Good day, ladies and gentlemen. And welcome to the NovoCure Third Quarter 2018 Earnings 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 may be recorded. I would now like to turn the conference over to Ashley Cordova, Senior Vice President of Finance and Investor Relations. You may begin.

Good morning, everyone, and thank you for joining us to review NovoCure third quarter 2018 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. The slides presented today can be viewed on our website, www.novocure.com, by clicking on the link for 2018 third 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 statements except as required by law. Following our prepared remarks today, we will open the line for questions. I will remind everyone that our financials for the three and nine months ended September 30, 2018, 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. Q3, 2018 was another solid quarter for NovoCure with continued revenue growth supported by commercial momentum in newly diagnosed GBM, and tangible progress in our clinical development programs. We reported revenue was $64.8 million in Q3, 2018. The number of patients on therapy has grown for 15 consecutive quarters since the initial presentation of our EF14 data in newly diagnosed GBM. And we exited the quarter with more than 2,250 active patients on Optune. We've established commercial operations in six countries and remain committed to driving adoption of Optune for the treatment of GBM around the globe. This quarter, I am particularly pleased with the strategic collaboration we announced with Zai Lab. Zai Lab is a Shanghai-based biopharmaceutical company that shares our passion for bringing innovative treatments to patients in need. The collaboration agreement grants Zai Lab a license to commercialize Optune in China, Hong Kong, Macau and Taiwan, and establishes a development partnership intended to accelerate the development of tumor-treating fields in multiple solid tumor indications. The Zai collaboration is aligned with our priorities to make options available to patients throughout the world, and to develop tumor-treating fields and indications beyond GBM. I look forward to working with the Zai Lab team. Speaking, specifically of progress in our clinical pipeline, we recently submitted a humanitarian device exemption or HDE application to the FDA for approval in malignant pleural mesothelioma, which we believe brings us one step closer to our first indication outside of the brain. We believe the combination of our growing commercial business in GBM, and the pipeline potential of tumor-treating fields in a variety of other solid tumor indications, differentiates NovoCure from most companies at our stage of development. Before I hand the call to Asaf, I want to review…

Thank you, Bill. Prescriptions for patients with newly diagnosed GBM continue to grow in the third quarter, driven primarily by prescriptions from radiation oncologists in the U.S. and Germany, and neurosurgeons in Germany and Japan. We believe that radiation oncologists are very strong partners for the use of TTFields for GBM. We believe that patients are more likely to choose Optune upon receipt of a confident physician recommendation. As a result, we have initiated several patient focused programs to drive patient awareness of Optune, and its unprecedented five years survival data in newly diagnosed GBM. These initiatives include Facebook live events, Optune open houses in local markets, and an expansion of our body program that connects patients and caregivers considering Optune, directly reduces who have experience with Optune. We also launched a new marketing campaign in August in the U.S. [indiscernible] Put Life on play. This campaign highlights Optune’s long-term survival and quality of life benefits for nearly diagnosed GBM patients in a way intended to resonate with both patients and physicians. We are committed to driving adoption of Optune for the treatment of GBM and are equally focused on advancing our pipeline. In the third quarter, operating income generated by the GBM business contributed to investments in research and development. We continue to believe, there is significant value in NovoCure's platform, which combined an established commercial business with significant pipeline potential. With that, I will turn the call over to Eilon, to highlight progress in our research and development activity.

Thank you, Asaf. As you all know, tumor-treating fields uses electric fields tune to specific frequencies to destruct cancer cell division. This single mechanism of action provides multiple opportunities in solid tumor cancers. In all tumor cell lungs we have tested, tumor-treating fields has had a consistent effect. We have not yet found a tumor cell line that does not respond to tumor-treating fields. In all of our research to date, tumor-treating fields has proven to be additive to, or potentially synergistic with certain other anti-cancer agents, with no observed dose limiting cumulative toxicity. In our parent clinical pipeline, we have three Phase III pivotal trials opened and enrolling in non-small cell lung cancer, in brain metastases from non-small cell lung cancer and in pancreatic cancer. We also have a Phase II pilot trial opened in liver cancer and planned to open a fourth Phase III pivotal trial in ovarian cancer later this year. In September, we presented the final results of our STELLAR registration trial in mesothelioma. The STELLAR data demonstrated a significant extension in median overall survival among patients treated with tumor-treating fields, plus standard of care chemotherapy, compared to historical control data of patients who received standard of care chemotherapy alone. Malignant pleural mesothelioma patients who received tumor-treating fields with pemetrexed and cisplatin or carboplatin experienced median overall survival of 18.2 months compared to 12.1 months in a historical control. No serious device related adverse events were reported. As noted on our prior calls, we received Humanitarian Use Device Designation for the use of tumor-treating fields for the treatment of malignant pleural mesothelioma in 2017, allowing for FDA approval via the HDE pathway. In the third quarter, we held a pre-submission meeting with the CDRH lung group of the FDA, and we have recently submitted our HDE…

Thank you, Elion, and thanks for everyone for joining us on the call this morning. We ended the third quarter in a strong financial position. Third quarter net revenues were $64.8 million from 29% year-over-year, and growing 5% quarter-over-quarter. This represents trailing 12-month revenues of more than $232 million. Sequential revenue growth was driven both by active patient growth and by ongoing improvements in the gross-to-net spreads. Improvements in the gross-to-net spreads were primarily driven by an increase in the proportion of claims for patients with newly diagnosed GBM and resulting increase in reimbursement approval rates on case-by-case basis claims. In Germany, the approval rate for individual claims is now approaching 60%. In September 2018, the German Federal Joint Committee, or GBE, announced that it will evaluate Optune for newly diagnosed GBM without a need to develop additional evidence through a clinical trial. This decision start to regular methods evaluation process for newly diagnosed GBM through IQWiG, the German Institute for Quality and Efficiency in Health Care. This is an acceleration of a previously anticipated timeline to secure national reimbursement for Optune in Germany through the 137e pathway. We believe this speaks to the strength of our EF-14 data. We continue to build payers for individual basis as we advance through a national reimbursement review process in Germany. Gross profit in the quarter was $45.8 million, reflecting a 71% gross margin. Ongoing efficiency initiatives and improvements in the gross-to-net spreads have both contributed to margin expansion. Moving down the income statement, we continued to be increase investments in research and development with $13.1 million in R&D expenses in the quarter. We have three ongoing Phase III pivotal trials creating a potential for multiple interim or final data readouts within the next three years. With an advancing clinical pipeline, we anticipate…

Thank you. [Operator Instructions] Our first question comes from Vijay Kumar of Evercore ISI. Your line is now open.

Hey guys, thanks for taking my question. So maybe Bill, big picture question relates in this environment for growth stocks where the numbers are not in line with where sleep numbers are. It's been a really challenging environment. So maybe help frame the context of strip fringe right because I understand that number mostly run quite a bit. Was this something that happened with recommend GBM or newly diagnosed? I know you mentioned radiation oncology is being the primary driver. Is there something changing? And how should we be thinking about scripts going forward?

Good morning, Vijay, and thanks very much for your questions. So I'll start with any comments we can add on. So again, this was a very solid quarter for NovoCure with progress in both of our key strategy-focus areas, commercial growth as well as developments in our clinical programs. With respect to scripts, our real focus of courses in the long-term to provide Optune to all the patients around the world that can benefit. Our focus specifically is on growth in newly diagnosed GBM. This is where patients benefit the most from therapy, and where, of course, the company benefits the most because we have a longer duration of therapy. We saw continued growth in that area. And that also, I think, reflects that continued confidence of clinicians in the therapy because they're using it first. With respect to the prescribers, radiation oncologists, neuro-oncologists -- pardon, neurosurgeons and radiation oncologists are all partners with respect to GBM. We find, however, that this is a natural fit with the radiation oncology community aligned detailed data, very impressive data, that was just presented at ASTRO with respect to the effect of power density on the overall survivals. It's absolutely clear that as power density increases, the overall survival also increases. These are the kind of data that radiation oncologists are used to dealing with. They understand it. So all of the prescriber groups are important, but I think, long-term, the radiation oncologists are natural partners with respect to tumor-treating fields.

That's helpful. Maybe couple of positives in the quarter was one with the German Government deciding to go ahead with the reimbursement process without a need for a clinical trial. And obviously you have the CMS updates. I just want to touch on both of those topics, right. So, relative to Germany, how -- when we -- when the timeline is being pull forward, is this now -- can we expect this within next six months or 12 months? Like what’s the process? And how should we be thinking about German reimbursement rates are trending up or when that 60% reimbursement takes up to 100%? And second on CMS LCD update. I think you mentioned, it’s a new process that they are following the 21st Century Cures Act. You say you have the CSE committee. So who is involved in the CSE committee, because I think you had Washington State Tech Assessment recently. So I am not really sure how all of those flows into any comments around CMS. Your comfort around reimbursement trends being positive on the CMS side, I think, that would be helpful.

So Vijay, that’s a lot of questions. So let me try and break it down. So simply we believe that the news in Germany and CMS are both very positive developments for NovoCure. I’ll start with Germany, the fact that the GDA determined that they do not require additional clinical evidence. We view, and I think it communicated to us that it's the result of the strength of the EF-14 data, and that no additional clinical evidence is required. So, while we don’t know the precise timing of any governmental process, we believe that this does accelerate the process by two to three years. That said we are, and again, I think, it’s a result of the strong EF-14 data. We’re now receiving reimbursement for approximately 60% of the prescriptions that are our sales in Germany. That number has continued to rise. And we will continue to work to increase that further. But I think the takeaway here is good news for NovoCure, increased confidence in Optune therapy for newly diagnosed GBM, and a dramatically accelerated timeline to governmental coverage. With respect to Medicare, here we also believe that this is good news on a number of different fronts for NovoCure. As I stated in my comments, it's clear to us, and I think this is to some degree, as a result of our conversation, that the leadership of CMS is committed to modernizing the way that they make decisions and a way that they reimburse novel DME in that list of category where our therapy falls. And so I think, for future indications, this is all going to be very good. One of the most important things is this -- and this is the result of the 21st Century Cures Act, this is now going to be a much more transparent process and will include feedback from the immunity. I don’t think we know precisely who will be represented on the CAC, I mentioned to you before, we don’t believe that this Washington analysis has anything to do with how NovoCure will be viewed. And we think that there is already very positive called pharmacoeconomic data on Optune therapy and GBM, and we expect more of that to be developed. But this is a -- now there is a defined process. In these calls before we've always said, we feel good, but we don't know what the process is. Now there is a process. And we also, while we don't have exact timing, we do have the commitment from CMS. And this is the result of the direct conversation that they're focused on Optune and proceeding deliberately with the process.

Thank you. Our next question comes from the line of Difei Yang of Mizuho Securities. Your line is now open.

Just a couple. So Bill, if you think about on the very high level growth for GBM patients in the U.S., so where do you think we are on the growth curve? Are we still mid-cycle growth? Or do you think we're kind of getting to the flat part of the growth?

Yes. So thanks for the question. Again, I think, that that is a very important question. We do, as everyone knows, we don't guide. I think that -- and the reason that we don't guide is that this is a difficult for us to predict the timing of this. This is still a relatively small number of patients. The therapy is new and requires the education of the coalitions. And as I mentioned earlier, the education of neuro-oncologists, neurosurgoens and radiation oncologists, I think, we indicated in the remarks that we're making real progress here, and particularly with our national partners in radiation oncology. That said, we're today at approximately 28% to 30% penetration in the U.S. We believe there are far many more patients in the U.S., Germany and Japan, our active markets who can benefit. And I personally don't believe that we are near to where we will be ultimately in GBM. That's said it's not easy to predict the timing, and we've always said it will be sort of a choppy path to think again compete.

Yes. Thank you for that color. And then, turning to the power density in electrical fields, are these parameters can be changed or down -- up or down by the physicians?

So thank you very much. That's an excellent question. Today, actually physicians can, by performing a planning procedure, place the arrays in different locations on the patients' head, leading to an optimization of the dose, of the delivered dose to the patient, and the power density in the tumor bed. So yes, this is something the physician can actually act upon. And it's actually joint effort here. So if the physician can optimize the delivered dose by increasing the power density to the tumor bed. And then with the good support and by educating patients, they can help patients remain on therapy for more time. And that leads to better compliance, better outcomes, which we have discussed in the past that compliance is correlated with the overall survival in the effort in the data set. And by optimizing both of those aspects, hopefully lead to the best patient outcomes.

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

So, again, a couple of questions on the U.S., which people are perceiving to look like it’s by telling based on the prescription data, the prescription number. So Bill, can you give us more color on what you’re doing to drive greater adoption? I heard some new programs in the prepared remarks. But a little more color on what you’re doing to drive greater adoption. Even by your preferred metric of newly diagnosed prescriptions, it was pretty similar from second quarter to third quarter. It’s slightly over 900. So what are you doing to drive greater adoption? I had a couple follow ups.

Sure. I'll let Asaf to comment specifically on this.

So, I just wanted to thank you very much for the question. I think that, as Bill mentioned, and we also mentioned that in previous calls, talking about small indication and the prescription, it's something that can be choppy from time-to-time. The important thing is that if I’m looking on the last four years, which we start in recurrent GBM, which was 100% of our treated population. Right now, we have 75% of our scripts come from newly diagnosed patients. And this is the important thing. This is a patient can benefit more, and also this is a patient that can basically driving the business to stay more -- longer time on therapy. So we feel very good about the fact that that we will continue to -- basically to increase the newly diagnosed patients from now total patients on treatment. And we do launch a few marketing campaign. The first one is like [indiscernible]. And we see that, we start to see that in the patients and also in the physician side, we start to see that these campaigns are working. But all-in-all, I think that our -- the fundamental business is remain unchanged. And we still comfortable and we are -- we believe that we will continue to grow our business.

Thank you. And then, Bill, how much on CMS? How much of the process is going to be public? And it’s still possible that we can have a positive decision in 2019? At this point, we’re trying to figure out how to model 2019? Some of us have some assumptions for Medicare reimbursement in 2019. So and then just lastly, on mesothelioma, what’s the plan for the rollout? Are you going to give the product away for free? What’s the plan for reimbursement? And is there going to be an investment needed in the sales force to drive adoption? Thanks for taking the questions.

Yes. So thanks, Larry. I’ll take the first part on CMS, and then Asaf will answer the question with respect to the mesothelioma rollout. So the simple answer is that, I think, it’s extremely possible that we complete the process in 2019. As I said, CMS hasn't promise anything to us. But they have told us, specifically that this is at the top of pile, and they are going to act with real deliberate attention to this. You can imagine that timing is something that we're focused on with them, and the direct answer is its absolutely possible that this happens in 2019.

And regarding to mesothelioma, so, let’s start from the end of your question, we’re explaining to give you [indiscernible], we have plan to use the same method that we used in GBM, and we feel very comfortable with that method. However, regarding CMS, we’re not planning to engage anything with CMS regarding news that only before we’ll finalize the GBM. I’ll, right now building our launch plans and -- but in general, we are not believed that we will need to build the huge business unit for that.

[Operator instructions] Our next question comes from the line of Cory Kasimov of JPMorgan. Your line is open.

Hey guys, this is Matthew on for Cory, and thanks for taking my question. Just wondering on the clinical front of the HEPANOVA trial, given that it looks like you’re only recruiting 25 patients, and these patients tend to react pretty quickly. I am wondering if you are able to give us some color on potential timing for the data?

So, thank you very much for that. The pilot HEPANOVA trial is opened for enrollment. We do anticipate to have our first patient in this year, okay. We do not yet our first patient in. We will, of course, announce this when it happens. And yes, since it's about 25 -- it's 25 patients on the trial. We’re looking – it will take probably about a year or two to enroll. So you can expect like patient in end of next year, I think, that’s very reasonable.

Great. And then on -- any internal threshold for this indication as far as like what you’d like to see?

Can you repeat the question? I am sorry.

Any threshold or any bar that you would like to see in this initial pilot study as far as big market?

Okay. That’s always a good question. The – it’s a small study, okay. This is a pilot study. It's going to be the first time we’re actually treating hepatocellular carcinoma patients with tumor-treatment fields. And our first target is always to improve safety, okay. Although we do not expect tumor-treating fields to cause any systemic toxicity, and that’s consistent throughout all of our clinical data to date, you always need to look at that first. It's also slightly different population than other diseases. Each disease state has a different color of different type of populations. And we need to see that these patients use the therapy properly that is feasible. I think all of this is very [indiscernible] should be okay. I mean we’re not expecting any issues there. But that’s really the primary target. And then the result serve usually do power our larger studies, and actually see what can we reach and what type of benefit do we expect to be able to get these patients in these larger studies.

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

So, first of all, I'd like to thank everyone on the call. And I’d like to thank, as I typically do, the NovoCure team for another solid quarter of performance. I can't take you enough for the continued growth and the drive to increase the number of prescriptions for newly diagnosed GBM in the markets that we serve. I want to thank you for the execution of the Zai Lab strategic partnership in China. We think this is extremely important for our future to both bring our therapy to the very large Chinese patient community, but also to leverage the excellent clinics in China to advance our -- and accelerate our clinical pipeline. I need to thank our group, our regulatory group, and our reimbursement group for the progress with the DME MACs and Medicare. I think this is the first time that we have really tangible process to reach the goal that's important to all of us, which is to receive appropriate reimbursement for the Medicare patients that we're treating, and also for our clinical and regulatory team for submitting the HPE application to the FDA for Malignant pleural mesothelioma. This is an incredible amount for work for those of you who have made submissions to the FDA. And to do it in this period of time is really extraordinary, and to open the Phase II trial in liver cancer that was discussed. For our investors, I want to assure everyone that the fundamentals of our investment thesis aren't changed. We continue to drive the commercial business in GBM around the world. That business is contributing to supporting our R&D pipeline. That pipeline includes the three open Phase III trials and soon to be open fourth trial in ovarian cancer, again, an extraordinary effort around the world. And to our finance team, for assuring that we can do this with the resources that we have on our balance sheet without requiring additional capital raise. So another solid quarter, great progress. And we look forward to reporting future progress. Thank you.

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.