Cover
Cover - shares | 3 Months Ended | |
Mar. 31, 2020 | Apr. 23, 2020 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2020 | |
Document Transition Report | false | |
Entity File Number | 001-37565 | |
Entity Registrant Name | NovoCure Limited | |
Entity Incorporation, State or Country Code | Y9 | |
Entity Tax Identification Number | 98-1057807 | |
Entity Address, Address Line One | No. 4 The Forum | |
Entity Address, Address Line Two | Grenville Street | |
Entity Address, City or Town | St. Helier | |
Entity Address, Country | JE | |
Entity Address, Postal Zip Code | JE2 4UF | |
City Area Code | 44 (0) 15 | |
Local Phone Number | 3475 6700 | |
Title of 12(b) Security | Ordinary Shares, no par value | |
Trading Symbol | NVCR | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 100,440,295 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q1 | |
Entity Central Index Key | 0001645113 | |
Current Fiscal Year End Date | --12-31 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
CURRENT ASSETS: | ||
Cash and cash equivalents | $ 181,919 | $ 177,321 |
Short-term investments | 149,349 | 148,769 |
Restricted cash | 786 | 2,095 |
Trade receivables | 65,139 | 58,859 |
Receivables and prepaid expenses | 42,483 | 29,202 |
Inventories | 22,502 | 23,701 |
Total current assets | 462,178 | 439,947 |
LONG-TERM ASSETS: | ||
Property and equipment, net | 9,778 | 9,342 |
Field equipment, net | 8,467 | 7,684 |
Right-of-use assets, net | 17,201 | 17,571 |
Other long-term assets | 4,824 | 4,904 |
Total long-term assets | 40,270 | 39,501 |
TOTAL ASSETS | 502,448 | 479,448 |
CURRENT LIABILITIES: | ||
Trade payables | 40,408 | 36,925 |
Other payables, lease liabilities and accrued expenses | 43,795 | 49,386 |
Total current liabilities | 84,203 | 86,311 |
LONG-TERM LIABILITIES: | ||
Long-term loan, net of discount and issuance costs | 149,465 | 149,424 |
Deferred revenue | 8,772 | 7,807 |
Long-term leases | 13,274 | 14,140 |
Employee benefits | 4,519 | 3,754 |
Other long-term liabilities | 267 | 222 |
Total long-term liabilities | 176,297 | 175,347 |
TOTAL LIABILITIES | 260,500 | 261,658 |
COMMITMENTS AND CONTINGENCIES | ||
SHAREHOLDERS' EQUITY: | ||
Ordinary shares no par value, unlimited shares authorized; issued and outstanding: 100,362,973 shares and 99,528,435 shares at March 31, 2020 (unaudited) and December 31, 2019, respectively | 0 | 0 |
Additional paid-in capital | 892,510 | 871,442 |
Accumulated other comprehensive income (loss) | (3,629) | (2,767) |
Retained earnings (accumulated deficit) | (646,933) | (650,885) |
TOTAL SHAREHOLDERS' EQUITY | 241,948 | 217,790 |
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ 502,448 | $ 479,448 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - shares | Mar. 31, 2020 | Dec. 31, 2019 |
Statement of Financial Position [Abstract] | ||
Common stock, shares issued | 100,362,973 | 99,528,435 |
Common stock, shares outstanding | 100,362,973 | 99,528,435 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Income Statement [Abstract] | |||
Net revenues | $ 101,828 | $ 73,309 | $ 351,318 |
Cost of revenues | 24,496 | 19,814 | 88,606 |
Gross profit | 77,332 | 53,495 | 262,712 |
Operating costs and expenses: | |||
Research, development and clinical trials | 25,271 | 17,042 | 79,003 |
Sales and marketing | 28,834 | 22,333 | 96,675 |
General and administrative | 26,608 | 20,238 | 87,948 |
Total operating costs and expenses | 80,713 | 59,613 | 263,626 |
Operating income (loss) | (3,381) | (6,118) | (914) |
Financial expenses (income), net | 2,432 | 2,371 | 7,910 |
Income (loss) before income tax | (5,813) | (8,489) | (8,824) |
Income tax | (9,765) | 3,661 | (1,594) |
Net income (loss) | $ 3,952 | $ (12,150) | $ (7,230) |
Basic net income (loss) per ordinary share (in usd per share) | $ 0.04 | $ (0.13) | $ (0.07) |
Weighted average number of ordinary shares used in computing basic net income (loss) per share (in shares) | 99,877,567 | 94,811,282 | 97,237,549 |
Diluted net income (loss) per ordinary share (in usd per share) | $ 0.04 | $ (0.13) | $ (0.07) |
Weighted average number of ordinary shares used in computing diluted net income (loss) per share (in shares) | 108,100,623 | 94,811,282 | 97,237,549 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Statement of Comprehensive Income [Abstract] | |||
Net income (loss) | $ 3,952 | $ (12,150) | $ (7,230) |
Other comprehensive income (loss), net of tax: | |||
Change in foreign currency translation adjustments | (200) | (261) | (304) |
Pension benefit plan | (662) | (81) | (1,063) |
Total comprehensive income (loss) | $ 3,090 | $ (12,492) | $ (8,597) |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY - USD ($) $ in Thousands | Total | Ordinary shares | Additional paid-in capital | Accumulated other comprehensive loss | Retained earnings (accumulated deficit) |
Beginning balance at Dec. 31, 2018 | $ 112,259 | $ 757,314 | $ (1,400) | $ (643,655) | |
Beginning balance (in shares) at Dec. 31, 2018 | 93,254,185 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Share-based compensation to employees | 9,649 | 9,649 | |||
Exercise of options and vested RSUs | 16,978 | 16,978 | |||
Exercise of options and warrants and vested RSUs (in shares) | 2,438,612 | ||||
Other comprehensive income (loss), net of tax benefit | (342) | (342) | |||
Net income (loss) | (12,150) | (12,150) | |||
Ending balance at Mar. 31, 2019 | 126,394 | 783,941 | (1,742) | (655,805) | |
Ending balance (in shares) at Mar. 31, 2019 | 95,692,797 | ||||
Beginning balance at Dec. 31, 2018 | 112,259 | 757,314 | (1,400) | (643,655) | |
Beginning balance (in shares) at Dec. 31, 2018 | 93,254,185 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income (loss) | (7,230) | ||||
Ending balance at Dec. 31, 2019 | 217,790 | 871,442 | (2,767) | (650,885) | |
Ending balance (in shares) at Dec. 31, 2019 | 99,528,435 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Share-based compensation to employees | 16,557 | 16,557 | |||
Exercise of options and vested RSUs | 4,511 | 4,511 | |||
Exercise of options and warrants and vested RSUs (in shares) | 834,538 | ||||
Other comprehensive income (loss), net of tax benefit | (862) | (862) | |||
Net income (loss) | 3,952 | 3,952 | |||
Ending balance at Mar. 31, 2020 | $ 241,948 | $ 892,510 | $ (3,629) | $ (646,933) | |
Ending balance (in shares) at Mar. 31, 2020 | 100,362,973 |
CONSOLIDATED STATEMENTS OF CH_2
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Statement of Stockholders' Equity [Abstract] | ||
Other comprehensive income (loss), tax benefit | $ 0 | $ 11 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Cash flows from operating activities: | |||
Net income (loss) | $ 3,952 | $ (12,150) | $ (7,230) |
Adjustments to reconcile net income (loss) to net cash used in operating activities: | |||
Depreciation and amortization | 1,888 | 1,929 | 8,460 |
Asset write-downs and impairment of field equipment | 6 | 75 | 398 |
Share-based compensation | 16,557 | 9,649 | 52,416 |
Foreign currency remeasurement loss (gain) | (7) | 0 | (917) |
Decrease (increase) in accounts receivables | (19,718) | (2,036) | (36,496) |
Amortization of discount (premium) | (539) | (578) | (2,176) |
Decrease (increase) in inventories | 1,147 | (1,583) | (1,159) |
Decrease (increase) in other long-term assets | 1,235 | (86) | 3,446 |
Increase (decrease) in accounts payables and accrued expenses | (2,339) | 2,246 | 16,883 |
Increase (decrease) in other long-term liabilities | (225) | (1,781) | (7,006) |
Net cash provided by (used in) operating activities | 1,957 | (4,315) | 26,620 |
Cash flows from investing activities: | |||
Purchase of property, equipment and field equipment | (3,112) | (2,325) | (10,485) |
Proceeds from maturity of short-term investments | 0 | 105,661 | 420,661 |
Purchase of short-term investments | 0 | (104,325) | (461,843) |
Net cash provided by (used in) investing activities | (3,112) | (989) | (51,667) |
Cash flows from financing activities: | |||
Proceeds from issuance of shares, net | 0 | 0 | 2,467 |
Repayment of long-term loan | (8) | (8) | (31) |
Exercise of options and warrants | 4,511 | 16,978 | 59,245 |
Net cash provided by (used in) financing activities | 4,503 | 16,970 | 61,681 |
Effect of exchange rate changes on cash, cash equivalents and restricted cash | (59) | (261) | 26 |
Increase (decrease) in cash, cash equivalents and restricted cash | 3,289 | 11,405 | 36,660 |
Cash, cash equivalents and restricted cash at the beginning of the period | 179,416 | 142,756 | 142,756 |
Cash, cash equivalents and restricted cash at the end of the period | 182,705 | 154,161 | 179,416 |
Cash paid during the period for: | |||
Income taxes | 2,209 | 3,033 | 11,241 |
Interest | 3,415 | 3,379 | 13,699 |
Non-cash activities in accordance with of ASC-842: | |||
Right-of-use assets obtained in exchange for lease obligations | $ 783 | $ 15,733 | $ 22,943 |
Organization and Basis of Prese
Organization and Basis of Presentation | 3 Months Ended |
Mar. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Basis of Presentation | ORGANIZATION AND BASIS OF PRESENTATION Organization . NovoCure Limited (including its consolidated subsidiaries, the “Company”) was incorporated in the Bailiwick of Jersey and is principally engaged in the development, manufacture and commercialization of Tumor Treating Fields delivery systems, including Optune and Optune Lua, for the treatment of solid tumors. The Company has received regulatory approval from the U.S. Food and Drug Administration (“FDA”) under the Premarket Approval (“PMA") pathway and regulatory approvals and clearances in certain other countries for Optune to treat adult patients with glioblastoma multiforme (“GBM”). The Company also has received FDA approval under the Humanitarian Device Exemption pathway to market Optune Lua for unresectable, locally advanced or metastatic malignant pleural mesothelioma (“MPM”) in combination with standard chemotherapies. Financial statement preparation . The accompanying unaudited consolidated financial statements include the accounts of the Company and 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 (the “2019 10-K”) filed with the Securities and Exchange Commission on February 27, 2020. The significant accounting policies applied in the audited annual consolidated financial statements of the Company as disclosed in the 2019 10-K are applied consistently in these unaudited interim consolidated financial statements, except as noted below: Recently Adopted Accounting Pronouncements. In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). ASU 2016-13 amends the impairment model to utilize an expected loss methodology in place of the currently used incurred loss methodology, which will result in the more timely recognition of losses. ASU 2016-13 also applies to employee benefit plan accounting, with an effective date of the first quarter of fiscal 2020. The Company adopted the standard effective as of January 1, 2020, 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 an impact on the Company's consolidated financial statements. |
Cash, Cash Equivalents and Shor
Cash, Cash Equivalents and Short-Term Investments | 3 Months Ended |
Mar. 31, 2020 | |
Cash, Cash Equivalents, and Short-term Investments [Abstract] | |
Cash, Cash Equivalents and Short-Term investments | 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. March 31, December 31, Unaudited Audited Cash $ 8,192 $ 18,377 Money market funds 173,727 158,944 Total cash and cash equivalents $ 181,919 $ 177,321 The Company 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. March 31, December 31, Unaudited Audited Short-term investments $ 149,349 $ 148,769 Quoted market prices were applied to determine the fair value of cash equivalents and short-term investments, therefore they are 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 March 31, 2020 and December 31, 2019 was $149,951 and $148,738, respectively. |
Inventories
Inventories | 3 Months Ended |
Mar. 31, 2020 | |
Inventory Disclosure [Abstract] | |
Inventories | INVENTORIES Inventories are stated at the lower of cost or net realizable value. The weighted average methodology is applied to determine cost. As of March 31, 2020 and December 31, 2019, the Company’s inventories were composed of: March 31, December 31, Unaudited Audited Raw materials $ 3,889 $ 3,912 Work in progress 7,498 6,482 Finished products 11,115 13,308 Total $ 22,502 $ 23,701 |
Commitments and Contingent Liab
Commitments and Contingent Liabilities | 3 Months Ended |
Mar. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingent Liabilities | 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 2023. Pledged deposits and bank guarantees. As of March 31, 2020 and December 31, 2019, the Company pledged bank deposits of $1,612 and $1,557, 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 $1,387 and $1,390, respectively . |
Share Option Plan and ESPP
Share Option Plan and ESPP | 3 Months Ended |
Mar. 31, 2020 | |
Share-based Compensation, Allocation and Classification in Financial Statements [Abstract] | |
Share Option Plan and ESPP | SHARE OPTION PLAN AND ESPPIn 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 three three six A summary of the status of the Company’s option plans as of March 31, 2020 and changes during the period then ended is presented below: Three months ended March 31, 2020 Unaudited Number Weighted Outstanding at beginning of year 10,350,810 $ 20.40 Granted 671,530 69.37 Exercised (291,088) 15.52 Forfeited and canceled (6,025) 41.39 Outstanding as of March 31, 2020 10,725,227 $ 23.58 Exercisable options 4,572,967 $ 16.17 For the three months, ended March 31, 2020, options to purchase 291,088 ordinary shares were exercised, resulting in the issuance of 291,088 ordinary shares. A summary of the status of the Company’s RSUs and PSUs as of March 31, 2020 and changes during the period then ended is presented below. Three months ended March 31, 2020 Unaudited Number Weighted Unvested at beginning of year 1,474,395 $ 30.26 Granted (1) 3,747,545 54.07 Vested (543,450) 22.10 Forfeited and cancelled (3,194) 52.84 Unvested as of March 31, 2020 4,675,296 50.28 (1) Represents RSUs and PSUs granted on March 3, 2020 as follows: (a) 527,041 RSUs that are expensed based on their grant date fair value of $69.37 per RSU over the service period of three years; (b) 408,539 PSUs that have a mix of service and clinical milestone vesting conditions, cliff-vest in pre-determined increments, and that have been deemed probable to vest and are therefore expensed beginning in the first quarter of 2020 based on their grant date fair value of $69.37 per PSU; (c) 108,113 PSUs that have a mix of service and clinical milestone vesting conditions, cliff-vest in pre-determined increments, and that will begin to be expensed at $69.37 per PSU when it becomes probable that the milestones will be achieved, and (d) 2,703,852 PSUs that have a mix of service, market and other milestone performance vesting conditions (including but not limited to new FDA approved indications), cliff-vest in pre-determined increments, and that will begin to be expensed at $48.16 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. All RSUs and PSUs are expensed 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 March 31, 2020, 4,050,089 ordinary shares were available to be purchased by eligible employees under the ESPP and 414,559 shares had been issued under the ESPP. 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: Three months ended March 31, Year ended December 31, 2020 2019 Unaudited Audited Stock Option Plans Expected term (years) 6.25 6.23 5.50-6.5 Expected volatility 54% 55% 55%-61% Risk-free interest rate 0.86% 2.40% 1.73%-2.40% Dividend yield 0.00 % 0.00 % 0.00 % ESPP Expected term (years) 0.50 0.50 0.50 Expected volatility 47% 62% 44%-62% Risk-free interest rate 1.57% 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 months ended March 31, 2020 and 2019 and the year ended December 31, 2019 was: Three months ended March 31, Year ended December 31, 2020 2019 Unaudited Audited Cost of revenues $ 590 $ 426 $ 2,231 Research, development and clinical trials 3,394 1,188 7,570 Sales and marketing 3,616 1,962 11,897 General and administrative 8,957 6,073 30,718 Total share-based compensation expense $ 16,557 $ 9,649 $ 52,416 |
Earnings Per Share
Earnings Per Share | 3 Months Ended |
Mar. 31, 2020 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | EARNINGS PER SHARE Basic net income (loss) per share is computed based on the weighted average number of ordinary shares outstanding during each period. Diluted net income per share is computed based on the weighted average number of ordinary shares outstanding during the period, plus potential dilutive shares considered outstanding during the period, in accordance with ASC 260-10, as determined under the treasury stock method. Basic and diluted net loss per ordinary share was the same for each period presented, except for the three months ended March 31, 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 8,223,056 shares for the three months ended March 31, 2020. The Company excluded 352,291 share options under the treasury stock method from the computation of dilutive net income per share for the three months ended March 31, 2020 because including them would had have an anti-dilutive effect. |
Supplemental Information
Supplemental Information | 3 Months Ended |
Mar. 31, 2020 | |
Geographic Areas, Long-Lived Assets [Abstract] | |
Supplemental Information | SUPPLEMENTAL INFORMATION The Company operates in a single reportable segment. The following table presents long-lived assets by location: March 31, December 31, Unaudited Audited United States $ 9,562 $ 8,896 Switzerland 2,472 3,067 Israel 3,366 2,753 Germany 711 729 Others 2,134 1,581 Total long-term assets $ 18,245 $ 17,026 The Company’s revenues by geographic region, based on the customer’s location, are summarized as follows: Three months ended March 31, Year ended December 31, 2020 2019 Unaudited Audited United States $ 69,259 $ 46,604 $ 232,805 EMEA: Germany 21,802 20,238 86,564 Other EMEA 2,674 2,282 8,782 Japan 6,451 3,370 17,912 Greater China (1) 1,642 815 5,255 Total net revenues $ 101,828 $ 73,309 $ 351,318 (1) Reflects revenue recognized in accordance with a License and Collaboration Agreement (the "Zai Agreement") between us 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”) and also includes $90 recognized during the three months ended March 31, 2020 from reaching a clinical trial milestone during the period. The full amount of the milestone payable is $2,000 that will be 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 our 2019 10-K. |
Income Tax
Income Tax | 3 Months Ended |
Mar. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Tax | 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. |
Organization and Basis of Pre_2
Organization and Basis of Presentation (Policies) | 3 Months Ended |
Mar. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Recently Adopted Accounting Pronouncements | Recently Adopted Accounting Pronouncements. In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). ASU 2016-13 amends the impairment model to utilize an expected loss methodology in place of the currently used incurred loss methodology, which will result in the more timely recognition of losses. ASU 2016-13 also applies to employee benefit plan accounting, with an effective date of the first quarter of fiscal 2020. The Company adopted the standard effective as of January 1, 2020, 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 an impact on the Company's consolidated financial statements. |
Cash, Cash Equivalents and Sh_2
Cash, Cash Equivalents and Short-Term Investments (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Cash, Cash Equivalents, and Short-term Investments [Abstract] | |
Summary of Cash and Cash Equivalents | 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. March 31, December 31, Unaudited Audited Cash $ 8,192 $ 18,377 Money market funds 173,727 158,944 Total cash and cash equivalents $ 181,919 $ 177,321 |
Summary of Amortized Cost and Recorded Basis of T-bills in Short-Term Investments | The Company 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. March 31, December 31, Unaudited Audited Short-term investments $ 149,349 $ 148,769 |
Inventories (Tables)
Inventories (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventories | Inventories are stated at the lower of cost or net realizable value. The weighted average methodology is applied to determine cost. As of March 31, 2020 and December 31, 2019, the Company’s inventories were composed of: March 31, December 31, Unaudited Audited Raw materials $ 3,889 $ 3,912 Work in progress 7,498 6,482 Finished products 11,115 13,308 Total $ 22,502 $ 23,701 |
Share Option Plan and ESPP (Tab
Share Option Plan and ESPP (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Share-based Compensation, Allocation and Classification in Financial Statements [Abstract] | |
Schedule of Stock Option Plans | A summary of the status of the Company’s option plans as of March 31, 2020 and changes during the period then ended is presented below: Three months ended March 31, 2020 Unaudited Number Weighted Outstanding at beginning of year 10,350,810 $ 20.40 Granted 671,530 69.37 Exercised (291,088) 15.52 Forfeited and canceled (6,025) 41.39 Outstanding as of March 31, 2020 10,725,227 $ 23.58 Exercisable options 4,572,967 $ 16.17 |
Schedule of RSUs and PSUs | A summary of the status of the Company’s RSUs and PSUs as of March 31, 2020 and changes during the period then ended is presented below. Three months ended March 31, 2020 Unaudited Number Weighted Unvested at beginning of year 1,474,395 $ 30.26 Granted (1) 3,747,545 54.07 Vested (543,450) 22.10 Forfeited and cancelled (3,194) 52.84 Unvested as of March 31, 2020 4,675,296 50.28 |
Schedule of Fair Value Assumptions Used for All Equity Based Awards Estimated Using Black-Scholes Option Pricing Model | 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: Three months ended March 31, Year ended December 31, 2020 2019 Unaudited Audited Stock Option Plans Expected term (years) 6.25 6.23 5.50-6.5 Expected volatility 54% 55% 55%-61% Risk-free interest rate 0.86% 2.40% 1.73%-2.40% Dividend yield 0.00 % 0.00 % 0.00 % ESPP Expected term (years) 0.50 0.50 0.50 Expected volatility 47% 62% 44%-62% Risk-free interest rate 1.57% 2.51% 2.10%-2.51% Dividend yield 0.00 % 0.00 % 0.00 % |
Schedule of Non-cash Share-based Compensation Expense Related to Company's Equity-Based Awards | The total non-cash share-based compensation expense related to all of the Company’s equity-based awards recognized for the three months ended March 31, 2020 and 2019 and the year ended December 31, 2019 was: Three months ended March 31, Year ended December 31, 2020 2019 Unaudited Audited Cost of revenues $ 590 $ 426 $ 2,231 Research, development and clinical trials 3,394 1,188 7,570 Sales and marketing 3,616 1,962 11,897 General and administrative 8,957 6,073 30,718 Total share-based compensation expense $ 16,557 $ 9,649 $ 52,416 |
Supplemental Information (Table
Supplemental Information (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Geographic Areas, Long-Lived Assets [Abstract] | |
Schedule of Long-Lived Assets by Location | The following table presents long-lived assets by location: March 31, December 31, Unaudited Audited United States $ 9,562 $ 8,896 Switzerland 2,472 3,067 Israel 3,366 2,753 Germany 711 729 Others 2,134 1,581 Total long-term assets $ 18,245 $ 17,026 |
Schedule of Revenues by Geographic Region | The Company’s revenues by geographic region, based on the customer’s location, are summarized as follows: Three months ended March 31, Year ended December 31, 2020 2019 Unaudited Audited United States $ 69,259 $ 46,604 $ 232,805 EMEA: Germany 21,802 20,238 86,564 Other EMEA 2,674 2,282 8,782 Japan 6,451 3,370 17,912 Greater China (1) 1,642 815 5,255 Total net revenues $ 101,828 $ 73,309 $ 351,318 (1) Reflects revenue recognized in accordance with a License and Collaboration Agreement (the "Zai Agreement") between us 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”) and also includes $90 recognized during the three months ended March 31, 2020 from reaching a clinical trial milestone during the period. The full amount of the milestone payable is $2,000 that will be recognized over the remainder of the Zai performance period ending in September 2024. For additional information, see Note 12 to the Consolidated Financial Statements in our 2019 10-K. |
Cash, Cash Equivalents and Sh_3
Cash, Cash Equivalents and Short-Term Investments - Summary of Cash and Cash Equivalents (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Cash, Cash Equivalents, and Short-term Investments [Abstract] | ||
Cash | $ 8,192 | $ 18,377 |
Money market funds | 173,727 | 158,944 |
Total cash and cash equivalents | $ 181,919 | $ 177,321 |
Cash, Cash Equivalents and Sh_4
Cash, Cash Equivalents and Short-Term Investments - Summary of Amortized Cost And Recorded Basis of T-bills in Short Term Investments (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Cash, Cash Equivalents, and Short-term Investments [Abstract] | ||
Short-term investments | $ 149,349 | $ 148,769 |
Cash, Cash Equivalents and Sh_5
Cash, Cash Equivalents and Short-Term Investments - Additional Information (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Cash, Cash Equivalents, and Short-term Investments [Abstract] | ||
Estimated fair value of short-term investments | $ 149,951 | $ 148,738 |
Inventories - Schedule of Inven
Inventories - Schedule of Inventories (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 3,889 | $ 3,912 |
Work in progress | 7,498 | 6,482 |
Finished products | 11,115 | 13,308 |
Total | $ 22,502 | $ 23,701 |
Commitments and Contingent Li_2
Commitments and Contingent Liabilities (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Commitments and Contingencies Disclosure [Abstract] | ||
Pledged bank deposits | $ 1,612 | $ 1,557 |
Operating lease and other contractual commitments | $ 1,387 | $ 1,390 |
Share Option Plan and ESPP - Ad
Share Option Plan and ESPP - Additional Information (Details) - shares | Mar. 03, 2020 | Mar. 31, 2020 |
Share Capital [Line Items] | ||
Options exercised (in shares) | 291,088 | |
Ordinary shares issued upon option exercise (in shares) | 291,088 | |
ESPP | ||
Share Capital [Line Items] | ||
Ordinary shares available for grants (in shares) | 4,050,089 | |
Shares issued under plan (in shares) | 414,559 | |
RSUs | ||
Share Capital [Line Items] | ||
Stock awards granted, vesting period (years) | 3 years | |
PSUs | Minimum | ||
Share Capital [Line Items] | ||
Stock awards granted, vesting period (years) | 3 years | |
PSUs | Maximum | ||
Share Capital [Line Items] | ||
Stock awards granted, vesting period (years) | 6 years | |
2015 Plan | ||
Share Capital [Line Items] | ||
Ordinary shares available for grants (in shares) | 11,430,386 | |
2015 Plan | Option | ||
Share Capital [Line Items] | ||
Stock awards granted, vesting period (years) | 4 years | |
Stock awards granted, expiration period (years) | 10 years | |
2015 Plan | RSUs | ||
Share Capital [Line Items] | ||
Stock awards granted, vesting period (years) | 3 years | |
2015 Plan | PSUs | Minimum | ||
Share Capital [Line Items] | ||
Stock awards granted, vesting period (years) | 3 years | |
2015 Plan | PSUs | Maximum | ||
Share Capital [Line Items] | ||
Stock awards granted, vesting period (years) | 6 years |
Share Option Plan and ESPP - Sc
Share Option Plan and ESPP - Schedule of Stock Option Plan (Details) | 3 Months Ended |
Mar. 31, 2020$ / sharesshares | |
Number of options | |
Number of options, beginning outstanding (in shares) | shares | 10,350,810 |
Number of options, granted (in shares) | shares | 671,530 |
Number of options, exercised (in shares) | shares | (291,088) |
Number of options, forfeited and canceled (in shares) | shares | (6,025) |
Number of options, ending outstanding (in shares) | shares | 10,725,227 |
Number of options, exercisable options (in shares) | shares | 4,572,967 |
Weighted average exercise price | |
Weighted average exercise price, beginning outstanding (in usd per share) | $ / shares | $ 20.40 |
Weighted average exercise price, granted (in usd per share) | $ / shares | 69.37 |
Weighted average exercise price, exercised (in usd per share) | $ / shares | 15.52 |
Weighted average exercise price, forfeited and canceled (in usd per share) | $ / shares | 41.39 |
Weighted average exercise price, ending outstanding (in usd per share) | $ / shares | 23.58 |
Weighted average exercise price, exercisable options (in usd per share) | $ / shares | $ 16.17 |
Share Option Plan and ESPP - _2
Share Option Plan and ESPP - Schedule of RSUs and PSUs (Details) - $ / shares | Mar. 03, 2020 | Mar. 31, 2020 |
Number of RSU/PSUs | ||
Number of RSUs, beginning unvested (in shares) | 1,474,395 | |
Number of RSUs, granted (in shares) | 3,747,545 | |
Number of RSUs, vested (in shares) | (543,450) | |
Number of RSUs, forfeited and cancelled (in shares) | (3,194) | |
Number of RSUs, ending unvested (in shares) | 4,675,296 | |
Weighted average grant date fair value | ||
Weighted average grant date fair value price, beginning unvested (in usd per share) | $ 30.26 | |
Weighted average grant date fair value price, granted (in usd per share) | 54.07 | |
Weighted average grant date fair value price, vested (in usd per share) | 22.10 | |
Weighted average grant date fair value price, forfeited and cancelled (in usd per share) | 52.84 | |
Weighted average grant date fair value price, ending unvested (in usd per share) | $ 50.28 | |
RSUs | ||
Number of RSU/PSUs | ||
Number of RSUs, granted (in shares) | 527,041 | |
Weighted average grant date fair value | ||
Weighted average grant date fair value price, granted (in usd per share) | $ 69.37 | |
Stock awards granted, vesting period (years) | 3 years | |
PSUs | Minimum | ||
Weighted average grant date fair value | ||
Stock awards granted, vesting period (years) | 3 years | |
PSUs | Maximum | ||
Weighted average grant date fair value | ||
Stock awards granted, vesting period (years) | 6 years | |
PSUs | Share-based Compensation Award, Tranche One | ||
Number of RSU/PSUs | ||
Number of RSUs, granted (in shares) | 408,539 | |
Weighted average grant date fair value | ||
Weighted average grant date fair value price, granted (in usd per share) | $ 69.37 | |
PSUs | Share-based Compensation Award, Tranche Two | ||
Number of RSU/PSUs | ||
Number of RSUs, granted (in shares) | 108,113 | |
Weighted average grant date fair value | ||
Weighted average grant date fair value price, granted (in usd per share) | $ 69.37 | |
PSUs | Share-based Compensation Award, Tranche Three | ||
Number of RSU/PSUs | ||
Number of RSUs, granted (in shares) | 2,703,852 | |
Weighted average grant date fair value | ||
Weighted average grant date fair value price, granted (in usd per share) | $ 48.16 |
Share Option Plan and ESPP - _3
Share Option Plan and ESPP - Schedule of Fair Value Assumptions Used Only for Equity Based Awards Estimated Using Black-Scholes Option Pricing Model (Details) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
ESPP | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expected term (years) | 6 months | 6 months | 6 months |
Expected volatility | 4700.00% | 6200.00% | |
Expected volatility, minimum | 44.00% | ||
Expected volatility, maximum | 62.00% | ||
Risk-free interest rate | 157.00% | 251.00% | |
Risk-free interest rate, minimum | 2.10% | ||
Risk-free interest rate, maximum | 2.51% | ||
Dividend yield | 0.00% | 0.00% | 0.00% |
Stock Option Plans | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expected term (years) | 6 years 3 months | 6 years 2 months 23 days | |
Expected volatility | 5400.00% | 5500.00% | |
Expected volatility, minimum | 55.00% | ||
Expected volatility, maximum | 61.00% | ||
Risk-free interest rate | 86.00% | 240.00% | |
Risk-free interest rate, minimum | 1.73% | ||
Risk-free interest rate, maximum | 2.40% | ||
Dividend yield | 0.00% | 0.00% | 0.00% |
Stock Option Plans | Minimum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expected term (years) | 5 years 6 months | ||
Stock Option Plans | Maximum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expected term (years) | 6 years 6 months |
Share Option Plan and ESPP - _4
Share Option Plan and ESPP - Schedule of Non-cash Share-Based Compensation Expenses Related to Company's Equity-Based Awards (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Total share-based compensation expense | $ 16,557 | $ 9,649 | $ 52,416 |
Cost of revenues | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Total share-based compensation expense | 590 | 426 | 2,231 |
Research, development and clinical trials | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Total share-based compensation expense | 3,394 | 1,188 | 7,570 |
Sales and marketing | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Total share-based compensation expense | 3,616 | 1,962 | 11,897 |
General and administrative | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Total share-based compensation expense | $ 8,957 | $ 6,073 | $ 30,718 |
Earnings Per Share (Details) -
Earnings Per Share (Details) - Additional Information (Details) | 3 Months Ended |
Mar. 31, 2020shares | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |
Effect of dilutive shares (in shares) | 8,223,056 |
Stock Option Plans | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |
Potentially dilutive share options (in shares) | 352,291 |
Supplemental Information - Sche
Supplemental Information - Schedule of Long-Lived Assets by Location (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Long-term assets | $ 18,245 | $ 17,026 |
United States | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Long-term assets | 9,562 | 8,896 |
Switzerland | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Long-term assets | 2,472 | 3,067 |
Israel | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Long-term assets | 3,366 | 2,753 |
Germany | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Long-term assets | 711 | 729 |
Others | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Long-term assets | $ 2,134 | $ 1,581 |
Supplemental Information - Sc_2
Supplemental Information - Schedule of Revenues by Geographic Region (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Net revenues | $ 101,828 | $ 73,309 | $ 351,318 |
Zai License and Collaboration Agreement | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Regulatory and commercial milestone payable | 2,000 | ||
Zai License and Collaboration Agreement | License | Accounting Standards Update 2014-09 | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Liability, revenue recognized | 90 | ||
United States | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Net revenues | 69,259 | 46,604 | 232,805 |
Germany | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Net revenues | 21,802 | 20,238 | 86,564 |
Other EMEA | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Net revenues | 2,674 | 2,282 | 8,782 |
Japan | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Net revenues | 6,451 | 3,370 | 17,912 |
Greater China | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Net revenues | $ 1,642 | $ 815 | $ 5,255 |
Income Tax (Details)
Income Tax (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Unusual or Infrequent Item, or Both [Line Items] | |||
Net tax benefit | $ (9,765) | $ 3,661 | $ (1,594) |
Natural Disasters and Other Casualty Events | |||
Unusual or Infrequent Item, or Both [Line Items] | |||
Net tax benefit | $ (11,269) |