NovoCure Limited (NVCR) Earnings Call Transcript & Summary

All right. Hello, and thanks for joining Piper Sandler's 33rd Annual Healthcare Conference, again, in a virtual setting here this year. Hopefully, we can all be back again in-person next year. This is Jason Bednar of Piper Sandler's MedTech team. And I'm pleased to have with me today from NovoCure, Executive Chairman, Bill Doyle; and CFO, Ashley Cordova. Bill and Ashley, thanks for joining us today.

Thank you.

Our pleasure.

I'll get started with questions here in a moment. But for those investors that are tuning in via the live webcast, please feel free to submit your own questions via the chat box at the bottom of your screen or you can e-mail them to me directly at [email protected], and I'll do my best to ask the questions on your behalf. So with that, why don't we get started?

The store -- there's just no shortage to talk -- the things to talk about with NovoCure right now. But why don't we get started with the update just from last week, last patient being enrolled in the Phase III LUNAR trial. This does now start the clock on that 12-month patient follow-up period, as you indicated in last week's release. But let's play it forward now 12 months. What will investors see when we get to that 12-month period? Will we get both primary and secondary endpoints by the end of next year? And then how soon will we get full results from that trial?

Sure. So thanks, Jason, and thanks, everyone, for joining the chat today. As you mentioned, we had 2 very important milestones in our clinical program. The first we actually announced was the last patient in our INNOVATE trial in ovarian cancer, although the follow-up there is 18 months. So those data will be available a little later. And then the last patient in our LUNAR trial in second-line non-small cell lung cancer and because of the 12-month follow-up, those data will be available earlier. So the follow-up period is the time from the last patient in to the end of the trial and as we approach the end of the trial, we begin to do data cleaning. So this is not -- these large complex oncology trials. It's not as if the date is on the 30th and then on the 1st, all of a sudden, the data are available. There is a period of time of cleaning and sorting the data. This is true for NovoCure. It's true for Merck. It's true for all of the trials. And then we actually start to see what the report is. Our expectation is that we will press release what we call the top line data, which basically gives everybody an indication of whether the trial has been successful or not. And then the full data set is typically presented in the first opportunity of a large medical conference. Again, this is the tradition in our industry to enable the full data set to be presented at an ASCO or some conference like that for the medical community to see it. So it's a combination of a top line press release and then a full disclosure and discussion of the data at the first available medical conference.

Okay. So just to put a finer point on that, does that top-line press release, would that include primary and secondary endpoints? Or will it just be primary endpoint that you'll be reporting on. And then just to baseline everyone so expectations don't get out of whack. Well, those full results, is it probably best to calibrate that we should be expecting those early 2023 then not late 2022?

I think it's probably a little early for me to answer any of those questions. Our goal is to get -- certainly let the market know as soon as possible. So as soon as we know. We don't like to be in the situation where there's data in the company and risk of disclosure in a way that we don't want to. So our goal is, as soon as we know to get the data that's important to the market out via a press release. And then the data that's important to the clinical community out as soon as possible in a medical conference, but it really is a 2-part process. But we want to get everything that's important to the market -- out to the market without jeopardizing a very high profile presentation at a medical conference.

Got it. Okay. Fair enough. Then for this new -- potential new indication, this is probably new for a lot of investors in the stock today. Maybe help with what this process looks like after we close up the last patient follow-up in November of '22, what happens when it comes to the regulatory submission process, assuming the data looks good as you expect it will. Is there anything you can do in advance of having that data in hand to prepare for that regulatory submission process?

Yes. So there's a lot. And in fact, we're doing it already. So first of all, what's the process? So we do the same data cleaning. And in fact, the data cleaning is really for the regulatory process. The secondary byproduct is the press release that I described presentation at a medical conference and then ultimately publication in a peer review journal. But the real process is to get the data ready for the FDA and the other international regulators. That is a focus on the FDA, but the process is similar in the other geographies. We then submit, we are governed by the PMA process at the FDA. This is for those medtech folks is the more rigorous of the medical device pathways. And then the FDA has 180 days to work on and review the data. Now what can we do ahead of time? That process will include site inspections and visits. Those are random, so they don't go to every site, every center, but they'll go to many of them. And it's usually the sites that have the highest volume of patients. So we begin to work with those sites to prepare them for their FDA audits. The submission also has a number of modules. The module that we're talking about now is the clinical module but there's also a device module that's based on the design of the device. This device will be very similar to our mesothelioma product that's already approved. So that module, that part of the submission quite frankly, it's already in very good shape, but it will be -- any modifications to that part of the submission that are specific to non-small cell lung cancer are already being worked on. So it's -- so we get everything ready, we get the sites ready, and then we pull together the clinical module as soon as the data are available.

All right. Excellent. That's helpful. Why don't we talk about another recent study, we had some data on, and it's one that I've actually characterized as being one of the more underappreciated trials out there using your technology. That's the 2-THE-TOP Phase II study out of the University of Florida. Progression-free survival extension there looked really impressive in that patient population when pairing KEYTRUDA with Optune. Maybe talk, Bill, about how you plan to use that 2-THE-TOP data. I think in the past, you've alluded to moving forward with a formal Phase III trial. Where are you at in that planning process or evaluating that planning process? And do you need to wait for 2-THE-TOP to actually be done and fully complete with all patient follow-up before you move forward with something on your own?

Yes. So thanks for asking that. In many respects, I think these are some of the most important results that we've presented. So why do I say that? So first of all, for everyone 2-THE-TOP is an open-label, Phase II study that was conducted by Dr. David Tran at the University of Florida. David leads the brain cancer clinical and research activity at the university. This is a so-called investigator-sponsored trial. So it's not a NovoCure-sponsored trial. This was an idea of David's that he submitted to the company and we agreed to fund. And it was based on preclinical research that he and others performed that showed that while there are many tumor types and KEYTRUDA has been tried in large studies to -- with GBM and it showed no benefit. Nivo, Bristol's product, has also been tried and has shown no benefit. But what David saw when he combined, well, he added KEYTRUDA after starting treating with Tumor Treating Fields with the Tumor Treating Fields activated the immune system to make it susceptible, if you will, to the effects of KEYTRUDA. To put it really simply, took a cold tumor and turned it hot to immunotherapy. So he then moved into a Phase II trial. And importantly, many Phase II trials have -- in GBM specifically have, I would say, given a false positive. What do I mean by that? The last 35-or-so drug trials in GBM have all -- Phase III trials have all failed. Many of them have happened after a Phase II trial showed promising results. Why is that the case and this different? It's been the case because the prognostic factors of many of those other trials of the patients have been very good. The patients have been young, they've been healthy. They have had their methylation status, their MGMT status has been positive, which means then that their expectancy -- their life expectancy is longer. And then those trials were compared to the old Roger Stupp original New England Journal of Medicine standard of care. And they say, "Gee, these patients did better than the Stupp protocol, than the New England Journal of Medicine 15 years ago, must be promising." Why is this different? This is different because the prognostic factors of the patients that Tran recruited were among the worst. So 72% of these patients were MGMT negative. These are the patients for whom temozolomide, TMZ, has no benefit. Many of the patients were biopsy only, meaning that they had multifocal tumors that were not amenable to surgery. And he compared his patients not to the old Stupp paper, but to our EF-14 active group. So the best Phase III data to date, which is our much more recent EF-14 data compared to 2-THE-TOP. And in that comparison, the progression-free survival so far, and he only had a 12-month follow-up on -- I forget the percentage but about 2/3 of the patients, is already double the progression-free survival that we saw in EF-14 and he has a significant number, about 25% have responses in a disease where there are very few responses. So very promising, very, very promising. We are now in the planning stages for a registration trial combining these 2 therapies. And these are the data that underpinned our partnership with Merck in non-small cell lung cancer. So under NDA prior to this disclosure last weekend, and Merck had seen the data, had analyzed the data and determined to go forward with the program in their key indication, right? First-line non-small cell lung cancer. And they are also the data that now underpin our partnership with Genentech in metastatic pancreatic cancer. So it's potentially great for GBM patients, but it's much more, it's much more. It has the potential to activate a whole classes of otherwise inactive solid tumors to KEYTRUDA and nivo and the other anti-PD-1 and anti-PD-L1 immunotherapies.

All right. That's extremely helpful. And if I could just follow up on 1 point there, just on -- and we always love on our side, just timing and things that are definitive. And I know that's really tough and kind of in the process that you're running. And I know you don't want to commit to anything necessarily, but if you're in the planning phases right now, does that mean planning is in like -- this is something within the next 3 years? Or can we actually reasonably think about something where we see protocols and in-patient enrollment in the next 12 months on this trial in a Phase III?

It's the latter.

Okay. All right. Great. That's very helpful.

We want to move this forward. These data are great. We've had early -- again, because it's been open label, it was the first time the community saw the totality of the data, but we've been aware of these data for some time and the planning has been ongoing for some time.

Excellent. I did have a question come in from the investor group, somewhat related to this. You touched, Bill, on KEYNOTE B36 the other -- the trial right now -- or other trial really, that's sponsored by NovoCure in cooperation or collaboration with Merck for KEYTRUDA plus TTFields for first-line therapy in Stage 3 non-small cell lung cancer. With the question being what's been holding up enrollment on that trial? It does feel like we've been waiting for that first patient to come in. I think you have 5 centers that have been gone to the process and been approved to recruit, they're actively out there trying to recruit. So what's holding up that patient enrollment?

Yes. So let me answer this -- I'll answer it directly, but I'm going to remind everyone that LUNAR, our Phase III trial in second-line non-small cell lung cancer. One of the 2 arms is Tumor Treating Fields plus immunotherapy. We didn't specify KEYTRUDA or nivo, it's physician's choice compared to tumor Treating Fields plus paclitaxel compared to control group. So now that, that trial has completed enrollment within 12 months, back to our original conversation, we're going to be seeing data in lung cancer. Now on to KEYNOTE B36. Patients are being screened for that trial. We're in the any day now mode to announce first patient in. I think it's just -- our focus, I will tell you within the company had been to get LUNAR complete. And so that's where our site energy has been is to really -- to get LUNAR done. And now that energy can be directed to KEYNOTE B36.

All right. Very helpful. That makes a ton of sense. Maybe bigger picture, we've touched on some of the other immunotherapy combination studies that have been proposed. I'm kind of curious maybe what's maybe holding up some more formal enrollment on some of those studies. Those maybe sound like they're coming some time here over the next year as well. But maybe, Bill, just bigger picture. Could you talk about how the company's view has evolved with TTFields? And what makes you confident pairing TTFields with immunotherapies will further extend survival just broadly? This is definitely a conversation. It seems to have shifted here just in maybe the last 12 to 18 months with the company. Do you think the evolution towards increasing pipeline exposure to immunotherapies, shifts at all is how we should be interpreting outcomes from your current late-stage pipeline. It's kind of a 2-part question there.

Yes. So let me start with the first part and then move to the second part. The first part is our view from 20 years ago has remained consistent that Tumor Treating Fields is a separate modality, so just as surgery, radiation, pharmacological therapies. And maybe pharmacological can be split into chemotherapy and immunotherapy. I'm not trying to be pedantic, but we are an additional modality. Our modality has a number of very interesting characteristics or facts. First, we have essentially no toxicity. So no systemic toxicity other than we do see some skin irritation under our arrays, which we're working to ameliorate. So because we don't have any toxicity, we can use our therapy for very long periods of time. We also see that it can be combined with radiation and pharmacological therapy. So we've -- and when we combine it with these other therapies, we never see an intensification of the side effects of either our therapy or their therapy. So the side effects of the -- of our therapy remain essentially non-toxic and we don't intensify the toxicity of the other therapies. When combining, we've never seen anything less than additivity, meaning 1 plus 1 equals 2. So things are always better together. And in certain cases, we see synergy. This is the 1 plus 1 equals 3. So we've been very interested in combinations with radiation where we see synergy. Combinations with certain chemotherapies but principally the taxanes, so ABRAXANE, paclitaxel, Taxol, where the mechanisms are synergistic. But in those cases, the taxanes are still toxic on their own. But more recently, we see synergy with the immunotherapies. And the exciting opportunity here is for us -- and again, I'll use the -- just the common way to talk about where we can turn tumors that are cold to immunotherapies to make them hot. So again, KEYTRUDA works wonderfully for patients who have a high PD-1 expression, but that's still the minority, for instance, of lung cancer patients. If we can combine Tumor Treating Fields with KEYTRUDA in these patients for whom the innate expression is not satisfactory. You can see how exciting that becomes. It also becomes exciting for us, and now I'll refer to our collaboration with Roche in pancreatic cancer. We are a regional therapy. So Tumor Treating Fields we can treat the head, we can treat the chest, we can treat the abdomen. But -- And in patients, what we've seen for patients who have metastatic disease, we extend their life, but those are not patients that we would expect to cure, where if we get the intensity right, we can cure GBM patients, we can cure patients where we treat the full extent of the disease. Now combining with an immunotherapy and a tuned-up immune system, we have the potential to treat systemic disease. And again, our PANOVA-3 trial in pancreatic cancer, we're treating locally advanced pancreatic cancer where we can treat the whole part of the peritoneum. But in our collaboration with Roche, Genentech, we're treating metastatic pancreatic cancer. We treat the primary tumor, but we also turn on the immune system for the immune checkpoint inhibitor for the metastatic component. So there's a lot that's exciting there. And that's why, as you said, it's not a new philosophy. I think it underlines our new strategy, but it underlines our original strategy with a new advance in pharmacology.

Very helpful, very helpful. Ashley, I do -- I want to bring you in. Sorry for the -- a lot of the clinical focus questions so far in the trials. But numbers for the street have come in quite a bit for 2022. We're now comfortably below $600 million last time I checked for revenue. I guess from your perspective, have numbers come down enough? Or does the recent spike in COVID cases over in Europe, maybe warrant another reevaluation of prescriptions and revenue, especially from a market like Germany?

Yes, no, great. Thanks for the question. And I don't mind following the clinical trial because I think that's certainly what we excited about internally. I think the message we want everybody to hear coming out of Q3, and this will remain as we look forward is that we're now in a position where active patient growth is going to be the predictor of revenue growth. After several years in which we were continuing to expand reimbursement to get through administrative [indiscernible] Medicare and to have a stable patient mix of newly diagnosed, we've now kind of hit all of those milestones successfully. And so it really comes down to your question of where do we think active patient growth is going to go. There's too many unknowns for me to give you a fine tooth point on that. But I think we can all look at those trends and make our own assessments there, and that's certainly what we're doing internally. So I would say we're now in a position where estimates are far more reasonable, I would say, given where active patients are trending. And then I think I would continue to guide people to look at the active patient trends and then extrapolate that out for where they would anticipate revenue to grow.

Got it, got it. Make sense.

With geographical expansion on top of that and, of course, then our continued focus on penetrating the academic centers. So we're not done accepting that, but I think that's -- those are longer-term switches to pull.

You anticipated my question on France. I'll just leave that as is. I did have a couple of other questions come in from the from the investor group, specifically on INNOVATE-3, the interim analysis there. This is probably the last question we have time for here today. So I guess, first, do you have insight as to what the process is right now with the DMC, have they met? Are there multiple meetings at play? What can be drawn from the length of time that's already played out since that last patient was enrolled because it has now been a little over a month. So again, thanks so much for that one.

Yes. So INNOVATE-3 is our Phase III trial in ovarian cancer. And as I mentioned in the beginning, we did announce last patient in about a month ago. That last patient in triggered the point where the DMC is charged with performing the interim analysis. I fully expect that this interim analysis will be a nonevent. In the case of LUNAR, where it turned out to be an event. LUNAR recall was a trial that recruited over a long period of time. Thus, when the DMC met to do the interim analysis, they had a lot of events even in a smaller patient population, and so they were able to draw certain conclusions about the trajectory of the trial. Recall this trial, the INNOVATE trial was the opposite. It recruited very, very quickly. So when the DMC -- they may be meeting as we speak, they're going to have many fewer events around which to base a conclusion other than proceed to the end of the trial. So we don't expect any negatives due to safety signals or lack of statistical power. But at the same time, we're not and we're really not expecting sort of an upside surprise, simply, again, because of the short -- relatively short duration over which those patients were recruited. So we don't read anything at all into the timing other than its Thanksgiving and they have to get together and take a look at the data.

All right. Fair enough. All right. It's great. We covered a lot of ground here over the last 25 or 30 minutes or so. Very helpful discussion, as always, Bill and Ashley. We really look forward to seeing how the next year unfolds for the business. Thanks so much for joining us today. Thanks to everyone for tuning in. Be well, and hope everyone enjoys the upcoming holidays.

Thank you, Jason.

Thank you.