Good day, ladies and gentlemen and welcome to the Novocure Second Quarter 2017 Earnings Results Conference Call. [Operator Instructions] As a reminder, this conference call maybe recorded. I would now like to turn the call over to Ashley Cordova, Vice President of Finance and Investor Relations. You may begin.

Good morning, everyone and thank you for joining us to review Novocure’s second quarter 2017 performance. I am 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. The slides that will be presented today can be viewed on our website, www.novocure.com, by clicking on the link for 2017 second quarter financial results, located in the Events section on our Investor Relations page. Before we start, I would 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 of 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 some brief prepared remarks and we will then move to a question-and-answer session. I will remind everyone that our financials for the three and six months ended June 30, 2017 are available in our press release and in our 10-Q, both of which were released earlier this morning. With that, I will now turn the call over to Bill Doyle.

Thank you, Ashley and good morning everyone. Before we get into the details of the quarter, I want to remind everyone of Novocure’s simple two-pronged strategy: We are committed to bringing Optune to as many patients with glioblastoma who may benefit from it. We are equally focused on advancing our clinical pipeline, developing our proprietary technology, TTFields, as a possible treatment for a variety of solid tumor indications with significant unmet medical needs. We believe we have made significant progress in both of these objectives during the second quarter of 2017. I will provide a pipeline update later in this morning’s call, but I will ask Asaf first to review our commercial activities during the quarter. Asaf?

Thank you, Bill and good morning everyone. Novocure continues to focus on driving commercial adoption of Optune for the treatment of glioblastoma. I am pleased with the progress we have made in the second quarter of 2017. In Q2 2017, we experienced steady growth in all key commercial metrics and in all key geographies. We achieved 64% year-over-year growth and 15% quarter-over-quarter growth of active patients. We had 1,460 active patients on treatment as of June 30, 2017. Q2 revenues were $38.4 million, representing 114% year-over-year growth and more than 10% quarter-over-quarter growth. We received 1,059 prescriptions in the second quarter, including 803 prescriptions in the U.S. and 255 prescriptions in EMEA. This represents 17% quarter-over-quarter growth in the U.S. and 24% quarter-over-quarter growth in EMEA. Our sequential growth was driven mainly by increased adoption by both neuro oncologists and radiation oncologists. Neuro oncologists continue to represent the largest portion of our prescriber base, with 47% of Q2 prescriptions. Radiation oncologists represent the second largest and fastest growing customer segment with 26% of Q2 prescriptions. We remain focused both on increasing adoption with our existing prescribers and on growing our prescriber base to capture the full market opportunity. We believe second quarter growth benefited from our ongoing emphasis on this prescriber confidence in Optune for the treatment of GBM, including the presentation of our EF-14 5-year survival data at AACR. 20 years ago, the majority of patients diagnosed with GBM lived less than 1 year and long-term survival was nearly absent. With the combination of Optune and temozolomide in our EF-14 Phase 3 pivotal trial, 1 out of 7 patients lives longer than 5 years. This represents a 2.5x greater survival at 5 years for patients treated with Optune plus temozolomide compared to those treated with temozolomide alone. We also made significant progress in market access for U.S. commercial patients in the second quarter. More than 204 million U.S. lives now have positive coverage of Optune as a treatment for newly diagnosed and/or recurrent GBM. This represents 93% of Americans with private insurance. We have also signed contracts to establish Optune as an in-network benefit for more than 174 million lives. We continue to be reimbursed on a case-by-case basis in Germany and have ongoing productive dialog with government payers in the U.S., Germany, Switzerland and Japan. While I am proud of the progress we made this quarter, I recognized there are many more patients who could benefit from Optune than are currently on therapy. We believe we have the tools necessary to increase physician confidence in Optune as a treatment for glioblastoma. We remain focused on commercial execution. I will now hand the call back over to Bill.

Thank you, Asaf. In addition to the progress we made in our commercial business during the second quarter, we also made strides in broadening awareness of TTFields more generally. Our presence at four medical conferences, with 41 unique abstracts by 36 authors, many of them external lead authors, highlights the growing body of knowledge regarding TTFields and points to increasing interest in our proprietary technology. Recent clinical data presentations continue to suggest broad applicability of TTFields. Data presented at AACR in April from our Phase 2 PANOVA pilot trial in advanced pancreatic cancer and Phase 2 INNOVATE pilot trial in recurrent ovarian cancer, suggest improved patient outcomes when TTFields is added to existing standards of care, without significantly increasing side effects. Based on these results, we plan to initiate Phase 3 pivotal trials in both pancreatic and ovarian cancers. At ESMO GI in June, we presented three abstracts studying TTFields in pancreatic cancer. Among the highlights was an abstract outlining the design of our Phase 3 PANOVA-3 pivotal trial evaluating TTFields with gemcitabine and nab-paclitaxel as frontline treatment of locally advanced pancreatic cancer. We are hopeful that TTFields, combined with standard-of-care chemotherapy may reduce metastases and tumor size in these patients, making more patients candidates for resection. Pending FDA approval of our IDE application, we anticipate enrolling the first patient in this trial by the end of 2017. In May, our TTFields delivery system received a Humanitarian Use Device designation from the FDA for treatment of pleural mesothelioma, an initial step toward a Humanitarian Device Exemption approval in the U.S. To remind everyone, interim results from the first 42-patient cohort of our Phase 2 STELLAR pilot trial presented at IASLC in December 2016 demonstrated that 1-year survival rates for patients treated with TTFields, combined with pemetrexed and cisplatin or carboplatin…

Thank you, Bill and good morning everyone. Second quarter 2017 was our tenth consecutive quarter of active patient and revenue growth since the first presentation of our EF-14 data at SNO in November 2014. Second quarter 2017 net revenues increased to $38.4 million compared to $17.9 million for the same period in 2016, representing 114% growth. Sequentially, net revenues for the second quarter were up 10% from the first quarter of 2017. Revenue growth was driven by increased Optune adoption in our active markets, as well as transition to accrual-based revenue recognition for a portion of our billings. As Asaf mentioned, we continued to make significant progress in securing positive coverage and signed contracts with U.S. commercial payers during the second quarter. More than 93% of Americans with private insurance now have positive coverage of Optune as a treatment for newly diagnosed and/or recurrent GBM. I will remind everyone that the Medicare Fee-for-Service program, representing 20% to 25% of our U.S. active patient population, continues to deny coverage for Optune. Germany is our largest active market outside of the U.S. and represents approximately 75% of our EMEA active patient population. We have submitted an application to the Gemeinsamer Bundesausschuss, or the G-BA, to review our proposed reimbursement review pathway for Optune in Germany. We are currently able to bill healthcare payers for individual cases and each case is evaluated individually on its merits and under the payer-specific rules for such cases. To-date, we have collected approximately one-third of gross billings in EMEA. We are engaged in constructive dialogs with government payers in the United States, Germany, Switzerland and Japan. We expect that any positive reimbursement decision resulting from these discussions would be the next likely trigger to drive a significant improvement in net revenue as a percentage of gross billings…

Thank you. [Operator Instructions] Our first question comes from the line of Gregg Gilbert of Deutsche Bank. Your line is now open/

Thanks. Good morning, team. I have a few. You talked about the growth in the prescriber base, are you in a position to be able to quantify that at all, other than pointing to the fact that your higher growth segment is outside of neurooncology?

Good morning, Gregg. This is Bill. How are you? Again, I think at this point, as we have all described, we are focused on increasing the adoption with both our existing prescribers and growing the prescriber base to new prescribers. This is principally, as you know, includes the various confidence-building activities that we have been engaged in over the last year as well as ongoing training of new clinicians. The neurooncologist remains our largest customer segment, were 52% of Q2 prescriptions versus 54% in Q1. And radiation oncology is the second largest and the fastest growing segment. They were approximately 29% of the prescriptions in Q2 versus 24% in Q1.

And Bill, some of our survey work suggests that physicians are becoming, in aggregate, I guess, less skeptical about the data post-SNO and post-AACR. Are you seeing a similar trend?

Again, as we have described, when a clinician first hears of Tumor Treating Fields, it’s something completely new. This is not something that doctors learned in medical school and it’s not even in the category of the historical therapies of surgery, radiation and pharmacology. So it starts outside the box. And so I would say everyone starts with a degree of skepticism, particularly in neurooncology, where there have been so many failures even within the traditional areas. From there, it’s our job to, again, educate them and build their confidence, so that they become dedicated prescribers. We have focused on that with a number of different activities over the year, but no doubt, I think the presentation of the full dataset at SNO from our EF-14 trial was an important confidence builder. There is something magical about 5-year data in oncology. And as you point out, I think the presentation of 5-year data at AACR was an important confidence builder. But I think the other things as well and some of the things that we pointed out in this quarter, success in other indications, so the ongoing success that we are seeing in our Phase 2 program in ovarian cancer, pancreatic cancer, mesothelioma, I think now that the various consortia have taken an interest, particularly with our first consortium trial with RTOG. And now that some of the big pharma companies have jumped in to engage Optune as part of their development program. And again, with the first one we announced with Celgene. So, it’s hard to point to any one item, but I think the totality of the progress is really diminishing that skepticism.

Great. And one more question before I get back in line, how would you set expectations on the timing and the outcome for Medicare reimbursement and can you update us on the amount of cash you believe you are owed for patients you have treated for free? Thanks.

Yes. So this remains, of course, one of our most important objectives. The Medicare population continues to represent between 20% and 25% of our patients in the U.S. We continue to provide access to all those patients, as you point out and we remain actively engaged with the appropriate bodies in Washington. As I said before, unfortunately, there is not a defined timeline at CMS and therefore we can’t comment or predict. I will say that one thing that has been helpful is now the political appointees at HHS, CMS and Medicare are in place and that was one of the – sort of the -- that vacuum was an issue from about the time of the election until recently. So, we are working on it, but I can’t predict an exact timing.

How about the amounts? Can you update us on that?

Yes, Gregg, this is Wilco. We have not really disclosed the amounts. This is not the time to do it we believe. I think the math is fairly simple; I think you probably have figured it out already, it’s 20% to 25% of our U.S. patient population and you know what our gross list price is.

Yes, thank you.

Thank you. And our next question comes from the line of Tao Levy of Wedbush. Your line is now open.

Great, thanks. Good morning.

Good morning, Tao.

Good morning. Maybe can you just provide that data around the neurooncologists and radiation oncologist prescribers? I felt the numbers were a little bit different than what was said earlier on in the prepared remarks.

Okay. So, let me be clear: In the U.S., 52% of Q2 prescriptions were from neurooncologists and that compares with 54% in Q1. And in radiation oncology, 29% of U.S. prescriptions were from radiation oncologists and that compares to 24% in Q1.

Okay, perfect. Thank you. Any – I know this was somewhat asked earlier on, but any insights into how you are tracking repeat clinician prescriptions of Optune. And are there any sort of telltale signs that they have figured out, in terms of who is more likely than not to prescribe therapy?

Again, we believe that there are significantly more GBM patients who can benefit from receiving Optune therapy than currently are benefiting from it and we are very focused on both building our confidence in our current prescribers and increasing their prescriptions, as well as continuing to broaden our prescriber base. And that includes neuro oncologists, radiation oncologists, as well as the general oncologists who treat patients in the community.

Okay, great. And in the Q you talked about you are expecting feedback from the MHLW here in the third quarter. What are some of the potential outcomes of that feedback? I mean, could it be – here is a reimbursement decision or could they ask for additional follow-up and data?

Yes. So I will let Asaf comment on our progress in Japan.

So, thank you very much and thank you very much for the question. So for your question, we are not expecting for additional follow-up and more data. The discussion with MHLW, it’s about pricing and coverage and it’s not about approval of the product, so the product is already approved. As I mentioned before, MHLW accepted the filing in the end of March and we are actively in ongoing negotiations with them and this negotiation, it’s usually a long negotiation and we will announce when we have something to announce about it.

Okay. And then just lastly for Wilco, the R&D expense is a little bit lower than we were looking for and I just assume that’s just a function of timing. When will that ramp up significantly? Essentially, when will the Phase 3 trials really start costing the company a lot of money?

You are teasing the initial guidance, right?

It came down. R&D expense came down largely because of roll-off and expiration of EF-14 related expenses. As you know, we have two Phase 3 trials enrolling, METIS and lung cancer trial. We expect this, as Bill outlined in the prepared statements, to start the pancreatic Phase 3 trial in – late in 2017. So with the enrollment of those three Phase 3 trials towards the end of the year, now you got a little bit of guidance, we would expect R&D expenses to go up.

Okay. So kind of next year for the real ramp up of the spend?

Yes, but we expect some ramp up in Q3 and Q4, but again, it’s dependent on the enrollment period.

Great. Thank you very much.

Thank you. Our next question comes from the line of Lei Huang of Wells Fargo. Your line is now open.

Thanks. Good morning. It’s Lei calling in for Larry Biegelsen. I have a few questions. Just starting with them, the revenue line: the $7 million of o-U.S. revenue was that all cash in the current period or was there also collection from prior period?

Good morning, Lei. This is Wilco. It was all on a cash basis. So, our European revenue was on a cash basis in the second quarter.

Okay. I am trying to reconcile that $7 million o-U.S. revenue against the $5.7 million of cash revenue collected in the current period.

Yes. So, the cash collections in Europe – by the way also the proportion of cash collections in the United States consist of cash collected for treatment in the current period as well as treatment from prior periods. So, you have to take both lines and that leaves your total cash collection to cash revenue.

Okay. Okay, thanks. And then just coming back to Japan reimbursement for a minute, I know someone asked about this. I just want to confirm what you said. So there have not been any requests for additional clinical work of any type in Japan or involving Japanese patients?

Yes, thank you. I think that I probably was not clear enough before, so I will be now. At least, I will try. The discussion is with payers. You get to be in position even to discuss coverage and pricing in Japan only after approval in Japan, which is the regulatory approval, which we already received. And during this approval, the PMDA, the Japanese FDA, didn’t request any Japanese trial.

Okay, understood. You have the approval, you are discussing reimbursement. I guess my question is more perhaps another way to ask it, how confident do you feel about getting reimbursement in Japan when – even though the device is approved, the study it was based on didn’t involve any Japanese patients? Would that affect reimbursement process in anyway?

So when the device approval in Japan – it’s approved, as I mentioned before, we filed our reimbursement package in March 2017 and we are right now in ongoing negotiation with MHLW and I cannot guide for the timeline for that, but we are during the negotiation.

Okay, fair enough.

As we speak.

And just on Medicare fee-for-service, can you provide any color on if there was any pushback of any type? I guess, what’s taking so long in the process? You mentioned there were some personnel issues obviously after election and that’s been resolved, but are there – has there been anything else in the discussion where you need to provide more data, show more evidence, something that’s holding it up other than just the process itself?

During the course of our discussions, there were a variety of things that were asked for, starting with peer review data, which came in our publication in JAMA. There were requests for full datasets, which have now been provided. We also now have provided subgroup analysis showing our performance in the Medicare age demographic, which were among the best of our subgroups. So, we feel at this point we have now provided all of the information required. And again, now we go into a process that unfortunately is fairly ill-defined certainly in terms of time, but nonetheless, it has been constructive.

Got it. Thank you. And then just last question, on mesothelioma, so you are expecting a full data sometime next year. Can you provide any sense on the process once you have the data? How do you move forward under the HDE designation?

Eilon, can you comment on that question, please?

Sure. I’d be happy to. So, we just received the HUD, the Humanitarian Use Device designation in May. And this is really the first step in order to submit an HDE for approval. Now, we are currently evaluating our options regarding submission of the STELLAR Phase 2 data as the basis for this HDE submission, okay. Once it’s submitted, there is a certain time period according to regulation where FDA can approve or deny this. Basically, that’s in the process. The HUD designation opens the door to this possibility of doing an HDE submission.

Okay. So you would be waiting for the full data and not use the interim data from the 42 patients?

We are currently evaluating exactly how to proceed with the HDE process.

Got it. Okay, great. Thank you very much.

Thank you.

Thank you. [Operator Instructions] Our next question comes from the line of Cory Kasimov of JPMorgan. Your line is now open.

Hi, guys. This is Shawn on for Cory. Thanks for taking my question and congratulations on the quarter and the continued progress. So, two questions if I might: The first you might have mentioned this and apologies if that’s the case, but it looks like the percent sales recognized on accrual basis was relatively flat this quarter from the last and given that a large percentage of payers have issued positive coverage policies, what do you expect the trend will be in this percentage going forward and what are the hurdles here? And then I have a follow-up.

Okay, this is Wilco. I’d like to know what the follow-up is, but I will start with the initial question. One of the earlier question was also what the revenue in Europe was, was it on an accrual basis or on a cash basis. We have not been able to convert the European revenue to an accrual basis just yet. We think it’s in our near future, but not in the second quarter. We saw some minor movement in our ability to add to accrual recognition in the United States. We expect that percentage to go up in the second half year, with additional switches to accrual-based revenue recognition. We also noted and we pointed it out in the release that when you look at net revenue as a percentage of gross billings, that’s approximately 44% and unless you really want to dive into accounting analyses or cash based rev rec and accrual based rev rec, that percentage is relatively – a reliable indicator of gross to net, if you want, under our GAAP accounting that we expect that to go up with large public payers being – covering and paying for the therapies, such as Medicare, such as Japan and we also talked about Germany. So that percentage will go up, but right now there is good hand of two.

Okay, great. That’s really helpful. And my follow-up is actually completely unrelated to the first question, but so in regards to some of your upcoming trials, you mentioned the design for panc, but regarding ovarian cancer – so the standard of care in this setting has evolved a bit over the past year, notably with the introduction of the PARP inhibitors. So my question is do you plan in some way to account for this shifting paradigm in the design of the upcoming Phase 3?

Eilon?

Sure. So, yes, it’s been a very interesting year for ovarian cancer, no doubt about that, with very big steps forward. We don’t think that [indiscernible] is the basic design of our trial. However, we will definitely need to take this into consideration in predicting both sample size and development of control group.

Okay, great. Thank you, guys.

Thank you. And our next question comes from the line of Gregg Gilbert of Deutsche Bank. Your line is now open.

Thanks. A few follow-ups. Wilco, the prescription bill rate and net pricing, have they been trending in line with prior periods in 2Q?

Well, thanks, Gregg. The prescription fill rates still trend between the 70% and the 75% that we talked about in the past.

Okay. On the R&D front guys, can you update us on the publications you expect over the next 6 to 12 months and should we expect additional collaborations with other oncology companies like the one you announced earlier this week?

Eilon?

Sure. So, we are planning to publish, of course, the full dataset with the 5-year survival data, okay. In addition, there will likely be additional publications based on our Phase 2 data, okay. We, of course, cannot commit to timelines on this and publications are always notorious in being unpredictable. That’s regarding publications. Regarding collaborations, such as the recent one we just released on Celgene, we are – we continue to engage in discussions with marketable companies to try and include Optune within clinical trials [indiscernible] or the standard of care and we really hope that this will be the first of many collaboration.

Thank you.

Thank you. I am showing no further questions at this time. I would like to hand the call back over to Mr. Bill Doyle for any closing remarks.

So, I would like to thank you all for your continued interest in Novocure. I would also take this opportunity to thank the Novocure team. I couldn’t be more proud of the progress that was made in Q2 as well as in the last 12 months. As was noted, I think all of the hard work is resulting in more and more patients who can benefit from our therapy or receiving it and that will be our continued goal both in GBM and in other solid tumor cancers with great unmet needs. So thanks again.

Ladies and gentlemen, thank you for participating in today’s conference. That does conclude today’s program. You may all disconnect. Everyone have a great day.