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Financial report summary
?Risks
- 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. If we are unable to increase sales of our Products, obtain further regulatory approvals and commercialize our Products for the treatment of additional indications, or are significantly delayed or limited in doing so, our business and prospects will be materially harmed.
- To date, we have generated only occasional and intermittent operating profits, and we have a history of incurring substantial operating losses.
- Our clinical studies could be delayed or otherwise adversely affected by many factors, including difficulties in enrolling patients.
- If we are unable to continue the development of an adequate sales and marketing organization or contract with third parties to assist us, we may not be able to successfully commercialize our Products for current and future indications.
- The success of our business may be dependent on the actions of our collaborative partners.
- We may not be successful in achieving market acceptance of our Products by healthcare professionals, patients and/or third-party payers in the timeframes we anticipate, or at all, which could have a material adverse effect on our business, prospects, financial condition and results of operations.
- Failure to secure and maintain adequate coverage and reimbursement from third-party payers could adversely affect acceptance of our Products and reduce our revenues.
- We may not be successful in securing and maintaining reimbursement codes necessary to facilitate accurate and timely billing for our Products or physician services attendant to our Products.
- We depend on single-source suppliers for some of our components. The loss of these suppliers could prevent or delay shipments of our Products, delay our clinical studies or otherwise adversely affect our business.
- If the third parties on which we rely to conduct our preclinical and clinical studies and to assist us with research and development do not perform as contractually required or expected, we may not be able to obtain regulatory approvals for or commercialize our Products.
- Continued testing of our Products may not yield successful results and could reveal currently unknown aspects or safety hazards associated with our Products.
- 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.
- As we expand, we may experience difficulties managing our growth.
- Because of the specialized nature of our business, the termination of relationships with our key employees, consultants and advisors may prevent us from successfully operating our business, including developing our Products, conducting clinical studies, commercializing our Products and obtaining any necessary financing.
- Product liability suits, whether or not meritorious, could be brought against us due to alleged defective devices or for the misuse of our Products, which could result in expensive and time-consuming litigation, payment of substantial damages and/or expenses and an increase in our insurance rates.
- Other future litigation and regulatory actions could have a material adverse impact on the Company.
- Global economic, political and industry conditions constantly change and unfavorable conditions may have a material adverse effect on our business and results of operations.
- A pandemic, such as the COVID-19 pandemic could materially adversely impact our business.
- We are increasingly dependent on information technology systems and subject to privacy and security laws. Our Products and our systems and infrastructure face certain risks, including from cyber security breaches and data leakage.
- Our device candidates must undergo rigorous preclinical and clinical testing and we must obtain regulatory approvals, which could be costly and time-consuming and subject us to unanticipated delays or prevent us from marketing any devices.
- 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.
- Legislative and regulatory changes in the U.S. and in other countries regarding healthcare insurance and government-sponsored reimbursement programs (such as Medicare in the United States) may adversely affect our business and financial results.
- We are subject to extensive post-marketing regulation by the FDA and comparable authorities in other jurisdictions, which could impact the sales and marketing of our Products and could cause us to incur significant costs to maintain compliance. 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.
- Over time, we expect to make modifications to our Products that are designed to improve efficacy, reduce side effects, enhance the user experience and other purposes. Modifications to our Products may require approvals of new PMAs, HDEs, or PMA/HDE supplement applications, modified or new CE Certificates and analogous regulatory approvals in other jurisdictions or even require us to cease promoting or to recall the modified versions of our Products until such clearances, approvals or modified or new CE Certificates are obtained, and the FDA, comparable regulatory authorities in other jurisdictions or our notified body may not agree with our conclusions regarding whether new approvals are required.
- In addition to FDA requirements, we will spend considerable time and money complying with other federal, state, local and foreign rules, regulations and guidance and, if we are unable to fully comply with such rules, regulations and guidance, we could face substantial penalties.
- 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.
- Our Products may in the future be subject to recalls that could harm our reputation, business and financial results.
- If our Products cause or contribute to a death or a serious injury, or malfunction in certain ways, we will be subject to medical device reporting regulations, which can result in voluntary corrective actions or agency enforcement actions.
- 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.
- We pay taxes in multiple jurisdictions and adverse determinations by taxing or other governmental authorities or changes in tax laws, rates or our status under which tax jurisdictions apply to us could increase our tax burden or otherwise affect our financial condition or results of operations, as well as subject our shareholders to additional taxes.
- 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.
- Safety issues concerning lithium-ion batteries could have a material adverse impact on our business.
- The oncology and medical device industries are characterized by patent and other intellectual property litigation and disputes, and any litigation, dispute or claim against us may cause us to incur substantial costs, could place a significant strain on our financial resources, divert the attention of management from our business, harm our reputation and require us to remove certain devices from the market.
- Changes in U.S. patent law could diminish the value of patents in general, thereby impairing our ability to protect our devices.
- 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.
- U.S. shareholders may not be able to enforce civil liabilities against us.
- 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.
- Transactions relating to our Convertible Notes may dilute the ownership interest of existing shareholders, or may otherwise depress the price of our ordinary shares.
Management Discussion
- Net revenues. 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. 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.
- 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. 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. 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.
- 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. 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.