UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒
☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, ~~2017~~

2020

☐
☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 001-37565

NovoCure Limited

(Exact Name of Registrant as Specified in Its Charter)

~~Jersey~~	~~98-1057807~~
Jersey		98-1057807
(State or Other Jurisdiction of		(I.R.S. Employer
Incorporation or Organization)		Identification No.)

~~Le Masurier House~~

~~La Rue Le Masurier~~

No. 4 The Forum

Grenville Street

St. Helier, Jersey JE2 ~~4YE~~

4UF

(Address of principal executive ~~offices)~~

offices, including zip code)

+44 (0) 15 3475 6700

(Registrant’s Telephone Number, Including Area Code)

Not Applicable

(Former Name, Former Address and Former Fiscal Year, If Changed Since Last Report)

Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Ordinary Shares, no par value	NVCR	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐.

☐.

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes ☒ No ☐.

☐.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. ~~(Check one):~~

Large accelerated filer

☒

☐

Accelerated filer

☒

☐

Non-accelerated filer

☐

☐ ~~(Do not check if a smaller reporting company)~~

Smaller reporting company

☐

Emerging growth company

☒

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒

☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒.

☒.

Indicate the number of shares outstanding of each of the ~~registrant’s~~issuer’s classes of common stock, as of the latest practicable date.

~~Class~~
Class						Outstanding as of October ~~19, 2017~~ 23, 2020
Ordinary shares, no par value						~~89,363,835~~101,797,241 Shares

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

In addition to historical facts or statements of current condition, this report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements contained in this report are based on our current plans, expectations, hopes, beliefs, intentions or strategies concerning future developments and their impact on us. Forward-looking statements contained in this report constitute our expectations or forecasts of future events as of the date this report was filed with the Securities and Exchange Commission (the “SEC”) and are not statements of historical fact. You can identify these statements by the fact that they do not relate strictly to historical or current facts. Such statements may include words such as “anticipate,” “will,” “estimate,” “expect,” “project,” “intend,” “should,” “plan,” “believe,” “hope,” and other words and terms of similar meaning in connection with any discussion of, among other things, future operating or financial performance, strategic initiatives and business strategies, regulatory or competitive environments, our intellectual property and ~~delivery system~~ research and ~~development.~~development related to our Tumor Treating Fields delivery systems marketed under various brand names, including Optune and Optune Lua, and software and systems to support and optimize the delivery of Tumor Treating Fields (collectively, our “Products”). In particular, these forward-looking statements include, among others, statements about:

•our research and development, clinical trial and commercialization activities and projected expenditures;

•the further commercialization of ~~Optune®,~~ our ~~first Tumor Treating Fields (“TTFields”) delivery system,~~Products for current and ~~our other TTFields delivery system candidates;~~

future indications;

•our business strategies and the expansion of our sales and marketing efforts in the United States and in other countries;

•the market acceptance of ~~Optune~~our Products for current and ~~our other TTFields delivery systems~~future indications by patients, physicians, third-party payers and others in the healthcare and scientific community;

•our plans to pursue the use of ~~TTFields~~our Products for the treatment of ~~other~~ solid tumor ~~cancers;~~

cancers other than glioblastoma multiforme (“GBM”) and malignant pleural mesothelioma (“MPM”);

•our estimates regarding revenues, expenses, capital requirements and needs for additional financing;

•our ability to obtain regulatory approvals for ~~additional indications~~the use of our Products in cancers other than GBM and ~~any future TTFields delivery systems;~~

MPM;

•our ability to acquire from third-party suppliers the supplies needed to manufacture our ~~TTFields delivery systems from third-party suppliers;~~

Products;

•our ability to manufacture adequate ~~supply;~~

supply of our products;

•our ability to secure and maintain adequate coverage from third-party payers to reimburse us for ~~Optune or~~our Products for current and future ~~TTFields delivery systems;~~

indications;

•our ability to receive payment from third-party payers for use of our Products for current and future indications;

•our ability to maintain and develop our intellectual property position;

•our ability to manage the risks and business disruptions associated with the COVID-19 pandemic;

•our cash needs;

and

~~our ongoing legal proceedings and tax audits; and~~

•our prospects, financial condition and results of operations.

These forward-looking statements involve a number of risks and uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these ~~forward-looking~~forward-looking statements. Factors which may cause such differences to occur include those risks and uncertainties set forth under Part I, Item 1A., “Risk Factors” ofin our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2016,~~2019 filed on February 27, 2020 (the “2019 10-K”) and in Part II, Item 1A of our Quarterly Report on Form 10-Q filed on April 30, 2020, as well as other risks and uncertainties set forth from time to time in the reports we file with the ~~U.S. Securities and Exchange Commission~~.SEC. In our prior filings, including our 2019 10-K, references to NovoTTF-100L now refer to Optune Lua. We do not intend to update publicly any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by law.

TRADEMARKS

This Quarterly Report on Form 10-Q includes trademarks of NovoCure Limited and other persons. All trademarks or trade names referred to herein are the property of their respective owners.

Table of Contents

NovoCure Limited

Quarterly Report on Form 10-Q

TABLE OF CONTENTS

1 -

Table of Contents

PART I—~~FINANCI~~ALFINANCIAL INFORMATION

Item 1. Financial Statements

~~NOVOCURE LIMITED AND SUBSIDIARIES~~


NOVOCURE LIMITED AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands (except share data)
	September 30, 2020		December 31, 2019
	Unaudited		Audited
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	234,461	$	177,321
Short-term investments	0		148,769
Restricted cash	920		2,095
Trade receivables	84,561		58,859
Receivables and prepaid expenses	37,064		29,202
Inventories	26,479		23,701
Total current assets	383,485		439,947
LONG-TERM ASSETS:
Property and equipment, net	10,271		9,342
Field equipment, net	9,132		7,684
Right-of-use assets, net	17,122		17,571
Other long-term assets	11,039		4,904
Total long-term assets	47,564		39,501
TOTAL ASSETS	$	431,049	$	479,448

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

Table of Contents ~~CONSOLIDATED BALANCE SHEETS~~

~~U.S. dollars in thousands~~

September 30,

December 31,

2017

2016

Unaudited

Audited

ASSETS

CURRENT ASSETS:

Cash and cash equivalents

$
82,104

$
99,780

Short-term investments

104,453

119,854

Restricted cash

2,129

267

Trade receivables

23,000

6,339

Receivables and prepaid expenses

5,559

10,084

Inventories

24,642

25,549

Total current assets

241,887

261,873

LONG-TERM ASSETS:

Property and equipment, net

9,361

9,812

Field equipment, net

8,948

8,808

Severance pay fund

104

88

Other long-term assets

1,978

1,500

Total long-term assets

20,391

20,208

TOTAL ASSETS

$
262,278

$
282,081


NOVOCURE LIMITED AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands (except share data)
	September 30, 2020		December 31, 2019
	Unaudited		Audited
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Trade payables	$	42,206	$	36,925
Other payables, lease liabilities and accrued expenses	53,128		49,386
Total current liabilities	95,334		86,311
LONG-TERM LIABILITIES:
Long-term loan, net of discount and issuance costs	0		149,424
Deferred revenue	10,859		7,807
Long-term leases	13,080		14,140
Employee benefits	4,571		3,754
Other long-term liabilities	168		222
Total long-term liabilities	28,678		175,347
TOTAL LIABILITIES	124,012		261,658

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY:
Share capital -
Ordinary shares no par value, unlimited shares authorized; issued and outstanding: 101,728,327 shares and 99,528,435 shares at September 30, 2020 (unaudited) and December 31, 2019, respectively	0		0
Additional paid-in capital	946,267		871,442
Accumulated other comprehensive income (loss)	(3,236)		(2,767)
Retained earnings (accumulated deficit)	(635,994)		(650,885)
TOTAL SHAREHOLDERS' EQUITY	307,037		217,790
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	431,049	$	479,448

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

~~- 2 -~~

Table of Contents~~NOVOCURE LIMITED AND SUBSIDIARIES~~

~~CONSOLIDATED BALANCE SHEETS~~

~~U.S. dollars in thousands (except share data)~~

September 30,

December 31,

2017

2016

Unaudited

Audited

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:

Trade payables

$
14,143

$
18,356

Other payables and accrued expenses

26,842

18,526

Total current liabilities

40,985

36,882

LONG-TERM LIABILITIES:

Long-term loan, net of discount and issuance costs

97,049

96,231

Employee benefit liabilities

2,489

2,590

Other long-term liabilities

5,070

4,033

Total long-term liabilities

104,608

102,854

TOTAL LIABILITIES

145,593

139,736

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY:

Share capital -

-

-

Ordinary shares no par value, unlimited shares authorized; issued and outstanding:
89,355,679 shares and 87,066,446 shares at September 30, 2017 (unaudited) and
December 31, 2016, respectively

Additional paid-in capital

689,460

664,154

Accumulated other comprehensive loss

(1,462
)

(1,883
)
Accumulated deficit

(571,313
)

(519,926
)
Total shareholders' equity

116,685

142,345

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$
262,278

$
282,081


NOVOCURE LIMITED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS
U.S. dollars in thousands (except share and per share data)
	Three months ended September 30,				Nine months ended September 30,				Year ended December 31,
	2020		2019		2020		2019		2019
	Unaudited				Unaudited				Audited
Net revenues	$	132,660	$	92,062	$	350,413	$	252,084	$	351,318
Cost of revenues	28,395		22,900		78,365		63,820		88,606
Gross profit	104,265		69,162		272,048		188,264		262,712

Operating costs and expenses:
Research, development and clinical trials	32,818		18,766		88,008		55,262		79,003
Sales and marketing	29,364		23,830		86,658		69,871		96,675
General and administrative	27,061		22,711		79,073		64,198		87,948
Total operating costs and expenses	89,243		65,307		253,739		189,331		263,626

Operating income (loss)	15,022		3,855		18,309		(1,067)		(914)
Financial expenses (income), net	3,983		2,555		9,032		6,165		7,910

Income (loss) before income tax	11,039		1,300		9,277		(7,232)		(8,824)
Income tax	1,755		(630)		(5,614)		4,258		(1,594)
Net income (loss)	$	9,284	$	1,930	$	14,891	$	(11,490)	$	(7,230)

Basic net income (loss) per ordinary share	$	0.09	$	0.02	$	0.15	$	(0.12)	$	(0.07)
Weighted average number of ordinary shares used in computing basic net income (loss) per share	101,234,306		98,485,519		100,601,427		96,551,041		97,237,549

Diluted net income (loss) per ordinary share	$	0.09	$	0.02	$	0.14	$	(0.12)	$	(0.07)
Weighted average number of ordinary shares used in computing diluted net income (loss) per share	108,643,814		107,604,578		108,113,416		96,551,041		97,237,549

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

~~- 3 -~~

Table of Contents~~NOVOCURE LIMITED AND SUBSIDIARIES~~


CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
U.S. dollars in thousands
	Three months ended September 30,				Nine months ended September 30,				Year ended December 31,
	2020		2019		2020		2019		2019
	Unaudited				Unaudited				Audited
Net income (loss)	$	9,284	$	1,930	$	14,891	$	(11,490)	$	(7,230)
Other comprehensive income (loss), net of tax:
Change in foreign currency translation adjustments	143		(216)		26		(430)		(304)
Pension benefit plan	153		(68)		(495)		(811)		(1,063)
Total comprehensive income (loss)	$	9,580	$	1,646	$	14,422	$	(12,731)	$	(8,597)

Table of Contents


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

Balance as of December 31, 2019 (audited)	99,528,435	$	871,442	$	(2,767)	$	(650,885)	$	217,790

Share-based compensation to employees	—	16,557		—		—		16,557
Exercise of options and vested RSUs	834,538	4,511		—		—		4,511
Other comprehensive income (loss), net of tax benefit of $0	—	—		(862)		—		(862)
Net income (loss)	—	—		—		3,952		3,952
Balance as of March 31, 2020 (Unaudited)	100,362,973	$	892,510	$	(3,629)	$	(646,933)	$	241,948

Share-based compensation to employees	—	18,770		—		—		18,770
Proceeds from issuance of shares	33,075	1,667		—		—		1,667
Exercise of options and vested RSUs	624,673	3,685		—		—		3,685
Other comprehensive income (loss), net of tax benefit of $0	—	—		97		—		97
Net income (loss)	—	—		—		1,655		1,655
Balance as of June 30, 2020 (Unaudited)	101,020,721	$	916,632	$	(3,532)	$	(645,278)	$	267,822

Share-based compensation to employees	—	20,121		—		—		20,121
Exercise of options and vested RSUs	707,606	9,514		—		—		9,514
Other comprehensive income (loss), net of tax benefit of $0	—	—		296		—		296
Net income (loss)	—	—		—		9,284		9,284
Balance as of September 30, 2020 (Unaudited)	101,728,327	$	946,267	$	(3,236)	$	(635,994)	$	307,037

Table of Contents~~CONSOLIDATED STATEMENTS OF OPERATIONS~~

~~U.S. dollars in thousands (except share and per share data)~~

Three months ended September 30,

Nine months ended September 30,

Year ended
December 31,

2017

2016

2017

2016

2016

Unaudited

Unaudited

Audited

Net revenues

$
50,109

$
21,674

$
123,365

$
52,646

$
82,888

Cost of revenues

15,153

11,118

39,969

28,897

39,870

Impairment of field equipment

-

-

-

6,412

6,412

Gross profit

34,956

10,556

83,396

17,337

36,606

Operating costs and expenses:

Research, development and clinical trials

9,273

10,233

28,055

32,996

41,467

Sales and marketing

16,387

15,865

47,503

43,771

59,449

General and administrative

15,215

12,723

42,660

38,010

51,007

Total operating costs and expenses

40,875

38,821

118,218

114,777

151,923

Operating loss

(5,919
)

(28,265
)

(34,822
)

(97,440
)

(115,317
)
Financial expenses, net

2,156

2,189

6,785

3,293

6,147

Loss before income tax expense

(8,075
)

(30,454
)

(41,607
)

(100,733
)

(121,464
)
Income tax expense

3,423

3,174

9,110

8,944

10,381

Net loss

$
(11,498
)

$
(33,628
)

$
(50,717
)

$
(109,677
)

$
(131,845
)

Basic and diluted net loss per ordinary share

$
(0.13
)

$
(0.39
)

$
(0.57
)

$
(1.29
)

$
(1.54
)

Weighted average number of ordinary shares used in
computing basic and diluted net loss per share

89,125,646

85,774,874

88,265,835

85,153,644

85,558,448


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

Balance as of December 31, 2018 (audited)	93,254,185	$	757,314	$	(1,400)	$	(643,655)	$	112,259

Share-based compensation to employees	—	9,649		—		—		9,649
Exercise of options and warrants and vested RSUs	2,438,612	16,978		—		—		16,978
Other comprehensive income (loss), net of tax benefit of $11	—	—		(342)		—		(342)
Net income (loss)	—	—		—		(12,150)		(12,150)
Balance as of March 31, 2019 (Unaudited)	95,692,797	$	783,941	$	(1,742)	$	(655,805)	$	126,394

Share-based compensation to employees	—	13,732		—		—		13,732
Proceeds from issuance of shares	43,421	1,208		—		—		1,208
Exercise of options and warrants and vested RSUs	2,122,658	19,457		—		—		19,457
Other comprehensive income (loss), net of tax benefit of $69	—	—		(615)		—		(615)
Net income (loss)	—	—		—		(1,270)		(1,270)
Balance as of June 30, 2019 (Unaudited)	97,858,876	$	818,338	$	(2,357)	$	(657,075)	$	158,906

Share-based compensation to employees	—	14,338		—		—		14,338
Exercise of options and warrants and vested RSUs	1,090,059	15,475		—		—		15,475
Other comprehensive income (loss), net of tax benefit of $11	—	—		(284)		—		(284)
Net income (loss)	—	—		—		1,930		1,930
Balance as of September 30, 2019 (Unaudited)	98,948,935	$	848,151	$	(2,641)	$	(655,145)	$	190,365

~~CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)~~

~~U.S. dollars in thousands~~

Three months ended September 30,

Nine months ended September 30,

Year ended
December 31,

2017

2016

2017

2016

2016

Unaudited

Unaudited

Audited

Net loss

$
(11,498
)

$
(33,628
)

$
(50,717
)

$
(109,677
)

$
(131,845
)
Other comprehensive income (loss), net of tax :

Change in foreign currency translation adjustments

(2
)

8

8

64

10

Pension benefit plan

279

(409
)

413

(644
)

(388
)
Total comprehensive loss

$
(11,221
)

$
(34,029
)

$
(50,296
)

(110,257
)

$
(132,223
)

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

~~- 4 -~~

Table of Contents~~NOVOCURE LIMITED AND SUBSIDIARIES~~


NOVOCURE LIMITED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. dollars in thousands
	Three months ended September 30,				Nine months ended September 30,				Year ended December 31,
	2020		2019		2020		2019		2019
	Unaudited				Unaudited				Audited
Cash flows from operating activities:
Net income (loss)	$	9,284	$	1,930	$	14,891	$	(11,490)	$	(7,230)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation and amortization	2,188		1,932		6,677		5,993		8,460
Asset write-downs and impairment of field equipment	124		78		263		239		398
Share-based compensation	20,121		14,338		55,448		37,719		52,416
Foreign currency remeasurement loss (gain)	(79)		0		(549)		0		(917)
Decrease (increase) in accounts receivables	(7,678)		(9,986)		(33,556)		(17,020)		(36,496)
Amortization of discount (premium)	424		(547)		(654)		(1,712)		(2,176)
Decrease (increase) in inventories	(55)		1,067		(2,446)		(1,832)		(1,159)
Decrease (increase) in other long-term assets	(5,173)		1,069		(2,794)		1,151		3,446
Increase (decrease) in accounts payables and accrued expenses	9,908		6,433		7,974		10,902		16,883
Increase (decrease) in other long-term liabilities	1,905		(1,407)		413		(4,292)		(7,006)
Net cash provided by (used in) operating activities	$	30,969	$	14,907	$	45,667	$	19,658	$	26,620

Cash flows from investing activities:
Purchase of property, equipment and field equipment	$	(2,782)	$	(2,708)	$	(9,209)	$	(7,430)	$	(10,485)
Proceeds from maturity of short-term investments	150,000		105,000		150,000		315,661		420,661
Purchase of short-term investments	0		(104,466)		0		(313,142)		(461,843)
Net cash provided by (used in) investing activities	$	147,218	$	(2,174)	$	140,791	$	(4,911)	$	(51,667)

Cash flows from financing activities:
Proceeds from issuance of shares, net	$	0	$	0	$	1,667	$	1,208	$	2,467
Repayment of long-term loan	(150,007)		(7)		(150,022)		(23)		(31)
Exercise of options and warrants	9,514		15,475		17,710		51,910		59,245
Net cash provided by (used in) financing activities	$	(140,493)	$	15,468	$	(130,645)	$	53,095	$	61,681

Effect of exchange rate changes on cash, cash equivalents and restricted cash	$	102	$	(216)	$	152	$	(430)	$	26

Increase (decrease) in cash, cash equivalents and restricted cash	37,796		27,985		55,965		67,412		36,660

Table of Contents ~~CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY~~

~~U.S. dollars in thousands (except share data)~~

Ordinary shares

Additional
paid-in

Accumulated
other
comprehensive

Accumulated

Total shareholders'

Shares

capital

loss

deficit

equity

Balance as of December 31, 2015 (audited)

83,778,581

$
640,406

$
(1,505
)

$
(388,081
)

$
250,820

Share-based compensation to employees

-

21,441

-

-

21,441

Exercise of options and warrants

3,195,477

993

-

-

993

Issuance of shares in connection with employee stock
   purchase plan

92,388

616

-

-

616

Tax benefit from share-based award activity

-

698

-

-

698

Other comprehensive loss, net of tax benefit of $38

-

-

(378
)

-

(378
)
Net loss

-

-

-

(131,845
)

(131,845
)
Balance as of December 31, 2016 (audited)

87,066,446

$
664,154

$
(1,883
)

$
(519,926
)

$
142,345

Share-based compensation to employees

-

20,760

-

-

20,760

Exercise of options and warrants

2,172,266

3,095

-

-

3,095

Cumulative effect adjustment resulting from ASU
   2016-09 adoption (see Note 1)

-

670

-

(670
)

-

Issuance of shares in connection with employee stock
   purchase plan

116,967

781

-

-

781

Other comprehensive income, net of tax benefit of $57

-

-

421

-

421

Net loss

-

-

-

(50,717
)

(50,717
)
Balance as of September 30, 2017 (unaudited)

89,355,679

$
689,460

$
(1,462
)

$
(571,313
)

$
116,685


Cash, cash equivalents and restricted cash at the beginning of the period	197,585		182,183		179,416		142,756		142,756

Cash, cash equivalents and restricted cash at the end of the period	$	235,381	$	210,168	$	235,381	$	210,168	$	179,416

	Three months ended September 30,				Nine months ended September 30,				Year ended December 31,
	2020		2019		2020		2019		2019
	Unaudited				Unaudited				Audited
Supplemental cash flow activities:
Cash paid during the period for:
Income taxes, net of refunds	$	4,382	$	3,040	$	11,319	$	10,431	$	11,241
Interest	$	1,840	$	3,453	$	8,671	$	10,247	$	13,699
Non-cash activities in accordance with ASC-842:
Right-of-use assets obtained in exchange for lease obligations	$	675	$	1,062	$	2,849	18,335		$	22,943

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

~~- 5 -~~

Table of Contents

NOVOCURE LIMITED AND SUBSIDIARIES

~~CONSOLIDATED STATEMENTS OF CASH FLOWS~~

~~U.S. dollars in thousands~~

Three months ended September 30,

Nine months ended September 30,

Year ended
December 31,

2017

2016

2017

2016

2016

Unaudited

Unaudited

Audited

Cash flows from operating activities:

Net loss

$
(11,498
)

$
(33,628
)

$
(50,717
)

$
(109,677
)

$
(131,845
)
Adjustments to reconcile net loss to net cash provided by
(used in) operating activities:

Depreciation and amortization

2,053

1,553

5,524

4,063

5,652

Asset write-downs and impairment of field equipment

72

10

206

6,440

6,446

Increase in accrued interest expense

-

222

-

222

-

Share-based compensation to employees

8,629

5,626

20,760

16,719

22,139

Excess tax benefits from share-based award activity

-

-

-

-

(698
)
Increase in trade receivables

(9,112
)

-

(16,661
)

-

(6,339
)
Amortization of discount

17

81

226

25

155

Decrease (increase) in receivables and prepaid expenses

5,986

694

4,525

(1,514
)

243

Decrease (increase) in inventories

504

(2,757
)

907

(10,378
)

(11,955
)
Increase in other long-term assets

(238
)

(526
)

(532
)

(804
)

(692
)
Increase (decrease) in trade payables

983

(6,765
)

(4,213
)

(2,621
)

1,601

Increase in other payables and accrued expenses

4,830

1,651

8,308

2,407

6,647

Increase in employee benefit liabilities, net

113

80

352

350

97

Increase in other long-term liabilities

208

263

1,079

901

957

Net cash provided by (used in) operating activities

$
2,547

$
(33,496
)

$
(30,236
)

$
(93,867
)

$
(107,592
)

Cash flows from investing activities:

Purchase of property and equipment

$
(544
)

$
(1,715
)

$
(1,951
)

$
(5,055
)

$
(5,674
)
Purchase of field equipment

(1,208
)

(3,113
)

(3,469
)

(9,213
)

(11,990
)
Decrease (increase) in restricted cash

(592
)

27

(1,861
)

15

(180
)
Proceeds from maturity of short-term investments

-

120,000

120,000

270,000

270,000

Purchase of short-term investments

-

(119,613
)

(104,006
)

(239,341
)

(239,341
)
Net cash provided by (used in) investing activities

$
(2,344
)

$
(4,414
)

$
8,713

$
16,406

$
12,815

Cash flows from financing activities:

Proceeds from issuance of shares, net

$
-

$
-

$
781

$
-

$
616

Proceeds from long-term loan, net

-

72,870

19

72,887

72,887

Excess tax benefits from share-based award activity

-

-

-

-

698

Repayment of other long-term loan

(19
)

(17
)

(56
)

(52
)

(70
)
Exercise of options and warrants

1,732

-

3,095

961

993

Net cash provided by financing activities

$
1,713

$
72,853

$
3,839

$
73,796

$
75,124

Effect of exchange rate changes on cash and cash equivalents

$
(2
)

$
8

$
8

$
64

$
10

Increase (decrease) in cash and cash equivalents

1,914

34,951

(17,676
)

(3,601
)

(19,643
)
Cash and cash equivalents at the beginning of the period

80,190

80,871

99,780

119,423

119,423

Cash and cash equivalents at the end of the period

$
82,104

$
115,822

$
82,104

$
115,822

$
99,780

Supplemental cash flow activities:

Cash paid during the period for:

Income taxes

$
2,335

$
4,624

$
7,237

$
7,793

$
9,447

Interest

$
2,561

$
1,880

$
7,603

$
3,813

$
6,595

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

~~- 6 -~~

~~NOVOCURE LIMITED AND SUBSIDIARIES~~

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands (except share data)

NOTE 1: ORGANIZATION AND BASIS OF PRESENTATION

Organization. NovoCure Limited (including its consolidated subsidiaries, the “Company”) was incorporated in the Bailiwick of Jersey and is principally engaged in the development, manufacture and commercialization of Tumor Treating Fields ~~(“TTFields”)~~delivery systems, including Optune andOptune Lua, for the treatment of solid tumors. The Company has received regulatory approval from the U.S. Food and Drug Administration (“FDA”) under the Premarket Approval (“PMA") pathway and regulatory approvals and clearances in certain other countries for Optune ~~its first TTFields delivery system,~~ to treat adult patients with glioblastoma multiforme (“GBM”).

The Company also has received FDA approval under the Humanitarian Device Exemption pathway to market Optune Lua for unresectable, locally advanced or metastatic malignant pleural mesothelioma (“MPM”) in combination with standard chemotherapies.

Financial statement preparation. The accompanying unaudited consolidated financial statements include the accounts of the Company ~~and its consolidated subsidiaries,~~ and intercompany accounts and transactions have been eliminated. In the opinion of the Company’s management, the consolidated financial statements reflect all adjustments, which are normal and recurring in nature, necessary for fair financial statement ~~presentation.~~presentation for the periods presented. The preparation of these consolidated financial statements in conformity with U.S. generally accepted accounting principles ~~(“GAAP”)~~ requires management to make estimates and assumptions that affect the amounts reported in these consolidated financial statements and accompanying notes. Actual results could differ materially from those estimates. These consolidated financial statements and accompanying notes should be read in conjunction with the Company’s annual consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, ~~2016~~2019 (the ~~“2016~~“2019 10-K”) filed with the Securities and Exchange Commission ~~(the “SEC”)~~ on February ~~23, 2017.~~

27, 2020.

The significant accounting policies applied in the audited annual consolidated financial statements of the Company as disclosed in the ~~2016~~2019 10-K are applied consistently in these unaudited interim consolidated financial statements, except as noted below:

Recently Adopted Accounting ~~Pronouncements~~. Pronouncements.

In ~~March~~June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) ~~2016-09, Compensation-Stock Compensation~~2016-13, Financial Instruments - Credit Losses (Topic ~~718)~~326): ~~Improvements~~Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). ASU 2016-13 amends the impairment model to ~~Employee Share-Based Payment Accounting. The amendments~~utilize an expected loss methodology in ~~ASU 2016-09 affect all entities that issue share-based payment awards to their employees and involve multiple aspects~~place of the currently used incurred loss methodology, which will result in the more timely recognition of losses. ASU 2016-13 also applies to employee benefit plan accounting, effective date for ~~share-based payment transactions, including income tax consequences, classification~~the first quarter of awards as either equity or liabilities, and classification on the statement of cash flows. ASU 2016-09 is effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. fiscal year 2020. The Company adopted ASU 2016-09 during the quarter ended March 31, 2017, at which time it changed its accounting policy to account for forfeitures as they occur. The change was applied on a modified retrospective basis with a cumulative effect adjustment to accumulated deficit of $670 as of January 1, 2017. In addition, excess tax benefits for share-based payments are now presented ~~as an operating activity in the statements of cash flows~~ ~~rather than financing~~ ~~activity. The changes have been applied prospectively in accordance with the ASU and prior periods have not been adjusted.~~

~~Recent Accounting Pronouncements.~~ In May 2014, FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606) (ASU 2014-09), which amends the existing accounting standards for revenue recognition. In August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, which delays the effective date of ASU 2014-09 by one year. The Company is currently evaluating the requirements of the new standard to insure that it has processes, systems and internal controls in place to collect the necessary information to implement the standard ~~which will be~~ effective as of January 1, ~~2018. Currently, the Company anticipates using a portfolio approach to apply the standard to portfolios of contracts with similar characteristics~~2020, and anticipates that it will apply the cumulative catch-up transition method which requires the application of the provisions of the new standard as of the date of adoption with the cumulative effect of the retrospective application of the provisions as an adjustment through retained earnings. While the Company is still in the process of completing its assessment on the impact this guidance will have on its consolidated financial statements and related disclosures, the Company does not anticipate that the adoption of this standard ~~will~~did not have ~~a material~~an impact on ~~its~~the Company's consolidated financial ~~position, results of operations or cash flows.~~

statements.

In ~~April 2016,~~August 2018, FASB issued ASU ~~2016-10, Revenue from Contracts~~2018-15, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. The amendments in this ASU align the requirements for capitalizing implementation costs incurred in a hosting arrangement with ~~Customers (Topic 606): Identifying Performance Obligations~~the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The implementation costs incurred in a hosting arrangement that is a service contract should be presented as a prepaid asset in the balance sheet and Licensing. ASU 2016-10 covers two specific topics: performance obligations and licensing. This amendment includes guidance on immaterial promised goods or services, shipping or handling activities, separately identifiable performance obligations, functional or symbolic intellectual property licenses, sales-based and usage-based royalties, license restrictions (time, use, geographical) and licensing renewals. In addition, in May 2016, FASB issued ASU No. 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients, which is intended to not change the core principle of the guidance in Topic 606, but rather affect only the narrow aspects of Topic 606 by reducing the potential for diversity in practice at initial application and by reducing the cost and complexity of applying Topic 606 both at transition and on an ongoing basis. The Company is currently evaluating the impact of the adoption of both revenue standards on its consolidated financial statements.

In February 2016, FASB issued ASU 2016-02-Leases (ASC 842), which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract (i.e. lessees and lessors). The new standard requires lessees to apply

~~- 7 -~~

a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification will determine whether lease expense is recognized based on an effective interest method or on a straight line basisexpensed over the term of the ~~lease, respectively. A lessee is also required~~hosting arrangement to ~~record a right-of-use asset and a lease liability for all leases with a term~~the same line item in the statement of ~~greater than twelve months regardless~~income as the costs related to the hosting fees. The Company adopted the standard effective as of their classification. Leases with a term of twelve months or less will be accounted for similar to existing guidance for operating leases. The new standard requires lessors to account for leases using an approach that is substantially equivalent to existing guidance for sales-type leases, direct financing leases and operating leases. ASC 842 supersedes the previous leases standard, ASC 840. The standard is effective on January 1, ~~2019, with early adoption permitted. The Company currently anticipates adopting the new standard effective January 1, 2019~~2020, and ~~is evaluating the impact of~~ the adoption of this standard did not have an impact on ~~its~~the Company's consolidated financial statements.

~~In May 2017, FASB issued ASU 2017-09,~~ ~~Compensation-Stock Compensation (Topic 718) Scope~~

Table of ~~Modification Accounting.~~ ~~ASU 2017-09 provides clarification on~~Contents

NOTE 2: CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS

Cash equivalents include items almost as liquid as cash, such as certificates of deposit and time deposits with maturity periods of three months or less when ~~modification accounting should be used for changes to~~purchased. As of September 30, 2020 and December 31, 2019, the terms or conditions of a share-based payment award. This ASU does not change the accounting for modifications but clarifies that modification accounting guidance should only be applied if there is a change to the value, vesting conditions, or award classificationCompany’s cash and ~~would not be required if the changes are considered non-substantive.~~ cash equivalents were composed of:


	September 30, 2020		December 31, 2019
	Unaudited		Audited
Cash	$	25,595	$	18,377
Money market funds	208,866		158,944
Total cash and cash equivalents	$	234,461	$	177,321

The Company ~~is evaluating the impact of ASU~~ ~~2017-09~~.

~~NOTE 2: SHORT-TERM INVESTMENTS~~

~~The Company~~also invests in marketable U.S. Treasury Bills (“T-bills”) that are classified as held-to-maturity securities. The amortized cost and recorded basis of the T-bills are presented as short-term investments. In August 2020, all outstanding short-term investments matured and were used to prepay the Company's outstanding term loan. See Note 5: Long Term Loan below. As of September 30, 2020 and December 31, 2019, the Company’s short-term investments were:


	September 30, 2020		December 31, 2019
	Unaudited		Audited
Short-term investments	$	0	$	148,769

Quoted market prices were applied to determine the fair value of cash equivalents and short-term investments, therefore they were categorized as Level 1 in accordance with Accounting Standards Codification (“ASC”) 820, “Fair Value Measurements and Disclosures.” The estimated fair value of the ~~amount of $104,453 and $119,854~~Company’s short-term investments as of September 30, ~~2017~~2020 and December 31, ~~2016, respectively,~~2019 was $0 and ~~their estimated fair value as of September 30, 2017 and December 31, 2016 was $104,419 and $119,825,~~$148,738, respectively.

NOTE 3: INVENTORIES

Inventories are stated at the lower of cost or ~~market.~~net realizable value. The weighted average methodology is applied to determine cost. As of September 30, ~~2017~~2020 and December 31, ~~2016,~~2019, the Company’s inventories were composed of:

	September 30,		December 31,
	2017		2016			September 30, 2020		December 31, 2019
	Unaudited		Audited			Unaudited		Audited
Raw materials	$	5,936	$	5,243	Raw materials	$	5,711	$	3,912
Work in progress		10,621		8,292	Work in progress	6,987		6,482
Finished products		8,085		12,014	Finished products	13,781		13,308
Total	$	24,642	$	25,549	Total	$	26,479	$	23,701

NOTE 4: COMMITMENTS AND CONTINGENT LIABILITIES

Operating Leases. The facilities of the Company are leased under various operating lease agreements for periods, including options for extensions, ending no later than ~~2024.~~2030. The Company also leases motor vehicles under various operating leases, which expire on various dates, the latest of which is in ~~2020.~~

2024.

Pledged deposits and bank guarantees. As of September 30, ~~2017~~2020 and December 31, ~~2016,~~2019, the Company pledged bank deposits of ~~$1,051~~ $1,420and ~~$807,~~$1,390, respectively, to cover bank guarantees in respect of its leases of operating facilities and obtained bank guarantees ~~by the bank~~ for the fulfillment of the Company’s lease and other contractual commitments of ~~$1,212~~ $1,652and ~~$955, respectively.~~

$1,557, respectively.

Table of Contents~~In January 2017, two putative class action lawsuits were filed against~~

NOTE 5: LONG TERM LOAN

On August 18, 2020, the Company terminated its ~~directors~~outstanding term loan, which bore interest at 9.0% per annum. The prepayment included $150,000 in principal repayment and ~~certain~~$3,000 in prepayment premium, plus accrued and unpaid interest and expenses payable through the payoff date. The un-amortized issuance costs in the amount of ~~its officers, as well as~~$478 that were fully amortized upon the ~~underwriters~~repayment and the prepayment premium were included in the Company’s October 2015 initial public offering. The complaints, which purport to be brought on behalf of a class of persons and/or entities who purchased or otherwise acquired ordinary shares of the Company pursuant and/or traceable to the registration statement and prospectus issued in connection with the Company’s initial public offering, allege material misstatements and/or omissions in the Company’s initial public offering materials in alleged violation of the federal securities laws and seek compensatory damages, among other remedies. The two actions have been consolidated and the plaintiffs filed a consolidated amended complaint on May 31, 2017. The court granted the defendants’ motion to bifurcate the motion to dismiss into two stages: a threshold motion to dismiss for lack of personal jurisdiction, lack of subject matter jurisdiction, and insufficient process and service of process; and, if the matter is not dismissed following that threshold motion, a subsequent merits motion to dismiss regarding whether the allegations in the amended complaint state a claim under the securities laws. The defendants filed the threshold motion to dismiss on July 31, 2017, and the plaintiffs filed an opposition to the threshold motion to dismiss on September 29, 2017. The Company believes that the amended complaint is without merit and plans to defend the consolidated lawsuits vigorously. The Company has not

~~- 8 -~~

~~accrued any amounts in respect of these lawsuits, as a liability is not probable and the amount of any potential liability cannot be reasonably estimated.~~

~~NOTE 5: SHARE CAPITAL~~

For the nine months ended September 30, 2017, warrants to purchase 1,418,711 ordinary shares with an exercise price of $3.59 per share were cashlessly exercised, resulting in the issuance of 803,138 ordinary shares. Also, warrants to purchase 6,498 ordinary shares with an exercise price of $3.59 per share were exercised for cash. For the nine months ended September 30, 2017, options to purchase 1,370,810 ordinary shares were exercised, resulting in the issuance of 1,364,645 ordinary shares.

third quarter finance expenses.

NOTE 6: EQUITY INCENTIVE PLANS

AND ESPP

In September 2015, the Company adopted the 2015 Omnibus Incentive Plan (the “2015 Plan”). Under the 2015 Plan, the Company can issue various types of equity compensation awards such as share options, restricted shares, performance shares, restricted ~~stock~~share units (“RSUs”), ~~performance~~performance-based share units (“PSUs”), long-term cash awards and other share-based awards.

Options granted under the 2015 Plan generally have a four-year vesting period and expire ten years after the date of grant. Options granted under the 2015 Plan that are ~~cancelled~~canceled or forfeited before expiration become available for future grants. RSUs granted under the 2015 Plan generally vest ~~in equal installments~~ over a ~~three-year~~three year period. PSUs granted under the 2015 Plan generally vest between a three and six year period as performance targets are attained. RSUs and PSUs granted under the 2015 Plan that are canceled before expiration become available for future grants. As of September 30, ~~2017,~~ ~~9,563,985~~2020, 11,263,270 ordinary shares were available for grant under the 2015 Plan.

A summary of the status of the Company’s option plans as of September 30, ~~2017~~2020 and changes during the period then ended is presented below:


	Nine months ended September 30, 2017						Nine months ended September 30, 2020
	Unaudited						Unaudited
	Number of options			Weighted average exercise price			Number of options	Weighted average exercise price
Outstanding at beginning of year		11,377,354		$	9.76	Outstanding at beginning of year	10,350,810	$	20.40
Granted		5,117,088			9.96	Granted	861,551	70.56
Exercised		(1,370,810	)		2.31	Exercised	(1,260,709)	14.16
Forfeited and cancelled		(310,693	)		12.39
Outstanding as of September 30, 2017		14,812,939			10.46
Forfeited and canceled						Forfeited and canceled	(183,758)	19.26
Outstanding as of September 30, 2020						Outstanding as of September 30, 2020	9,767,894	$	25.65

Exercisable options		6,119,710			8.17	Exercisable options	4,858,926	$	16.84

Vested and expected to vest		14,812,939		$	10.46

For the nine months ended September 30, 2020, options to purchase 1,260,709 ordinary shares were exercised, resulting in the issuance of 1,260,709 ordinary shares.

A summary of the status of the Company’s RSUs and PSUs as of September 30, ~~2017~~2020 and changes during the period then ended is presented ~~below:~~

below.

Nine months ended September 30, 2017

Unaudited

Number
of RSUs

Weighted
average
grant date fair value
price

Unvested at beginning of year

-

$
-

Granted

1,661,619

9.64

Vested

-

-

Forfeited and cancelled

(10,400
)

7.15

Unvested as of September 30, 2017

1,651,219

$
9.66

~~- 9 -~~

Table of Contents


	Nine months ended September 30, 2020
	Unaudited
	Number of RSU/PSUs	Weighted average grant date fair value
Unvested at beginning of year	1,474,395	$	30.26
Granted (1)	3,923,573	55.06
Vested	(906,108)	21.31
Forfeited and cancelled	(24,394)	48.49
Unvested as of September 30, 2020	4,467,466	53.76

(1) Includes RSUs and PSUs granted on March 3, 2020 as follows: (a) 527,041 RSUs that are expensed based on their grant date fair value of $69.37 per RSU over the service period of three years; (b) 408,539 PSUs that have a mix of service and clinical milestone vesting conditions, cliff-vest in pre-determined increments, and that have been deemed probable to vest and are therefore expensed beginning in the first quarter of 2020 based on their grant date fair value of $69.37 per PSU; (c) 108,113 PSUs that have a mix of service and clinical milestone vesting conditions, cliff-vest in pre-determined increments, and that will begin to be expensed at $69.37 per PSU when it becomes probable that the milestones will be achieved, and (d) 2,703,852 PSUs that have a mix of service, market and other milestone performance vesting conditions (including but not limited to new FDA approved indications), cliff-vest in pre-determined increments, and have a compensation cost of $48.16 per PSU that will not be recognized until the performance condition becomes probable. Also includes RSUs and PSUs granted on September 1, 2020 as follows: (a) 25,090 RSUs that are expensed based on their grant date fair value of $84.68 per RSU over the service period of three years; (b) 17,712 PSUs that have a mix of service and clinical milestone vesting conditions, cliff-vest in pre-determined increments, and that have been deemed probable to vest and are therefore expensed beginning in the third quarter of 2020 based on their grant date fair value of $84.68 per PSU; and (c) 17,712 PSUs that have a mix of service and clinical milestone vesting conditions, cliff-vest in pre-determined increments, and that will begin to be expensed at $84.68 per PSU when it becomes probable that the milestones will be achieved. The PSUs vest no earlier than three years from the date of grant and no later than six years from the date of grant. The grant date fair value of PSUs with market vesting conditions were obtained by using Monte Carlo simulations. The Company accounts for share-based compensation in accordance with ASC 718.

In September 2015, the Company adopted an employee share purchase plan (“ESPP”) to encourage and enable eligible employees to acquire ownership of the Company’s ordinary shares purchased through accumulated payroll deductions on an after-tax basis. In the United States, the ESPP is intended to be an “employee stock purchase plan” within the meaning of Section 423 of the Internal Revenue Code and the provisions of the ESPP ~~will be~~are construed in a manner consistent with the requirements of such section. ~~The Company began its offerings under the ESPP on August 1, 2016.~~ As of September 30, ~~2017, 2,328,171~~2020, 4,017,014 ordinary shares were available to be purchased by eligible employees under the ESPP and ~~209,355~~447,634 shares had been issued under the ESPP.

Table of Contents

The fair value of ~~all equity-based~~share-based awards was estimated using the Black-Scholes ~~option-pricing~~ model ~~with~~for all equity grants. For market condition awards, the Company also applied the Monte-Carlo simulation model. We assessed fair value using the following underlying ~~assumptions, excluding market condition awards for which fair value was estimated using the Monte Carlo option-pricing model:~~

assumptions:


	Nine months ended September 30,			Year ended December 31,		Nine months ended September 30,				Year ended December 31, 2019
	2017	2016		2016		2020		2019
	Unaudited			Audited		Unaudited				Audited
Stock Option Plans					Stock Option Plans
Expected term (years)	5.5-6.25	6.25		6.25	Expected term (years)	5.50-6.25		5.50-6.50		5.50-6.5
Expected volatility	56.74%-59.45%	59.80%-61.65%		58.40%-61.70%	Expected volatility	54%-56%		55%-61%		55%-61%
Risk-free interest rate	1.97%-2.23%	1.23%-1.88%		1.23%-1.88%	Risk-free interest rate	0.30%-0.86%		1.90%-2.40%		1.73%-2.40%

Dividend yield	0.00%	0.00%		0.00%	Dividend yield	0.00	%	0.00	%	0.00	%
ESPP					ESPP
Expected term (years)	0.50		0.42	0.42	Expected term (years)	0.50		0.50		0.50

Expected volatility	76.37%-82.00%	70.45%		70.45%	Expected volatility	47%-66%		44%-62%		44%-62%
Risk-free interest rate	0.62%-1.13%	0.40%		0.40%	Risk-free interest rate	0.17%-1.57%		2.10%-2.51%		2.10%-2.51%
Dividend yield	0.00%	0.00%		0.00%	Dividend yield	0.00	%	0.00	%	0.00	%

The total non-cash share-based compensation expense related to all of the Company’s equity-based awards recognized for the three and nine months ended September 30, ~~2017~~2020 and ~~2016~~2019 and the year ended December 31, ~~2016~~2019 was:


	Three months ended September 30,				Nine months ended September 30,				Year ended December 31,			Three months ended September 30,				Nine months ended September 30,				Year ended December 31, 2019
	2017		2016		2017		2016		2016			2020		2019		2020		2019		Year ended December 31, 2019
	Unaudited				Unaudited				Audited			Unaudited				Unaudited				Audited
Cost of revenues	$	79	$	160	$	353	$	471	$	623	Cost of revenues	$	767	$	605	$	1,916	$	1,626	$	2,231
Research, development and clinical trials		972		776		2,645		2,378		3,155	Research, development and clinical trials	5,101		2,202		12,275		5,203		7,570
Sales and marketing		1,874		1,249		4,264		3,888		5,111	Sales and marketing	4,677		3,368		13,061		8,585		11,897
General and administrative		5,704		3,441		13,498		9,982		12,552	General and administrative	9,576		8,163		28,196		22,305		30,718
Total share-based compensation expense	$	8,629	$	5,626	$	20,760	$	16,719	$	21,441	Total share-based compensation expense	$	20,121	$	14,338	$	55,448	$	37,719	$	52,416

NOTE 7: EARNINGS PER SHARE

Basic net income (loss) per share is computed based on the weighted average number of ordinary shares outstanding during each period. Diluted net income per share is computed based on the weighted average number of ordinary shares outstanding during the period, plus potential dilutive shares considered outstanding during the period, in accordance with ASC 260-10, as determined under the treasury stock method. Basic and diluted net income per ordinary share was the same for each period presented, except for the three months ended September 30, 2020, as the inclusion of all potential dilutive shares (deriving from options, RSUs and the ESPP) outstanding would be anti-dilutive.

The calculation of diluted earnings per share includes the weighted average of potentially dilutive securities, which consists of ordinary shares underlying outstanding share options, RSUs, performance share units and the ESPP. The effect of these dilutive securities under the treasury stock method was approximately 7,409,508 and 7,511,989 shares for the three and nine months ended September 30, 2020, respectively.

The Company excluded 952,823 and 717,492 share options under the treasury stock method from the computation of dilutive net income per share for the three and nine months ended September 30, 2020 because including them would have had an anti-dilutive effect.

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NOTE 7:8: SUPPLEMENTAL INFORMATION

The Company operates in a single reportable segment.

The following table presents long-lived assets by location:

	September 30,		December 31,
	2017		2016			September 30, 2020		December 31, 2019
	Unaudited		Audited			Unaudited		Audited
United States	$	10,942	$	11,981	United States	$	10,317	$	8,896
Switzerland		5,057		4,346	Switzerland	2,012		3,067
Israel		1,884		1,915	Israel	3,998		2,753
Japan					Japan	1,237		999
Germany					Germany	895		729
Others	426			378	Others	944		582
Total	$	18,309	$	18,620
Total long-term assets					Total long-term assets	$	19,403	$	17,026

~~- 10 -~~

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

Three months ended September 30,

Nine months ended September 30,

Year ended
December 31,

2017

2016

2017

2016

2016

Unaudited

Unaudited

Audited

United States

$
35,300

$
18,131

$
95,826

$
46,264

$
72,771

EMEA (*)

14,757

3,519

27,316

6,296

10,028

Japan

52

24

223

86

89

Total

$
50,109

$
21,674

$
123,365

$
52,646

$
82,888

(*) including Germany

$
14,664

$
1,766

26,880

2,659

$
9,799


	Three months ended September 30,				Nine months ended September 30,				Year ended December 31, 2019
	2020		2019		2020		2019
	Unaudited				Unaudited				Audited
United States	$	92,635	$	61,399	$	243,103	$	166,937	$	232,805
EMEA:
Germany	22,756		21,688		66,027		64,065		86,564
Other EMEA	5,468		2,794		12,069		5,442		8,782
Japan	7,523		4,779		21,153		12,334		17,912
Greater China (1)	4,278		1,402		8,061		3,306		5,255
Total net revenues	$	132,660	$	92,062	$	350,413	$	252,084	$	351,318

~~- 11 -~~

(1) Reflects revenue recognized in accordance with a License and Collaboration Agreement (the “Zai Agreement”) between the Company and Zai Lab (Shanghai) Co., Ltd. (“Zai”), dated September 10, 2018, pursuant to which Zai is commercializing Optune in China, Hong Kong, Macau and Taiwan (referred to in this table as “Greater China”). During the nine month period ended September 30, 2020, the Company triggered an $8,000 milestone related to the approval of Optune for the treatment of GBM in China and a $2,000 clinical trial milestone, each of which are being recognized over the remainder of the Zai performance period ending in September 2024. For additional information, see Note 12 to the Consolidated Financial Statements in the 2019 10-K.

NOTE 9: INCOME TAX

In accordance with the changes to the U.S. tax code enacted in response to the economic impacts of COVID-19 signed into legislation on March 27, 2020 the Company recorded a net tax benefit of $11,269 in the first quarter of 2020. The benefit resultsfrom net operating loss carry-backs in the U.S.

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Item 2. Management’s Discussion and Analysis ofof Financial Condition and Results of Operations

Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to provide information to assist you in better understanding and evaluating our financial condition and results of operations. We encourage you to read this MD&A in conjunction with our unaudited consolidated financial statements and the notes thereto for the period ended September 30, ~~2017~~2020 included in Part I, Item 1 of this Quarterly Report on Form 10-Q. This discussion contains forward-looking statements that involve risks and uncertainties. ~~As a result of many factors, such as those set forth~~Please refer to the information under ~~Part I, Item 1A, “Risk Factors”, of our Annual Report on Form 10-K for~~ the ~~fiscal year ended December 31, 2016 (the “2016 10-K”), our actual results may differ materially from those anticipated~~heading “Cautionary Note Regarding Forward-Looking Statements” elsewhere in ~~these forward-looking statements.~~this report. 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 ~~commercial stage~~global oncology company ~~developing a profoundly different cancer treatment centered on~~with a proprietary ~~therapy~~platform technology called Tumor Treating Fields, ~~(“TTFields”),~~ the use of electric fields tuned to specific frequencies to disrupt solid tumor cancer cell division. Our key priorities are to ~~accelerate commercial~~drive adoption of Optune and Optune Lua, our ~~first~~ commercial ~~TTFields~~Tumor Treating Fields delivery ~~system, for the treatment of glioblastoma (“GBM”~~systems (collectively, our “Products”), and to advance clinical and product development programs ~~testing~~intended to extend overall survival in some of the ~~efficacy and safety~~most aggressive forms of ~~TTFields in multiple solid tumor indications through our clinical pipeline.~~

~~We were founded in 2000 and operated as a development stage company through December 31, 2011. We initially received U.S.~~cancer.

Optune is approved by the United States Food and Drug Administration (“FDA”) under the premarket approval (“PMA”) pathway for ~~Optune~~the treatment of adult patients with newly diagnosed glioblastoma multiforme (“GBM”) in ~~2011 for use as~~combination with temozolomide, a ~~monotherapy treatment~~chemotherapy drug, and for adult patients with GBM following confirmed recurrence after ~~chemotherapy. In October 2015, we received FDA~~chemotherapy as monotherapy treatment. We also have approval to market Optune for the treatment of ~~adult patients with newly diagnosed~~ GBM in ~~combination with temozolomide, a chemotherapy drug. We have also received approval to market Optune in Germany, Austria, Switzerland, Israel,~~the European Union (“EU”), Japan and certain other countries. ~~To date, we have focused on commercializing~~Optune Lua is approved by the FDA under the humanitarian device exemption (“HDE”) pathway to treat malignant pleural mesothelioma (“MPM") in combination with standard chemotherapies. We are currently seeking to obtain CE Certification for Optune Lua in the EU.

We market Optune in the ~~United States,~~U.S., Austria, Germany, ~~Austria,~~Israel, Japan, Sweden and Switzerland, ~~Israel and Japan,~~ which we refer to ~~collectively~~ as our ~~currently active markets.~~

~~In April 2017,~~“active markets”, and we ~~announced final analyses~~market Optune Lua in the U.S. With respect to the treatment of GBM, our sales and marketing efforts are principally focused on driving adoption with both neuro-oncologists and radiation oncologists. With respect to the treatment of MPM, our commercial efforts are principally focused on generating awareness with radiation oncologists and medical oncologists who treat cancer indications of the ~~full 695 patient dataset~~torso and on establishing a dialogue with third-party payers around access to Optune Lua. We are expanding our commercial operations into France with an initial focus on developing key opinion leader relationships in GBM and establishing a ~~median follow-up of 40 months from~~path to reimbursement for our phase 3 pivotal trial of Optune in combination with temozolomide for patients with newly diagnosed GBM. For patients treated with Optune in combination with temozolomide versus patients treated with temozolomide alone, the two-year survival rate increased from 30 percent to 43 percent and the five-year survival rate increased from five percent to 13 percent. In September 2017, we announced results from health-related quality of life analyses from this same phase 3 pivotal trial. Patients treated with Optune in combination with temozolomide were able to maintain quality of life for longer compared to patients treated with temozolomide alone. These data further support our belief that Optune plus temozolomide is an essential combination treatment for patients with newly diagnosed GBM.

Products.

We continue to work with payers to expand access to Optune for patients with GBM. In January 2020, the State of Israel Ministry of Health added Optune in combination with temozolomide to the Israeli medical services basket, establishing national reimbursement for Optune in newly diagnosed and recurrent GBM. As of September 30, 2017, more than 210 million Americans have available coverage for the use of Optune for newly diagnosed and/or recurrent GBM. Additionally, we have signed contracts to establish Optune as an in-network benefit for more than 178 million American lives. The percentage of our U.S. active patient population who are beneficiaries of the Medicare fee-for-service program, which has denied coverage for our claims to date, continues to range from 20 to 25 percent.

GBM in Israel. In Germany, we are able to bill healthcare payers for individual cases and each case is evaluated individually on its merits and under the payer’s specific rules for such cases. In the third quarter 2017, approximately half of German claims were approved for reimbursement. In September 2017,March 2020, the German Federal Joint Committee ~~or G-BA, published~~(G-BA) updated its ~~decision~~directive for Contracted Medical Care to support a clinical trial studying Optune for the treatment of newly diagnosed GBM. The proposed trial design will examine the benefit of starting Optune concurrent with radiation therapy and temozolomide prior to the initiation of maintenance temozolomide in accordance with Section 137e of the German Healthcare Provision Act. We anticipate that we will share the costs for the conduct of the clinical trial with the G-BA. The statutory health insurance funds will reimburse treatment costs, including the cost of Optune for clinical trial patients. The G-BA decision is an important first step in the process to secureinclude Tumor Treating Fields, establishing national reimbursement for Optune in newly diagnosed GBM in Germany.

~~In August 2017, we signed a contract with the Federation of Austrian Social Insurance Institutions~~ We continue to ~~grant reimbursement for Optune. All 18 Austrian insurance funds~~ have agreed to participate in the contract, marking our first national reimbursement decision. We are currently working to implement the contract and believe that our first payments for Austrian claims will begin in the fourth quarter 2017.

~~In April 2017, we submitted our applicate to~~productive discussions with the Federal Office of Public Health in Switzerland to ~~secure a defined reimbursement rate~~establish coverage for Optune ~~based upon~~and plan to submit a full reimbursement package to establish coverage for Optune to the long-term analysis of the EF-14 clinical trial data. We now believe a Swiss reimbursement decision will come no earlier than 2018. Until we secure a defined reimbursement rate, payment is not guaranteed.

~~- 12 -~~

~~In March 2017, we received Japanese~~French Ministry of Health ~~Labour~~in upcoming quarters.

As of September 30, 2020, the total number of contracted GBM lives was approximately 274 million in the U.S., approximately 111 million in our active EMEA markets and Welfare (“MHLW”) approval for the second generation Optune. In March 2017, we filed an application to request a defined reimbursement rate for Optune based on the December 2016 regulatory approval of Optune to treat newly diagnosed GBM. We are currentlyapproximately 126 million in ~~active reimbursement discussions with the MHLW and believe that a reimbursement decision will come before the end of 2017.~~

We have researched the biological effects of TTFields extensively. Because TTFields are delivered regionally, act only on dividing cells (a biological process known as mitosis) and are frequency-tuned to target cells of a specific size, we believe there is minimal damage to healthy cells. Japan.

We believe ~~our pre-clinical and clinical research demonstrates that TTFields’~~the mechanism of action ~~affects fundamental aspects of cell division and~~behind Tumor Treating Fields therapy may ~~have broad applicability across a variety of~~be broadly applicable to solid tumors. We have demonstrated in pre-clinical studies that TTFields can offer additive or synergistic benefits in combination with radiation, chemotherapy and immunotherapy, which may lead to greater efficacy than radiation, chemotherapy and immunotherapy alone, without significantly increasing the side effects when used in combination with other cancer treatments.

Wetumor cancers. Currently, we are ~~currently planning or~~ conducting ~~clinical~~phase 3 pivotal trials evaluating the use of ~~TTFields~~Tumor Treating Fields in brain metastases, ~~non-small-cell~~non-small cell lung cancer (“NSCLC”), pancreatic cancer and ovarian cancer. We are also conducting phase 2 pilot trials evaluating the use of Tumor Treating Fields in liver cancer and ~~mesothelioma.~~gastric cancer. In July 2020, we enrolled the last patient in HEPANOVA, a phase 2 pilot trial testing Tumor Treating Fields in combination with sorafenib in advanced liver cancer with final data expected in the first quarter of 2021. We plan to initiate additional randomized trials in GBM in order to further advance the scientific evidence supporting the use of Optune in GBM

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and to gather additional information about Optune's optimal use. We also anticipate expanding our clinical pipeline over time to study the safety and efficacy of ~~TTFields~~Tumor Treating Fields for additional solid tumor indications.

We have several product development programs underway intended to improve efficacy and usability for patients. In July 2020, we enrolled the first patient in our EF-33 pilot study to test the potential incremental survival benefit of delivering Tumor Treating Fields through high-intensity arrays. Additionally, during the third quarter of 2020, we initiated a beta testing program with a select number of radiation oncology partners to test MAXPOINTTM treatment planning software, which we developed to optimize Tumor Treating Fields dosing with the potential to improve the efficacy of our therapy.

The table below presents the current status of the ongoing or completed clinical and product development programs in our ~~clinical~~ pipeline and anticipated timing of final data.

In July 2020, we entered into a clinical trial collaboration with MSD, a trade name of Merck & Co., Inc., through a subsidiary, to develop Tumor Treating Fields together with MSD’s anti-PD-1 therapy KEYTRUDA® (pembrolizumab) for treatment of first-line NSCLC, expanding our research in the lung cancer space. We plan to conduct a phase 2 pilot study of Tumor Treating Fields concomitant with KEYTRUDA for first-line treatment of intrathoracic advanced or metastatic, PD-L1 positive NSCLC. The study is now expected ~~next milestone~~to begin in the first half of 2021 due to a modification in the regulatory strategy.

In October 2020, we entered into a strategic alliance with the NYU Grossman School of Medicine’s Department of Radiation Oncology that provides a framework for ~~each.~~

preclinical and clinical development projects studying Tumor Treating Fields. The research to be conducted is geared to further the understanding of the interaction between Tumor Treating Fields and radiation therapy, to study Tumor Treating Fields in combination with various pharmacological agents, and to identify new indications for use

In 2018, we entered into a License and Collaboration Agreement (the “Zai Agreement”) between us and Zai Lab (Shanghai) Co., Ltd. (“Zai”), pursuant to which we granted Zai a license to commercialize Optune in China, Hong Kong, Macau and Taiwan (collectively, “Greater China”). The Zai Agreement also establishes a development partnership intended to accelerate the development of Tumor Treating Fields in multiple solid tumor indications. In May ~~2017, we received humanitarian use device (HUD) designation~~2020, the China National Medical Products Administration approved the Marketing Authorization Application for ~~the use of TTFields~~Optune in combination with temozolomide for the treatment of ~~pleural mesothelioma. The HUD designation is the first step in obtaining~~patients with newly diagnosed GBM, and also as a ~~Humanitarian Device Exemption (HDE)~~monotherapy for the treatment of ~~pleural mesothelioma~~patients with ~~TTFields. An approved HDE would allow us~~recurrent GBM. For additional information, see Note 12 to ~~market TTFields in combination with standard of care chemotherapy as a treatment for pleural mesothelioma in~~ the ~~United States.~~

~~In October 2016, we enrolled the first patient~~Consolidated Financial Statements in our ~~METIS trial,~~2019 10-K.

We believe we have a phase 3 pivotal trial testing the effectiveness of stereotactic radiosurgery plus TTFields compared to stereotactic radiosurgery alone in patients with brain metastases resulting from NSCLC. In September 2017, the FDA approved an IDE supplement amending the protocol for the METIS trial. The protocol amendment is designed to accelerate the pace of enrollment by expanding the eligible patient population. Among other updates, the protocol now allows for the enrollment of patients with infratentorial brain metastases, based upon new scientific information to support a specialized array layout to treat infratentorial tumors.

~~We own all commercialization rights to TTFields in oncology. Our~~ robust ~~global~~ patent and intellectual property portfolio, ~~consists of~~with over ~~120~~180 issued patents ~~with~~and numerous ~~additional~~ patent applications pending worldwide. ~~The patents have expected expiration dates between 2021 and 2035. We have also filed approximately 50 additional patent applications that, if issued, may protect aspects of our platform beyond 2035.~~ We believe we ~~will maintain exclusive~~own global commercialization rights to ~~market TTFields for all solid tumor indications~~our Products in ~~our key markets through~~oncology and that we are well-positioned to extend those rights into the ~~life of our patents.~~

~~We were incorporated in the Bailiwick of Jersey in 2000. Our U.S. operations are located in Portsmouth, New Hampshire, Malvern, Pennsylvania, and New York City. Additionally,~~future as we have offices in Germany, Switzerland, Israel and Japan, and a research center in Israel. We completed our initial public offering of our ordinary shares in October 2015. Our ordinary shares are quoted on the NASDAQ Global Select Market under the symbol “NVCR.”

~~Financial Overview.~~ ~~We expect to~~ continue to ~~incur significant expenses~~find innovative ways to improve our Products.

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We view our operations and manage our business in one operating ~~losses~~segment. For the three and nine months ended September 30, 2020, our net revenues were $132.7 million and $350.4 million, respectively. Our net income for ~~at least~~ the ~~next several years. We expect our research, development~~three and ~~clinical trials expenses to increase~~nine months ended September 30, 2020 was $9.3 million and $14.9 million, respectively. As of September 30, 2020, we had an accumulated deficit of $636.0 million. Our accumulated deficit primarily resulted from costs incurred in connection with our preclinical and clinical trial programs, costs incurred to commercialize our Products and general and administrative costs necessary to operate as a global oncology business.

Impact of COVID-19

The COVID-19 pandemic did not have a material impact on our financial results through the third quarter of 2020. During the first three quarters of 2020, our commercial business or global supply chain was not materially affected by the COVID-19 pandemic, and we believe the anticipated timing of final data from our ongoing ~~activities,~~clinical trials has not been adversely impacted since our Quarterly Report on Form 10-Q filed on April 30, 2020 and amended on Form 10-Q/A filed on October 2, 2020 (“First Quarter 2020 10-Q”).

We believe the prolonged disruption caused by COVID-19 is resulting in increased volatility across global health care systems, such as ~~additional indications enter late-stage~~fluctuations in patient volumes and changes in patterns of care in certain regions, which might materially impact our business and clinical ~~development. In addition,~~trials in the future. For example, we ~~expect to incur significant commercialization expenses~~have seen some fluctuations in the timing of surgeries and radiation therapy in certain regions, which has had some influence on when patients are prescribed Optune. Since the pandemic began, we have generally been following the guidance of the World Health Organization, the U.S. Centers for ~~product sales, marketing, manufacturing~~Disease Control and ~~distribution. We may need additional funding to support the continuation~~Prevention, and local health authorities in all of our operating activities. Until we can generate substantial revenues (which may not occur), we expect to finance our cash needs through our existing cash, cash equivalents, short-term investments, equity issuances or additional debt, and possibly also from collaborations, strategic alliances, licensing arrangements and other marketing and distribution arrangements. We will need to generate significant revenues to achieve profitability,active markets and we have adjusted the way we conduct business to adapt to the evolving situation. For example, our field-based patient support teams continue to conduct in-person patient visits when possible and leverage technology to virtually conduct new patient starts and provide ongoing patient support visits. We are respecting any restrictions on external visitors at the cancer centers, hospitals and research institutions we serve and have implemented web-based technologies to engage healthcare professionals and enable information sharing. Many of the medical conferences where we present have been moved to virtual formats, and we have been able to present our findings and speak with thought leaders remotely. The extent to which the COVID-19 pandemic may ~~never do so.~~

~~- 13 -~~

impact our business and clinical trials in the future will depend on further developments, which are highly uncertain and cannot be predicted with confidence. The COVID-19 pandemic may also have the effect of heightening many of the other risks described in our risk factors disclosed in our 2019 10-K and our First Quarter 2020 10-Q.

Critical ~~accounting policies~~Accounting Policies and ~~estimates~~

Estimates

In accordance with U.S. ~~GAAP,~~generally accepted accounting principles (“GAAP”), in preparing our financial statements, we must make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of net revenues and expenses during the reporting period. We develop and periodically change these estimates and assumptions based on historical experience and on various other factors that we believe are reasonable under the circumstances. Actual results may differ from these estimates.

The critical accounting policies requiring estimates, assumptions and judgments that we believe have the most significant impact on our consolidated financial statements can be found in our ~~2016~~2019 10-K. For additional information, see Note 1 to our unaudited consolidated financial statements in Part I, Item 1 of this Quarterly Report. There ~~have been~~were no other material changes to our critical accounting policies and estimates as compared to the critical accounting policies and estimates described in our ~~2016~~2019 10-K.

Commentary on Results of Operations

~~We account for revenue when all revenue recognition criteria have been met or when cash is collected.~~ ~~Revenue recognized in a given period may include a mixture of accrued revenue, cash collections from amounts billed in prior periods and cash collections from amounts billed in the current period~~

Net revenues. ~~We report certain operating statistics to provide additional insight into the commercial performance of Optune in our currently active markets.~~

The number of active patients on Optune is our principal revenue driver. Growth in the number of active patients is a factor of both treatment duration and new patient starts. Median treatment duration differs based upon the clinical diagnosis of the patient. For the three months ended September 30, 2017, more than 60% of prescriptions received were for patients with newly diagnosed GBM. The conversion of prescriptions to new patients is driven by the prescription fill rate and the time to fill. In the twelve months ended September 30, 2017, our prescription fill rate was between 70-75%.

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

September 30,

Operating statistics

2017

2016

Active patients at period end (1)

United States

1,234

783

EMEA (2) (*)

448

202

Japan (2)

1

-

1,683

985

(*) including Germany

331

146

Three months ended September 30,

Nine months ended September 30,

2017

2016

2017

2016

Prescriptions received in period (3)

United States

805

569

2,293

1,800

EMEA (2) (*)

270

120

731

301

Japan (2)

1

1

5

1

1,076

690

3,029

2,102

(*) including Germany

202

87

553

221

~~(1)~~

An “active patient” is a patient who is on Optune under a commercial prescription order as of the measurement date, including patients who may be on a temporary break from treatment and who plan to resume treatment in less than 60 days.

~~(2)~~

As we enter each new market, our commercial activities focus initially on establishing the required in-market infrastructure, certifying physicians to prescribe Optune and obtaining a defined reimbursement pathway. Once established, our commercial efforts turn to increasing adoption.

~~(3)~~

A “prescription received” is a commercial order for Optune that is received from a physician certified to treat patients with Optune for a patient not previously on Optune. Orders to renew or extend treatment are not included in this total.

~~- 14 -~~

~~Net revenues.~~ ~~Substantially all of our~~Our revenues are primarily derived from patients using our ~~TTFields delivery system, marketed as Optune~~Products in our ~~currently~~ active markets. We charge ~~patients or their third-party healthcare payers directly~~ for treatment with our Productson a monthly ~~basis and bear the financial risk of securing payment in the United States and Europe.~~

~~The following is a summary of gross billings and revenues recorded on an accrual basis and a cash basis by quarters (unaudited):~~

2017

2016

U.S. dollars in millions

Q3

Q2

Q1

Q4

Q3

Q2

Q1

Gross billings

$
101.9

$
87.2

$
73.2

$
63.8

$
57.5

$
54.0

$
45.5

Accrual basis revenue

$
35.7

$
19.1

$
14.7

$
8.5

$
0.0

$
0.0

$
0.0

Cash basis revenue for therapy provided in the period

3.1

5.7

5.9

6.3

8.9

7.6

5.6

Cash basis revenue for therapy provided in previous periods

11.3

13.6

14.3

15.5

12.7

10.3

7.4

Net revenues

$
50.1

$
38.4

$
34.9

$
30.2

$
21.7

$
17.9

$
13.1

~~We began recognizing a portion of our~~basis. Our potential net revenues per patient are determined by our ability to secure payment, the monthly fee we collect and the number of months that the patient remains on ~~an accrual basis in the fourth quarter 2016. Prior~~therapy.

We also receive revenues pursuant to the ~~third quarter 2017,~~ ~~all~~Zai Agreement. For additional information regarding the Zai Agreement, see Note 12 to the Consolidated Financial Statements in our 2019 10-K.

Table of ~~the net revenues recognized on an accrual basis represent charges to certain U.S.-based third-party payers.~~ Beginning in the third quarter 2017, net revenues recognized on an accrual basis represent charges to certain U.S.-based third-party payers and certain German payers. In the period of transition from cash-based to accrual-based revenue recognition, there is a one-time impact to net revenues as net revenues in the current period may also include revenues from gross billings from previous periods. In the table above, gross billings reflect the total charges for active patients on Optune without any deductions or adjustments for payer discounts, patient financial assistance, charitable care or other similar items. The subsequent table line items detail the three sources of net revenue in the applicable reporting period.

Contents

Cost of revenues.We contract with third parties to manufacture our Products. Our cost of revenues is ~~comprised~~ primarily ~~of (i) cost~~comprised of the following:

•disposable transducer ~~arrays purchased from third-party manufacturers, (ii)~~ arrays;

•depreciation expense for the field equipment, including the electric field generator used by ~~patients~~patients; and ~~(iii)~~

•personnel, warranty and overhead costs such as facilities, freight and depreciation of property, plant and equipment associated with managing our inventory, warehousing and order fulfillment functions.

Operating ~~Expenses.~~ expenses. Our operating expenses consist of research, development and clinical trials, sales and marketing and general and administrative expenses. Personnel costs are a significant component for each category of operating expenses and consist of wages, benefits and bonuses. Personnel costs also include share-based compensation.

Financial expenses, ~~net.~~net.Financial expenses, net primarily consists of credit facility interest expense and related debt issuance costs, ~~under our~~ ~~Term Loan Credit Facility (as defined below)~~, interest income from cash balances and short-term investments and gains (losses) from foreign currency transactions.

Our reporting currency is the U.S. dollar. We ~~view~~have historically held substantially all of our cash balances in U.S. dollar denominated accounts to minimize the risk of translational currency exposure.

Results of Operations

The following discussion provides an analysis of our results of operations and manage our business in one operating segment. For the three and nine months ended September 30, 2017, our net revenues were $50.1 million and $123.4 million, respectively, and our net loss was $11.5 million and $50.7 million, respectively. Our net lossreasons for material changes therein for the three and nine months ended September 30, ~~2017 includes $8.6 million~~2020 as compared to the three and ~~$20.8 million, respectively, in non-cash share-based compensation expense. As of September 30, 2017, we had an accumulated deficit of $571.3 million.~~

~~Three~~nine months ended September 30, ~~2017 compared~~2019. The tables contained in this section report U.S. dollars in thousands (except share, patient, and prescription data).

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The following table sets forth our consolidated statements of operations data:


	Three months ended September 30,				Nine months ended September 30,
	2020		2019		2020		2019
	Unaudited				Unaudited
Net revenues	$	132,660	$	92,062	$	350,413	$	252,084
Cost of revenues	28,395		22,900		78,365		63,820
Gross profit	104,265		69,162		272,048		188,264

Operating costs and expenses:
Research, development and clinical trials	32,818		18,766		88,008		55,262
Sales and marketing	29,364		23,830		86,658		69,871
General and administrative	27,061		22,711		79,073		64,198
Total operating costs and expenses	89,243		65,307		253,739		189,331

Operating income (loss)	15,022		3,855		18,309		(1,067)
Financial expenses (income), net	3,983		2,555		9,032		6,165

Income (loss) before income taxes	11,039		1,300		9,277		(7,232)
Income taxes	1,755		(630)		(5,614)		4,258
Net income (loss)	$	9,284	$	1,930	$	14,891	$	(11,490)

Basic net income (loss) per ordinary share	$	0.09	$	0.02	$	0.15	$	(0.12)
Weighted average number of ordinary shares used in computing basic net income (loss) per share	101,234,306		98,485,519		100,601,427		96,551,041
Diluted net income (loss) per ordinary share	$	0.09	$	0.02	$	0.14	$	(0.12)
Weighted average number of ordinary shares used in computing diluted net income (loss) per share	108,643,814		107,604,578		108,113,416		96,551,041

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


	Three months ended September 30,				Nine months ended September 30,
	2020		2019		2020		2019
	Unaudited				Unaudited
Cost of revenues	$	767	$	605	$	1,916	$	1,626
Research, development and clinical trials	5,101		2,202		12,275		5,203
Sales and marketing	4,677		3,368		13,061		8,585
General and administrative	9,576		8,163		28,196		22,305
Total share-based compensation expense	$	20,121	$	14,338	$	55,448	$	37,719

Key performance indicators

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We believe certain commercial operating statistics are useful to ~~three months ended~~investors in evaluating our commercial business as they help our management team and investors evaluate and compare the adoption of our Products from period to period. The number of active patients on therapy is our principal revenue driver. An "active patient" is a patient who is receiving treatment under a commercial prescription order as of the measurement date, including patients who may be on a temporary break from treatment and who plan to resume treatment in less than 60 days. Prescriptions are a leading indicator of demand. A "prescription received" is a commercial order for Optune or Optune Lua that is received from a physician certified to treat patients with our Products for a patient not previously on Optune or Optune Lua. Orders to renew or extend treatment are not included in this total.

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


	September 30,
Operating statistics	2020	2019
Active patients at period end
United States	2,218	1,860
EMEA:
Germany	533	499
Other EMEA	369	232
Japan	241	160
Total	3,361	2,751


	Three months ended September 30,		Nine months ended September 30,
	2020	2019	2020	2019
Prescriptions received in period
United States	955	917	2,909	2,831
EMEA:
Germany	239	218	677	696
Other EMEA	91	100	351	251
Japan	86	84	265	213
Total	1,371	1,319	4,202	3,991

In the U.S., there were 13 active MPM patients on therapy as of September 30, ~~2016~~

~~(All dollar figures~~2020 and 13 MPM prescriptions were received in ~~tables are in thousands unless otherwise indicated)~~

Three months ended September 30,

2017

2016

Change

% Change

Net revenues

$
50,109

$
21,674

$
28,435

131
%

~~Net revenues.~~ ~~Net revenues increased $28.4 million, or 131%, to $50.1 million for~~ the three months ended September 30, ~~2017~~2020.

Three and nine months ended September 30, 2020 compared to three and nine months ended September 30, 2019


	Three months ended September 30,						Nine months ended September 30,
	2020		2019		% Change		2020		2019		% Change
Net revenues	$	132,660	$	92,062	44	%	$	350,413	$	252,084	39	%

Net revenues. Net revenues increased 44% to $132.7 million for the three month period ending September 30, 2020 from ~~$21.7~~$92.1 million for the same period in 2019, and increased 39% to $350.4 million for the nine month period endedSeptember 30, 2020 from $252.1 million for the same period in 2019. The increase in both the three and nine month periods resulted primarily from an increase of 610 active patients in our currently active markets, representing 22% growth, and a durable improvement in the net revenues booked per active patient, as well as an increase in collaboration revenues from our partnership with Zai Lab.

We recorded $10 million and $27 million in revenues from Medicare fee-for-service beneficiaries billed under the coverage policy effective on September 1, 2019 for the three and nine month periods ended September 30, 2020, respectively. We have gained a good understanding of how to ensure timely processing of Medicare claims and have sufficient experience to recognize approximately two-thirds of the expected contribution from Medicare beneficiaries. In the third quarter of 2020, we also recognized approximately $8 million in incremental net revenues

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compared to the first two quarters of 2020 resulting from the successful appeal of previously denied claims for Medicare fee-for-service beneficiaries billed prior to established coverage.


	Three months ended September 30,						Nine months ended September 30,
	2020		2019		% Change		2020		2019		% Change
Cost of revenues	$	28,395	$	22,900	24	%	$	78,365	$	63,820	23	%

Cost of revenues. Our cost of revenues increased by 24%, to $28.4 million for the three months endedSeptember 30, ~~2016. This~~2020from $22.9 million for the same period in 2019, and increased by 23% to $78.4 million for the nine months ended September 30, 2020 from $63.8 million for the same period in 2019. For both the three and nine month periods, the increase in cost of revenues was primarily due to an increase of $17.2 million in commercial sales of Optune in the United States and an increase of $11.3 million in commercial sales of Optune in our other currently active markets, as well as the transition to accrual-based revenue recognition for a portion of our billings.

~~- 15 -~~

~~Cost of revenues.~~ Our cost of revenues increased by $4.0 million, or 36%, to $15.2 million for the three months ended September 30, 2017 from $11.1 million for the three months ended September 30, 2016. The increase resulted primarily from the cost of shipping transducer arrays to a higher volume of commercial patients ~~as well as an increase in field~~and increasing shipments of equipment ~~depreciation. Cost~~to Zai Lab, partially offset by benefits of ~~revenues includes $0.1 million of non-cash share-based compensation.~~

ongoing efficiency initiatives and scale.

Gross margin was79% for the three months endedSeptember 30, 2020 compared to75% for the three months endedSeptember 30, 2019. Gross margin was 78% for the nine months ended September 30, 2020 compared to 75% for the nine months ended September 30, 2019.

Operating Expenses.

Three months ended September 30,

2017

2016

Change

% Change

Research, development and clinical trials

$
9,273

$
10,233

$
(960
)

(9
%)
Sales and marketing

16,387

15,865

522

3
%
General and administrative

15,215

12,723

2,492

20
%
Total operating expenses

$
40,875

$
38,821

$
2,054

5
%

Non-cash expenses:

Share-based compensation expense

$
8,550

$
5,466

$
3,084

56
%
Other non-cash expenses

600

708

(108
)

(15
%)
Total non-cash expenses

$
9,150

$
6,174

$
2,976

48
%

Total operating expenses, net of non-cash expenses *

$
31,725

$
32,647

$
(922
)

(3
%)


	Three months ended September 30,						Nine months ended September 30,
	2020		2019		% Change		2020		2019		% Change
Research, development and clinical trials	$	32,818	$	18,766	75	%	$	88,008	$	55,262	59	%
Sales and marketing	29,364		23,830		23	%	86,658		69,871		24	%
General and administrative	27,061		22,711		19	%	79,073		64,198		23	%
Total operating expenses	$	89,243	$	65,307	37	%	$	253,739	$	189,331	34	%

*	~~This non-GAAP metric has been included because management believes that it provides for a more accurate year to year comparison of our operating expenses without the impact of non-cash items.~~

Research, development and clinical trials expenses.Research, development and clinical trials expenses ~~decreased $1.0~~increased 75% to $32.8 million ~~or 9%,~~for the three month period ended September 30, 2020 from $18.8 million for the same period in 2019, and increased 59% to ~~$9.3~~$88.0 million for the nine month period ended September 30, 2020 from $55.3 million for the same period in 2019. For both the three and nine month periods, the change is primarily due to an increase in clinical trial and personnel expenses for our phase 3 pivotal and post-marketing trials, an increase in development and personnel expenses to support our product development programs, increased investments in preclinical research and the expansion of our medical affairs activities.

We continue to invest in the advancement of Tumor Treating Fields' science and technology as part of our long-term value creation strategy. We anticipate that R&D expenses will continue to increase in future quarters as we advance our preclinical, clinical and product development programs and continue our efforts to increase acceptance of Tumor Treating Fields across the global scientific community.

Sales and marketing expenses. Sales and marketing expenses increased 23% to $29.4 million for the three months ended September 30, ~~2017~~2020 from ~~$10.2~~$23.8 million for the same period in 2019, and increased 24% to $86.7 million for the nine months ended September 30, 2020 from $69.9 million for the same period in 2019. For both the three and nine month periods, the change was primarily due to an increase in personnel and professional services costs to support our growing commercial business and reimbursement efforts and an increase in marketing expenses related to the launch of Optune Lua for MPM.

General and administrative expenses. General and administrative expenses increased 19% to $27.1 million for the three months ended September 30, ~~2016. The~~2020 from $22.7 million for the same period in 2019, and increased 23% to $79.1 million for the nine months ended September 30, 2020 from $64.2 million for the same period in 2019. For both the three and nine month periods, the change iswas primarily due to a decrease in clinical trial expenses resulting from the conclusion of our EF-14 phase 3 pivotal trial in newly diagnosed GBM, a decrease in expenses related to the approval of our second generation Optune and a decrease in medical grants driven principally by timing, partially offset by an increase in ~~clinical trial~~personnel costs, insurance premiums and professional services.

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	Three months ended September 30,						Nine months ended September 30,
	2020		2019		% Change		2020		2019		% Change
Financial expenses (income), net	$	3,983	$	2,555	56	%	$	9,032	$	6,165	47	%

Financial expenses, ~~for our LUNAR and METIS trials. These expenses include $1.0 million of non-cash share-based compensation.~~

~~Sales and marketing expenses.~~ ~~Sales and marketing~~net. Financial expenses increased ~~$0.5 million, or 3%,~~56% to ~~$16.4~~$4.0 million for the three months ended September 30, ~~2017~~2020 from ~~$15.9~~$2.6 million for the same period in 2019, and increased 47% to $9.0 million for the nine months ended September 30, 2020 from $6.2 million for the same period in 2019. For both the three and nine month periods, the change was primarily due to a prepayment premium related to the 2018 credit facility.


	Three months ended September 30,						Nine months ended September 30,
	2020		2019		% Change		2020		2019		% Change
Income taxes	$	1,755	$	(630)	(378)	%	$	(5,614)	$	4,258	(232)	%

Income taxes. Income taxes increased 378% to $1.8 million for the three months ended September 30, ~~2016. The change was primarily due to an increase of $1.7~~2020 from $(0.6) million in personnel costs, including an increase of $0.7 million in non-cash share-based compensation, and an increase of $0.4 million in commercial shipping charges, reflecting our expanding commercial operations in the United States and Germany. This was partially offset by a decrease of $1.6 million in marketing expenses primarily related to advertising and professional services for the ~~launch~~same period in 2019, and decreased 232% to a benefit of ~~our second generation Optune and~~$5.6 million for the ~~communication of our inclusion~~nine months endedSeptember 30, 2020from $4.3 million for the same period in the updated National Comprehensive Cancer Network (NCCN) Clinical Practice Guidelines in Oncology for Central Nervous System Cancer (“NCCN Guidelines”). These expenses include $1.9 million of non-cash share-based compensation.

~~General and administrative expenses.~~ ~~General and administrative expenses increased $2.5 million, or 20%, to $15.2 million for~~2019. For the three months ended September 30, ~~2017 from $12.7 million for~~2020, the ~~three months ended September 30, 2016. The change was~~increase is primarily due to ~~an increase~~a change in amortization of $2.5 million in personnel costs, including an increase of $2.3 million in share based compensation. Personnel costs included $5.7 million of non-cash share-based compensation expense, including equity awards granted to our executive chairmanintellectual property rights and ~~expenses related to our employee share purchase plan (“ESPP”).~~

~~Financial expenses, net.~~ ~~Financial expenses remained consistent at $2.2 million for both the three months ended September 30, 2017 and the three months ended September 30, 2016.~~

Three months ended September 30,

2017

2016

Change

% Change

Income tax expenses

$
3,423

$
3,174

$
249

8
%

~~Income taxes.~~ Income taxes increased $0.2 million, or 8%, to $3.4 million for the three months ended September 30, 2017 from $3.2 million for the three months ended September 30, 2016. The increase was primarily a result of a change in the mix of applicable statutory tax rates in certain ~~non-US~~active jurisdictions.

~~- 16 -~~

~~Nine months ended September 30, 2017 compared to nine months ended September 30, 2016~~

~~(All dollar figures in tables are in thousands unless otherwise indicated)~~

Nine months ended September 30,

2017

2016

Change

% Change

Net revenues

$
123,365

$
52,646

$
70,719

134
%

~~Net revenues.~~ ~~Net revenues increased by $70.7 million, or 134%, to $123.4 million for~~ For the nine months ended September 30, ~~2017 from $52.6 million for~~2020 the nine months ended September 30, 2016. This was primarily due to an increase of $49.6 million in commercial sales of Optune in the United States and an increase of $21.2 million in commercial sales of Optune in our other currently active markets, as well as the transition to accrual-based revenue recognition for a portion of our billings.

~~Cost of revenues.~~ Our cost of revenues (excluding the impairment of field equipment described below) increased by $11.1 million, or 38%, to $40.0 million for the nine months ended September 30, 2017 from $28.9 million for the nine months ended September 30, 2016. The increase resulted primarily from the cost of shipping transducer arrays to a higher volume of commercial patients, as well as an increase in field equipment depreciation. Cost of revenues include $0.4 million of non-cash share-based compensation.

We received FDA approval on our PMA supplement application to market our second generation Optune in the United States in July 2016. In the second quarter 2016, we recorded an impairment loss with respect to the write-off of first generation Optune field equipment (finished goods and production stage) in the amount of $6.4 million that was not recoverable and was presented in cost of revenues. We do not expect the conversion to our second generation Optune to result in an additional material impairment charge in the future.

~~Operating Expenses.~~

Nine months ended September 30,

2017

2016

Change

% Change

Research, development and clinical trials

$
28,055

$
32,996

$
(4,941
)

(15
%)
Sales and marketing

47,503

43,771

3,732

9
%
General and administrative

42,660

38,010

4,650

12
%
Total operating expenses

$
118,218

$
114,777

$
3,441

3
%

Non-cash expenses:

Share-based compensation expense

$
20,407

$
16,248

$
4,159

26
%
Other non-cash expenses

1,749

2,023

(274
)

(14
%)
Total non-cash expenses

$
22,156

$
18,271

$
3,885

21
%

Total operating expenses, net of non-cash expenses

$
96,062

$
96,506

$
(444
)

(0
%)

*	~~This non-GAAP metric has been included because management believes that it provides for a more accurate year to year comparison of our operating expenses without the impact of non-cash items.~~

~~Research, development and clinical trials expenses.~~ Research, development and clinical trials expenses decreased $4.9 million, or 15%, to $28.1 million for the nine months ended September 30, 2017 from $33.0 million for the nine months ended September 30, 2016 . The changedecrease is primarily due to a decrease in clinical trial expenses resulting from the conclusion of our EF-14 phase 3 pivotal trial in newly diagnosed GBM, a decrease in expenses related to the approval of our second generation Optunenet operating loss carry-backs and a decrease in medical grants driven principally by timing, partially offset by an increase in clinical trial expenses for our LUNAR and METIS trials. These expenses include $2.6 million of non-cash share-based compensation.

~~Sales and marketing expenses.~~ Sales and marketing expenses increased $3.7 million, or 9%, to $47.5 million for the nine months ended September 30, 2017 from $43.8 million for the nine months ended September 30, 2016. The change was primarily due to an increase of $6.1 million in personnel costs, including $0.4 million of non-cash share-based compensation, and an increase of $1.2 million in commercial shipping charges, reflecting our expanding commercial operations in the United States and Germany. This was partially offset by a decrease of $1.6 million in marketing expenses primarily related to advertising and professional services for the launch of our second generation Optune and the communication of our inclusion in the updated NCCN Guidelines. These expenses include $4.3 million of non-cash share-based compensation.

~~- 17 -~~

~~General and administrative expenses.~~ General and administrative expenses increased $4.7 million, or 12%, to $42.7 million for the nine months ended September 30, 2017 from $38.0 million for the nine months ended September 30, 2016. The change was primarily due to an increase of $5.6 million in personnel costs, including $3.5 million in share based compensation, partially offset by a decrease of $0.9 million in professional services and other expenses. Personnel costs included $13.5 million of non-cash share-based compensation expense, including equity awards granted to our executive chairman and expenses related to our ESPP.

~~Financial expenses, net.~~ Financial expenses, net increased by $3.5 million, or 106%, to $6.8 million for the nine months ended September 30, 2017 from $3.3 million for the nine months ended September 30, 2016. The change was primarily due to an increase in interest expense, including amortization expense of the discount and deferred issuance costs, related to our July 2016 withdrawal of the remaining $75 million in available funds under the term loan credit facility that we, as borrower, entered into with BioPharma Secured Investments III Holdings Cayman LP, as lender, in January 2015, amended as of December 2016, February 2017 and September 2017 (collectively, the “Term Loan Credit Facility”).

Nine months ended September 30,

2017

2016

Change

% Change

Income tax expenses

$
9,110

$
8,944

$
166

2
%

~~Income taxes.~~ Income taxes increased by $0.2 million to $9.1 million for the nine months ended September 30, 2017 from $8.9 million for the nine months ended September 30, 2016. The increase was primarily a result of a change in the mix of applicable statutory tax rates in certain ~~non-US jurisdictions.~~

active jurisdictions The Company recorded a net tax benefit of $11.3 million in the first quarter of 2020 resulting from net operating loss carry-backs in the U.S. in accordance with the changes to the U.S. tax code enacted in response to the economic impacts of COVID-19 signed into legislation on March 27, 2020.

Non-GAAP financial measures

We also measure our performance using a non-GAAP measurement of earnings before interest, taxes, depreciation, amortization and shared-based compensation (“Adjusted EBITDA”). We believe Adjusted EBITDA is useful to investors in evaluating our operating performance because it helps investors evaluate and compare the results of our operations from period to period by removing the impact of earnings attributable to our capital structure, tax rate and material non-cash items, specifically share-based compensation.

We calculate Adjusted EBITDA as operating income before financial expenses and income taxes, net of depreciation, amortization and share-based compensation. The following table reconciles net income (loss), which is the most directly comparable GAAP operating performance measure, to Adjusted EBITDA.


	Three months ended September 30,						Nine months ended September 30,
	2020		2019		% Change		2020		2019		% Change
Net income (loss)	$	9,284	$	1,930	381	%	$	14,891	$	(11,490)	(230)	%
Add: Income tax	1,755		(630)		(379)	%	(5,614)		4,258		(232)	%
Add: Financial income (expenses), net	3,983		2,555		56	%	9,032		6,165		47	%
Add: Depreciation and amortization	2,188		1,932		13	%	6,677		5,993		11	%
EBITDA	$	17,210	$	5,787	197	%	$	24,986	$	4,926	407	%
Add: Share-based compensation	20,121		14,338		40	%	55,448		37,719		47	%
Adjusted EBITDA	$	37,331	$	20,125	85	%	$	80,434	$	42,645	89	%

Adjusted EBITDA increased by 85% to $37.3 million for the three months ended September 30, 2020 from $20.1 million for the same period in 2019, and increased by 89% to $80.4 million for the nine months ended September 30, 2020 from $42.6 million for the same period in 2019. This improvement in fundamental financial performance in both the three and nine month periods was driven by net revenue growth coupled with an ongoing commitment to disciplined management of expenses.

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	Three months ended September 30,						Nine months ended September 30,
	2019		2018		% Change		2019		2018		% Change
Net income (loss)	$	1,930	$	(11,694)	(117)	%	$	(11,490)	$	(47,928)	(76)	%
Add: Income tax	(630)		4,051		(116)	%	4,258		12,810		(67)	%
Add: Financial income (expenses), net	2,555		2,397		7	%	6,165		10,110		(39)	%
Add: Depreciation and amortization	1,932		2,311		(16)	%	5,993		6,801		(12)	%
EBITDA	$	5,787	$	(2,935)	(297)	%	$	4,926	$	(18,207)	(127)	%
Add: Share-based compensation	14,338		10,479		37	%	37,719		29,205		29	%
Adjusted EBITDA	$	20,125	$	7,544	167	%	$	42,645	$	10,998	288	%

Liquidity and Capital Resources

~~Sources~~

We have incurred significant losses and cumulative negative cash flows from operations since our founding in 2000. As of ~~Liquidity~~

~~Since inception,~~September 30, 2020, we had an accumulated deficit of $636.0 million. To date, we have primarily financed our operations ~~primarily~~ through the issuance and sale of equity and the proceeds from long-term loans. ~~As of~~

At September 30, ~~2017,~~2020, we had ~~received a total of $715.9~~$234.5 million ~~from these activities. As of September 30, 2017, we had an accumulated deficit of $571.3 million since inception.~~

~~Our net losses were $50.7 million for the nine months ended September 30, 2017 and $131.8 million for the year ended December 31, 2016. Our net losses primarily resulted from costs incurred~~ in connection with our pre-clinical and clinical trial programs, costs incurred in our commercial launch efforts, and general and administrative costs necessary to operate as a multi-national oncology business.

~~As of September 30, 2017, we had $82.1 million of~~ cash, ~~and~~ cash equivalents and ~~$104.5~~short-term investments, a decrease of $91.6 million compared to $326.1 million at December 31, 2019. The decrease in our cash, cash equivalents and short-term investments was primarily due to the prepayment of ~~short-term investments.~~ the 2018 credit facility in the amount of $150 million, partially offset by the cash flow from operations and the exercise of options and proceeds from the issuance of shares.

We believe our cash, ~~and~~ cash equivalents and ~~short term~~short-term investments as of September 30, ~~2017,~~2020 are sufficient for our operations for at least the next ~~twelve~~12 months ~~taking into consideration~~based on our existing business plan and our ability to control the timing of significant expense ~~commitments and our upcoming milestone payment obligation discussed below.~~

In the first quarter of 2018, we anticipate making a milestone payment of $5.5 million (the “Milestone Payment”) to the Technion Research and Development Foundation (“Technion”) pursuant to the settlement agreement dated February 10, 2015 (the “Settlement Agreement”). Pursuant to the Settlement Agreement, we are obligated to pay the Milestone Payment to Technion in the quarter following the quarter in which we achieve $250.0 million of cumulative net sales (as defined in the Settlement Agreement) (the “Net Sales Milestone”).commitments. We ~~anticipate achieving the Net Sales Milestone in the fourth quarter of 2017. We previously accrued for the anticipated Milestone Payment in the fourth quarter of 2016.~~

~~We also~~ expect that our research, development and clinical trials expenses, sales and marketing expenses and general and administrative expenses will continue to increase over the next several ~~years.~~years and may outpace our gross profit. As a result, we may need to raise additional capital ~~in the future~~ to fund our operations.

~~- 18 -~~

Nine months ended September 30,

2017

2016

Net cash used in operating activities

$
(30,236
)

$
(93,867
)
Net cash provided by investing activities

8,713

16,406

Net cash provided by financing activities

3,839

73,796

Net decrease in cash and cash equivalents

(17,684
)

(3,665
)
Effect of exchange rates on cash and cash equivalents

8

64

Changes in short-term investments

(15,994
)

(30,277
)
Net decrease in cash, cash equivalents and short-term investments

$
(33,670
)

$
(33,878
)
The following summary of our cash flows for the periods indicated has been derived from our unaudited consolidated financial statements, which are included elsewhere in this Quarterly Report:


	Nine months ended September 30,
	2020		2019		Change		% Change
Net cash provided by operating activities	$	45,667	$	19,658	$	26,009	132	%
Net cash provided by (used in) investing activities	140,791		(4,911)		145,702		(2967)	%
Net cash provided by (used in) financing activities	(130,645)		53,095		(183,740)		(346)	%
Effect of exchange rate changes on cash and cash equivalents	152		(430)		582		(135)	%
Net increase (decrease) in cash, cash equivalents and restricted cash	$	55,965	$	67,412	$	(11,447)	(17)	%

Operating ~~activities~~

activities. Net cash ~~used in~~provided by operating activities primarily represents our net ~~loss~~income (loss) for the periods presented. Adjustments to net ~~loss~~income (loss) for non-cash items include share-based compensation, depreciation and amortization, ~~accrued interest~~ and ~~impairments.~~asset write-downs and impairment of field equipment. Operating cash flows are also impacted by changes in ~~operating assets and liabilities,~~working capital, principally trade receivables, ~~prepaid expenses, inventories,~~ trade payables and accrued ~~expenses.~~

expenses, inventories, and other long-term assets.

Net cash ~~used in~~provided by operating activities was ~~$30.2~~$45.7 million for the nine months ended September 30, ~~2017,~~2020, as compared to ~~$93.9~~$19.7 million used in operating activities for the nine months ended September 30, 2019. Gross profit increased by $83.8 million for the nine months ended September 30, ~~2016, reflecting a net loss~~2020 versus the nine months ended September 30, 2019, fully funding incremental investments of ~~$50.7 million and a change of $6.2~~$32.7 million in ~~our net operating assets~~research and ~~liabilities, partially offset by non-cash charges~~development and $31.7 million in sales, marketing, general and administrative expenses. The increase in positive cash flow from operations

Table of ~~$26.7 million.~~

~~The change in our net operating assets and liabilities~~ Contents

was primarily ~~the result of~~driven by an increase in ~~other payables of $8.3 million, a decrease in other receivables of $4.5 million,~~net profit and an increase in ~~other long-term liabilities and employee benefit liabilities,~~the amount of non-cash share-based compensation included in the reported net ~~of $1.4 million, and a decrease in inventories of $0.9 million~~income (loss) partially offset by an increase in trade receivables of $16.7 million, a decrease in trade payables of $4.2 million, and an increase in other long-term assets of $0.5 million. Non-cash charges included $20.8 million of share-based compensation, $5.7 million of depreciation and amortization and $0.2 million in impairments.

working capital.

Investing ~~activities~~

activities. Our investing activities consist primarily of capital expenditures to purchase property and equipment and field equipment, as well as investments in and redemptions of our short-term investments.

Net cash provided by investing activities was ~~$8.7~~$140.8 million for the nine months ended September 30, ~~2017,~~2020, compared to ~~$16.4~~$4.9 million used in investing activities for the nine months ended September 30, ~~2016, reflecting an~~2019. The increase in net cash provided by investing activities was primarily attributable to ~~our receipt of $120.0 million~~the net proceeds generated from the ~~maturity~~sale of ~~short-term~~ investments ~~partially offset by~~for cash needs to prepay the purchase of $104.0 million of new short-term investments, purchases of $3.5 million of field equipment, purchases of $2.0 million of property and equipment, and a $1.9 million increase in restricted cash.

2018 credit facility.

Financing ~~activities~~

activities. To date, our primary financing activities have been the sale of equity and the proceeds from long-term loans.

Net cash ~~provided by~~used in financing activities was ~~$3.8~~$130.6 million for the nine months ended September 30, ~~2017,~~2020, as compared to ~~$73.8~~$53.1 million provided by financing activities for the nine months ended September 30, ~~2016, reflecting~~2019. The year-over-year decrease in cash provided by financing activities was primarily related to the prepayment of the 2018 credit facility and a decrease in proceeds ~~received~~ from the exercise of ~~warrants~~options.

On August 18, 2020, we terminated our 2018 term loan credit facility (the “2018 Credit Facility”) by repaying in full the term loan issued thereunder. The repayment included $150.0 million in principal repayment and ~~options~~$3.0 million in prepayment premium, plus accrued and unpaid interest and expenses payable through the payoff date. The un-amortized issuance costs in the amount of $478 that were fully amortized upon the repayment and the prepayment premium were included in our ~~ESPP.~~

~~Our material outstanding indebtedness consists of our Term Loan Credit Facility. As of September 30, 2017, the aggregate principal balance of amounts outstanding under the Term Loan~~third quarter finance expenses. The 2018 Credit Facility ~~was $100.0 million. We may prepay~~consisted of the term ~~loans, in whole, at any time, and must prepay in the event of a change of control, in each case, subject to a pay-down fee, prepayment premium and/or make-whole payment. Interest~~loan, originally maturing on February 7, 2023, with interest on the outstanding loan ~~is 10%~~of 9% annually, payable quarterly in arrears. The pay-down fee on all principal payments to be paid on the date such payments are made is 0.75% and the pre-payment fee if we prepay outstanding loan amounts prior to the first, second or third year from the initial funding date is 3.0%, 2.0% or 1.0%, respectively.

~~- 19 -~~

~~All obligations~~Obligations under the ~~Term Loan~~2018 Credit Facility ~~are~~were guaranteed by certain of our ~~current and future~~ domestic direct and indirect ~~subsidiaries. In addition, the obligations under the Term Loan Credit Facility are~~subsidiaries and were secured by a first-priority security interest in substantially all of the property and assets of, as well as the equity interests owned by, us and the other ~~guarantors. On March 28, 2017, the Term Loan Credit Facility was amended as~~guarantors, all of ~~February 21, 2017 to increase to $1.5 million the limit~~which have been released.

We are in the ~~Company’s pledges~~process of negotiating a new $150.0 million senior secured revolving credit facility with a syndicate of relationship banks. If completed, the facility would provide, subject to certain conditions and ~~deposits security liability~~limitations, for ~~reimbursement or indemnification obligations~~an increase in ~~respect of letters of~~the revolving credit ~~or bank guarantees~~commitments to an aggregate principal amount not to exceed $250.0 million. The indicative interest rate for the ~~benefit of~~loans is a sliding scale between LIBOR plus 2.75% and LIBOR plus 3.25% per annum. The commitments under the Company’s landlords. On September 29, 2017, the Term Loan Credit Facility was amended as of September 27, 2017 to increase the limit on the Company’s cash held at any financial institution to secure one or more letters ofrevolving credit ~~issued~~facility would be guaranteed by ~~such financial institution in respect of leased premises to $1.5 million, to increase the limit on the aggregate balance in~~ certain of ~~the Company’s operating accounts~~our subsidiaries and secured by a first-lien of our and certain subsidiary assets. While we expect to ~~$2.5 million, and to add certain provisions enabling the Company’s use of storage facilities to facilitate distribution of products to patients.~~

The Term Loan Credit Facility has a minimum liquidity covenant, which is tested quarterly. In addition, we must meet certain pro forma net sales requirements. The Term Loan Credit Facility also contains other customary covenants.

enter into this facility, there can be no assurances that closing will occur or will close on these terms.

Contractual Obligations and Commitments

There ~~were~~have been no material changes from the information disclosed in our ~~commitments under contractual obligations during the three months ended September 30, 2017.~~

The total amount of unrecognized tax benefits for uncertain tax positions was $3.5 million and $2.4 million at September 30, 2017 and December 31, 2016, respectively. Payment of these obligations would result from settlements with taxing authorities. Discussions with the taxing authorities are ongoing and we cannot estimate with reasonable certainty the timing or amount of any such payments.

2019 10-K.

Off-Balance Sheet Arrangements

We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements as defined under ~~SEC~~U.S. Securities and Exchange Commission (“SEC”) rules.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes from the information disclosed in our ~~Annual Report on Form 10-K for the year ended December 31, 2016.~~

2019 10-K.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

As required by Rule 13a-15(b) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), our management, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of ~~the design and operation of~~ our disclosure controls and procedures as of September 30, ~~2017.~~2020. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed,

Table of Contents

summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate, to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of September 30, ~~2017,~~2020, our Chief Executive Officer and Chief Financial Officer have concluded that, as of September 30, ~~2017,~~2020, our disclosure controls and procedures were effective at the reasonable assurance level.

Changes in Internal Control over Financial Reporting

There has been no change in our internal control over financial reporting during the quarter ended September 30, ~~2017,~~2020 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

~~- 20 -~~

Table of Contents

PART II—OTHER INFORMATION

Item 1. Legal Proceedings

In January 2017, two putative class action lawsuits were filed against the Company, its directors and certain of its officers, as well as the underwriters in the Company’s October 2015 initial public offering. The complaints, which purport to be brought on behalf of a class of persons and/or entities who purchased or otherwise acquired ordinary shares of the Company pursuant and/or traceable to the registration statement and prospectus issued in connection with the Company’s initial public offering, allege material misstatements and/or omissions in the Company’s initial public offering materials in alleged violation of the federal securities laws and seek compensatory damages, among other remedies. The two actions have been consolidated and the plaintiffs filed a consolidated amended complaint on May 31, 2017. The court granted the defendants’ motion to bifurcate the motion to dismiss into two stages: a threshold motion to dismiss for lack of personal jurisdiction, lack of subject matter jurisdiction, and insufficient process and service of process; and, if the matter is not dismissed following that threshold motion, a subsequent merits motion to dismiss regarding whether the allegations in the amended complaint state a claim under the securities laws. The defendants filed the threshold motion to dismiss on July 31, 2017, and the plaintiffs filed an opposition to the threshold motion to dismiss on September 29, 2017. The Company believes that the amended complaint is without merit and plans to defend the consolidated lawsuits vigorously. The Company has not accrued any amounts in respect of these lawsuits, as a liability is not probable and the amount of any potential liability cannot be reasonably estimated.

None.

Item 1A. Risk Factors

There have been no material changes to our risk factors disclosed in Part I, Item 1A “Risk Factors” in the 2019 10-K and in Part II, Item 1A of our ~~Annual~~Quarterly Report on Form 10-Q filed on April 30, 2020. Also note that references in the 2019 10-K ~~for the year ended December 31, 2016.~~

to NovoTTF-100L now refer to Optune Lua.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

In July 2017, an investor in our 2007 Series E preferred shares offering exercised warrants to purchase 1,293 ordinary shares with an exercise price of $3.59 per share. We believe that this issuance was exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”), in reliance on Section 4(a)(2) of the Securities Act regarding transactions not involving a public offering.

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

~~- 21 -~~

Table of Contents

Item 6. Exhibits

EXHIBIT INDEX

Exhibit
Number

Incorporated by Reference

Filed
Herewith

Exhibit Description

Form

Date

Number

10.1

Employment Agreement, dated as of September 1, 2020, by and between Wilco Groenhuysen and Novocure USA LLC

8-K

8/13/20

10.1

10.2

Employment Agreement, dated as of September 1, 2020, by and between Ashley Cordova and Novocure USA LLC

8-K

8/13/20

10.2

10.3

Employment Agreement, dated as of September 1, 2020, by and between Michael Ambrogi and Novocure USA LLC

8-K

8/13/20

10.3

31.1

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

31.2

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

32.1*

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

32.2*

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

101.INS

Inline XBRL Instance Document

101.SCH

Inline XBRL Taxonomy Extension Schema Document

101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF

Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB

Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE

Inline XBRL Extension Presentation Linkbase Document

104

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

Exhibit

Incorporated by Reference

Filed
Number

Exhibit Description

Form

Date

Number

Herewith
10.1

Third Amendment to Loan and Security Agreement, dated as of September 27, 2017, by and between the Company and BioPharma Secured Investments III Holdings Cayman LP

8-K

10/5/17

10.1

31.1

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


X
31.2

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


X
32.1*

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


X
32.2*

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


X
99.1

NovoCure Limited Policy on Recoupment of Incentive Compensation

8-K

8/1/17

99.1

101.INS

XBRL Instance Document

X
101.SCH

XBRL Taxonomy Extension Schema Document

X
101.CAL

XBRL Taxonomy Extension Calculation Linkbase Document

X
101.DEF

XBRL Taxonomy Extension Definition Linkbase Document

X
101.LAB

XBRL Taxonomy Extension Label Linkbase Document

X
101.PRE

XBRL Extension Presentation Linkbase Document

X
*    The certifications attached as Exhibits 32.1 and 32.2 that accompany this Quarterly Report on Form 10-Q are not deemed filed with the Securities and Exchange Commission and are not to be incorporated by reference into any filing of NovoCure Limited under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Form 10-Q, irrespective of any general incorporation language contained in such filing.

The certifications attached as Exhibits 32.1 and 32.2 that accompany this Quarterly Report on Form 10-Q are not deemed filed with the Securities and Exchange Commission and are not to be incorporated by reference into any filing of NovoCure Limited under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Form 10-Q, irrespective of any general incorporation language contained in such filing.

~~- 22 -~~

Table of Contents ~~SIGNATURES~~

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	~~NovoCure Limited~~
		NovoCure Limited

Date: October ~~26, 2017~~ 29, 2020		/s/ ~~Wilco Groenhuysen~~ Ashley Cordova
		~~Wilco Groenhuysen~~
	Ashley Cordova Chief Financial Officer
	(principal financial and accounting officer and duly authorized officer)

~~- 23 -~~

	~~Page~~
		Page
Cautionary Note Regarding Forward Looking Statements			ii i
Trademarks			ii

PART I—FINANCIAL INFORMATION

Item 1.		Financial Statements			2
Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations			12 16
Item 3.		Quantitative and Qualitative Disclosures About Market Risk			20 25
Item 4.		Controls and Procedures			20 25

PART II—OTHER INFORMATION

Item 1.		Legal Proceedings			21 27
Item 1A.		Risk Factors			21 27
Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds			21 27
Item 3.		Defaults Upon Senior Securities			21 27
Item 4.		Mine Safety Disclosures			21 27
Item 5.		Other Information			21 27
Item 6.		Exhibits			22 28

		Signatures		23 29

	Ordinary shares		Additional paid-in		Accumulated other comprehensive			Accumulated			Total shareholders'
	Shares		capital		loss			deficit			equity

Balance as of December 31, 2015 (audited)		83,778,581	$	640,406	$	(1,505	)	$	(388,081	)	$	250,820
Share-based compensation to employees		-		21,441		-			-			21,441
Exercise of options and warrants		3,195,477		993		-			-			993
Issuance of shares in connection with employee stock purchase plan		92,388		616		-			-			616
Tax benefit from share-based award activity		-		698		-			-			698
Other comprehensive loss, net of tax benefit of $38		-		-		(378	)		-			(378	)
Net loss		-		-		-			(131,845	)		(131,845	)
Balance as of December 31, 2016 (audited)		87,066,446	$	664,154	$	(1,883	)	$	(519,926	)	$	142,345

Share-based compensation to employees		-		20,760		-			-			20,760
Exercise of options and warrants		2,172,266		3,095		-			-			3,095
Cumulative effect adjustment resulting from ASU 2016-09 adoption (see Note 1)		-		670		-			(670	)		-
Issuance of shares in connection with employee stock purchase plan		116,967		781		-			-			781
Other comprehensive income, net of tax benefit of $57		-		-		421			-			421
Net loss		-		-		-			(50,717	)		(50,717	)
Balance as of September 30, 2017 (unaudited)		89,355,679	$	689,460	$	(1,462	)	$	(571,313	)	$	116,685

	Nine months ended September 30, 2017
	Unaudited
	Number of RSUs			Weighted average grant date fair value price
Unvested at beginning of year		-		$	-
Granted		1,661,619			9.64
Vested		-			-
Forfeited and cancelled		(10,400	)		7.15
Unvested as of September 30, 2017		1,651,219		$	9.66

	2017						2016
U.S. dollars in millions	Q3		Q2		Q1		Q4		Q3		Q2		Q1
Gross billings	$	101.9	$	87.2	$	73.2	$	63.8	$	57.5	$	54.0	$	45.5

Accrual basis revenue	$	35.7	$	19.1	$	14.7	$	8.5	$	0.0	$	0.0	$	0.0
Cash basis revenue for therapy provided in the period		3.1		5.7		5.9		6.3		8.9		7.6		5.6
Cash basis revenue for therapy provided in previous periods		11.3		13.6		14.3		15.5		12.7		10.3		7.4
Net revenues	$	50.1	$	38.4	$	34.9	$	30.2	$	21.7	$	17.9	$	13.1

Exhibit		Incorporated by Reference			Filed
Number	Exhibit Description	Form	Date	Number	Herewith
10.1	Third Amendment to Loan and Security Agreement, dated as of September 27, 2017, by and between the Company and BioPharma Secured Investments III Holdings Cayman LP	8-K	10/5/17	10.1
31.1	Certification of Principal Executive Officer Required Under Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as amended				X
31.2	Certification of Principal Financial Officer Required Under Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as amended				X
32.1*	Certification of Principal Executive Officer Required Under Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended, and 18 U.S.C. §1350				X
32.2*	Certification of Principal Financial Officer Required Under Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended, and 18 U.S.C. §1350				X
99.1	NovoCure Limited Policy on Recoupment of Incentive Compensation	8-K	8/1/17	99.1
101.INS	XBRL Instance Document				X
101.SCH	XBRL Taxonomy Extension Schema Document				X
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document				X
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document				X
101.LAB	XBRL Taxonomy Extension Label Linkbase Document				X
101.PRE	XBRL Extension Presentation Linkbase Document				X