NovoCure Limited (NVCR) Earnings Call Transcript & Summary

Great. Good morning, everyone. My name is Jess Fye. I'm the large cap biotech analyst at JPMorgan. Welcome back for Day 2 of our very in-person health care conference. A little different format this year than in the past. You're not going to switch rooms for Q&A. So we're going to, after the presentation, just go seamlessly into Q&A. There's 2 ways to ask questions. You can raise your hand and some will bring you a mic. You can also submit questions electronically through our portal. We'll send it to that iPad up there, and I can read them off for the management team. So with that out of the way, let me pass it over to NovoCure's Executive Chairman, Bill Doyle for the presentation.

Thank you, Jess. Good morning, everyone. Welcome to the Sunrise session at JPMorgan. I wasn't sure whether they'd actually be anybody in the room or not at 7:30. So I'm pleased to see everyone. I'll be making forward-looking statements. You can find the details on our website. So let me start. Novocure was founded in 2000 with a very simple mission. Our intention was to develop the Tumor Treating Fields platform to help patients with some of the most difficult-to-treat cancers. In the year since the founding, we've made tremendous progress. And the number on this page, of which I'm most proud is the fact that we've now treated over 26,000 patients with GBM. And that number grows every day. In addition to that, we've created now an infrastructure that allows us to go even further and that's the exciting news today that while we have helped these 26,000 patients, we are now standing on the threshold of the opportunity to treat many, many, many more patients by extending the reach of our platform. So what are our Tumor Treating Fields? So this is a new unexpected modality to treat cancer. It was invented by Professor Yoram Palti at the Technion again, over 20 years ago. And he had what I will call the ingenious insight that the machinery of cell division is made up of highly charged proteins. And if I drag you back to freshman physics, if you have a charged body, and you expose it to an electric field, you can push and pull on that body with the electric field. It's almost as simple as that. And so we are able to tune electric fields to enter cancer cells. We can do this selectively, so we only enter the cells that we target, and then we can kill those cancer cells. We deliver the electric fields and our electric field therapy via a medical device. It's shown here. The device consists of 2 parts. There is a field generator. The current generation weighs about 2 pounds. The patients wear this and it's attached to arrays, arrays with fancy name. These are basically bandages that are placed on the body to surround the region of the tumor. And these transmit the electric fields, again, these tuned electric fields to the region of the tumor. So when we started the company and when Professor Palti, and I still have the napkin. This is one of those literal -- he explained it to me on a napkin story. We understood that we could disrupt the mitotic spindle and that was the mechanism that we explored and pursued. In the 20 years since and maybe not surprisingly, we've learned that these strong electric fields do much more within the cells than just disrupt the mitotic spindle. We, in fact, prevent double-strand DNA repair. We interfere with cell mobility, so the ability of cells to move when they're in the presence of the field. And one of the most things -- one of the most exciting things, and I'm certainly going to talk about this in a little more detail during this presentation. When we kill the cells, we kill the cells via an immunogenic pathway. What does that mean? It means when the cells die, we expose the immune system to the components of the cell, essentially unmasking tumors that are hidden from the immune system. Each one of these mechanisms has implications for how we deliver the therapy and how we combine the therapy with other agents to maximize the benefit to the patients. But the bottom line is that Tumor Treating Fields can be a backbone therapy, can be used to improve immunotherapy, chemotherapy and radiation. And we're investigating opportunities, again, to help patients with all of these combinations. It's gotten to the point that I almost don't mention it anymore, but we do this without any systemic toxicity. So normally, when you think about cancer therapies, you're always thinking about trade-offs, right? It's side effects versus the therapeutic effect. Because we can target so selectively, we don't cause systemic toxicity, even in combination with all of these other agents. So our strategy, which hasn't changed since the beginning since our founding, is built on three pillars. First, we're focused on expanding our reach in our existing indications, trying to reach as many patients as we can. Second, we're expanding our reach in terms of new clinical trials, new indications. And finally, and this is an important difference because our therapy is delivered via a medical device and not via a chemical or a cell. We have the opportunity to continue to engineer that device in order to improve various aspects of the therapy. The example that I always give here is, of course, radiation therapy was invented by the Curie's. And if you compare one of the Curie's radium-filled balloons with a modern radiation oncology system, clearly, it's the same therapy, but there's been a tremendous change in the way that it's been delivered. We have that same opportunity. The only difference is the Curie's didn't patent their therapy, we patented ours. So our strategy is built on a foundation first of all, of a comprehensive intellectual property portfolio. And secondly, on a foundation of financial strength. And I'll talk about each one of these a little bit. So first, the commercial engine. So we were approved for first-line GBM at the end of 2015, we launched in early '16. So we have just over 5 years now of solid experience with this indication. During that time, we've built a commercial company. And we are generating now over $0.5 billion a year in revenue from this business. We just announced last year, it was about $540 million. This provides us with tremendous flexibility to invest in the future. But while we're pleased with a $0.5 billion business, we're not satisfied. And we see tremendous opportunity to continue growth. And I will acknowledge that we have plateaued in growth over the last year or so during the COVID years, but we are determined, first and foremost, because we want to get the therapy to more patients but because this growth is within our reach. There are 3 levers for growth in the existing business. One is continued geographic expansion. The business today is principally a business in Germany, Japan and the U.S. We announced at the end of last year, our expansion into Canada. We're this close for France, and we'll continue to bring the therapy into additional countries. The second lever. I'm going to talk about later in the presentation, but our business model is a subscription business model, meaning that we are paid per month of therapy. So the better the patients do, the better we do. Our first clinical trial had an average duration of therapy of 8 months. In the real world, that's up to 10 months. So the patients in the real world are doing better than our patients in the clinical trial. And we have ways, again, that I'll mention at the end of the presentation to extend that further. The final lever is increased penetration in our existing markets. We've reached about 40% of the patients in the U.S., Germany and Japan. That's great. But that means 60% are still not getting the therapy. And there's no inherent reason that they cannot benefit. So what are we doing there? We are focused, notwithstanding all the exciting news that I'm going to talk about, but we are focused in growing in GBM. In order to grow the penetration, we have to strengthen the conviction of prescribers to say to patients, you must have this therapy. And we have a variety of programs in order to do that. But we also have to increase patient demand. This is an area where I say we've been a laggard, which is the digital encounters with our patients, but we're focused on this. And we want every patient diagnosed with GBM and every family to walk into the doctor's office asking about Optune therapy. And finally, we've reorganized in order to really put our best people and the best facets of our organization on this task. But we haven't just reorganized -- there are more tools. I mentioned that we're about at the 5-year mark in the real-world application. And the real-world evidence is now pouring in. Center after center is reporting their 5-year experience. And I'm delighted to say that these are big name centers. You can see Duke on the paper here. All of which are either as good or better than what we've seen in the clinical trial. This is a real therapy that's working in the real world. And this is the sort of information that we are bringing to the prescribers who are yet to give the confident endorsement to their patients. So now the next pillar of the strategy. Tumor Treating Fields, as I said, is a platform. It will kill any cancer cell that we can surround with the field and tune the electric fields to enter. Of course, we're investigating the use in new indications, but we're also expanding the labels of our existing indications going from second line, first line as we did in GBM. And we're continuing to explore, as I alluded to earlier, the combinations, what are the most powerful uses of Tumor Treating Fields. This has resulted in a very large clinical program. We are funding this ourselves back to the financial strength. And we've reached a point in the early days, I remember trying to explain this to doctors and potential partners. And we were called [ Vudu ] and a bunch of names that were less complementary even. But now we have attractive partners. So we're partnered with Merck in first-line GBM and in first-line non-small cell lung cancer. We're partnered with Roche in metastatic pancreatic cancer. And I would expect that we are going to expand this platform. Of course, what's exciting and the way I started this presentation is that we're on the threshold of transformation. So in that big Gantt chart, we have 4 Phase III trials that are going to read out over the next 18 to 24 months. I'll talk about LUNAR in a second. We announced the successful completion of LUNAR on Thursday, but LUNAR is going to be followed in 6 months by INNOVATE in ovarian cancer, then followed by Metis in brain metastases in -- from non-small cell lung cancer, followed by PANOVA in pancreatic cancer. So we have a cadence, if we are talking to investors, so I'll use the word of catalysts every 6 months for the next 2 years. And these catalysts are not only important for all of us investors, but this creates a virtuous cycle. I'll go back to GBM. Success in lung cancer is not just success in lung cancer. Success in lung cancer expands the halo on Tumor Treating Fields, and this is where we start. So let me mention, LUNAR. So LUNAR was our study in second-line non-small cell lung cancer. So we recruited in LUNAR patients who had failed platinum therapy and based on physician choice, they were either treated with Tumor Treating Fields plus immune checkpoint inhibitor or Tumor Treating Fields plus docetaxel. These are the standard second-line therapies in different parts of the world and depending on what came before in each patient. I couldn't be more pleased to reiterate that this trial met its primary endpoint of overall survival and also produced a clinically meaningful conclusion. As is always the case, the full data set will be made available at the soonest prestigious cancer conference upcoming later this year. But more than just the top line, we also announced the results of the powered secondary endpoints looking at the 2 cohorts. And the result for the patients who were treated with Tumor Treating Fields and docetaxel was a positive trend. A clinically meaningful outcome, but it didn't reach statistical significance in the subgroup. But in the Tumor Treating Fields plus immunotherapy arm, we achieved what we said in the press release was a profound result. And that goes back to what we're seeing, not only now in a Phase III randomized study in non-small cell lung cancer, but what we're seeing in GBM. When we combine pembrolizumab, KEYTRUDA with Tumor Treating Fields, KEYTRUDA has had no effect in GBM as a single agent, but when combined with Tumor Treating Fields, we see the best result. We're going to be talking a lot more about this. We think we know why, but we also think that this points toward the treatment of all solid tumors in the future. So more to come on LUNAR. We get asked a lot about, okay, so what's the cadence from here. As I mentioned, the full data set will come in a conference later this year. At the same time, we've already started the regulatory work. We are preparing the file. This will go to the FDA as a new PMA. We expect this to be filed with the FDA this year and also with the European regulators this year. And with luck and with hard work, that will result in approvals in 2024. And with the approvals, we will start the commercial launch. The commercial work is underway. We've been investing already building the new infrastructure. This will be a different sales force than the sales force that is calling on the neuro oncologists and all of that work to prepare for this launch is underway within the company. So now let me get to the final pillar here in the final minutes. I mentioned that we have the opportunity to continue to innovate, to continue to improve the therapy. When we looked at our pivotal GBM data, and of course, this was the trial that was stopped early due to success -- the first successful trial in GBM and really the only successful in GBM before since the original Temodar trial 20 years ago now. But when we look closely at these data, while in the intent-to-treat group, we see this impressive separation at the median and a meaningful increase in 5-year survival. When we look closely, we saw an unmistakable dose response. This, first of all, should provide everyone with confidence that we saw that when patients receive more therapy, they did much better than when they receive less therapy, but that also provided the pathway, the development pathway for us to get more therapy to all patients. And this was meaningful. If you look at the graph here on the right-hand side, we see we took the 5-year survival in all patients from about 5% to 13%. But for those patients who are compliant with the therapy used it at least 18 hours a day, the 5-year survival was 30%. So 5% to 30%. So what has that led to? We know the dose is a function of time on therapy and the intensity of the electric field. So the strength of the electric fields and the tissue. We are limited by the strength that we can apply, not by something that's physiological in the tumor, not by side effects. But by the heat on the skin. When we create this circuit that provides the electric field, we put a patch on one side of the tumor, a patch on the other side of the tumor. And the point of the highest resistance is that interface with the skin. So we turn up the intensity to the maximum point when we reach skin temperature. So to turn it up further, it's not really a science problem. It's an engineering problem. It's a material science problem. And it's one that we've made a major step forward. This kind of gets a little bit lost in the LUNAR news. But in December, we commercially launched our next-generation array. We have not yet announced the name for this array. So we're calling it the new array at the moment. But -- and I'm happy to do a show and tell about this. This array is lighter, it's more flexible, it's more comfortable. And this is on real patients now. So we're getting the real reports, which should enable us to treat for a longer period of time, but it also delivers much more power. It's much better at dissipating the heat. And this is real data from one of the initial patients. This heat map shows the intensity of the Tumor Treating Fields in the brain. The darker, the better. And you can see that this is a 1/3 more energy per unit time just by giving them something that's more comfortable. So this is CE marked. We are going to roll it out in Europe in the first part of the year, and we'll be applying for a PMA supplement, which was required in the U.S. so that we can get it in the U.S. toward the end of the year. So that's the presentation this morning. I want to thank you for your interest. I have to thank our employees. People have been working and working and working. I will tell you over the holidays, especially to get the LUNAR data in shape to provide for you today. And it's hard for me to describe how energized the team is. At least in much of the world, COVID is waning. Our societies met this year, the Society of Neuro-Oncology, the Society of Radiation Oncologists, we were able to get together to share new data. And we're -- we couldn't be happier. We couldn't be more excited that the promise to bring Tumor Treating Fields into new indications is here. So thank you. So I'll ask Ashley Cordova to come up for Q&A.

Thanks for that presentation. [Operator Instructions] Bill, can you just clarify, did I hear you correctly? Did you say there was a clinically meaningful benefit in LUNAR in the docetaxel population, maybe in terms of like months of OS but it just fell short of statistical significance.

That's what I said. And if you think about it, the primary endpoint is the combination. And so if you think of the label is going to be the treatment of patients with either docetaxel or physician's choice immune checkpoint inhibitor. So that is the primary endpoint that is the label that we expect.

Okay. And when you talked about a prestigious conference coming soon, is that ASCO?

Since all these applications are being made as we speak, we're not stating the conference, but clearly, that's a logical conference for us.

Okay. So we've got a couple of iPad questions here. First one, pancreatic cancer has been resistant to all new therapies, IO, cell therapy, et cetera. Why will TTF have a good chance of success?

Okay. So that's a great question because it's absolutely true. The same thing could have been said about GBM as well. And in fact, there are some parallels between GBM and pancreatic cancer in that they're in regions of the body where it's very difficult for the immunotherapies to -- or chemotherapies to access. So first and foremost, our Tumor Treating Fields will penetrate the stromal tissue and they will get to the pancreas and all of the surrounding area. So first and foremost, we can deliver the therapy to the region. Secondly, I'll note that we just don't jump in to Phase III trials. They're built on a foundation of preclinical work and clinical work. So we have a very successful Phase II trial. The data we've published in pancreatic cancer already. And that trial, again, single-arm small group of patients. But among the impressive endpoints was a very impressive response rate. So you can -- again, you have to look at Phase II data with -- very carefully. But at the end of the day, tumor response is not a function of the health of the patient. So, for a variety of reasons, plus the evidence that we've generated to date, we feel like we have a very strong possibility to have a meaningful impact in pancreatic cancer.

So it's my understanding, the LUNAR study was started before PD-1 status at baseline was I guess, a thing. Is that correct? And if it's so, did you guys measure PD-1 status at baseline?

So the answer to your questions, and I know why you asked this, right? There was a short note yesterday about PD-1 status. So the first thing I'll remind you, this is a trial in the second line, not the first line. And PD-1 status has not shown any relevance in second line. Secondly, I will tell you that when we -- and I didn't mention this in the presentation. But there was nothing unusual about the control group. So when you report top line data, it's very encouraging to hear that the trial was successful in the top line. But then you have to ask what about the controls. Was there anything funky about the controls. So these arms were well balanced and the controls behaved as expected, in line with prior studies. So there was nothing funky here. So this is a well-powered, randomized study where we showed a profound benefit. And the full data, including PD-1 status will be presented later. But I think that's a red herring.

So were all the patients measured in terms of PD-1 status...

As I said, we will provide all that data at an upcoming conference.

Another one from the iPad here. So it's a question about the changing standard of care during the course of the LUNAR trial. Were patients with prior PD-1 exposure allowed in the trial? And if so, what percentage of patients in the trial had prior PD-1 exposure?

Okay. So the first answer is this study was designed knowing that the standard of care was moving. And in fact, that's why there were the 2 arms with chemotherapy and with immunotherapy. I can answer the first part of that question that patients were allowed into the trial if they had prior exposure. So they could have received, for instance, a PD-1 inhibitor in the first line, recurred and then received it again in the second line.

Thank you. This is along the line or from the patient and compliance. So for GBM, it seems like the patch size is fairly large. Do you need to shave the patient's head in order to apply the patch?

Yes. We have to make intimate contact with the skin in order to deliver the fields.

Have you found with patients that there's any pullback on that? Or maybe they just -- once they see the clinical results, it doesn't really matter?

Yes. Sorry, I won't say anything that doesn't matter. We all wish we had a pill or a magic wand that made this easy. GBM diagnosis is a terribly difficult diagnosis. These are not patients who are generally old and sick. The median age is in the late 50s. So these are patients who are living productive lives. And what we found and we measured this, the quality of life of patients on Optune is maintained much longer than patients who don't use Optune. For a very simple reason, GBM is a neurodegenerative disease. And as I showed before, if you use the therapy and are compliant, you have a good chance for an extended survival. The data I showed with the 30% 5-year survival, those patients received therapy for 2 years, and then we're done and continued living. So that's the message. And then every patient has to decide, do I want to shave my head for the possibility of getting over this or not. But the answer is that while at first, it may -- gee, I prefer not to shave my head, I'd prefer to beat this disease.

Yes. I appreciate your results are really great. The other question I have is, I mean, you and I wear a Band-Aid for too long, I can get a lot of redness, irritation, for adhesives, I know that allergic reactions for that when you're talking they're wearing this for 8 months. How is that...