have only occasionally and intermittently generated operating profits. We have otherwise had a history of and expect to continue incurring substantial operating losses.
We expect that the vast majority of our revenues will come from third-party payers either directly to us in markets where we provide our Products or plan to provide our device candidates to patients or indirectly via payments made to hospitals or other entities providing our Products or which may in the future provide our device candidates to patients. 25 In the U.S., private payers cover the largest segment of the population, with the remainder either uninsured or covered by governmental payers.
We expect that the vast majority of our revenues will come from third-party payers either directly to us in markets where we provide our Products or plan to provide our device candidates to patients or indirectly via payments made to hospitals or other entities providing our Products or which may in the future provide our device candidates to patients.
The Notes are not redeemable prior to November 6, 2023 and are convertible into a combination of cash and ordinary shares on or after August 1, 2025, or earlier upon certain events.
The Convertible Notes are senior unsecured obligations. The Convertible Notes do not bear regular interest, and mature on November 1, 2025, unless earlier repurchased, redeemed or converted. The Notes are not redeemable prior to November 6, 2023 and are convertible into a combination of cash and ordinary shares on or after August 1, 2025, or earlier upon certain events.
The failure to obtain and maintain these codes could affect the future growth of our business. There is no assurance that Medicare or the Medicare Administrative Contractors will provide, or continue to provide, coverage or adequate payment rates for our Products. We anticipate that a significant portion of patients using our Products will be beneficiaries under the Medicare fee-for-service program.
The failure to obtain and maintain these codes could affect the future growth of our business. 25 There is no assurance that Medicare or the Medicare Administrative Contractors will provide, or continue to provide, coverage or adequate payment rates for our Products.
The absence of a positive coverage determination or a future restriction to existing coverage from Medicare or the DME MACs would materially affect our future revenues. Additionally, Medicare has the authority to publish the reimbursement amounts for DME products. Medicare has published a reimbursement amount for Optune that falls below the median reimbursement that we have established with non-Medicare payers.
The absence of a positive coverage determination or a future restriction to existing coverage from Medicare or the DME MACs would materially affect our future revenues. Additionally, Medicare has the authority to publish the reimbursement amounts for DME products.
The response to the pandemic may result in permanent changes to the environment in which we operate as described above in ways we are unable to predict. The COVID-19 pandemic may also have the effect of heightening many of the other risks described herein. We are increasingly dependent on information technology systems and subject to privacy and security laws.
The response to a pandemic or outbreak may result in permanent changes to the environment in which we operate as described above in ways we are unable to predict. We are increasingly dependent on information technology systems and subject to privacy and security laws.
DME items in this billing category are billed monthly and payment is not capped after a time period. If Medicare revises its payment category classifications for our Products, this action could materially reduce our revenues and operating results. CMS requires prior authorization for certain DME items.
Medicare has assigned the billing codes describing our Products to the DME category for products that require frequent and substantial servicing. DME items in this billing category are billed monthly and payment is not capped after a time period. If Medicare revises its payment category classifications for our Products, this action could materially reduce our revenues and operating results.
Loss of these codes or any alteration in the reimbursement amounts attached to these codes would materially impact our operating results. We do not have a unique HCPCS Level II code for Optune Lua at this time. No CPT codes currently exist to describe physician services related to the delivery of therapy using our Products.
Loss of these codes or any alteration in the reimbursement amounts attached to these codes would materially impact our operating results. We do not expect to obtain different codes for new indications. No CPT codes currently exist to describe physician services related to the delivery of therapy using our Products.
Our future revenues and results may be affected by the absence of CPT codes, as physicians may be less likely to prescribe the therapy when there is no certainty that adequate reimbursement will be available for the time, effort, skill, practice expense and malpractice costs required to provide the therapy to patients. 26 Outside the U.S., but excluding Germany and Japan, we have not secured codes to describe our Products or to document physician services related to the delivery of therapy using our Products.
Our future revenues and results may be affected by the absence of CPT codes, as physicians may be less likely to prescribe the therapy when there is no certainty that adequate reimbursement will be available for the time, effort, skill, practice expense and malpractice costs required to provide the therapy to patients.
There is a risk that the competent authorities of the EU member states or our notified body may disagree with our assessment of the changes introduced to our Products.
There is a risk that the competent authorities of the EU member states or our notified body may disagree with our assessment of the changes introduced to our Products. 37 The competent authorities of the EU member states or our notified body also may come to a different conclusion than the FDA on any given product modification.
Depending on the nature of the conduct found in such audits and whether the underlying conduct could be considered systemic, the resolution of these audits could adversely impact our revenue, financial condition and results of operations. 40 If we, our collaborative partners, our contract manufacturers or our component suppliers fail to comply with the FDA’s QSR or equivalent regulations established in other countries, the manufacturing and distribution of our Products could be interrupted, and our Product sales and results of operations could suffer.
If we, our collaborative partners, our contract manufacturers or our component suppliers fail to comply with the FDA’s QSR or equivalent regulations established in other countries, the manufacturing and distribution of our Products could be interrupted, and our Product sales and results of operations could suffer.
Medical devices may be marketed only for the indications for which they are approved. Our promotional materials and training materials must comply with FDA regulations and other applicable laws and regulations governing the promotion of our Products in the U.S. and other jurisdictions.
Our promotional materials and training materials must comply with FDA regulations and other applicable laws and regulations governing the promotion of our Products in the U.S. and other jurisdictions.
The termination or revision of any of our tax rulings or indirect tax exemptions that we have or may have in the future may have a material adverse effect on our cash flows, financial condition and results of operations. 42 We are affected by and subject to environmental laws and regulations that could be costly to comply with or that may result in costly liabilities.
The termination or revision of any of our tax rulings or indirect tax exemptions that we have or may have in the future may have a material adverse effect on our cash flows, financial condition and results of operations.
Medicare's publication of reimbursement amounts for our Products that are below our Products’ established prices could materially reduce our revenues and operating results with respect to non-Medicare payers in the U.S. and our other active markets. Medicare has assigned the billing codes describing Optune to the DME category for products that require frequent and substantial servicing.
Medicare fee schedules are frequently referenced by private payers in the U.S. and around the world. Medicare's publication of reimbursement amounts for our Products that are below our Products’ established prices could materially reduce our revenues and operating results with respect to non-Medicare payers in the U.S. and our other active markets.
Any corrective action, whether voluntary or involuntary, as well as defending ourselves in a lawsuit, will require the dedication of our time and capital, distract management from operating our business, and may harm our reputation and financial results. 41 We may be subject to fines, penalties or injunctions if we are determined to be promoting the use of our Products for unapproved or off-label uses.
Any corrective action, whether voluntary or 40 involuntary, as well as defending ourselves in a lawsuit, will require the dedication of our time and capital, distract management from operating our business, and may harm our reputation and financial results.
We have borrowed a significant amount of debt and have the ability to borrow additional debt in the future, which could adversely affect our financial condition and results of operations and our ability to react to changes in our business. We currently have two significant debt arrangements outstanding.
We have borrowed a significant amount of debt and have the ability to borrow additional debt in the future, which could adversely affect our financial condition and results of operations and our ability to react to changes in our business. On November 5, 2020, we issued $575 million of 0% Convertible Senior Notes due 2025 (the “Convertible Notes”).
Our existing indebtedness and any additional indebtedness we may incur otherwise could require us to divert funds identified for other purposes for debt service and impair our liquidity position.
While our existing material indebtedness does not accrue interest, our ability to incur indebtedness in the future and service that indebtedness could be impacted by interest and currency rate fluctuations. Our existing indebtedness and any additional indebtedness we may incur otherwise could require us to divert funds identified for other purposes for debt service and impair our liquidity position.
Our ability to generate cash is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control.
Our ability to obtain necessary funds through borrowing, as well as our ability to service our indebtedness, will depend on our ability to generate cash flow from operations. Our ability to generate cash is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control.
While we have obtained Medicare coverage for our existing Products, we cannot provide any assurance that we can access transitional, expedited, or expanded Medicare coverage for our future Products.
While we have obtained Medicare coverage for our existing Products, we cannot provide any assurance that we can access transitional, expedited, or expanded Medicare coverage for our future Products. CMS has issued new draft guidance regarding coverage of emerging technologies that does not specifically address whether our future Products will obtain coverage.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeITEM 2. PROPERTIES Our global headquarters and operating center is located in Root, Switzerland, our U.S. operating center is located in Portsmouth, New Hampshire, and our research and development operations are located in Haifa, Israel, all of which are leased. In December 2021 we acquired a property in downtown Portsmouth, New Hampshire that will become our U.S. flagship location.
Biggest changeITEM 2. PROPERTIES Our global headquarters and operating center is located in Root, Switzerland, our U.S. operating center is located in Portsmouth, New Hampshire, and our research and development operations are located in Haifa, Israel, all of which 47 are leased. In December 2021 we acquired a property in downtown Portsmouth, New Hampshire that will become our U.S. flagship location.
Construction on the property is expected to be completed in 2023. We also lease additional office and warehouse space across North America, Europe, Israel and Japan. We believe that our current facilities are adequate for our present purposes, but we may need additional space as we continue to grow and expand our operations.
Construction on the property is expected to be completed in 2024. We also lease additional office and warehouse space across North America, Europe, Israel and Japan. We believe that our current facilities are adequate for our present purposes, but we may need additional space as we continue to grow and expand our operations.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeITEM 3. 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.
Biggest changeThe Company believes that the action is without merit and plans to defend the lawsuit vigorously. In addition, from time to time, we are involved in various legal proceedings, claims, investigations and litigation that arise in the ordinary course of our business. Litigation is inherently uncertain. Accordingly, we cannot predict with certainty the outcome of these matters.
After considering a number of factors, including (but not limited to) the views of legal counsel, the nature of contingencies to which the Company is subject and prior experience, management believes that the ultimate disposition of these legal actions will not materially affect its consolidated financial position or results of operations. ITEM 4. MINE SAFETY DISCLOSURES None. 48 PART II
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.
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ITEM 3. LEGAL PROCEEDINGS In June 2023, a putative class action lawsuit was filed against the Company, its Executive Chairman and its Chief Executive Officer.
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The complaint, later amended to add our Chief Financial Officer as a defendant, purports to be brought on behalf of a class of persons and/or entities who purchased or otherwise acquired ordinary shares of the Company from January 5, 2023 through June 5, 2023, and alleges material misstatements and/or omissions in the Company’s public statements with respect to the results from its phase 3 LUNAR clinical trial.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe shareholder return shown on the graph below is not necessarily indicative of future performance, and we do not make or endorse any predictions as to future stockholder returns. 49 12/17 12/18 12/19 12/20 12/21 12/22 NovoCure Ltd 100.00 165.74 417.18 856.63 371.68 363.12 Russell 2000 100.00 88.99 111.70 134.00 153.85 122.41 NASDAQ Biotechnology 100.00 91.14 114.02 144.15 144.18 129.59 Recent Sales of Unregistered Securities Not applicable Issuer Purchases of Equity Securities Not applicable.
Biggest changeThe shareholder return shown on the graph below is not necessarily indicative of future performance, and we do not make or endorse any predictions as to future stockholder returns. 50 12/18 12/19 12/20 12/21 12/22 12/23 NovoCure Ltd 100.00 251.70 516.85 224.25 219.09 44.59 Russell 2000 100.00 125.52 150.58 172.90 137.56 160.85 NASDAQ Biotechnology 100.00 125.11 158.17 158.20 142.19 148.72 Recent Sales of Unregistered Securities Not applicable Issuer Purchases of Equity Securities Not applicable.
Securities Authorized for Issuance Under Equity Compensation Plans The following table gives information about our ordinary shares that may be issued upon the exercise of stock options and vesting of restricted stock units, as applicable, under all of our existing equity compensation plans as of December 31, 2022, including the 2003 Share Option Plan (the "2003 Plan"), the 2013 Share Option Plan (the "2013 Plan"), the 2015 Omnibus Incentive Plan (the "2015 Plan") and the Employee Share Purchase Plan (the "ESPP").
Securities Authorized for Issuance Under Equity Compensation Plans The following table gives information about our ordinary shares that may be issued upon the exercise of stock options and vesting of restricted stock units, as applicable, under all of our existing equity compensation plans as of December 31, 2023, including the 2003 Share Option Plan (the "2003 Plan"), the 2013 Share Option Plan (the "2013 Plan"), the 2015 Omnibus Incentive Plan (the "2015 Plan") and the Employee Share Purchase Plan (the "ESPP").
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our ordinary shares are quoted on the NASDAQ Global Select Market under the symbol "NVCR." Holders of Ordinary Shares As of February 17, 2023, there were 17 holders of record of our ordinary shares.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our ordinary shares are quoted on the NASDAQ Global Select Market under the symbol "NVCR." Holders of Ordinary Shares As of February 16, 2024, there were 17 holders of record of our ordinary shares.
The graph below matches our cumulative 5-Year total shareholder return on our ordinary shares with the cumulative total returns of the Russell 2000 index and the Nasdaq Biotechnology index. The graph tracks the performance of a $100 investment in our ordinary shares and in each index (with the reinvestment of all dividends) from December 31, 2017 to December 31, 2022.
The graph below matches our cumulative 5-Year total shareholder return on our ordinary shares with the cumulative total returns of the Russell 2000 index and the Nasdaq Biotechnology index. The graph tracks the performance of a $100 investment in our ordinary shares and in each index (with the reinvestment of all dividends) from December 31, 2018 to December 31, 2023.
On February 17, 2023, the last reported sale price of our ordinary shares on the NASDAQ Global Select Market was $84.74 per share. Dividend Policy We have not paid any dividends on our ordinary shares since our inception and do not anticipate paying any dividends on our ordinary shares in the foreseeable future.
On February 16, 2024, the last reported sale price of our ordinary shares on the NASDAQ Global Select Market was $16.14 per share. Dividend Policy We have not paid any dividends on our ordinary shares since our inception and do not anticipate paying any dividends on our ordinary shares in the foreseeable future.
Equity Compensation Plan Information Plan Category (a) Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights (b) Weighted Average Exercise Price of Outstanding Options, Warrants and Rights (c) Number of Securities Remaining Available for Future Issuance (Excludes Securities Reflected in Column (a)) Equity compensation plans approved by shareholders 14,163,823 $ 23.12 25,499,056 Equity compensation plans not approved by shareholders — — — Total 14,163,823 $ 23.12 25,499,056 ITEM 6. [RESERVED] 50
Equity Compensation Plan Information Plan Category (a) Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights (b) Weighted Average Exercise Price of Outstanding Options, Warrants and Rights (c) Number of Securities Remaining Available for Future Issuance (Excludes Securities Reflected in Column (a)) Equity compensation plans approved by shareholders 14,352,573 $ 23.84 28,632,049 Equity compensation plans not approved by shareholders — — — Total 14,352,573 $ 23.84 28,632,049 ITEM 6. [RESERVED] 51

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeThe following table sets forth our consolidated statements of operations data: Year ended December 31, U.S. dollars in thousands, except share and per share data 2022 2021 2020 Net revenues $ 537,840 $ 535,031 $ 494,366 Cost of revenues 114,867 114,877 106,501 Gross profit 422,973 420,154 387,865 Operating costs and expenses: Research, development and clinical studies 206,085 201,303 132,010 Sales and marketing 173,658 137,057 118,017 General and administrative 132,753 126,127 107,437 Total operating costs and expenses 512,496 464,487 357,464 Operating income (loss) (89,523) (44,333) 30,401 Financial (expenses) income, net 7,677 (7,742) (12,299) Income (loss) before income tax (81,846) (52,075) 18,102 Income tax 10,688 6,276 (1,706) Net income (loss) $ (92,534) $ (58,351) $ 19,808 Basic net income (loss) per ordinary share $ (0.88) $ (0.56) $ 0.20 Weighted average number of ordinary shares used in computing basic net income (loss) per share 104,660,476 103,433,274 100,930,866 Diluted net income (loss) per ordinary share $ (0.88) $ (0.56) $ 0.18 Weighted average number of ordinary shares used in computing diluted net income (loss) per share 104,660,476 103,433,274 108,877,648 The following table details the share-based compensation expense included in costs and expenses: Year ended December 31, U.S. dollars in thousands 2022 2021 2020 Cost of revenues $ 4,690 $ 3,471 $ 2,221 Research, development and clinical studies 30,790 27,597 18,125 Sales and marketing 28,826 22,673 17,672 General and administrative 42,649 41,159 37,703 Total share-based compensation expense $ 106,955 $ 94,900 $ 75,721 Key performance indicators We believe certain commercial operating statistics are useful to investors in evaluating our commercial business as they help investors evaluate and compare the adoption of our Products from period to period.
Biggest changeThe following table sets forth our consolidated statements of operations data: Year ended December 31, U.S. dollars in thousands, except share and per share data 2023 2022 2021 Net revenues $ 509,338 $ 537,840 $ 535,031 Cost of revenues 128,280 114,867 114,877 Gross profit 381,058 422,973 420,154 Operating costs and expenses: Research, development and clinical studies 223,062 206,085 201,303 Sales and marketing 226,809 173,658 137,057 General and administrative 164,057 132,753 126,127 Total operating costs and expenses 613,928 512,496 464,487 Operating income (loss) (232,870) (89,523) (44,333) Financial (expenses) income, net 41,130 7,677 (7,742) Income (loss) before income tax (191,740) (81,846) (52,075) Income tax 15,303 10,688 6,276 Net income (loss) $ (207,043) $ (92,534) $ (58,351) Basic and diluted net income (loss) per ordinary share $ (1.95) $ (0.88) $ (0.56) Weighted average number of ordinary shares used in computing basic and diluted net income (loss) per share 106,391,178 104,660,476 103,433,274 The following table details the share-based compensation expense included in costs and expenses: Year ended December 31, U.S. dollars in thousands 2023 2022 2021 Cost of revenues $ 6,587 $ 4,690 $ 3,471 Research, development and clinical studies 31,827 30,790 27,597 Sales and marketing 35,968 28,826 22,673 General and administrative 41,226 42,649 41,159 Total share-based compensation expense $ 115,608 $ 106,955 $ 94,900 Key performance indicators We believe certain commercial operating statistics are useful to investors in evaluating our commercial business as they help investors evaluate and compare the adoption of our Products from period to period.
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 mechanisms of action behind TTFields therapy may be broadly applicable to solid tumor cancers.
We market Optune Gio and Optune Lua in multiple countries around the globe with the majority of our revenues coming from the use of Optune Gio in the U.S., Germany and Japan. We are actively evaluating opportunities to expand our international footprint. We believe the physical mechanisms of action behind TTFields therapy may be broadly applicable to solid tumor cancers.
The LUNAR study also showed a statistically significant and clinically meaningful improvement in overall survival when patients were treated with TTFields and immune checkpoint inhibitors, as compared to those treated with immune checkpoint inhibitors alone, and a positive trend in overall survival when patients were treated with TTFields and docetaxel versus docetaxel alone.
The LUNAR study also showed a statistically significant and clinically meaningful improvement in overall survival when patients were treated with TTFields therapy and immune checkpoint inhibitors, as compared to those treated with immune checkpoint inhibitors alone, and a positive trend in overall survival when patients were treated with TTFields therapy and docetaxel versus docetaxel alone.
In 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 The Notes are not redeemable prior to November 6, 2023, except in the event of certain tax law changes.
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 The Notes were not redeemable prior to November 6, 2023, except in the event of certain tax law changes.
We have historically held substantially all of our cash balances in U.S. dollar denominated accounts to minimize the risk of translational currency exposure. 54 Critical accounting policies and estimates In accordance with U.S.
We have historically held substantially all of our cash balances in U.S. dollar denominated accounts to minimize the risk of translational currency exposure. Critical accounting policies and estimates In accordance with U.S.
Cost of revenues per active patient is calculated by dividing the cost of revenues for the year less product sales to Zai for the year by the average of the active patients at the end of the each quarter in the current year and the end of the year active patients from the prior year.
Cost of revenues per active patient is calculated by dividing the cost of revenues for the year less product sales to Zai for the year by the average of the active patients at the end of the each quarter in the current year and the end 57 of the year active patients from the prior year.
Research, development and clinical studies Our research, development and clinical studies activity is focused on advancing TTFields through clinical studies across multiple solid tumor types and improving the efficacy and usability of our devices.
Research, development and clinical studies Our research, development and clinical studies activity is focused on advancing TTFields therapy through clinical studies across multiple solid tumor types and improving the efficacy and usability of our devices.
Treasury securities with periods commensurate with the expected term of the options being valued; and • the expected dividend yield, which we estimate to be zero based on the fact that we have never paid cash dividends and have no present intention to pay cash dividends. For information about our ESPP, see Note 14 to the Consolidated Financial Statements.
Treasury securities with periods commensurate with the expected term of the options being valued; and • the expected dividend yield, which we estimate to be zero based on the fact that we have never paid cash dividends and have no present intention to pay cash dividends. For information about our ESPP, see Note 15 to the Consolidated Financial Statements.
Optune Lua is approved by the FDA under the Humanitarian Device Exemption ("HDE") pathway to treatment 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.
Optune Lua is approved by the FDA under the Humanitarian Device Exemption ("HDE") pathway to treat malignant pleural mesothelioma and pleural mesothelioma (together, "MPM") together with standard chemotherapies. We have also received CE certification in the EU and approval or local registration to market Optune Lua in certain other countries.
For additional information, see Note 14 to the Consolidated Financial Statements. Long-lived assets Property and equipment and field equipment are stated at cost, net of accumulated depreciation. Depreciation is calculated using the straight-line method over the estimated useful life of the relevant asset.
For additional information, see Note 15 to the Consolidated Financial Statements. Long-lived assets Property and equipment and field equipment are stated at cost, net of accumulated depreciation. Depreciation is calculated using the straight-line method over the estimated useful life of the relevant asset.
Adjustments to net income for non-cash items include share-based compensation, depreciation, amortization and asset write-downs. Operating cash flows are also impacted by changes in operating assets and liabilities, principally trade payables, deferred revenues, other payables, prepaid expenses, inventory and trade receivables.
Adjustments to net loss for non-cash items include share-based compensation, depreciation, amortization and asset write-downs. Operating cash flows are also impacted by changes in operating assets and liabilities, principally trade payables, deferred revenues, other payables, prepaid expenses, inventory and trade receivables.
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.
Our key priorities are to drive commercial adoption of Optune Gio ® and Optune Lua ® , our commercial TTFields therapy devices, and to advance clinical and product development programs intended to extend overall survival in some of the most aggressive forms of cancer. Optune Gio is approved by the U.S.
We believe our cash, cash equivalents and short-term investments as of December 31, 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 believe our cash, cash equivalents and short-term investments as of December 31, 2023 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 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, Canada and certain other countries.
We also have a CE certificate to market Optune Gio for the treatment of GBM in the 61 European Union ("EU"), as well as approval or local registration in the United Kingdom ("UK"), Japan, Canada and certain other countries.
Financial expenses, net Financial expenses, net primarily consists of credit facility interest expense and related 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.
Financial expenses, net Financial expenses, net, primarily consists of bank fees, credit facility interest expense and related debt issuance costs, interest income from cash balances and short-term investments and gains (losses) from foreign currency 53 transactions. Our reporting currency is the U.S. dollar.
We believe collections from those claims which were most accessible were largely exhausted in 2022 and the remaining outstanding claims will take time to collect. As a result, we expect future net revenue to more closely reflect core drivers of net revenue: number of active patients on therapy, duration of therapy, and net realized price per month.
We believe collections from these claims that were most accessible were largely exhausted in 2022 and the remaining outstanding claims will take time to collect. As a result, we expect future net revenue to more closely reflect core drivers of net revenue: number of active patients on therapy, duration of therapy, and net realized price per month.
("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.
("Zai") a license to commercialize our Products in China, Hong Kong, Macau and Taiwan ("Greater China") under a License and Collaboration Agreement (the "Zai Agreement"). The Zai Agreement also establishes a development partnership intended to accelerate the development of TTFields therapy in multiple solid tumor cancer indications. For additional information, see Note 12 to the Consolidated Financial Statements.
We recognize compensation costs for the value of performance stock units ("PSU") over the performance period when the vesting conditions become probable in accordance with ASC 718. 55 The table below summarizes the assumptions that were used to estimate the fair value of the options granted to employees during the periods presented: Year ended December 31, 2022 2021 2020 Expected term (years) 5.33-5.83 5.50-6.00 5.50-6.00 Expected volatility 60%-62% 60%-63% 54%-56% Risk-free interest rate 1.58%-4.23% 0.78%-1.27% 0.30%-0.86% Dividend yield 0.00% 0.00% 0.00% If any of the assumptions used in the Black-Scholes option pricing model change significantly, share-based compensation for future awards may differ materially from the awards granted previously.
We recognize compensation costs for the value of performance stock units ("PSU") over the performance period when the vesting conditions become probable in accordance with ASC 718. 54 The table below summarizes the assumptions that were used to estimate the fair value of the options granted to employees during the periods presented: Year ended December 31, 2023 2022 2021 Expected term (years) 5.50-6.00 5.33-5.83 5.50-6.00 Expected volatility 63%-70% 60%-62% 60%-63% Risk-free interest rate 3.48%-4.79% 1.58%-4.23% 0.78%-1.27% Dividend yield 0.00% 0.00% 0.00% If any of the assumptions used in the Black-Scholes option pricing model change significantly, share-based compensation for future awards may differ materially from the awards granted previously.
Liquidity and capital resources We have incurred significant losses and cumulative negative cash flows from operations with only limited and intermittent operating profits since our founding in 2000. As of December 31, 2022, we had an accumulated deficit of $778.5 million.
Liquidity and capital resources We have incurred significant losses and cumulative negative cash flows from operations with only limited and intermittent operating profits since our founding in 2000. As of December 31, 2023, we had an accumulated deficit of $985.5 million.
Sales and marketing Sales and marketing expenses consist primarily of personnel costs, travel, marketing and promotional activities, medical education, commercial shipping and facilities costs.
Sales and marketing Sales and marketing expenses consist primarily of personnel costs, travel, marketing and promotional activities, medical education, market access, commercial shipping and facilities costs.
See "Results of Operations" in Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations in the Company's 2021 Annual Report on Form 10-K, filed with the SEC on February 24, 2022, for an analysis of the 2021 results as compared to 2020.
See "Results of Operations" in Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations in the Company's 2022 Annual Report on Form 10-K, filed with the SEC on February 23, 2023, for an analysis of the 2022 results as compared to 2021.
So long as our ordinary shares are publicly traded in a liquid market, we will rely on the daily trading price of our ordinary shares when we estimate the fair value of options granted. We incurred share-based compensation expense of $107.0 million, $94.9 million and $75.7 million during the years ended December 31, 2022, 2021 and 2020, respectively.
So long as our ordinary shares are publicly traded in a liquid market, we will rely on the daily trading price of our ordinary shares when we estimate the fair value of options granted. We incurred share-based compensation expense of $115.6 million, $107.0 million and $94.9 million during the years ended December 31, 2023, 2022 and 2021, respectively.
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 $15.5 million for the year ended December 31, 2022 compared to $25.7 million for the year ended December 31, 2021.
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 $15.8 million for the year ended December 31, 2023 compared to $15.5 million for the year ended December 31, 2022.
Upcoming use of cash in operations will include payments in the normal course of business of $42.1 million in purchase obligations with certain of our suppliers, primarily for the purchase of Product components along with other commitments to purchase goods or services. These amounts include approximately $30.6 million of commitments with three major suppliers.
Upcoming use of cash in operations will include payments in the normal course of business of $43.1 million in purchase obligations with certain of our suppliers, primarily for the purchase of Product components along with other commitments to purchase goods or services. These amounts include approximately $34.5 million of commitments with three major suppliers.
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.
We continue to evaluate and plan for the potential effects of a possible COVID-19 resurgence or other similar outbreak on our business moving forward. The extent to which the COVID-19 pandemic or other outbreak 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.
As of December 31, 2022, we have unrecognized compensation expense of $125.6 million, which is expected to be recognized over a weighted average period of approximately 2.38 years. We expect to continue to grant equity awards in the future, and to the extent that we do, our recognized share-based compensation expense will likely increase.
As of December 31, 2023, we have unrecognized compensation expense of $98.6 million, which is expected to be recognized over a weighted average period of approximately 1.64 years. We expect to continue to grant equity awards in the future, and to the extent that we do, our recognized share-based compensation expense will likely increase.
The net cash provided by financing activities for 2021 was primarily attributable to $21.2 million in proceeds from the exercise of options and $4.5 million in proceeds from the issuance of shares pursuant to the ESPP. 61 Convertible Notes On November 5, 2020, we issued $575.0 million aggregate principal amount of 0% Convertible Senior Notes due 2025 (the “Notes”).
The net cash provided by financing activities for 2022 was primarily 60 attributable to $10.3 million in proceeds from the exercise of options and $5.2 million in proceeds from the issuance of shares pursuant to the ESPP. Convertible Notes On November 5, 2020, we issued $575.0 million aggregate principal amount of 0% Convertible Senior Notes due 2025 (the “Notes”).
For additional information, see Note 13 to the Consolidated Financial Statements. 56 Results of operations The following discussion provides an analysis of our results of operations and reasons for material changes therein for 2022 as compared to 2021.
For additional information, see Note 14 to the Consolidated Financial Statements. 55 Results of operations The following discussion provides an analysis of our results of operations and reasons for material changes therein for 2023 as compared to 2022.
As a result, we may need to raise additional capital to fund our operations. 60 The following summary of our cash flows for the periods indicated has been derived from our consolidated financial statements, which are included elsewhere in this Annual Report: Year ended December 31, U.S. dollars in thousands 2022 2021 2020 Net cash provided by (used in) operating activities $ 30,788 $ 82,756 $ 99,148 Net cash provided by (used in) investing activities (139,957) (144,834) (472,847) Net cash provided by (used in) financing activities 15,491 25,702 440,209 Effect of exchange rate changes on cash and cash equivalents (97) (188) 247 Net increase (decrease) in cash, cash equivalents and restricted cash $ (93,775) $ (36,564) $ 66,757 Operating activities Net cash provided by operating activities primarily represents our net income for the periods presented.
As a result, we may need to raise additional capital to fund our operations. 59 The following summary of our cash flows for the periods indicated has been derived from our consolidated financial statements, which are included elsewhere in this Annual Report: Year ended December 31, U.S. dollars in thousands 2023 2022 2021 Net cash provided by (used in) operating activities $ (73,336) $ 30,788 $ 82,756 Net cash provided by (used in) investing activities 184,148 (139,957) (144,834) Net cash provided by (used in) financing activities 15,787 15,491 25,702 Effect of exchange rate changes on cash and cash equivalents 131 (97) (188) Net increase (decrease) in cash, cash equivalents and restricted cash $ 126,730 $ (93,775) $ (36,564) Operating activities Net cash used in operating activities primarily represents our net loss for the periods presented.
Research, development and clinical studies costs, including direct and allocated expenses, are expensed as incurred and consist primarily of the following: • personnel costs for those employees involved in our preclinical and basic research, clinical development programs, clinical affairs, product development and regulatory activities; • costs to conduct research, product development and clinical study activity through agreements with contract research organizations and other third parties; • manufacturing expenses associated with our Products, including durable components and disposable arrays, utilized in clinical studies and other research; • costs associated with medical grants, publications, presentations and investigator-sponsored trials; • professional fees related to regulatory approvals and conformity assessment procedures; and • facilities, depreciation and other allocated expenses, which include direct and allocated expenses for rent and maintenance of facilities, depreciation of leasehold improvements and equipment and laboratory and other supplies. 53 The following table summarizes our research, development and clinical study expenses by program for the years ended December 31, 2022, 2021 and 2020: Year ended December 31, U.S. dollars in thousands 2022 2021 2020 Preclinical and basic research $ 16,922 $ 15,580 $ 12,079 Clinical development programs: LUNAR 6,905 9,069 8,261 INNOVATE - 3 9,494 17,708 14,190 METIS 8,480 7,056 5,147 PANOVA - 3 22,185 15,026 7,033 TRIDENT 12,162 12,588 3,709 Other clinical studies 5,524 4,634 2,764 Clinical administration 22,690 19,764 13,158 Product development 15,323 15,248 9,710 Clinical affairs 19,891 24,486 21,058 Other research and development costs (1) 35,719 32,547 16,776 Share based compensation 30,790 27,597 18,125 Research, development and clinical studies $ 206,085 $ 201,303 $ 132,010 (1) Other research, development and clinical study costs include regulatory affairs, quality assurance, intellectual property, product safety, allocated facilities and other overhead costs.
Research, development and clinical studies costs, including direct and allocated expenses, are expensed as incurred and consist primarily of the following: • personnel costs for those employees involved in our preclinical and basic research, clinical development programs, clinical affairs, product development and regulatory activities; • costs to conduct research, product development and clinical study activity through agreements with contract research organizations and other third parties; • manufacturing expenses associated with our Products, including durable components and disposable arrays, utilized in clinical studies and other research; • costs associated with publications, presentations and investigator-sponsored trials; • professional fees related to regulatory approvals and conformity assessment procedures; and • facilities, depreciation and other allocated expenses, which include direct and allocated expenses for rent and maintenance of facilities, depreciation of leasehold improvements and equipment and laboratory and other supplies. 52 The following table summarizes our research, development and clinical study expenses by program for the years ended December 31, 2023, 2022 and 2021: Year ended December 31, U.S. dollars in thousands 2023 2022 2021 Preclinical and basic research $ 18,936 $ 16,922 $ 15,580 Clinical development programs: LUNAR 6,846 6,905 9,069 LUNAR - 2 2,999 — — INNOVATE - 3 7,810 9,494 17,708 METIS 5,758 8,480 7,056 PANOVA - 3 18,243 22,185 15,026 TRIDENT 20,348 12,162 12,588 Other clinical studies 6,640 5,524 4,634 Clinical administration 25,363 22,690 19,764 Product development 18,219 15,323 15,248 Clinical affairs 15,935 19,891 24,486 Other research and development costs (1) 44,138 35,719 32,547 Share based compensation 31,827 30,790 27,597 Research, development and clinical studies $ 223,062 $ 206,085 $ 201,303 (1) Other research, development and clinical study costs include regulatory affairs, quality assurance, intellectual property, product safety, allocated facilities and other overhead costs.
Over the next few years, we expect to continue to make significant expenditures associated with selling and marketing our Products, primarily in connection with continued commercialization in North America, the EU and Japan for the treatment of our approved indications. General and administrative General and administrative expenses consist primarily of personnel, professional fees and facilities costs.
Over the next few years, we expect to continue to make significant expenditures associated with selling and marketing our Products, primarily in connection with continued commercialization in North America, the EU and Japan for the treatment of our approved indications.
Product's cost sold to Zai totaled $11.1 million for the year ended December 31, 2022 compared to $11.3 million for the year ended December 31, 2021. Gross margin was 79% for the year ended December 31, 2022 and 79% for the year ended December 31, 2021.
Product's cost sold to Zai totaled $12.0 million for the year ended December 31, 2023 compared to $11.1 million for the year ended December 31, 2022. Gross margin was 75% for the year ended December 31, 2023 and 79% for the year ended December 31, 2022.
To date, we primarily have financed our operations through the issuance and sale of equity and the proceeds from long-term loans. At December 31, 2022, we had $115.3 million in cash and cash equivalents and $854.1 million in short-term investments.
To date, we primarily have financed our operations through the issuance and sale of equity and the proceeds from long-term loans. At December 31, 2023, we had $240.8 million in cash and cash equivalents and $669.8 million in short-term investments.
Our net revenues were $537.8 million for the year ended December 31, 2022, $535.0 million for the year ended December 31, 2021 and $494.4 million for the year ended December 31, 2020.
Our net revenues were $509.3 million for the year ended December 31, 2023, $537.8 million for the year ended December 31, 2022 and $535.0 million for the year ended December 31, 2021.
Prescriptions are a leading indicator of 57 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.
Prescriptions are a leading indicator of demand. A "prescription received" is a commercial order for Optune Gio or Optune Lua that is received from a physician certified to treat patients with our Products for a patient not previously on Optune Gio or Optune Lua.
The decrease in net cash provided by operating activities was primarily driven by a $43.2 million increase in sales, marketing, general and administrative expenses to enhance our capabilities in anticipation of potential future approvals of new indications and entry into potential new markets, and a $4.8 million increase in research and development expenses.
In addition, the decrease in net cash from operating activities was driven by increased expenses, primarily driven by a $84.5 million increase in sales, marketing, general and administrative expenses to enhance our capabilities in anticipation of potential future approvals of new indications and entry into potential new markets, and a $17.0 million increase in research and development expenses.
The net cash provided by financing activities for 2022 was primarily attributable to $10.3 million in proceeds from the exercise of options and $5.2 million in proceeds from the issuance of shares pursuant to the ESPP.
The net cash provided by financing activities for 2023 was primarily attributable to $11.4 million in proceeds from the exercise of options and $4.4 million in proceeds from the issuance of shares pursuant to the ESPP.
Net cash used in investing activities was $140.0 million for the year ended December 31, 2022 compared to net cash used in investing activities of $144.8 million for the year ended December 31, 2021.
Net cash provided by investing activities was $184.1 million for the year ended December 31, 2023 compared to net cash used in investing activities of $140.0 million for the year ended December 31, 2022.
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.
Our intellectual property portfolio contains hundreds of issued patents and numerous patent applications pending 62 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.
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 anticipate expanding our clinical pipeline over time to study the safety and efficacy of TTFields therapy for additional solid tumor indications and combinations with other cancer treatment modalities. . The table below presents the current status of the ongoing clinical trials in our pipeline and anticipated timing of data.
We recently completed patient follow-up and announced top line results from our pivotal LUNAR study evaluating the use of TTFields in the treatment of non-small cell lung cancer ("NSCLC") together with standard therapies. Patients treated with TTFields and standard therapies demonstrated a statistically significant and clinically meaningful improvement in overall survival over standard therapies alone.
In 2023, we announced results from our phase 3 LUNAR study evaluating the use of TTFields together with standard therapies following platinum-based treatment failure in the treatment of patients with metastatic non-small cell lung cancer ("NSCLC"). Patients treated with TTFields therapy and standard therapies demonstrated a statistically significant and clinically meaningful improvement in overall survival over standard therapies alone.
Non-GAAP financial measures We also measure our performance based upon a non-U.S. GAAP measurement of earnings before interest, taxes, depreciation, amortization and shared-based compensation ("Adjusted EBITDA").
The increase reflects a change in the mix of applicable statutory tax rates in active jurisdictions. 58 Non-GAAP financial measures We also measure our performance based upon a non-U.S. GAAP measurement of earnings before interest, taxes, depreciation, amortization and shared-based compensation ("Adjusted EBITDA").
Net cash provided by operating activities was $30.8 million for the year ended December 31, 2022 compared to $82.8 million for the year ended December 31, 2021 a decrease of $ 52.0 million.
Net cash used in operating activities was $73.3 million for the year ended December 31, 2023 compared to $30.8 million provided by operating activities for the year ended December 31, 2022 a decrease of $ 104.1 million.
The net cash used in investing activities for 2022 was primarily attributable to $21.4 million in property and equipment and the net purchase of $118.6 million in short-term investments. The net cash used in investing activities for 2021 was primary attributable to $24.2 million in property and equipment and the net purchase of $120.7 million in short-term investments.
The net cash provided by investing activities for 2023 was primarily attributable to net proceeds of $211.2 million from short-term investments, offset by $27.1 million invested in property and equipment. The net cash used in investing activities for 2022 was primary attributable to $21.4 million in property and equipment and the net purchase of $118.6 million in short-term investments.
References to the words "we," "our," "us," and the "Company" in this report refer to NovoCure Limited, including its consolidated subsidiaries . Overview We are a global oncology company with a proprietary platform technology called Tumor Treating Fields ("TTFields"), which are electric fields that exert physical forces to kill cancer cells via a variety of mechanisms.
Overview We are a global oncology company with a proprietary platform technology called Tumor Treating Fields ("TTFields"), which are electric fields that exert physical forces to kill cancer cells via a variety of mechanisms.
Income tax expenses increased by $4.4 million, or 70%, resulting in a tax expense of $10.7 million for the year ended December 31, 2022 compared to a tax expense of $6.3 million for the year ended December 31, 2021. The increase was primarily due to an increase in income before taxes in the U.S.
Income tax expenses increased by $4.6 million, or 43%, resulting in a tax expense of $15.3 million for the year ended December 31, 2023 compared to a tax expense of $10.7 million for the year ended December 31, 2022.
Year ended December 31, 2022 2021 2020 Net income (loss) $ (92,534) $ (58,351) $ 19,808 Add: Income tax 10,688 6,276 (1,706) Add: Financial expenses (income), net (7,677) 7,742 12,299 Add: Depreciation and amortization 10,624 10,251 9,150 EBITDA $ (78,899) $ (34,082) $ 39,551 Add: Share-based compensation 106,955 94,900 75,721 Adjusted EBITDA $ 28,056 $ 60,818 $ 115,272 Adjusted EBITDA decreased by $32.8 million, or 54%, to $28.1 million for the year ended December 31, 2022 from $60.8 million for the year ended December 31, 2021.
Year ended December 31, 2023 2022 2021 Net income (loss) $ (207,043) $ (92,534) $ (58,351) Add: Income tax 15,303 10,688 6,276 Add: Financial expenses (income), net (41,130) (7,677) 7,742 Add: Depreciation and amortization 10,969 10,624 10,251 EBITDA $ (221,901) $ (78,899) $ (34,082) Add: Share-based compensation 115,608 106,955 94,900 Adjusted EBITDA $ (106,293) $ 28,056 $ 60,818 Adjusted EBITDA decreased by $134.3 million, or 479%, to $(106.3) million for the year ended December 31, 2023 from $28.1 million for the year ended December 31, 2022.
Sales and marketing expenses increased by $36.6 million, or 27%, to $173.7 million for the year ended December 31, 2022 from $137.1 million for the year ended December 31, 2021.
Sales and marketing expenses increased by $53.2 million, or 31%, to $226.8 million for the year ended December 31, 2023 from $173.7 million for the year ended December 31, 2022.
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").
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"). On February 17, 2023, we gave irrevocable notice to the administrative agent under the 2020 Credit Facility that we terminated all commitments, effective February 22, 2023.
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 throughout 2022.
Centers for Disease Control and Prevention, and local health authorities in all of our active markets and will continue to do so. The COVID-19 pandemic did not have a material impact on our financial results through the fourth quarter of 2023.
At December 31, 2022, our cash, cash equivalents and short-term investments totaled $969.4 million, an increase of $31.7 million compared to $937.7 million at December 31, 2021. The increase was primarily due to net cash generated by operating activities and the exercise of options.
At December 31, 2023, our cash, cash equivalents and short-term investments totaled $910.6 million, a decrease of $58.8 million compared to $969.4 million at December 31, 2022. The decrease was primarily due to net cash used in operating activities partially offset by the net cash provided by the exercise of options.
Net revenues increased by $2.8 million, or 1%, to $537.8 million for the year ended December 31, 2022 from $535.0 million for the year ended December 31, 2021.
Net revenues decreased by $28.5 million, or 5%, to $509.3 million for the year ended December 31, 2023 from $537.8 million for the year ended December 31, 2022.
Research, development and clinical studies expenses increased by $4.8 million, or 2%, to $206.1 million for the year ended December 31, 2022 from $201.3 million for the year ended December 31, 2021. The change is driven by an increase of $4.8 million in product development and regulatory affairs expenses.
Research, development and clinical studies expenses increased by $17.0 million, or 8%, to $223.1 million for the year ended December 31, 2023 from $206.1 million for the year ended December 31, 2022. The change is primarily due to an increase of $11.0 million in costs incurred in support of ongoing and anticipated clinical trial launches and regulatory filings.
Our net loss was $92.5 million for the year ended December 31, 2022, net loss was $58.4 million for the year ended December 31, 2021 and net income was $19.8 million for the year ended December 31, 2020.
Our net loss was $207.0 million for the year ended December 31, 2023, net loss was $92.5 million for the year ended December 31, 2022 and net loss was $58.4 million for the year ended December 31, 2021. As of December 31, 2023, we had an accumulated deficit of $985.5 million.
In 2022, we recorded $32 million in revenue from the successful appeal of previously denied claims for Medicare fee-for-service beneficiaries billed prior to established coverage. We continue to actively appeal and pursue previously denied claims for beneficiaries billed prior to established coverage, but the cadence and amount of these Medicare payments are impossible to predict.
For the year ended December 31, 2023, we recorded $5 million in revenue from the successful appeal of previously denied claims for Medicare fee-for-service beneficiaries billed prior to established coverage, a decrease of $27 million from $32 million recorded for the year ended December 31, 2022.
The following table includes certain commercial operating statistics for and as of the end of the periods presented.
Orders to renew or extend treatment are not included in this total. 56 The following table includes certain commercial operating statistics for and as of the end of the periods presented.
Year ended December 31, 2022 2021 Change % Change Cost of revenues $ 114,867 $ 114,877 $ (10) — % Cost of revenues. Our cost of revenues were $114.9 million for the year ended December 31, 2022, virtually unchanged from $114.9 million for the year ended December 31, 2021.
Year ended December 31, 2023 2022 Change % Change Cost of revenues $ 128,280 $ 114,867 $ 13,413 12 % Cost of revenues. Our cost of revenues were $128.3 million for the year ended December 31, 2023, an increase of $13.4 million, or 12%, from $114.9 million for the year ended December 31, 2022.
Year ended December 31, 2022 2021 Change % Change Financial (expenses) income, net $ 7,677 $ (7,742) $ 15,419 (199) % Financial (expenses) income, net. Financial expenses, net, decreased by $15.4 million, or 199%, to $7.7 million income for the year ended December 31, 2022 from $7.7 million expense for the year ended December 31, 2021.
Year ended December 31, 2023 2022 Change % Change Financial (expenses) income, net $ 41,130 $ 7,677 $ 33,453 436 % Financial (expenses) income, net. Financial income, net, increased by $33.5 million, or 436%, to $41.1 million income for the year ended December 31, 2023 from $7.7 million income for the year ended December 31, 2022.
On February 17, 2023, we gave irrevocable notice to the administrative agent under the 2020 Credit Facility that we terminated all commitments, effective February 22, 2023. This effectively terminated the 2020 Credit Facility, as our ability to borrow and our obligations to comply with all covenants ended on such date.
This effectively terminated the 2020 Credit Facility, as our ability to borrow and our obligations to comply with all covenants ended on such date. The liens and guaranties in favor of the lenders are released. There were no early termination fees payable and as of February 22, 2023 we had no outstanding balance borrowed under the 2020 Credit Facility.
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.
Impact of COVID-19 On May 5, 2023, the World Health Organization (“WHO”) declared the end of the COVID-19 pandemic as a public health emergency of international concern, however the WHO maintains that the virus remains a global health threat. Since the pandemic began, we have followed the guidance of the WHO, the U.S.
As of December 31, 2022, we had an accumulated deficit of $778.5 million. 52 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.
References to the words "we," "our," "us," and the "Company" in this report refer to NovoCure Limited, including its consolidated subsidiaries . 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.
This decrease was primarily driven by an increase in sales and marketing expenses intended to increase awareness and acceptance of TTFields in our approved indications, enhance our commercial capabilities in anticipation of potential future approvals in new indications, and expand our international footprint.
This decrease was primarily attributable to increased growth investments intended to expand our capacity to treat larger patient populations, to enhance commercial capabilities and to increase awareness of TTFields in anticipation of potential future approvals in new indications, and a reduction in revenue as described above.
The table below presents the current status of the ongoing clinical studies in our pipeline and anticipated timing of data. 51 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.
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 the delivery of TTFields to the target tumor and enhance patient ease of use.
Excluding sales to Zai, cost of revenues per 58 active patient per month were $2,481 for the year ended December 31, 2022 compared to $2,474 for the year ended December 31, 2021.
Excluding sales to Zai, cost of revenues per active patient per month were $2,714 for the year ended December 31, 2023 compared to $2,481 for the year ended December 31, 2022 driven by higher costs of arrays from our initial roll out of a next generation array and an increase in capacity of patient support services in anticipation of new indications.
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 increased by $6.6 million, or 5%, to $132.8 million for the year ended December 31, 2022 from $126.1 million for the year ended December 31, 2021.
General and administrative expenses increased by $31.3 million, or 24%, to $164.1 million for the year ended December 31, 2023 from $132.8 million for the year ended December 31, 2022.
Year ended December 31, 2022 2021 Change % Change Operating expenses: Research, development and clinical studies $ 206,085 $ 201,303 $ 4,782 2 % Sales and marketing 173,658 137,057 36,601 27 % General and administrative 132,753 126,127 6,626 5 % Total operating expenses $ 512,496 $ 464,487 $ 48,009 10 % Research, development and clinical studies expenses.
Year ended December 31, 2023 2022 Change % Change Operating expenses: Research, development and clinical studies $ 223,062 $ 206,085 $ 16,977 8 % Sales and marketing 226,809 173,658 53,151 31 % General and administrative 164,057 132,753 31,304 24 % Total operating expenses $ 613,928 $ 512,496 $ 101,432 20 % Research, development and clinical studies expenses.
In 2022, financial income was primary driven by interest income and amortization of investment premiums on our cash, cash equivalents and short term investments. In 2021, financial expenses were primarily driven by foreign exchange expenses. 59 Year ended December 31, 2022 2021 Change % Change Income tax $ 10,688 $ 6,276 $ 4,412 70 % Income taxes.
The increase was primarily driven by an increase in interest income of $30.4 million and a decrease of foreign exchange expenses of $3.1 million. Year ended December 31, 2023 2022 Change % Change Income tax $ 15,303 $ 10,688 $ 4,615 43 % Income taxes.
The change primarily was due to increases of $5.0 million and $2.5 million in information technology infrastructure and supply chain optimization, respectively, and offset by a decrease in expenses associated with personnel costs and professional services.
The change was due to increases of $20.2 million in costs associated with increased personnel and services to support our anticipated launch in NSCLC and new geographies, as well as $11.1 million in costs associated with information technology services and personnel.
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.
For example, in many locations staffing levels at clinical trial sites have not returned to pre-pandemic levels, and our ability to conduct and monitor clinical studies may be impacted. Given the aggressive nature of the cancers that we treat, we believe that the fundamental value proposition of the TTFields platform remains unchanged.
Removed
We expect to present full results of the LUNAR study at a future medical conference. In addition to the LUNAR study, we are conducting pivotal studies evaluating the use of TTFields in the treatment of ovarian cancer, brain metastases from NSCLC ("brain metastases") and pancreatic cancer.
Added
We are committed to investing strategically to maximize the growth potential of the TTFields therapy platform. As such, we are prioritizing clinical programs which have the greatest value potential in solid tumors where TTFields therapy has established efficacy, including glioblastoma, non-small cell lung cancer and pancreatic cancer.
Removed
We are also conducting a pivotal study testing the potential survival benefit of initiating Optune concurrent with radiation therapy versus following radiation therapy in patients with newly diagnosed GBM.
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We are prioritizing launch readiness, including field-based commercial and field-based medical team hiring, for the anticipated approval of TTFields therapy for the treatment of metastatic non-small cell lung cancer following progression on or after platinum-based therapies. General and administrative General and administrative expenses consist primarily of personnel, professional fees and facilities costs.
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We have one ongoing pilot study evaluating the use of TTFields in the treatment of stage 3 NSCLC and are designing several additional pilot and pivotal studies in partnership with oncology leaders to further explore the capabilities of TTFields.
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December 31, Operating statistics 2023 2022 2021 Active patients at period end United States 2,162 2,164 2,259 International markets: Germany 525 467 563 Japan 375 369 307 Other international 693 430 458 International markets - Total 1,593 1,266 1,328 Total 3,755 3,430 3,587 Year ended December 31, 2023 2022 2021 Prescriptions received in period United States 3,912 3,790 3,770 International markets: Germany 792 830 924 Japan 354 381 436 Other international 1,025 528 532 International markets - Total 2,171 1,739 1,892 Total 6,083 5,529 5,662 Year ended December 31, 2023 compared to year ended December 31, 2022 Year ended December 31, 2023 2022 Change % Change Net revenues $ 509,338 $ 537,840 $ (28,502) (5) % Net revenues.
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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 property portfolio contains hundreds of issued patents and numerous patent applications pending worldwide.
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The decrease resulted primarily from $48.4 million in reduced collections from denied or appealed claims in the U.S., partially offset by an increase of $14.1 million resulting from improved reimbursement approval rates in Germany and $11.7 million from our launch in France.
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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.
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Following regulatory approval and prior to the establishment of coverage criteria, we have treated on-label patients in the U.S. at risk and appealed denied claims for commercial and Medicare fee-for-service beneficiaries on a case-by-case basis.
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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.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeThe effect of a hypothetical 10% change in foreign currency exchange rates applicable to our business would not have a material impact on our historical consolidated financial statements. We do not hedge our foreign currency exchange risk. 63
Biggest changeThe effect of a hypothetical 10% change in foreign currency exchange rates applicable to our business would not have a material impact on our historical consolidated financial statements. We do not currently hedge our foreign currency exchange risk; however we may engage in hedging transactions in the future. 64
However, because of portfolio diversification, the short-term nature of the instruments in our portfolio and our intent to hold non-money market instruments to maturity, a 10% change in market interest rates would not be expected to have a material impact on our financial condition or our results of operations.
However, because of portfolio diversification, the 63 short-term nature of the instruments in our portfolio and our intent to hold non-money market instruments to maturity, a 10% change in market interest rates would not be expected to have a material impact on our financial condition or our results of operations.
Our market risk exposure is primarily a result of fluctuations in interest rates and foreign currency exchange rates. We do not hold or issue financial instruments for trading purposes. There were no material quantitative changes in our market risk exposures between the year ended December 31, 2022 and the year ended December 31, 2021.
Our market risk exposure is primarily a result of fluctuations in interest rates and foreign currency exchange rates. We do not hold or issue financial instruments for trading purposes. There were no material quantitative changes in our market risk exposures between the year ended December 31, 2023 and the year ended December 31, 2022.
Interest rate sensitivity Our exposure to market risk for changes in interest rates relates primarily to our investment portfolio. Our cash, cash equivalents and short-term investment accounts as of December 31, 2022 totaled $969.4 million and consist of cash, cash equivalents and short-term investments with maturities of less than one year from the date of purchase.
Interest rate sensitivity Our exposure to market risk for changes in interest rates relates primarily to our investment portfolio. Our cash, cash equivalents and short-term investment accounts as of December 31, 2023 totaled $910.6 million and consist of cash, cash equivalents and short-term investments with maturities of less than one year from the date of purchase.

Other NVCR 10-K year-over-year comparisons