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, 2020~~March 31, 2021


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

For the transition period from to

Commission File Number 001-37565

NovoCure Limited

(Exact Name of Registrant as Specified in Its Charter)


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

No. 4 The Forum

Grenville Street

St. Helier, Jersey JE2 4UF

(Address of principal executive offices, including zip code)

+44 (0) 15 3475 6700

(Registrant’s Telephone Number, Including Area Code)

Not Applicable

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

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


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

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

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

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

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

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

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

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


Class						Outstanding as of ~~October~~April 23, ~~2020~~2021
Ordinary shares, no par value						~~101,797,241~~103,413,367 Shares

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

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

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

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

•our plans to pursue the use of our Products for the treatment of solid tumor cancers other than glioblastoma multiforme (“GBM”) and malignant pleural mesothelioma (“MPM”);

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

•our ability to obtain regulatory approvals for the use of our Products in ~~cancers~~indications other than GBM and MPM;

•our ability to acquire from third-party suppliers the supplies needed to manufacture our Products;

•our ability to manufacture adequate supply of our ~~products;~~Products;

•our ability to secure and maintain adequate coverage from third-party payers to reimburse us for our Products for current and future indications;

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

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

•our ability to manage the risks ~~and~~associated with business disruptions ~~associated with~~caused by natural disasters, extreme weather events, pandemics such as the COVID-19 ~~pandemic;~~(coronavirus) or international conflict or other disruptions outside of our control;

•our cash needs; and

•our prospects, financial condition and results of operations.

These forward-looking statements involve a number of risks and uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. Factors which may cause such differences to occur include those risks and uncertainties set forth under Part I, Item 1A., “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2019~~2020 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,~~25, 2021, as well as other risks and uncertainties set forth from time to time in the reports we file with the SEC. In our prior filings, ~~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

Table of Contents

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements


NOVOCURE LIMITED AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS	NOVOCURE LIMITED AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS					NOVOCURE LIMITED AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands (except share data)	U.S. dollars in thousands (except share data)					U.S. dollars in thousands (except share data)
		September 30, 2020		December 31, 2019			March 31, 2021		December 31, 2020
		Unaudited		Audited			Unaudited		Audited
ASSETS	ASSETS					ASSETS
CURRENT ASSETS:	CURRENT ASSETS:					CURRENT ASSETS:
Cash and cash equivalents	Cash and cash equivalents	$	234,461	$	177,321	Cash and cash equivalents	$	314,547	$	234,674
Short-term investments	Short-term investments	0		148,769		Short-term investments	549,855		607,902
Restricted cash	Restricted cash	920		2,095		Restricted cash	11,430		11,499
Trade receivables		84,561		58,859
Trade receivables, net						Trade receivables, net	92,514		96,699
Receivables and prepaid expenses	Receivables and prepaid expenses	37,064		29,202		Receivables and prepaid expenses	18,922		21,245
Inventories	Inventories	26,479		23,701		Inventories	27,968		27,422
Total current assets	Total current assets	383,485		439,947		Total current assets	1,015,236		999,441
LONG-TERM ASSETS:	LONG-TERM ASSETS:					LONG-TERM ASSETS:
Property and equipment, net	Property and equipment, net	10,271		9,342		Property and equipment, net	11,733		11,395
Field equipment, net	Field equipment, net	9,132		7,684		Field equipment, net	12,132		11,230
Right-of-use assets, net		17,122		17,571
Right-of-use assets						Right-of-use assets	17,741		19,009
Other long-term assets	Other long-term assets	11,039		4,904		Other long-term assets	10,788		10,908
Total long-term assets	Total long-term assets	47,564		39,501		Total long-term assets	52,394		52,542
TOTAL ASSETS	TOTAL ASSETS	$	431,049	$	479,448	TOTAL ASSETS	$	1,067,630	$	1,051,983

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

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NOVOCURE LIMITED AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS	NOVOCURE LIMITED AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS					NOVOCURE LIMITED AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands (except share data)	U.S. dollars in thousands (except share data)					U.S. dollars in thousands (except share data)
		September 30, 2020		December 31, 2019			March 31, 2021		December 31, 2020
		Unaudited		Audited			Unaudited		Audited
LIABILITIES AND SHAREHOLDERS' EQUITY	LIABILITIES AND SHAREHOLDERS' EQUITY					LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:	CURRENT LIABILITIES:					CURRENT LIABILITIES:
Trade payables	Trade payables	$	42,206	$	36,925	Trade payables	$	52,703	$	53,647
Other payables, lease liabilities and accrued expenses	Other payables, lease liabilities and accrued expenses	53,128		49,386		Other payables, lease liabilities and accrued expenses	57,784		59,965
Total current liabilities	Total current liabilities	95,334		86,311		Total current liabilities	110,487		113,612
LONG-TERM LIABILITIES:	LONG-TERM LIABILITIES:					LONG-TERM LIABILITIES:
Long-term loan, net of discount and issuance costs		0		149,424
Long-term debt, net						Long-term debt, net	559,584		429,905
Deferred revenue	Deferred revenue	10,859		7,807		Deferred revenue	9,577		12,139
Long-term leases	Long-term leases	13,080		14,140		Long-term leases	12,708		14,293
Employee benefits	Employee benefits	4,571		3,754		Employee benefits	2,963		5,171
Other long-term liabilities	Other long-term liabilities	168		222		Other long-term liabilities	177		337
Total long-term liabilities	Total long-term liabilities	28,678		175,347		Total long-term liabilities	585,009		461,845
TOTAL LIABILITIES	TOTAL LIABILITIES	124,012		261,658		TOTAL LIABILITIES	695,496		575,457

COMMITMENTS AND CONTINGENCIES	COMMITMENTS AND CONTINGENCIES					COMMITMENTS AND CONTINGENCIES	0		0

SHAREHOLDERS' EQUITY:	SHAREHOLDERS' EQUITY:					SHAREHOLDERS' EQUITY:
Share capital -	Share capital -					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
Ordinary shares no par value, unlimited shares authorized; issued and outstanding: 103,187,460 shares and 102,334,276 shares at March 31, 2021 (unaudited) and December 31, 2020, respectively						Ordinary shares no par value, unlimited shares authorized; issued and outstanding: 103,187,460 shares and 102,334,276 shares at March 31, 2021 (unaudited) and December 31, 2020, respectively	0		0
Additional paid-in capital	Additional paid-in capital	946,267		871,442		Additional paid-in capital	1,005,785		1,111,435
Accumulated other comprehensive income (loss)	Accumulated other comprehensive income (loss)	(3,236)		(2,767)		Accumulated other comprehensive income (loss)	(1,948)		(3,832)
Retained earnings (accumulated deficit)	Retained earnings (accumulated deficit)	(635,994)		(650,885)		Retained earnings (accumulated deficit)	(631,703)		(631,077)
TOTAL SHAREHOLDERS' EQUITY	TOTAL SHAREHOLDERS' EQUITY	307,037		217,790		TOTAL SHAREHOLDERS' EQUITY	372,134		476,526
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	431,049	$	479,448	TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	1,067,630	$	1,051,983

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

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NOVOCURE LIMITED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS	NOVOCURE LIMITED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS											NOVOCURE LIMITED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS
U.S. dollars in thousands (except share and per share data)	U.S. dollars in thousands (except share and per share data)											U.S. dollars in thousands (except share and per share data)
		Three months ended September 30,				Nine months ended September 30,				Year ended December 31,			Three months ended March 31,			Year ended December 31,
		2020		2019		2020		2019		2019				2021		2020		2020
		Unaudited				Unaudited				Audited			Unaudited			Audited
Net revenues	Net revenues	$	132,660	$	92,062	$	350,413	$	252,084	$	351,318	Net revenues		$	134,695	$	101,828	$	494,366
Cost of revenues	Cost of revenues	28,395		22,900		78,365		63,820		88,606		Cost of revenues		26,385		24,496		106,501
Gross profit	Gross profit	104,265		69,162		272,048		188,264		262,712		Gross profit		108,310		77,332		387,865

Operating costs and expenses:	Operating costs and expenses:											Operating costs and expenses:
Research, development and clinical trials	Research, development and clinical trials	32,818		18,766		88,008		55,262		79,003		Research, development and clinical trials		45,916		25,271		132,010
Sales and marketing	Sales and marketing	29,364		23,830		86,658		69,871		96,675		Sales and marketing		31,357		28,834		118,017
General and administrative	General and administrative	27,061		22,711		79,073		64,198		87,948		General and administrative		31,125		26,608		107,437
Total operating costs and expenses	Total operating costs and expenses	89,243		65,307		253,739		189,331		263,626		Total operating costs and expenses		108,398		80,713		357,464

Operating income (loss)	Operating income (loss)	15,022		3,855		18,309		(1,067)		(914)		Operating income (loss)		(88)		(3,381)		30,401
Financial expenses (income), net	Financial expenses (income), net	3,983		2,555		9,032		6,165		7,910		Financial expenses (income), net		2,646		2,432		12,299

Income (loss) before income tax	Income (loss) before income tax	11,039		1,300		9,277		(7,232)		(8,824)		Income (loss) before income tax		(2,734)		(5,813)		18,102
Income tax	Income tax	1,755		(630)		(5,614)		4,258		(1,594)		Income tax		1,394		(9,765)		(1,706)
Net income (loss)	Net income (loss)	$	9,284	$	1,930	$	14,891	$	(11,490)	$	(7,230)	Net income (loss)		$	(4,128)	$	3,952	$	19,808

Basic net income (loss) per ordinary share	Basic net income (loss) per ordinary share	$	0.09	$	0.02	$	0.15	$	(0.12)	$	(0.07)	Basic net income (loss) per ordinary share		$	(0.04)	$	0.04	$	0.20
Weighted average number of ordinary shares used in computing basic net income (loss) per share	Weighted average number of ordinary shares used in computing basic net income (loss) per share	101,234,306		98,485,519		100,601,427		96,551,041		97,237,549		Weighted average number of ordinary shares used in computing basic net income (loss) per share		102,633,545		99,877,567		100,930,866

Diluted net income (loss) per ordinary share	Diluted net income (loss) per ordinary share	$	0.09	$	0.02	$	0.14	$	(0.12)	$	(0.07)	Diluted net income (loss) per ordinary share		$	(0.04)	$	0.04	$	0.18
Weighted average number of ordinary shares used in computing diluted net income (loss) per share	Weighted average number of ordinary shares used in computing diluted net income (loss) per share	108,643,814		107,604,578		108,113,416		96,551,041		97,237,549		Weighted average number of ordinary shares used in computing diluted net income (loss) per share		102,633,545		108,100,623		108,877,648

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

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)	CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)											CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
U.S. dollars in thousands	U.S. dollars in thousands											U.S. dollars in thousands
		Three months ended September 30,				Nine months ended September 30,				Year ended December 31,			Three months ended March 31,			Year ended December 31,
		2020		2019		2020		2019		2019				2021		2020		2020
		Unaudited				Unaudited				Audited			Unaudited			Audited
Net income (loss)	Net income (loss)	$	9,284	$	1,930	$	14,891	$	(11,490)	$	(7,230)	Net income (loss)		$	(4,128)	$	3,952	$	19,808
Other comprehensive income (loss), net of tax:	Other comprehensive income (loss), net of tax:											Other comprehensive income (loss), net of tax:
Change in foreign currency translation adjustments	Change in foreign currency translation adjustments	143		(216)		26		(430)		(304)		Change in foreign currency translation adjustments		(268)		(200)		(85)
Pension benefit plan	Pension benefit plan	153		(68)		(495)		(811)		(1,063)		Pension benefit plan		2,152		(662)		(980)
Total comprehensive income (loss)	Total comprehensive income (loss)	$	9,580	$	1,646	$	14,422	$	(12,731)	$	(8,597)	Total comprehensive income (loss)		$	(2,244)	$	3,090	$	18,743

~~Table of Contents~~


NOVOCURE LIMITED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY	NOVOCURE LIMITED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY														NOVOCURE LIMITED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
U.S. dollars in thousands (except share data)	U.S. dollars in thousands (except share data)														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			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
Balance as of December 31, 2020 (audited)															Balance as of December 31, 2020 (audited)	102,334,276			$	1,111,435		$	(3,832)	$	(631,077)	$	476,526

Share-based compensation to employees	Share-based compensation to employees	—	16,557				—		—				16,557		Share-based compensation to employees	—			18,863			—		—		18,863
Exercise of options and vested RSUs	Exercise of options and vested RSUs	834,538	4,511				—		—				4,511		Exercise of options and vested RSUs	853,184			7,961			—		—		7,961
Cumulative effect adjustment resulting from ASU 2020-06 early adoption (see Note 5)															Cumulative effect adjustment resulting from ASU 2020-06 early adoption (see Note 5)	—			(132,474)			—		3,502		(128,972)
Other comprehensive income (loss), net of tax benefit of $0	Other comprehensive income (loss), net of tax benefit of $0	—	—				(862)		—				(862)		Other comprehensive income (loss), net of tax benefit of $0	—			—			1,884		—		1,884
Net income (loss)	Net income (loss)	—	—				—		3,952				3,952		Net income (loss)	—			—			—		(4,128)		(4,128)
Balance as of March 31, 2020 (Unaudited)		100,362,973	$	892,510			$	(3,629)	$	(646,933)			$	241,948
Balance as of March 31, 2021(Unaudited)															Balance as of March 31, 2021(Unaudited)	103,187,460			$	1,005,785		$	(1,948)	$	(631,703)	$	372,134

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~~

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


	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

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

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NOVOCURE LIMITED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS	NOVOCURE LIMITED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS											NOVOCURE LIMITED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. dollars in thousands	U.S. dollars in thousands											U.S. dollars in thousands
		Three months ended September 30,				Nine months ended September 30,				Year ended December 31,			Three months ended March 31,			Year ended December 31,
		2020		2019		2020		2019		2019				2021		2020		2020
		Unaudited				Unaudited				Audited			Unaudited			Audited
Cash flows from operating activities:	Cash flows from operating activities:											Cash flows from operating activities:
Net income (loss)	Net income (loss)	$	9,284	$	1,930	$	14,891	$	(11,490)	$	(7,230)	Net income (loss)		$	(4,128)	$	3,952	$	19,808
Adjustments to reconcile net income (loss) to net cash used in operating activities:	Adjustments to reconcile net income (loss) to net cash used in operating activities:											Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation and amortization	Depreciation and amortization	2,188		1,932		6,677		5,993		8,460		Depreciation and amortization		2,370		1,888		9,150
Asset write-downs and impairment of field equipment	Asset write-downs and impairment of field equipment	124		78		263		239		398		Asset write-downs and impairment of field equipment		176		6		429
Share-based compensation	Share-based compensation	20,121		14,338		55,448		37,719		52,416		Share-based compensation		18,863		16,557		75,721
Foreign currency remeasurement loss (gain)	Foreign currency remeasurement loss (gain)	(79)		0		(549)		0		(917)		Foreign currency remeasurement loss (gain)		2,157		(7)		(699)
Decrease (increase) in accounts receivables	Decrease (increase) in accounts receivables	(7,678)		(9,986)		(33,556)		(17,020)		(36,496)		Decrease (increase) in accounts receivables		4,624		(19,718)		(30,354)
Amortization of discount (premium)	Amortization of discount (premium)	424		(547)		(654)		(1,712)		(2,176)		Amortization of discount (premium)		603		(539)		3,260
Decrease (increase) in inventories	Decrease (increase) in inventories	(55)		1,067		(2,446)		(1,832)		(1,159)		Decrease (increase) in inventories		(1,296)		1,147		(2,935)
Decrease (increase) in other long-term assets	Decrease (increase) in other long-term assets	(5,173)		1,069		(2,794)		1,151		3,446		Decrease (increase) in other long-term assets		1,432		1,235		(1,366)
Increase (decrease) in accounts payables and accrued expenses	Increase (decrease) in accounts payables and accrued expenses	9,908		6,433		7,974		10,902		16,883		Increase (decrease) in accounts payables and accrued expenses		(2,626)		(2,339)		25,470
Increase (decrease) in other long-term liabilities	Increase (decrease) in other long-term liabilities	1,905		(1,407)		413		(4,292)		(7,006)		Increase (decrease) in other long-term liabilities		(4,394)		(225)		664
Net cash provided by (used in) operating activities	Net cash provided by (used in) operating activities	$	30,969	$	14,907	$	45,667	$	19,658	$	26,620	Net cash provided by (used in) operating activities		$	17,780	$	1,957	$	99,148

Cash flows from investing activities:	Cash flows from investing activities:											Cash flows from investing activities:
Purchase of property, equipment and field equipment	Purchase of property, equipment and field equipment	$	(2,782)	$	(2,708)	$	(9,209)	$	(7,430)	$	(10,485)	Purchase of property, equipment and field equipment		$	(3,981)	$	(3,112)	$	(14,968)
Proceeds from maturity of short-term investments	Proceeds from maturity of short-term investments	150,000		105,000		150,000		315,661		420,661		Proceeds from maturity of short-term investments		608,000		0		150,000
Purchase of short-term investments	Purchase of short-term investments	0		(104,466)		0		(313,142)		(461,843)		Purchase of short-term investments		(549,848)		0		(607,879)
Net cash provided by (used in) investing activities	Net cash provided by (used in) investing activities	$	147,218	$	(2,174)	$	140,791	$	(4,911)	$	(51,667)	Net cash provided by (used in) investing activities		$	54,171	$	(3,112)	$	(472,847)

Cash flows from financing activities:	Cash flows from financing activities:											Cash flows from financing activities:
Proceeds from issuance of shares, net	Proceeds from issuance of shares, net	$	0	$	0	$	1,667	$	1,208	$	2,467	Proceeds from issuance of shares, net		$	0	$	0	$	3,370
Proceeds from long term debt, net												Proceeds from long term debt, net		0		0		558,439
Repayment of long-term loan	Repayment of long-term loan	(150,007)		(7)		(150,022)		(23)		(31)		Repayment of long-term loan		(6)		(8)		(150,028)
Exercise of options and warrants	Exercise of options and warrants	9,514		15,475		17,710		51,910		59,245		Exercise of options and warrants		7,961		4,511		28,428
Net cash provided by (used in) financing activities	Net cash provided by (used in) financing activities	$	(140,493)	$	15,468	$	(130,645)	$	53,095	$	61,681	Net cash provided by (used in) financing activities		$	7,955	$	4,503	$	440,209

Effect of exchange rate changes on cash, cash equivalents and restricted cash	Effect of exchange rate changes on cash, cash equivalents and restricted cash	$	102	$	(216)	$	152	$	(430)	$	26	Effect of exchange rate changes on cash, cash equivalents and restricted cash		$	(102)	$	(59)	$	247

Increase (decrease) in cash, cash equivalents and restricted cash	Increase (decrease) in cash, cash equivalents and restricted cash	37,796		27,985		55,965		67,412		36,660		Increase (decrease) in cash, cash equivalents and restricted cash		79,804		3,289		66,757
Cash, cash equivalents and restricted cash at the beginning of the period												Cash, cash equivalents and restricted cash at the beginning of the period		246,173		179,416		179,416

Cash, cash equivalents and restricted cash at the end of the period												Cash, cash equivalents and restricted cash at the end of the period		$	325,977	$	182,705	$	246,173

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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



	Three months ended March 31,			Year ended December 31,
		2021		2020		2020
	Unaudited			Audited
Supplemental cash flow activities:
Cash paid during the period for:
Income taxes paid (refunded), net		$	(2,405)	$	2,209	$	(3,261)
Interest paid		$	1	$	3,415	$	8,686
Non-cash activities:
Right-of-use assets obtained in exchange for lease liabilities		$	284	783		$	5,617

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

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NOVOCURE LIMITED AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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

NOTE 1: ORGANIZATION AND BASIS OF PRESENTATION

Organization. NovoCure Limited (including its consolidated subsidiaries, the ~~“Company”~~"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 (collectively, our "Products"), for the treatment of solid ~~tumors.~~tumor cancers. The Company ~~has received regulatory approval from~~currently markets Optune in the United States ("U.S. ~~Food~~"), Austria, Germany, Israel, Japan, Sweden and ~~Drug Administration (“FDA”) under~~Switzerland. The Company currently markets Optune Lua in the ~~Premarket Approval (“PMA") pathway and regulatory approvals and clearances in certain other countries for Optune to treat adult patients with glioblastoma multiforme (“GBM”).~~U.S. The Company also has ~~received FDA approval under the Humanitarian Device Exemption pathway~~a License and Collaboration Agreement (the "Zai Agreement") with Zai Lab (Shanghai) Co., Ltd. ("Zai") to market Optune ~~Lua for unresectable, locally advanced or metastatic malignant pleural mesothelioma (“MPM”)~~ in ~~combination with standard chemotherapies.~~Greater China.

Financial statement preparation. The accompanying unaudited consolidated financial statements include the accounts of the Company and intercompany accounts and transactions have been eliminated. In the opinion of the Company’s management, the consolidated financial statements reflect all adjustments, which are normal and recurring in nature, necessary for fair financial statement presentation for the periods presented. The preparation of these consolidated financial statements in conformity with U.S. generally accepted accounting principles 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, ~~2019~~2020 (the ~~“2019 10-K”~~"2020 10-K') filed with the Securities and Exchange Commission on February ~~27, 2020.~~25, 2021.

The significant accounting policies applied in the audited annual consolidated financial statements of the Company as disclosed in the ~~2019~~2020 10-K are applied consistently in these unaudited interim consolidated financial statements, except as noted below:

Recently Adopted Accounting Pronouncements.

In ~~June 2016,~~August 2020, the Financial Accounting Standards Board ~~(“FASB”~~("FASB") issued Accounting Standards Update ~~(“ASU”~~("ASU") ~~2016-13, Financial~~No. 2020-06, Accounting for Convertible Instruments ~~- Credit Losses (Topic 326): Measurement~~and Contracts in an Entity’s Own Equity (ASU 2020-06), which simplifies the accounting for certain financial instruments with characteristics of ~~Credit Losses on Financial Instruments (“~~liabilities and equity, including convertible instruments and contracts in an entity’s own equity. Among other changes, ASU ~~2016-13”). ASU 2016-13 amends~~2020-06 removes from GAAP the ~~impairment~~liability and equity separation model ~~to utilize~~for convertible instruments with a cash conversion feature, and as a result, after adoption, entities will no longer separately present in equity an ~~expected loss methodology in place~~embedded conversion feature for such debt. Similarly, the embedded conversion feature will no longer be amortized into income as interest expense over the life of the ~~currently used incurred loss methodology,~~instrument. Instead, entities will account for a convertible debt instrument wholly as debt unless (1) a convertible instrument contains features that require bifurcation as a derivative under ASC Topic 815, Derivatives and Hedging, or (2) a convertible debt instrument was issued at a substantial premium. Additionally, ASU 2020-06 requires the application of the if-converted method to calculate the impact of convertible instruments on diluted earnings per share (EPS), which ~~will result in~~is consistent with the ~~more timely recognition of losses.~~Company’s accounting treatment under the current standard. ASU ~~2016-13 also applies to employee benefit plan accounting,~~2020-06 is effective ~~date~~ for ~~the first quarter of~~ fiscal ~~year 2020.~~years beginning after December 15, 2021, with early adoption permitted for fiscal years beginning after December 15, 2020, and can be adopted on either a fully retrospective or modified retrospective basis. The Company early adopted ASU 2020-06, effective January 1, 2021 on a modified retrospective basis.

The impact of the ~~standard effective~~Company’s adoption of ASU 2020-06 on the balance sheet as of January 1, ~~2020,~~2021 was an increase in long term debt, net of $128,972, a decrease in additional paid-in capital of $132,474, and a decrease in accumulated deficit of $3,502. Interest expense recognized in future periods will be reduced as a result of accounting for the convertible debt instrument as a single liability measured at its amortized cost. For additional information see Note 5 of these unaudited consolidated financial statements.

In December 2019, the FASB issued Accounting Standard Update No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (ASU 2019-12), which simplifies the accounting for income taxes, eliminates certain exceptions within ASC 740, Income Taxes, and clarifies certain aspects of the current guidance. ASU 2019-12 is effective for the Company as of January 1, 2021 and the adoption of this standard did not have ~~an impact on the Company's consolidated financial statements.~~

~~In August 2018, FASB issued ASU 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 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 expensed over the term of the hosting arrangement to the same line item in the statement of income as the costs related to the hosting fees. The Company adopted the standard effective as of January 1, 2020, and the adoption of this standard did not have anmaterial impact on the Company's consolidated financial statements.

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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 purchased. As of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, the Company’s cash and 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


	March 31, 2021		December 31, 2020
	Unaudited		Audited
Cash	$	31,849	$	20,339
Money market funds	282,698		214,335
Total cash and cash equivalents	$	314,547	$	234,674

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~~March 31, 2021 and December 31, ~~2019,~~2020, the Company’s short-term investments were:

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


	March 31, 2021		December 31, 2020
	Unaudited		Audited
Short-term investments	$	549,855	$	607,902

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 Company’s short-term investments as of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019~~2020 was $0$549,890 and ~~$148,738,~~$607,905, respectively.

NOTE 3: INVENTORIES

Inventories are stated at the lower of cost or net realizable value. The weighted average methodology is applied to determine cost. As of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, the Company’s inventories were composed of:

September 30,
2020 December 31,
2019
Unaudited Audited
Raw materials $ 5,711 $ 3,912
Work in progress 6,987 6,482
Finished products 13,781 13,308
Total $ 26,479 $ 23,701


	March 31, 2021		December 31, 2020
	Unaudited		Audited
Raw materials	$	3,376	$	5,175
Work in progress	9,342		4,896
Finished products	15,250		17,351
Total	$	27,968	$	27,422

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 2030. The Company also leases motor vehicles under various operating leases, which expire on various dates, the latest of which is in 2024.

Pledged deposits and bank guarantees. As of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, the Company pledged bank deposits of ~~$1,420~~$1,409 and ~~$1,390,~~$1,438, respectively, to cover bank guarantees in respect of its leases of operating facilities and obtained bank guarantees for the fulfillment of the Company’s lease and other contractual commitments of ~~$1,652~~$1,649 and ~~$1,557,~~$1,687, respectively.

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Senior secured revolving credit facility. On November 6, 2020, the Company entered into a new three-year $150,000 senior secured revolving credit facility with a syndicate of relationship banks. For additional information, see Note 12(c) to the Consolidated Financial Statements in the 2020 10-K. As of March 31, 2021, the Company had no outstanding balance borrowed under the facility.

NOTE 5: ~~LONG TERM LOAN~~CONVERTIBLE NOTE

On ~~August 18,~~November 5, 2020, the Company ~~terminated its outstanding term loan, which bore interest at 9.0% per annum.~~ issued $575,000 aggregate principal amount of 0% Convertible Senior Notes due 2025 (the “Notes”).

The ~~prepayment included $150,000 in principal repayment and $3,000 in prepayment premium, plus accrued and unpaid~~Notes are senior unsecured obligations of the Company. The Notes do not bear regular interest, and ~~expenses~~the principal amount of the Notes will not accrete. Special interest, if any, payable ~~through~~in accordance with the ~~payoff date.~~terms of the Notes will be payable in cash semi-annually in arrears on May 1 and November 1 of each year, beginning on May 1, 2021. The ~~un-amortized issuance costs~~Notes mature on November 1, 2025, unless earlier repurchased, redeemed or converted. For additional information, see Note 10(a) to the Consolidated Financial Statements in the 2020 10-K.

In January 2021, the Company irrevocably elected to settle all conversions of Notes by a combination of cash and the Company's ordinary shares and that the cash portion per $1,000 principal amount of ~~$478 that were fully amortized~~Notes for all conversion settlements shall be $1,000. Accordingly, from and after the date of the election, upon ~~the repayment~~conversion of any Notes, holders of Notes will receive, with respect to each $1,000 principal amount of Notes converted, cash in an amount up to $1,000 and the ~~prepayment premium~~balance of the conversion value, if any, in ordinary shares (the "Conversion Shares").

The net carrying amount of the liability and equity components of the Notes as of March 31, 2021 and December 31, 2020 are as follows:


	March 31, 2021		December 31, 2020
	Unaudited		Audited
Liability component, net:
Principal amount	$	575,000	$	575,000
Unamortized discount	0		(132,797)
Unamortized issuance costs	(15,416)		(12,298)
Net carrying amount of liability component (1)	$	559,584	$	429,905

Equity component, net:
Conversion feature	$	0	$	136,402
Issuance costs	0		(3,928)
Net carrying amount of equity component	$	0	$	132,474

(1) An effective interest rate determines the fair value of the Notes, therefore they are categorized as Level 3 in accordance with ASC 820, "Fair Value Measurements and Disclosures." The estimated fair value of the Net carrying amount of liability component of the Notes as of March 31, 2021 and December 31, 2020 were ~~included in~~$477,841 and $450,437, respectively.

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Finance expense related to the ~~Company’s third quarter finance expenses.~~Notes was as follows:


	Three months ended March 31,				Year ended December 31, 2020
	2021		2020
	Unaudited				Audited
Amortization of debt discount	$	0	$	0	$	3,605
Amortization of debt issuance costs	709		0		333
Total finance expense recognized	$	709	$	0	$	3,938

Effective January 1, 2021, the Company early adopted ASU 2020-06 using the modified retrospective approach.

NOTE 6: ~~EQUITY INCENTIVE~~SHARE OPTION PLANS AND ESPP

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

Options granted under the 2015 Plan generally have a four-year vesting period and expire ten years after the date of grant. Options granted under the 2015 Plan that are canceled or forfeited before expiration become available for future grants. RSUs granted under the 2015 Plan generally vest over a three year period. PSUs granted under the 2015 Plan generally vest between a three and six year period as performance targets are attained. RSUs and PSUs granted under the 2015 Plan that are canceled before expiration become available for future grants. As of ~~September 30, 2020, 11,263,270~~March 31, 2021, 14,450,270 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, 2020~~March 31, 2021 and changes during the period then ended is presented below:


		Nine months ended September 30, 2020				Three months ended March 31, 2021
		Unaudited				Unaudited
		Number of options	Weighted average exercise price			Number of options	Weighted average exercise price
Outstanding at beginning of year	Outstanding at beginning of year	10,350,810	$	20.40	Outstanding at beginning of year	9,220,326	$	26.21
Granted	Granted	861,551	70.56		Granted	375,689	153.09
Exercised	Exercised	(1,260,709)	14.16		Exercised	(404,591)	19.36
Forfeited and canceled	Forfeited and canceled	(183,758)	19.26		Forfeited and canceled	(20,911)	62.86
Outstanding as of September 30, 2020		9,767,894	$	25.65
Outstanding as of March 31, 2021					Outstanding as of March 31, 2021	9,170,513	$	31.63

Exercisable options	Exercisable options	4,858,926	$	16.84	Exercisable options	5,344,848	$	18.59

For the ~~nine~~three months ended ~~September 30, 2020,~~March 31, 2021, options to purchase ~~1,260,709~~404,591 ordinary shares were exercised, resulting in the issuance of ~~1,260,709~~404,591 ordinary shares.

A summary of the status of the Company’s RSUs and PSUs as of ~~September 30, 2020~~March 31, 2021 and changes during the period then ended is presented below.

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		Nine months ended September 30, 2020				Three months ended March 31, 2021
		Unaudited				Unaudited
		Number of RSU/PSUs	Weighted average grant date fair value			Number of RSU/PSUs	Weighted average grant date fair value
Unvested at beginning of year	Unvested at beginning of year	1,474,395	$	30.26	Unvested at beginning of year	4,466,151	$	54.06
Granted ~~(1)~~	Granted ~~(1)~~	3,923,573	55.06		Granted ~~(1)~~	538,908	139.43
Vested	Vested	(906,108)	21.31		Vested	(448,593)	48.38
Forfeited and cancelled	Forfeited and cancelled	(24,394)	48.49		Forfeited and cancelled	(12,262)	75.05
Unvested as of September 30, 2020		4,467,466	53.76
Unvested as of March 31, 2021 (1)					Unvested as of March 31, 2021 (1)	4,544,204	64.69

(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~~which are vested upon achievements of performance milestones which are not ~~limited to new FDA approved indications), cliff-vest~~probable, as of March 31, 2021, in ~~pre-determined increments, and have a compensation cost of $48.16 per PSU that~~accordance with ASC 718 as follows:


March 31, 2021
Number of PSUs	Fair value at grant date per PSU		Total fair value at gtant date
2,703,852	$	48.16	$	130,218
216,226	69.37		15,000
35,424	84.68		3,000
94,813	$	114.26	10,833
3,050,315			$	159,050

These PSUs will ~~not~~ be ~~recognized until~~expensed over 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~~period when 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~~become 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 are construed in a manner consistent with the requirements of such section. As of ~~September 30, 2020, 4,017,014~~March 31, 2021, 5,006,367 ordinary shares were available to be purchased by eligible employees under the ~~ESPP and 447,634 shares had been issued under the~~ ESPP.

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


		Nine months ended September 30,				Year ended December 31, 2019			Three months ended March 31,				Year ended December 31, 2020
		2020		2019					2021		2020
		Unaudited				Audited			Unaudited				Audited
Stock Option Plans	Stock Option Plans							Stock Option Plans

Expected term (years)								Expected term (years)	5.86-6.00		6.25		5.50-6.00
Expected volatility								Expected volatility	60	%	54	%	54%-56%
Risk-free interest rate								Risk-free interest rate	0.85%-0.88%		0.86	%	0.30%-0.86%
Dividend yield								Dividend yield	0.00	%	0.00	%	0.00	%
ESPP								ESPP
Expected term (years)	Expected term (years)	5.50-6.25		5.50-6.50		5.50-6.5		Expected term (years)	0.50		0.50		0.50
Expected volatility	Expected volatility	54%-56%		55%-61%		55%-61%		Expected volatility	55	%	47	%	47%-66%
Risk-free interest rate	Risk-free interest rate	0.30%-0.86%		1.90%-2.40%		1.73%-2.40%		Risk-free interest rate	0.09	%	1.57	%	0.17%-1.57%

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

Expected volatility		47%-66%		44%-62%		44%-62%
Risk-free interest rate		0.17%-1.57%		2.10%-2.51%		2.10%-2.51%
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,~~March 31, 2021 and 2020 ~~and 2019~~ and the year ended December 31, ~~2019~~2020 was:

Three months ended September 30, Nine months ended September 30, Year ended December 31,
2019
2020 2019 2020 2019
Unaudited Unaudited Audited
Cost of revenues $ 767 $ 605 $ 1,916 $ 1,626 $ 2,231
Research, development and clinical trials 5,101 2,202 12,275 5,203 7,570
Sales and marketing 4,677 3,368 13,061 8,585 11,897
General and administrative 9,576 8,163 28,196 22,305 30,718
Total share-based compensation expense $ 20,121 $ 14,338 $ 55,448 $ 37,719 $ 52,416


	Three months ended March 31,			Year ended December 31, 2020
		2021				2020
	Unaudited			Audited
Cost of revenues		$	733	$	590		$	2,221
Research, development and clinical trials		5,124		3,394			18,125
Sales and marketing		4,471		3,616			17,672
General and administrative		8,535		8,957			37,703
Total share-based compensation expense		$	18,863	$	16,557		$	75,721

NOTE 7: ~~EARNINGS PER SHARE~~Basic and diluted net income (loss) per ordinary share

Basic net income (loss) per share is computed based on the weighted average number of ordinary shares outstanding during each period. Diluted net income per share is computed based on the weighted average number of ordinary shares outstanding during the period, plus potential dilutive shares (deriving from options, RSUs, PSUs, convertible notes and the ESPP) considered outstanding during the period, in accordance with ASC 260-10, as determined under the ~~treasury stock~~if-converted 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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The following table sets forth the computation of the Company’s basic and diluted net income (loss) per ordinary share:


	Three months ended March 31,				Year ended December 31, 2020
	2021		2020
	Unaudited				Audited
Net income (loss) attributable to ordinary shares as reported	$	(4,128)	$	3,952	$	19,808

Net income (loss) used in computing basic net income (loss) per share	$	(4,128)	$	3,952	$	19,808
Adjustment needed in calculating diluted net income (loss) per share	0		0		0
Net income (loss) used in computing diluted net income (loss) per share	$	(4,128)	$	3,952	$	19,808

Weighted average number of ordinary shares used in computing basic net income (loss) per share	102,633,545		99,877,567		100,930,866
Potentially dilutive shares that were excluded from the computation of basic net income (loss) per share:
Options	0		7,113,992		6,967,554
Restricted share units	0		1,094,385		945,612
ESPP	0		14,679		33,616
Weighted average number of ordinary shares used in computing diluted net income (loss) per share	102,633,545		108,100,623		108,877,648

Weighted anti-dilutive shares outstanding which were not included in the diluted calculation	9,734,269		352,291		1,307,762

Basic net income (loss) per ordinary share	$	(0.04)	$	0.04	$	0.20

Diluted net income (loss) per ordinary share	$	(0.04)	$	0.04	$	0.18

NOTE 8: SUPPLEMENTAL INFORMATION

The Company operates in a single reportable segment.

The following table presents long-lived assets by location:


		September 30, 2020		December 31, 2019			March 31, 2021		December 31, 2020
		Unaudited		Audited			Unaudited		Audited
United States	United States	$	10,317	$	8,896	United States	$	12,418	$	11,868
Israel						Israel	4,552		4,370
Switzerland	Switzerland	2,012		3,067		Switzerland	4,048		2,849
Israel		3,998		2,753
Japan	Japan	1,237		999		Japan	1,042		1,230
Germany	Germany	895		729		Germany	1,084		1,075
Others	Others	944		582		Others	721		1,233
Total long-term assets		$	19,403	$	17,026
Total						Total	$	23,865	$	22,625

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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,
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


	Three months ended March 31,			Year ended December 31, 2020
		2021				2020
	Unaudited			Audited
United States		$	85,908	$	69,259		$	340,782
EMEA:
Germany		26,364		21,802			93,264
Other EMEA		8,619		2,674			18,654
Japan		8,278		6,451			29,076
Greater China (1)		5,526		1,642			12,590
Total net revenues		$	134,695	$	101,828		$	494,366

(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~~2020 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 results~~from net operating loss carry-backs in the U.S.~~

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

Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to provide information to assist you in better understanding and evaluating our financial condition and results of operations. We encourage you to read this MD&A in conjunction with our unaudited consolidated financial statements and the notes thereto for the period ended ~~September 30, 2020~~March 31, 2021 included in Part I, Item 1 of this Quarterly Report on Form 10-Q. This discussion contains forward-looking statements that involve risks and uncertainties. Please refer to the information under the heading “Cautionary Note Regarding Forward-Looking Statements” elsewhere in this report. References to the words “we,” “our,” “us,” and the “Company” in this report refer to NovoCure Limited, including its consolidated subsidiaries.

Overview

We are a global oncology company with a proprietary platform technology called Tumor Treating Fields ~~the use of~~("TTFields"), which are electric fields tuned to specific frequencies tothat disrupt ~~solid tumor~~ cancer cell division. Our key priorities are to drive commercial adoption of Optune and Optune Lua, our commercial ~~Tumor Treating Fields~~TTFields delivery systems, ~~(collectively, our “Products”),~~ and to advance clinical and product development programs intended to extend overall survival in some of the most aggressive forms of cancer.

Optune is approved by the ~~United States~~U.S. Food and Drug Administration ~~(“FDA”~~("FDA") under the ~~premarket approval (“PMA”~~Premarket Approval ("PMA") pathway for the treatment of adult patients with newly diagnosed ~~glioblastoma multiforme (“GBM”)~~GBM in combination with temozolomide, a chemotherapy drug, and for adult patients with GBM following confirmed recurrence after chemotherapy as monotherapy treatment. We also have approval or a CE certificate to market Optune for the treatment of GBM in the European Union ~~(“EU”~~("EU"), Japan and certain other countries. 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 U.S., Austria, Germany, Israel, Japan, Sweden and Switzerland, which we refer to as our ~~“active markets”, and we market Optune Lua in the U.S.~~"active markets." 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 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 path to reimbursement for our Products.

Optune Lua is approved by the FDA under the Humanitarian Device Exemption ("HDE") pathway to treat MPM in combination with standard chemotherapies. We ~~continue~~have received CE certification to ~~work with payers~~market Optune Lua (under the name "NovoTTF-100L") in the EU and Switzerland. We currently market Optune Lua in the U.S., and are evaluating plans to expand access to our therapy for MPM patients in other markets. With respect to MPM, our commercial efforts are principally focused on generating awareness and on establishing a dialogue with third-party payers around 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 GBM in Israel. In March 2020, the German Federal Joint Committee (G-BA) updated its directive for Contracted Medical Care to include Tumor Treating Fields, establishing national reimbursement for Optune in newly diagnosed GBM in Germany. We continue to have productive discussions with the Federal Office of Public Health in Switzerland to establish coverage for Optune and plan to submit a full reimbursement package to establish coverage for Optune to the French Ministry of Health 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 approximately 126 million in Japan.

Lua.

We believe the mechanism of action behind ~~Tumor Treating Fields~~TTFields therapy may be broadly applicable to solid tumor cancers. Currently, we are conducting phase 3 pivotal trials evaluating the use of ~~Tumor Treating Fields~~TTFields in brain metastases ~~non-small cell~~from non-small-cell lung cancer ~~(“NSCLC”~~("brain metastases"), ~~pancreatic~~non-small-cell lung cancer ("NSCLC"), ovarian cancer and ~~ovarian~~pancreatic cancer. ~~We are also conducting phase 2 pilot trials evaluating the use of Tumor Treating Fields in liver cancer and gastric cancer.~~ In ~~July~~ 2020, we enrolled ~~the last~~our first patient in ~~HEPANOVA,~~our global phase 4 TRIDENT trial to test the potential survival benefit of initiating Optune concurrent with radiation therapy versus following radiation therapy in patients with newly diagnosed GBM. We recently concluded 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 supportingevaluating the use of ~~Optune~~TTFields in ~~GBM~~

~~Table~~liver cancer and are conducting a phase 2 pilot trial in gastric cancer, as well as testing the potential incremental survival benefit of ~~Contents~~

~~and to gather additional information about Optune's optimal use.~~TTFields delivered using high-intensity arrays versus standard arrays. We ~~also~~ anticipate expanding our clinical pipeline over time to study the safety and efficacy of ~~Tumor Treating Fields~~TTFields for additional solid tumor ~~indications.~~indications and combinations with other cancer treatment modalities.

On April 13, 2021, we announced that an independent data monitoring committee ("DMC") informed Novocure that the pre-specified interim analysis for the phase 3 pivotal LUNAR trial for the treatment of NSCLC was accelerated given the length of accrual and the number of events observed, to date. The interim analysis included data from 210 patients accrued through February 2021. After review of the interim analysis, the DMC concluded that the LUNAR trial should continue with no evidence of increased systemic toxicity. The DMC went on to comment that the continued accrual to 534 patients as proposed in the original protocol, given the current rate of accrual and the interim data presented, is likely unnecessary and possibly unethical for patients randomized to control. For this reason, the DMC recommended an adjustment of accrual to approximately 276 patients with a 12-month follow-up following the enrollment of the last patient. The DMC believes this amended protocol would provide adequate data regarding toxicity and efficacy, providing sufficient overall power, as well as potentially providing important information regarding efficacy within treatment subgroups. We have ~~several product development programs underway intended~~since filed an IDE supplement incorporating the recommended protocol adjustments for FDA approval.

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In April 2021, the FDA approved our investigational device exemption ("IDE") application to ~~improve efficacy and usability~~initiate the KEYNOTE B36 phase 2 pilot trial to study TTFields with pembrolizumab in first-line NSCLC through our clinical collaboration with MSD (a tradename of Merck & Co.). We are currently evaluating clinical trial sites for ~~patients. In July 2020,~~initiation.

Also in April 2021, we ~~enrolled the first patient in~~concluded our ~~EF-33~~phase 2 pilot ~~study to test the potential incremental survival benefit of delivering~~HEPANOVA trial investigating Tumor Treating Fields ~~through high-intensity arrays. Additionally, during~~together with sorafenib, a kinase inhibitor, in 25 patients with advanced liver cancer. We have submitted an abstract for presentation at an upcoming medical conference in late June and look forward to discussing the ~~third quarter of 2020, we initiated a beta testing program~~full data set with ~~a select number of radiation oncology partners to test MAXPOINT~~TM ~~treatment planning software, which we developed to optimize Tumor Treating Fields dosing with~~clinicians, investigators and investors in the ~~potential to improve the efficacy of our therapy.~~future.

The table below presents the current status of the ongoing ~~or completed~~ clinical ~~and product development programs~~trials in our oncology 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.,~~Our therapy is delivered through a ~~subsidiary,~~medical device and we continue to ~~develop Tumor Treating Fields together with MSD’s anti-PD-1 therapy KEYTRUDA® (pembrolizumab) for treatment of first-line NSCLC, expanding~~advance 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 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~~Products with the ~~NYU Grossman School~~intention to extend survival and maintain quality of ~~Medicine’s Department~~life for patients. We have several product development programs underway that prioritize impact on both TTFields' dose and patient ease of Radiation Oncology that provides a framework for 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 2020, the China National Medical Products Administration approved the Marketing Authorization Application for Optune in combination with temozolomide for the treatment of patients with newly diagnosed GBM, and also as a monotherapy for the treatment of patients with recurrent GBM. For additional information, see Note 12 to the Consolidated Financial Statements in our 2019 10-K.

~~We believe we have a robust patent and~~use. Our oncology intellectual property portfolio ~~with~~contains over ~~180~~185 issued patents and numerous patent applications pending worldwide. We believe we own global commercialization rights to our Products in oncology and ~~that we~~ are well-positioned to extend those rights into the future as we continue to find innovative ways to improve our Products.

~~Table~~In 2018, we granted Zai Lab (Shanghai) Co., Ltd. ("Zai") a license to commercialize Optune in China, Hong Kong, Macau and Taiwan ("Greater China") under a License and Collaboration Agreement (the "Zai Agreement"). The Zai Agreement also establishes a development partnership intended to accelerate the development of ~~Contents~~

TTFields in multiple solid tumor cancer indications. For additional information, see Note 12 to the Consolidated Financial Statements in the 2020 10-K.

We view our operations and manage our business in one operating segment. For the three ~~and nine~~ months ended ~~September 30, 2020,~~March 31, 2021, our net revenues were ~~$132.7 million and $350.4 million, respectively.~~$134.7 million. Our net ~~income~~loss for the three ~~and nine~~ months ended ~~September 30, 2020~~March 31, 2021, was ~~$9.3 million and $14.9 million, respectively.~~$4.1 million. As of ~~September 30, 2020,~~March 31, 2021, we had an accumulated deficit of ~~$636.0~~$631.7 million. Our ~~accumulated deficit~~net loss resulted primarily ~~resulted~~ from ~~costs incurred~~net revenue growth which was more than offset by increasing investments in ~~connection with~~research and development to advance our ~~preclinical~~pipeline programs and ~~clinical trial programs, costs incurred to commercialize our Products and general and administrative costs necessary to operate as a~~increase acceptance of TTFields across the global oncology ~~business.~~community.

Impact of COVID-19

The COVID-19 pandemic did not have a material impact on our financial results through the ~~third~~first quarter of ~~2020. During~~2021. The pandemic has had and is having an impact on our day-to-day operations, which varies by region based on factors such as geographical spread, stage of containment and recurrence of the ~~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 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”).

in each region. We believe the prolonged disruption caused by the COVID-19 pandemic is resulting in increased volatility across global health care systems, such as fluctuations in patient volumes and changes in patterns of care in certain regions, which is currently impacting and might ~~materially~~continue to impact our business and clinical trials in the future. For example,

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we ~~have seen some~~continue to see fluctuations in the timing of surgeries and radiation therapy in certain regions, which has had some adverse influence on ~~when patients are prescribed~~the eligible patient population for Optune. ~~Since~~TTFields is an emerging modality in cancer care and requires significant educational effort to drive awareness and acceptance of our therapy. We have relied heavily on virtual engagement to manage these educational efforts for nearly a year, which poses challenges to our ability to effectively communicate and engage with our customers and partners around the ~~pandemic began, we have generally been following~~world.

Given the ~~guidance~~aggressive nature of the ~~World Health Organization,~~cancers that we treat, we believe that the ~~U.S. Centers for Disease Control and Prevention, and local health authorities in all~~fundamental value proposition of ~~our 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~~TTFields platform remains unchanged. We continue to ~~conduct in-person patient visits when possible~~evaluate and ~~leverage technology to virtually conduct new patient starts and provide ongoing patient support visits. We are respecting any restrictions on external visitors at~~plan for the ~~cancer centers, hospitals and research institutions we serve and have implemented web-based technologies to engage healthcare professionals and enable information sharing. Many~~potential effects of the ~~medical conferences where we present have been moved to virtual formats, and we have been able to present~~COVID-19 pandemic on our ~~findings and speak with thought leaders remotely.~~business moving forward. The extent to which the COVID-19 pandemic may 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.~~10-K.

Critical Accounting Policies and Estimates

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

The critical accounting policies requiring estimates, assumptions and judgments that we believe have the most significant impact on our consolidated financial statements can be found in our ~~2019~~2020 10-K. For additional information, see Note 1 to our unaudited consolidated financial statements in Part I, Item 1 of this Quarterly Report. There were no other material changes to our critical accounting policies and estimates as compared to the critical accounting policies and estimates described in our ~~2019~~2020 10-K.

Commentary on Results of Operations

Net revenues. Our revenues are primarily derived from patients using our Products in our active markets. We charge for treatment with our Productson a monthly basis. Our potential net revenues per patient are determined by our ability to secure payment, the monthly fee we collect and the number of months that the patient remains on therapy.

We also receive revenues pursuant to the Zai Agreement. For additional information regarding the Zai Agreement, see Note 12 to the Consolidated Financial Statements in our ~~2019~~2020 10-K.

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

•disposable ~~transducer~~ arrays;

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

•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. 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. Financial expenses, net primarily consists of credit facility interest expense and related debt issuance costs, interest income from cash balances and short-term investments and gains (losses) from foreign currency transactions. Our reporting currency is the U.S. dollar. We have historically held substantially all of our cash balances in U.S. dollar denominated accounts to minimize the risk of translational currency exposure.

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Results of Operations

The following discussion provides an analysis of our results of operations and reasons for material changes therein for the three ~~and nine~~ months ended ~~September 30, 2020~~March 31, 2021 as compared to the three ~~and nine~~ months ended ~~September 30, 2019.~~March 31, 2020. 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 March 31,
		2021		2020
	Unaudited
Net revenues		$	134,695	$	101,828
Cost of revenues		26,385		24,496
Gross profit		108,310		77,332

Operating costs and expenses:
Research, development and clinical trials		45,916		25,271
Sales and marketing		31,357		28,834
General and administrative		31,125		26,608
Total operating costs and expenses		108,398		80,713

Operating income (loss)		(88)		(3,381)
Financial expenses (income), net		2,646		2,432

Income (loss) before income taxes		(2,734)		(5,813)
Income taxes		1,394		(9,765)
Net income (loss)		$	(4,128)	$	3,952

Basic net income (loss) per ordinary share		$	(0.04)	$	0.04
Weighted average number of ordinary shares used in computing basic net income (loss) per share		102,633,545		99,877,567
Diluted net income (loss) per ordinary share		$	(0.04)	$	0.04
Weighted average number of ordinary shares used in computing diluted net income (loss) per share		102,633,545		108,100,623

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

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


		Three months ended September 30,				Nine months ended September 30,					Three months ended March 31,
		2020		2019		2020		2019				2021		2020
		Unaudited				Unaudited					Unaudited
Cost of revenues	Cost of revenues	$	767	$	605	$	1,916	$	1,626	Cost of revenues		$	733	$	590
Research, development and clinical trials	Research, development and clinical trials	5,101		2,202		12,275		5,203		Research, development and clinical trials		5,124		3,394
Sales and marketing	Sales and marketing	4,677		3,368		13,061		8,585		Sales and marketing		4,471		3,616
General and administrative	General and administrative	9,576		8,163		28,196		22,305		General and administrative		8,535		8,957
Total share-based compensation expense	Total share-based compensation expense	$	20,121	$	14,338	$	55,448	$	37,719	Total share-based compensation expense		$	18,863	$	16,557

Key performance indicators

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We believe certain commercial operating statistics are useful to investors in evaluating our commercial business as they help our management team and investors evaluate and compare the adoption of our Products from period to period. The number of active patients on therapy is our principal revenue driver. An "active patient" is a patient who is receiving treatment under a commercial prescription order as of the measurement date, including patients who may be on a temporary break from treatment and who plan to resume treatment in less than 60 days. Prescriptions 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.


	March 31,
Operating statistics	2021	2020
Active patients at period end
United States	2,183	2,023
EMEA:
Germany	594	514
Other EMEA	406	336
Japan	271	222
Total	3,454	3,095

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,			Three months ended March 31,
		2020	2019	2020	2019			2021	2020
Prescriptions received in period	Prescriptions received in period					Prescriptions received in period
United States	United States	955	917	2,909	2,831	United States		917	986
EMEA:	EMEA:					EMEA:
Germany	Germany	239	218	677	696	Germany		248	207
Other EMEA	Other EMEA	91	100	351	251	Other EMEA		134	122
Japan	Japan	86	84	265	213	Japan		103	94
Total	Total	1,371	1,319	4,202	3,991	Total		1,402	1,409

In the U.S., there were 1317 active MPM patients on therapy as of ~~September 30, 2020~~March 31, 2021 and 1311 MPM prescriptions were received in the three months ended ~~September 30, 2020.~~March 31, 2021.

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Three ~~and nine~~ months ended ~~September 30, 2020~~March 31, 2021 compared to three ~~and nine~~ months ended ~~September 30, 2019~~March 31, 2020

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 %


	Three months ended March 31,
		2021		2020		% Change
Net revenues		$	134,695	$	101,828	32	%

Net revenues. Net revenues increased ~~44%~~32% to ~~$132.7~~$134.7 million for the three month period ending ~~September 30, 2020~~March 31, 2021 from ~~$92.1~~$101.8 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.~~2020. The increase ~~in both the three and nine month periods~~ resulted primarily from an increase of ~~610~~359 active patients in our currently active markets, representing ~~22%~~12% 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.~~patient.

We recorded ~~$10 million and $27~~$9.4 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~~period ended ~~September 30, 2020, respectively.~~March 31, 2021, an increase of 32% from the $7.1 million recognized in the same period in 2020. We have gained a good understanding of how to ensure timely processing of Medicare claims and we believe that we have sufficient experience to recognize approximately two-thirds of the expected contribution from Medicare beneficiaries.

In the ~~third~~first quarter of ~~2020, we also recognized approximately $8 million in~~2021, 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.~~coverage reverted to normalized levels from the first half of 2020.

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 %


	Three months ended March 31,
		2021		2020		% Change
Cost of revenues		$	26,385	$	24,496	8	%

Cost of revenues. Our cost of revenues increased by ~~24%~~8%, to ~~$28.4~~$26.4 million for the three months ended ~~September 30, 2020~~March 31, 2021 from ~~$22.9~~$24.5 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.~~2020. For ~~both~~ the three ~~and nine~~ month ~~periods,~~period, the increase in cost of revenues was primarily due to the cost of shipping transducer arrays to a higher volume of commercial patients and increasing shipments of equipment to Zai ~~Lab, partially offset by benefits~~Lab. Excluding sales to Zai, cost of ~~ongoing~~revenues per active patient per month decreased 9% to $2,415 for the three months ended March 31, 2021 from $2,641 for the same period in 2020 due to on-going efficiency initiatives and scale.

Cost of revenues per active patient is calculated by dividing the cost of revenues for the quarter less equipment sales to Zai for the quarter by the average of the active patients at the end of the prior quarter and the ending active patients in the current quarter. This quarterly figure is then divided by three to estimate the monthly cost of revenues per active patient. Sales to Zai are deducted because they are sold at cost and in anticipation of future royalties from Zai, and Zai patient counts are not included in our active patient population. Product sales to Zai totaled $1.5 million for the quarter ended March 31, 2021 compared to $0.7 million for the quarter ended March 31, 2020.

Gross margin was ~~79%~~80% for the three months ended ~~September 30, 2020~~March 31, 2021 compared to ~~75%~~76% for the three months ended ~~September 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.~~March 31, 2020.

Operating Expenses.

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 %


	Three months ended March 31,
		2021		2020		% Change
Research, development and clinical trials		$	45,916	$	25,271	82	%
Sales and marketing		31,357		28,834		9	%
General and administrative		31,125		26,608		17	%
Total operating expenses		$	108,398	$	80,714	34	%

Research, development and clinical trials expenses. Research, development and clinical trials expenses increased ~~75%~~82% to ~~$32.8~~$45.9 million for the three month period ended ~~September 30, 2020~~March 31, 2021 from ~~$18.8~~$25.3 million for the same period in ~~2019, and increased 59% to $88.0 million for the nine month period ended September 30, 2020 from $55.3 million for the same period in 2019.~~2020. For ~~both~~ the three ~~and nine~~ month ~~periods,~~period, 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~~

Table 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.Contents

Sales and marketing expenses. Sales and marketing expenses increased ~~23%~~9% to ~~$29.4~~$31.4 million for the three months ended ~~September 30, 2020~~March 31, 2021 from ~~$23.8~~$28.8 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.~~2020. For ~~both~~ the three ~~and nine~~ month ~~periods,~~period, 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.~~efforts.

General and administrative expenses. General and administrative expenses increased ~~19%~~17% to ~~$27.1~~$31.1 million for the three months ended ~~September 30, 2020~~March 31, 2021 from ~~$22.7~~$26.6 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.~~2020. For ~~both~~ the three ~~and nine~~ month ~~periods,~~period, the change was primarily due to an increase in 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 %


	Three months ended March 31,
		2021		2020		% Change
Financial expenses (income), net		$	2,646	$	2,432	9	%

Financial expenses, net. Financial expenses increased ~~56%~~9% to ~~$4.0~~$2.6 million for the three months ended ~~September 30, 2020~~March 31, 2021 from ~~$2.6~~$2.4 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.~~2020. For ~~both~~ the three ~~and nine~~ month ~~periods,~~period, the ~~change~~increase was primarily due to foreign currency translation expenses, partially offset by the absence of interest payments as a ~~prepayment premium related to~~result of the ~~2018 credit facility.~~loan repayment in August 2020.

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) %


	Three months ended March 31,
		2021		2020		% Change
Income taxes		$	1,394	$	(9,765)	(114)	%

Income taxes. Income taxes increased ~~378%~~$11.2 million or 114% to ~~$1.8~~an expense of $1.4 million for the three months ended ~~September 30, 2020~~March 31, 2021 from ~~$(0.6)~~a benefit of $9.8 million for the same period in ~~2019, and decreased 232% to~~2020. In the first quarter of 2020, a net one-time tax benefit of ~~$5.6~~$11.3 million ~~for~~was recorded in response to the ~~nine months endedSeptember 30, 2020from $4.3 million for~~changes in the ~~same period in 2019. For~~U.S. tax code related to the ~~three months ended September 30, 2020,~~economic impacts of the ~~increase is primarily due to a change in amortization of intellectual property rights and~~COVID-19 pandemic. The variance also reflects a change in the mix of applicable statutory tax rates in certain active jurisdictions. For the nine months ended September 30, 2020 the decrease is primarily due to net operating loss carry-backs and a change in the mix of applicable statutory tax rates in certain 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,							Three months ended March 31,
		2020		2019		% Change		2020		2019		% Change				2021		2020		% Change
Net income (loss)	Net income (loss)	$	9,284	$	1,930	381	%	$	14,891	$	(11,490)	(230)	%	Net income (loss)		$	(4,128)	$	3,952	(204)	%
Add: Income tax	Add: Income tax	1,755		(630)		(379)	%	(5,614)		4,258		(232)	%	Add: Income tax		1,394		(9,765)		(114)	%
Add: Financial income (expenses), net	Add: Financial income (expenses), net	3,983		2,555		56	%	9,032		6,165		47	%	Add: Financial income (expenses), net		2,646		2,432		9	%
Add: Depreciation and amortization	Add: Depreciation and amortization	2,188		1,932		13	%	6,677		5,993		11	%	Add: Depreciation and amortization		2,370		1,888		26	%
EBITDA	EBITDA	$	17,210	$	5,787	197	%	$	24,986	$	4,926	407	%	EBITDA		$	2,282	$	(1,493)	(253)	%
Add: Share-based compensation	Add: Share-based compensation	20,121		14,338		40	%	55,448		37,719		47	%	Add: Share-based compensation		18,863		16,557		14	%
Adjusted EBITDA	Adjusted EBITDA	$	37,331	$	20,125	85	%	$	80,434	$	42,645	89	%	Adjusted EBITDA		$	21,145	$	15,064	40	%

Adjusted EBITDA increased by ~~85%~~40% to ~~$37.3~~$21.1 million for the three months ended ~~September 30, 2020~~March 31, 2021 from ~~$20.1~~$15.1 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.~~2020. 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~~partially offset by research and development investments to ~~disciplined management~~advance our pipeline programs and increase acceptance of ~~expenses.~~TTFields across the global oncology community.

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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

We have incurred significant losses and cumulative negative cash flows from operations since our founding in 2000. As of ~~September 30, 2020,~~March 31, 2021, we had an accumulated deficit of ~~$636.0~~$631.7 million. To date, we have primarily financed our operations through the issuance and sale of equity and the proceeds from long-term loans.

At ~~September 30, 2020,~~March 31, 2021, we had ~~$234.5~~$864.4 million in cash, cash equivalents and short-term investments, ~~a decrease~~an increase of ~~$91.6~~$21.8 million compared to ~~$326.1~~$842.6 million at December 31, ~~2019.~~2020. The ~~decrease~~increase in our cash, cash equivalents and short-term investments was primarily due to the ~~prepayment of 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.~~options.

We believe our cash, cash equivalents and short-term investments as of ~~September 30, 2020~~March 31, 2021 are sufficient for our operations for at least the next 12 months based on our existing business plan and our ability to control the timing of significant expense commitments. We expect that our research, development and clinical trials expenses, sales and marketing expenses and general and administrative expenses will continue to increase over the next several years and may outpace our gross profit. As a result, we may need to raise additional capital to fund our operations.

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

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) %


	Three months ended March 31,
	2021		2020		Change		% Change
Net cash provided by operating activities	$	17,780	$	1,957	$	15,823	809	%
Net cash provided by (used in) investing activities	54,171		(3,112)		57,283		(1841)	%
Net cash provided by (used in) financing activities	7,955		4,503		3,452		77	%
Effect of exchange rate changes on cash and cash equivalents	(102)		(59)		(43)		73	%
Net increase (decrease) in cash, cash equivalents and restricted cash	$	79,804	$	3,289	$	76,515	2326	%

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

Net cash provided by operating activities was ~~$45.7~~$17.8 million for the ~~nine~~three months ended ~~September 30, 2020,~~March 31, 2021, as compared to ~~$19.7~~$2.0 million ~~used in~~provided by operating activities for the ~~nine~~three months ended ~~September 30, 2019.~~March 31, 2020. Gross profit increased by ~~$83.8~~$31.0 million for the ~~nine~~three months ended ~~September 30, 2020~~March 31, 2021 versus the ~~nine~~three months ended ~~September 30, 2019,~~March 31, 2020, fully funding incremental investments of ~~$32.7~~$20.6 million in research and development and ~~$31.7~~$7.0 million in sales, marketing, general and administrative expenses. The increase in positive cash flow from operations

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was primarily driven by ~~an increase in net profit~~higher cash earnings, lower interest payments, the receipt of income tax refunds, as well as the timing of receipts and ~~an increase~~payments in the ~~amount~~ordinary course of ~~non-cash share-based compensation included in the reported net income (loss) partially offset by an increase in working capital.~~business.

Investing 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 ~~$140.8~~$54.2 million for the ~~nine~~three months ended ~~September 30, 2020,~~March 31, 2021, compared to ~~$4.9~~$3.1 million used in investing activities for the ~~nine~~three months ended ~~September 30, 2019.~~March 31, 2020. The ~~increase in~~ net cash provided by investing activities for the three months ended March 31, 2021 was primarily attributable to $58.2 million of net proceeds from maturity of short-term investments, partially offset by the purchase of $4.0 million of property and equipment. The net cash used in investing activities for the three months ended March 31, 2020 was primarily attributable to the ~~net proceeds generated from the sale~~purchase of ~~investments for cash needs to prepay the 2018 credit facility.~~$3.1 million of property and equipment.

Financing activities. To date, our primary financing activities have been the sale of equity and the proceeds from long-term loans. Net cash ~~used in~~provided by financing activities was ~~$130.6~~$8.0 million for the ~~nine~~three months ended ~~September 30, 2020,~~March 31, 2021, as compared to ~~$53.1~~$4.5 million provided by financing activities for the ~~nine~~three months ended ~~September 30, 2019.~~March 31, 2020. The ~~year-over-year decrease in~~net cash provided by financing activities for the three months ended March 31, 2021 was ~~primarily related~~due to ~~the prepayment~~$8.0 million of ~~the 2018 credit facility and a decrease in~~

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proceeds from the exercise of options. The net cash provided by financing activities for the three months ended March 31, 2020 was due to $4.5 million of proceeds from the exercise of options.

Convertible Notes

On ~~August 18,~~November 5, 2020, we ~~terminated~~issued $575.0 million aggregate principal amount of 0% Convertible Senior Notes due 2025 (the “Notes”). The Notes are senior unsecured obligations. The Notes do not bear regular interest, and the principal amount of the Notes will not accrete. The Notes are convertible at an initial conversion rate of 5.9439 ordinary shares per $1,000 principal amount of the Notes, which is equivalent to an initial conversion price of approximately $168.24 per ordinary share. Prior to the close of business on July 31, 2025, the Notes are convertible at the option of the holders only upon the satisfaction of certain conditions and during certain periods and if the Company exercises its right to redeem the Notes as permitted or required by the indenture. On or after August 1, 2025 until the close of the business on the business day immediately preceding the maturity date, holders may convert all or any portion of their Notes at the conversion rate at any time irrespective of the foregoing conditions.

In January 2021, we irrevocably elected to settle all conversions of Notes by a combination of cash and our ~~2018 term~~ordinary shares and that the cash portion per $1,000 principal amount of Notes for all conversion settlements shall be $1,000. Accordingly, from and after the date of the election, upon conversion of any Notes, holders of Notes will receive, with respect to each $1,000 principal amount of Notes converted, cash in an amount up to $1,000 and the balance of the conversion value, if any, in our ordinary shares

For more information, see Note 10(a) to the Consolidated Financial Statements in the 2020 10-K.

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 $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 third quarter finance expenses. The 2018 Credit Facility consisted of the term loan, originally maturing on February 7, 2023, with interest on the outstanding loan of 9% annually, payable quarterly in arrears. Obligations under the 2018 Credit Facility were guaranteed by certain of our domestic direct and indirect subsidiaries and were secured by

On November 6, 2020, we entered into 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, all of which have been released.~~

~~We are in the process of negotiating a~~ new three-year $150.0 million senior secured revolving credit facility with a syndicate of relationship ~~banks. If completed, the facility would provide,~~banks (the "2020 Credit Facility"). We may, subject to certain conditions and limitations, ~~for an~~ increase in the revolving credit commitments tooutstanding under the 2020 Credit Facility or incur new incremental term loans in an aggregate principal amount not to exceed ~~$250.0~~an additional $100.0 million. ~~The indicative interest rate for the loans is a sliding scale between LIBOR plus 2.75% and LIBOR plus 3.25% per annum.~~

The commitments under the ~~revolving credit facility would be~~2020 Credit Facility are guaranteed by certain of our subsidiaries and secured by a ~~first-lien of~~first lien on our and certain ~~subsidiary~~of our subsidiaries’ assets. ~~While~~Outstanding loans will bear interest at a sliding scale based on our secured leverage ratio from LIBOR plus 2.75% to LIBOR plus 3.25% per annum. Additionally, the 2020 Credit Facility contains a fee for the unused revolving credit commitments at a sliding scale based on our secured leverage ratio from 0.35% to 0.45%. The 2020 Credit Facility contains financial covenants requiring maintenance of a minimum fixed charge coverage ratio and specifying a maximum senior secured net leverage ratio, as well as customary events of default which include a change of control. As of March 31, 2021, we ~~expect to enter into this facility, there can be~~were in compliance with such covenants.

As of March 31, 2021, we had no ~~assurances that closing will occur or will close on these terms.~~

outstanding balance borrowed under the 2020 Credit Facility.

Contractual Obligations and Commitments

There have been no material changes from the information disclosed in our ~~2019~~2020 10-K.

Off-Balance Sheet Arrangements

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

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes from the information disclosed in our ~~2019~~2020 10-K.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

As required by Rule 13a-15(b) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), our management, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures as of ~~September 30, 2020.~~March 31, 2021. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means

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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,

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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, 2020,~~March 31, 2021, our Chief Executive Officer and Chief Financial Officer have concluded that, as of ~~September 30, 2020,~~March 31, 2021, 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, 2020~~March 31, 2021 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II—OTHER INFORMATION

Item 1. Legal Proceedings

~~None.~~From time to time, we are involved in various legal proceedings, claims, investigations and litigation that arise in the ordinary course of our business. Litigation is inherently uncertain. Accordingly, we cannot predict with certainty the outcome of these matters. After considering a number of factors, including (but not limited to) the views of legal counsel, the nature of contingencies to which the Company is subject and prior experience, management believes that the ultimate disposition of these legal actions will not materially affect its consolidated financial position or results of operations.

Item 1A. Risk Factors

There have been no material changes to our risk factors disclosed in Part I, Item 1A “Risk Factors” in the ~~2019 10-K and in Part II, Item 1A of our Quarterly Report on Form 10-Q filed on April 30, 2020. Also note that references in the 2019 10-K to NovoTTF-100L now refer to Optune Lua.~~2020 10-K.

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

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

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Item 6. Exhibits

EXHIBIT INDEX

Exhibit
Number Incorporated by Reference Filed
Herewith
Exhibit Description Form Date Number
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
X
31.2
Certification of Principal Financial Officer Required Under Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as amended
X
32.1*
Certification of Principal Executive Officer Required Under Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended, and 18 U.S.C. §1350
X
32.2*
Certification of Principal Financial Officer Required Under Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended, and 18 U.S.C. §1350
X
101.INS Inline XBRL Instance Document X
101.SCH Inline XBRL Taxonomy Extension Schema Document X
101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document X
101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document X
101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document X
101.PRE Inline XBRL Extension Presentation Linkbase Document X
104 Cover Page Interactive Date File (formatted as Inline XBRL and contained in Exhibit 101) X

Exhibit
Number

Incorporated by Reference

Filed
Herewith

Exhibit Description

Form

Date

Number

10.1

Employment Agreement, dated as of February 3, 2017 by and between Novocure USA LLC and Todd Longsworth#

10.2

Non-Employee Director Compensation Program#

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)

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

# Compensation plans and arrangements for executive officers and others.

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SIGNATURES

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


						NovoCure Limited

Date: ~~October~~April 29, ~~2020~~2021						/s/ Ashley Cordova
						Ashley Cordova Chief Financial Officer (principal financial and accounting officer and duly authorized officer)

2928


		Page
Cautionary Note Regarding Forward Looking Statements		i
Trademarks		ii

PART I—FINANCIAL INFORMATION

Item 1.	Financial Statements	2
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2524
Item 4.	Controls and Procedures	2524

PART II—OTHER INFORMATION

Item 1.	Legal Proceedings	2726
Item 1A.	Risk Factors	2726
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	2726
Item 3.	Defaults Upon Senior Securities	2726
Item 4.	Mine Safety Disclosures	2726
Item 5.	Other Information	2726
Item 6.	Exhibits	2827

	Signatures	2928


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


	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