Good day, ladies and gentlemen, and welcome to the Novocure First Quarter 2016 Earnings Results Conference Call. At this time all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will be given at that time. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to introduce your host for today's conference, Ms. Ashley Cordova. Ashley, you may begin.

Thank you. Good afternoon, everyone, and thank you for joining us to review Novocure's first quarter 2016 performance. I'm joined today by our Executive Chairman, Bill Doyle; our CEO, Asaf Danziger; our CFO, Wilco Groenhuysen; and our Chief Science Officer and Head of Research and Development, Eilon Kirson. Slides supporting today's prepared marks can be viewed on our homepage, www.novocure.com by clicking on the links for 2016 first quarter financial results, located in the events and presentation section and the lower middle column of the investor's page. Before we start, I'd like to remind you that our discussions during this conference call will include forward-looking statements and actual results could differ materially from those projected in these statements. These statements involve a number of risks and uncertainties, some which are beyond our control, including those risks and uncertainties described from time to time in our SEC filings. We do not intend to update publicly any forward-looking statement, except as required by law. We will first make prepared remarks and then we will move to a question-and-answer session. With that, I'll now turn the call over to Bill Doyle.

Thank you, Ashley, and good afternoon, everyone. During my remarks today, I will are briefly recap highlights from the quarter related to our two strategic priorities, the launch of Optune for the treatment of newly diagnosed GBM and the development of Tumor Treating Fields therapy for the treatment of additional solid tumors. Starting with the Optune launch, commercial adoption of Optune was strong in Q1, 2016. We saw significant growth in prescriptions and active patients compared to both Q1, 2015 and the prior quarter. Wilco will take you through the financials a bit later in the call. But first I'll spend a few minutes reviewing our non-financial metrics. 755 Optune prescriptions were received in the first quarter of 2016, representing 73% growth compared to the first quarter 2015 and 36% growth compared to Q4, 2015. The first presentation of our EF-14 Phase 3 superiority data in newly diagnosed GBM occurred at the Society of Neuro-Oncology Annual Meeting in November 2014. Q1, 2016 was the first quarter in which the year-over-year growth included trends from a base quarter occurring after the EF-14 superiority data was disclosed to the oncology community. I believe we will continue to see year-over-year growth in prescriptions throughout 2016 as we've begin to promote Optune for the treatment of newly diagnosed GBM since our FDA approval in October 2015. The United States remains our largest commercial market, 684 perceptions were recorded in the US in the first quarter of 2016, an increase of 273 prescriptions or 66% versus the same period in 2015. We estimate that approximately 9,300 GBM patients per year are candidates for treatment with Optune in the US. Based on the incidents, the rate of disease progression and medical eligibility with a global trailing 12 month prescription fill rate of 75%, our 684 prescriptions…

Thank you, Bill. While it's still very early, I am pleased with the long performance of Optune for treatment of newly diagnosed GBM. We continue to put significant focus and resources behind Optune. At the end of the quarter, we had 38 sales reps in the field in the US, presenting Optune EF-14 superiority data to physicians. We continue to hire and expand the sales team to increase reach and frequency to high-volume oncologists. We have also created a team of thought-leader liaisons focused on on-label support and education. The thought-leader liaisons are responsible for key opinion leader, an advocacy group engagement. They work to increase the support for TTFields within the scientific community as a superior treatment in combination with temozolomide for newly diagnosed GBM versus temozolomide alone. Support is growing. Our EF-14 results were recently recognized at the Clinical Cancer Advances by ASCO. In the US we believe Clinical Practice Guidelines play a key role in the treatment decision, especially in the community setting. We believe that Optune will be added to the NCCN practice guidelines for the treatment of newly diagnosed GBM in 2016. And if this occurs, we expect that this will be a catalyst for increased adoption of Optune. The rollout in neuro [ph] for our second-generation Optune system is complete. The device is lighter, smaller and quieter than our original system. Patient feedback has been extremely positive. We filed a PMA supplement application with the FDA for second-generation Optune in December 2015. In April, we responded to questions from the FDA. Assuming we do not receive additional questions or comments from the FDA, we hope to begin marketing our second-generation Optune system in the US in the third quarter of this year. We continue to build our team. At the end of the quarter, we added more than 350 employees around the world. We are breeding a global business. In everything we do, we are patient forward. I will now pass the call to Wilco to review our financial results.

Thank you, Asaf, and good evening, everyone. Before I jump into the financial results, I'm going to spend a few minutes on our key operating statistics and reimbursement metrics. Prescriptions are a leading indicator of demand. We receive each prescription directly from prescribers and as such, have visibility into all prescriptions written, regardless of whether or not the patient ultimately starts Optune therapy. The confirmation of prescriptions to new patients is written by the prescription fill rate and the time to fill a prescription. The increase or decrease in active patients in any given period reflects the number of new patients, less the number of patients discontinuing therapy. The rate of patients discontinuing therapy is determined by the treatment duration for patients starting therapy in prior periods. Active patients are a leading indicator of future collections. We bill a single, monthly fee per month of therapy for each active patient. For the three months ended March 31, 2016, gross billings increased to $45.5 million compared to $20.8 million for the same period in 2015, representing 118% growth and aligning with our growth in active patients. Gross billings represent total charges that are established list prices for providing Optune to a patient before any deductions are applied. The monthly charge for Optune is $21,000 in the United States and €21,000 in the European Union. For the 12 months ended March 31, 2016, the average cash payment received was more than $14,000 per charged month in the United States. The difference between billed and paid amounts consists of patient financial assistance, charitable care, discounts, disputed underpayments and indirect taxes. Novocure's average time to collect on billed charges ranges between four and five months in the United States. Our time to collect reflects a wide distribution of payment times from payers. Contracted payers…

Thank you. [Operator Instructions] Our first question is from Tao Levy of Wedbush. Your question please.

Great, thank you. Good afternoon. Maybe we could start with - you give us some nice metrics there around the prescribers in the quarter. I was wondering if I could assess for sort of like any description around repeat prescribers?

Can you state the question one more time? We're having a little trouble hearing you on our end of the phone Tao.

Sorry about that, is this better?

Yes, much better.

Okay. I was looking to if you had a number of repeat prescribers?

So we grow - basically certified over 100 new sites this quarter, and we are right now still in the process to grow the business and increase our footprint in the US. In general, we do have a significant amount of prescribers which they would be repeat prescribers.

Maybe average length of duration, any numbers around that, I mean, if you look at - I know it is a tough metric, but second quarter of last year for example, percent of patients that are still on therapy? Any sort of metric like that, that can give us a better understanding of how long patients are averaging on the therapy?

Yes, we see – this is Wilco, we see nothing that’s inconsistent what we shared with you before the recurrent GBM patients are aligned with what historically has been the trend in treatment duration, newly diagnosed or in line with what we saw coming out of the EF-14 study. And as we mentioned during the script, more than 50% of our scripts are now in the newly diagnosed indication. So we think after the FDA approval and the JAMA publication, we are making great strides in shifting towards this newly diagnosed and helping patients earlier in their disease stage and hopefully with an NCCN upgrade, all three catalysts have been met and will drive for growth.

Okay. And just one last question on the financial side, on the accounting side, at what point can you start accruing your revenues from some of the I guess US-based insurance payers?

We can start accruing full revenue at the point in time where within a very narrow bandwidth, we can project what the actual collection is going to be on an almost per claim basis. As I said during the script, we have a broad, we have a new treatment paradigm, and we have a new business approach, so relatively low volume business. So, it’s very difficult to predict payment behavior with any statistical significance and that’s basically the hurdle that we are taking. We believe we've now coverage significantly expanded with shifting focus over to contracting that will enable us to project it with significantly more accuracy and that should enable us to shift to an accrual-based revenue recognition.

When does that take place? Is that the end of this year or next couple of quarters, next year?

It is difficult to project. We hope we can make the first step this year, but whether that's going to be the -one of the immediate quarters or a later quarter, that I'm not ready to go there yet. I think a few more things need to fall into right place for us to be able to make that move.

Okay, great, thanks a lot.

Our next question is from Gregg Gilbert of Deutsche Bank. Your question please.

Thanks. I have a few. First if you have been getting similar terms from payers as you have been adding payers to coverage, and you have any updates on how the chats with the CMS for Medicare are going?

Yes, those are two separate topics, so private payers, we basically see consistent behavior from what we saw in the past we shared with you, a very high percentage of claims successfully honored after a long appeal process. That appeal process is not the coverage universe expanding into this 112 million lives that I mentioned. We see some very positive development there. I think the EF-14 data, the efficacy resulting from that is broadly accepted, the approval of the JAMA publication. So we see very strong developments there and overall claim history we don’t see a substantial shift either way. We still think 14,000 in the United States is the right number to assume with respect to anticipated collection with respect to what Medicare making positive developments there, also based again on the EF-14 data, the approval, the JAMA publication, it’s less about efficacy, it’s more about terms of coverage. We think NCCN guidelines will help there as well. So a constructive dialogue, unfortunately still a dialogue and no conclusions yet and hopefully that will come soon.

Do you have the visibility on the timing for NCCN guidelines update?

I'm not sure we can talk on behalf of NCCN guidelines but I think one of their new guidelines is coming out relatively soon.

Then just two quick pipeline questions, I'll get back in line. For LUNAR, does it – does including taxanes make sense given where standard of care appears to be going? And then on pancreatic, when is the soonest you could envision getting Phase 3 going there, given your optimism in that?

Eilon, why don't you take both of those questions?

Sure, I would be happy to. So regarding LUNAR, first of all, with our new data about - which suggests additivity of TTFields together with PD-1 inhibitors in pre-clinical models, we are looking to reassess the trial design. We do want to try to capitalize on both the taxane synergy which we are very, very hopeful of making a true clinical difference to patients, and also, of course, take into consideration the issue of the shifting landscape in non-small cell lung cancer with the recent approvals PD-1 inhibitors in second-line setting. So we are working right now to try to capitalize on both of these aspects in a trial design for LUNAR. Regarding PANOVA, if you could repeat the question, one second?

When is the soonest you can envision being in Phase 3 trials for pancreatic given your bullishness on what you've seen so far in pancreatic?

Well, we're in very advanced stages of the discussions with key opinion leaders in pancreatic cancer to define the best trial design for Tumor Treating Fields in pancreatic cancer. We aren’t going to give an exact timing on this, but we're definitely expediting our efforts to move forward on the Phase 3 program.

Thank you.

Our next question is from Cory Kasimov with JPMorgan. Your question please. Q –Unidentified Analyst: Hey, good afternoon. Thanks for taking the question. This is Morgan on for Cory. I just had a quick question as far as the new coverage wins you've had over the past several weeks and months, when should we expect those to come on live? And then I have a follow-up.

Sorry, Cory, I could hear most of it, but not the last sentence. Would you mind repeating that? Q –Unidentified Analyst: Sure, sorry. This is Morgan on for Cory, by the way. So I was just wondering with the number of commercial payers that you've been adding over the course of the last couple weeks and months when we should expect those to come online, as far as fully kind of working with them and how long will it take for them to get up and running?

I think these are issues - sorry, Morgan, I thought that everyone announced as Cory, so I hope Cory or you don't mind that I'm mixing up the names. I think first of all, we're very pleased with these developments, so we are shortly following the approval and broad acceptance of newly diagnosed is an indication that needs to be covered, basically, when these coverage decisions are announced, the coverage is in place. So with immediate effect, I should say. Q –Unidentified Analyst: Okay, great. Thank you. And then – so are you planning to give out guidance at some point this year on the revenue?

No. I can give you a long answer, but no, we don't think it makes a whole lot of sense. We think within this situation of recognizing revenue on a cash basis, we try to provide you with information that we think helps you in understand your long-term value proposition. We don't think it helps you a lot in anticipating what our collection within a quarter timeframe might or might not be.

And keep in mind, too, we are in the earliest stages of a launch of a new cancer treatment paradigm. We are educating the community and the absorption of these paradigm-changing therapies tends to over time become standard of care. But it tends to be very difficult to predict on a short-term basis exactly the trajectory that it will take. Q –Unidentified Analyst: Okay, great. Thanks.

Our next question is from Mark Schoenebaum of Evercore. Your question please. Q – Vivad Nikovenka: Hi, guys. Thank you for taking my questions. It's actually Vivad Nikovenka on behalf of Mark Schoenebaum. So I actual want to discuss the operating metrics has been reported and specifically how far back we need to go and look at the patient numbers on therapy reported versus revenue recognized in a specific quarter. So I just want to be crystal clear about this four to five months delay between billings and revenue recognized in a quarter. So is it a fair statement to say that basically currently reported revenues are coming primarily from patients that where on recurrent treating [ph] and has been reported as new prescription back in July, August, September or we need to go even further back or maybe closer to the current period?

Yes, so as I said, this is Wilco, as I said during the introductory remarks, the average, as you said, is four to five months. There is a broad distribution around it. It's in fact more of a bimodal type of a distribution. So the claims that we ultimately prevail in but we have to go through a long appeal process, take longer than 180 days for contracted lives which is still a smaller proportion of our active patient population. It’s shorter than the 90 days. When you look at the four to five months, a very substantial portion of collection in the first quarter, which we report as revenue, as you know, comes from active patients from the third quarter. Q – Vivad Nikovenka: Okay, so it’s primarily third quarter. Thank you. Thank you so much. And you also reported previously in the previous slide deck from March that as of end of Q4 over the last year, 35% of patients were first-life patients. So I'm wondering if you have an updated figure for this quarter and if it’s continued to grow from the 35%?

This is Wilco again. We mentioned in the script earlier that it’s slightly above 50% now. So we made tremendous progress there in the first quarter in the adoption towards newly diagnosed. Q – Vivad Nikovenka: The last question about the fill rate. So this 75% fill rate reported over the last question is the number of the scripts filled and does it also include maybe fee-for-service patients in the US. So should we also took another 20% haircut from the 75% when we are trying sort of calculate it by revenue or [indiscernible] 25%? And what are the trends for this fill rate? Is it going to go up?

So the answer is yes, no, and none. So yes, Medicare is included in the 75% but the 75% is over the overall patient population, so don't get a 20% cut on the 75%. Every patient that is prescribed Optune therapy by their physician counts as part of this calculation, whether it is Medicare or not. So 75% of scripts received will be filled historically and we don't see substantial shift in that trend. It’s been around 75% for a while. Q – Vivad Nikovenka: But from those that have been filled, as of now we should exclude Medicare populations only 80% will be collected?

Well, we do think Medicare eventually should pay us once they process [indiscernible]. We would expect to see those claims collected. So from a projection overall patient population, 20% to 25% is fee for service and overall population 75% gets filled Q – Vivad Nikovenka: And will be a current trend, is the 75% you think its going to be a larger next quarter, it's going saturate its growth or?

No, it is fairly stable. Q – Vivad Nikovenka: Okay. Thank you so much. Thank you for taking all my question.

You're welcome.

Our next question is from Larry Biegelsen of Wells Fargo. Your question please. Q –Unidentified Analyst: Hi, yes, it's Leah calling in for Larry. Thanks for taking my questions. I'll start with a couple on the pipeline, then I have a few more on the financials. In terms of pipeline, you mentioned that the second-generation Optune devise, you responded to some FDA questions on your application. Can you characterize those questions at all, what type of questions and the nature of those questions?

This was a standard question that we don't believe we will change the timeline of the second-generation launch. Q –Unidentified Analyst: Okay. You didn't have to do additional work to generate the answers?

No, actually we already… Q –Unidentified Analyst: Okay. Great. Then on the brain mets Phase 3 trial, you said the IDE went in, in April of this year. So just two questions on that, one, once the IDE is approved, what needs to be done before you can start enrolling patients? And number two, can you provide any color on physician interest in the trials this far and the type of training that might be needed to enroll those physicians in the trial?

Eilon? Q –Unidentified Analyst: Hi. Could you hear me?

Sure. I would be happy to take that. Yes, I can hear you very well. The steps that need to be taken after FDA approval and FDA basically have a 30 day window to answer an IDE. And so we are expecting very soon to hear from FDA. Assuming they approve the IDE, the next step, of course, is IRB submissions and site initiation visits, which is a standard operational clinical ops sort of process. It’s relatively quick and we're starting it in parallel, while waiting for the FDA approval. So we are expecting we'll be able to start accruing patients very soon after the FDA approval. Regarding physician interest, this is actually - there is extreme interest, mainly in the radiation oncology field and with our commercial outreach to radiation oncologist now, I think most of them are very interested in joining the trial as well. And so I think we have a lot of traction in the radiation oncology field to perform this trial successfully. Q –Unidentified Analyst: Great. Thanks. And then just on the financial side, Wilco did I hear you correctly that you expect to move to accrual accounting some time this year?

I think I had said I hoped without being specific on what quarter, I think it largely depends on contracting. We want to make some further inroads into contracting and that will enable us to meet the requirements under GAAP. Q –Unidentified Analyst: Okay. Then as far as the gross billing number you talked, the $45.5 million, is that based on the 21,000 device price or is that based on the 14,000…

It is, yes Okay. Q –Unidentified Analyst: It's the 21,000. Okay.

Expected patients, basically billed months in the quarter. Q –Unidentified Analyst: Okay. So if you look four to five months down the road, we should expect 75% to 80% of that collected, but at the 14,000 rate in stead of the 21,000 rate?

Correct, 14,000 rate. That is exactly the way at least we think about it, yes. Q –Unidentified Analyst: Okay. All right. Thank you.

And again, I'd like to stipulate the 14k and I think I said - I know I said it during the introductory remarks, the 14k reflects the commercial payment behavior in the States. It doesn't include Medicare.

Our next question is from Jon Eckert of Barclays. Your question please.

Good afternoon. Thanks for taking the question.

Hi, Jon.

Hi. My first question was I think I might have misheard something, when you were talking about your cash and equivalents position and your runway for the cash, I think you said that together with short-term investments, I think it was $236 million in cash and equivalents and then there was a comment about that supporting operation for the next 12 months. That seems quite conservative, so I'm not sure if I mixed up some numbers there. Could you just clarify that part of it for me?

Yes, this is Wilco. Thanks for asking me to clarify that. What we didn’t try to say is that we're going to burn through the $235 million in the next 12 months. What we wanted to indicate is that we believe our liquidity will get us at least through this next 12 months. But actually I added to that, that with the clinical program that we expect to execute and developing commercial adoption for TTFields, we actually would anticipate it unless something very unforeseen happens, our current liquidity should get us through break even.

Yes, okay. And then when I look at the - you guys are saying the average time for collection is around between four to five months and the contract payers, it's about 90 days and the non-contract payers it can be long as180 days. So right now it kind of seems like the mix between those two is about 50/50-ish. So as you get more covered lives, I guess, should we start thinking that, that time window should contract as more get towards the shorter time frame? I have just one short follow-up after that.

Yes. So it’s not exactly a 50/50 distribution, but yes, with more contracted lives here overall, the four to five months average we'll come down. It certainly one of our bigger objectives.

And I might've asked you guys this offline but I forget the answer. So when you get a new coverage approval from a healthcare provider, does the any of the payments or kind of negotiations going on for past bills that have not been paid, do those get expedited pretty quick, you know, at the same pace as a new one, so do we see like a little catch up once to start getting more covered lives?

Yes, well coverage decision helps within any conversation we have with payers. It doesn't necessarily mean there's an agreement on fee or an automatic process towards paying. It helps in a conversation. It shortens the dialogue. It reduces the paperwork required to get paid, but it is not an automatic agreement on the fee. That comes with further discussions and that's what we want to embark upon now where we move from coverage into contracting.

Very helpful, thank you very much.

[Operator Instructions] Our next question is from Mike King of JM.P Securities. Your question please.

Good afternoon, guys. Thanks for taking the question and congrats on the growth in the quarter. So speaking of which, and I apologize if you answered this. And I got on the call a little bit late. But I noticed, and this may be coincidence, but the average number of scripts per sales reps was about the same in the quarter, in this quarter versus the fourth quarter '15. And again, it may just be coincidence, but it also suggests you're getting some very good productivity out of you new reps. I just wonder going forward with that, is that the correct ratio, I think its about 18 per rep. Is that right way to think about or should we think about it some other way?

So I would be happy to tell you this is actually -- but it is. The reps responsible for different regions and so I will not to this kind of talk elation. As we mentioned we have -- continue Irene and we believe we will finish hiring the first wave which will be around Q2 reps and then we will see if we need more and this will happen in the next quarter or so. So it’s going to be end of cycle…

So you are saying you're going to max out at 50 and that will be in this quarter?

And then we will evaluate if we need more or not. But we believe this will be enough for now.

Okay. And then just a couple related questions on your sales metrics. In terms of the active number of patients, can you talk about, you know, sort of I'm particularly interested in the primary reason why scripts don't get filled, number one. And then number two, just on the discontinuation rate, if you could give us some trends on that, recent trends on that. And then finally, and again related, is the question about do you have duration numbers for us, either in the relapse setting or that newly diagnosed setting? Thank you.

So I will start with discontinuation. So remember we move from recurrent to newly diagnosed which in recurrent the real life scenario which we published it's 4.5 months in treatment. In newly diagnosed, it’s more than double. So I cannot give you a matrix discontinuation, unfortunately. Our main goal is to make sure that the majority of our patient will be newly diagnosed patients. The reason why not all of the scripts convert, so there is a few reasons for that, but the fundamental difference between the recurrent and the newly diagnosed is that in the newly diagnosed, we receive the scripts a little bit earlier that the patient is still under radiation and there is some windows that we expect will need more time to be on treatment and this by definition creates some another windows for conversion. And besides that, we don't - the 75% conversion rate is a reasonable rate. Anything that you would like to add?

Yes, maybe I can add to that. As you know, it's primary brain cancer, very aggressive. Some patients, some scripts get lost because of disease progression and patient very quickly deteriorates from when the script was written or the script was written very late in the disease stage, so there's some lost there. Also certain patients, certainly in the academic setting opt into clinical trials. So there is a variety of reasons why not all scripts are filled and as we stated earlier, about 75% consistently are filled. In terms of treatment duration, I think we at had an earlier question in the call. We see nothing that would cause us to think that for recurrent treatment duration differs from what we shared with you in the past and also for newly diagnosed, it appears to be consistent, at least from what we can see now with the EF-14 data.

Thanks for taking the questions.

Our following is a follow up from Gregg Gilbert of Deutsche Bank. Your question please.

Thanks, Wilco. I believe you said in the past that the $14,000 per patient would be a good number to use going forward, including the assumption that you would eventually get Medicare reimbursement. Can you clarify that I have that right? Thanks.

Yes, Gregg, you have that right, but the $14,000 is based on actual payment behavior in a commercial setting in the United States. We believe once the discussion that we also referred to with Medicare resolved, that hopefully that will not affect the $14,000 to much. From a modeling perspective, we think the $14,000 is at least a best indicator available right now, since it’s based on actual collection patterns in the United States.

Thank you.

This time, I'm showing no further questions from the audience.

Okay. Thank you, everyone. We appreciate your interest in Novocure and we'll conclude the call.