NovoCure Limited (NVCR) Q4 2025 Earnings Report, Transcript and Summary

Good day, and thank you for standing by. Welcome to the NovoCure Fourth Quarter 2025 Earnings Call. [Operator Instructions] Please be advised that today's conference is being recorded. I'd now like to hand the conference over to Adam Daney, Head of Investor Relations. Please go ahead.

Good morning, and thank you for joining us to review NovoCure's Fourth Quarter and Full Year 2025 performance. I'm joined on the phone today with our Executive Chairman, Bill Doyle; CEO, Frank Leonard; and CFO, Christoph Brackmann. Other members of our executive leadership team will be available for Q&A. For your reference, slides accompanying this earnings release can be found on our website, www.novocure.com, on the Investor Relations page under Quarterly Reports. Before we start, I would like to remind you that our discussions today 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 and are 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. Where appropriate, we will refer to non-GAAP financial measures to evaluate our business, specifically adjusted EBITDA, a measure of earnings before interest, taxes, depreciation, amortization, and share-based compensation. We believe adjusted EBITDA is an important metric as it removes the impact of earnings attributable to our capital structure, tax rate, and material noncash items and best reflects the financial value generated by our business. We do not provide forward-looking guidance for adjusted EBITDA on a GAAP basis due to the inability to predict share-based compensation expenses contained in the reconciled GAAP measure of net income without reasonable efforts. Reconciliations of non-GAAP to GAAP financial measures are included in our press release, earnings slides, and in our Form 10-K filed with the SEC today. These materials can also be accessed from the Investor Relations page of our website. Following our prepared remarks this morning, we will open the line for your questions. I will now turn the call over to our Executive Chairman, Bill Doyle.

Thank you, Adam. I'll begin this morning with a brief review of our 2025 accomplishments and look ahead to 2026. Our CEO, Frank Leonard, will then discuss recent commercial updates. And finally, our CFO, Christoph Brackmann, will walk through our fourth quarter financial performance and 2026 guidance before opening the line for questions. 2025 was a year of progress and change at NovoCure. We generated a record $655 million in net revenues last year, an 8% increase from 2024. We presented final data from 2 large randomized trials in plenary sessions at major medical congresses, followed by publications in leading medical journals. We submitted PMA applications to the FDA for the use of TTFields therapy to treat pancreatic cancer and brain metastases from non-small cell lung cancer. And we rolled out product enhancements designed to improve the TTFields therapy experience for both patients and physicians. 2025 was a strong year of execution, setting the stage for a catalyst-rich 2026. We expect to reach a number of regulatory, clinical, and commercial milestones this year. The first milestone was reached earlier this month with the approval of Optune Pax for the treatment of locally advanced pancreatic cancer, and we have submitted regulatory filings for Optune Pax in Europe and Japan. We expect Optune Pax to be a significant contributor to our long-term growth and are eager to begin treating patients in the coming weeks. We also expect a decision from the FDA on our brain metastases PMA later this year. On the clinical front, we are on track for top-line readouts from both the PANOVA-4 and TRIDENT trials this year. PANOVA-4 is a Phase II trial exploring the use of TTFields, atezolizumab, a checkpoint inhibitor, and chemotherapy in metastatic pancreatic cancer with top-line data anticipated next month. TRIDENT is a Phase III trial exploring earlier use of TTFields concomitant with radiation and temozolomide in newly diagnosed GBM, which we expect to read out in Q2. We are also on track to complete enrollment of our next Phase III trial, KEYNOTE D58, studying Tumor Treating Fields, temozolomide, and the checkpoint inhibitor pembrolizumab in newly diagnosed GBM by year-end. Turning to our commercial portfolio. We anticipate a number of national or regional launches of our 3 products this year. This includes Optune Gio launches in Spain, Czechia, and the Canadian province of British Columbia, and Optune Lua launch in Japan and Optune Pax launches in the U.S. and Germany. Before I hand the call over to Frank, I would like to touch on one update from this morning's press release. Dr. Nicolas Leupin, our Chief Medical Officer, resigned from the company effective February 25. Following Nicolas' departure, we have decided to combine our scientific and clinical organizations to accelerate our R&D execution and shorten the cycle from scientific insight to clinical relevance. Dr. Uri Weinberg, our Chief Innovation Officer, will now also assume the role of Chief Medical Officer. Dr. Weinberg joined NovoCure in 2008 and has been instrumental in establishing and leading a number of our scientific and research and development functions over the years. Uri is well qualified to take over this dual mandate. I would like to personally thank Nicolas for his contributions to NovoCure and to congratulate Uri on his expanded role. With that, let me hand the call to Frank to walk through recent updates.

Thank you, Bill, and good morning. I'm excited to speak to you in my new role as CEO and at a time when NovoCure is evolving into a multi-indication platform company. 2025 was our most successful commercial year to date, and we expect to carry this positive momentum into 2026. Our business remains core, our GBM business remains core to our commercial operations. In 2025, we saw substantial active patient growth across all our major markets. OUS markets were the biggest driver, including 10% year-over-year growth in Germany, 19% in France, and 29% in Japan. We also saw 4% active patient growth in the U.S., which had been flat in recent years. In 2026, we expect growth rates to stabilize in the low to mid-single-digit range as these markets continue to mature. We should also see a tailwind from new market launches in Spain, Czechia, and British Columbia, though first-year revenue contributions are likely to be modest. Turning to Optune Lua. We are preparing to launch in Japan. Japan represents a promising opportunity for Optune Lua, given first and second-line use of immune checkpoint inhibitors is standard of care in Japan. We expect to receive our final reimbursement approval in the coming weeks. We will then be able to launch in Japan with national coverage and pricing. As we've previously stated, the Optune Lua launch has been slower than we originally projected in the U.S. and Germany. We have rightsized our marketing spend based on the current demand and are prioritizing investments in indications with a higher return potential, such as pancreatic cancer. Finally, I will turn now to our newest FDA approval, Optune Pax for locally advanced pancreatic cancer. We are very pleased to have received FDA approval and appreciate the agency's partnership throughout the review process. The industry standard time for PMA reviews is between 9 to 12 months. In the case of Optune Pax, the FDA review was completed exactly at the 180-day mark, with approval received on February 11. We've commenced our Optune Pax launch and are now certifying prescribers and receiving prescriptions. We have designed the launch plans for Optune Pax to make prescribing and starting patients as easy as possible for physicians, including emphasizing the use of our HCP portal to enable digital prescriptions. We are also giving the prescriber more discretion in patient selection rather than detailing to a preferred patient profile. We are also able to leverage our established torso sales force for the Optune Pax launch. The existence of a trained team significantly lessens the educational burden of onboarding a new team and enables us to take advantage of the established team's deep knowledge of TTFields therapy. This team has built extensive connections with physicians, which will prove invaluable given that some medical oncologists treat both lung and pancreatic cancer patients. There are a lot of similarities between GBM and pancreatic cancer that give us confidence in both the market opportunity and our ability to commercialize Optune Pax. Both cancers are typically diagnosed at a late stage and are incredibly difficult to treat. Both cancers have properties that limit the bioavailability of systemic therapies, making these tumors prime targets for a physical treatment approach. And both tumors have limited approved therapeutic options for patients. We are eager to begin treating patients in the coming weeks. Now is an exciting time to step into the CEO role at NovoCure. Since I joined the company in 2010, we have had numerous clinical, regulatory, and commercial milestones across multiple indications, and we are now primed to enter our next era of substantial growth. I'm thankful for the opportunity to lead at such an exciting time, and I want to thank all of my colleagues for their dedication and support during the transition. I'll now pass the call over to Christoph to review our Q4 and full-year 2025 financials as well as our guidance for 2026.

Thank you, Frank. We closed 2025 with continued momentum, delivering record net revenue for both the quarter and full year. Fourth quarter net revenue was $174 million, and full year net revenue totaled $655 million, representing 8% year-over-year growth for both periods. Growth was primarily driven by continued expansion in ex-U.S. markets, particularly Germany, France, and Japan, reflecting solid underlying demand and increased active patient count. Foreign exchange provided a tailwind of approximately $5 million in Q4 and $11 million for the full year compared to 2024. We recognized $3.5 million from Optune Lua claims in the quarter, including $2.4 million from non-small cell lung cancer. For the full year, Optune Lua revenue was $10.4 million, including $5.8 million from non-small cell lung cancer patients. I would also like to briefly address the recent Medicare billing situation. Earlier this month, CMS notified us that our billing privileges were halted due to an administrative issue identified during the DME supplier revalidation process. We engaged with the agency quickly, submitted a corrective action plan the following business day, and completed our required reinspection. Two days ago, we were notified that CMS rescinded the revocation and directed that our Medicare enrollment and billing privileges be reinstated retroactively to December 17, 2025. As a result, we do not expect any negative impact on revenue recognition from this matter. We are pleased that the issue is resolved and are appreciative of the agency's partnership in addressing the issue swiftly. Looking ahead to 2026. This morning, we issued annual net revenue guidance at constant exchange rates of $675 million to $705 million, representing year-over-year growth between 3% and 8%. This assumes Optune Gio net revenue growth in the low to mid-single digits and net revenue contributions from non-GBM products of $15 million to $25 million compared to $10 million in 2025. Moving down the P&L. Fourth quarter gross margin was 76% and 75% for the full year compared to 79% and 77% for the fourth quarter and full year 2024. The decrease was primarily driven by a decrease in prior period collections in the U.S. and increased costs associated with the HIV rates and tariffs. For 2026, we expect gross margin in the mid-70s percentage range. Research and development costs in the quarter were $61 million, an increase of 19% from the same period last year, and $225 million for the full year, an increase of 7%. The quarterly increase was driven by increased costs related to the KEYNOTE-58 and LUNAR-2 Phase III trials and regulatory costs. Sales and marketing expenses in the quarter were $69 million, an increase of 2% from Q4 2024, and full year sales and marketing expenses were $240 million, flat year-over-year. The increase in the quarter was driven by increased marketing activities related to new indications. G&A expenses for the fourth quarter were $43 million, a decrease of 41%, and $178 million for the full year, a decrease of 6% from 2024. The primary driver for the quarter was lower share-based compensation expenses related to 2020 PSUs triggered by the approval of Optune Lua in 2024. As noted in the 10-K today, we will have a similar charge in Q1 triggered by the Optune Pax approval. Net loss for the quarter was $24 million with a loss per share of $0.22. Full-year net loss was $136 million or $1.22 per share. Adjusted EBITDA in the quarter was negative $16 million and negative $34 million for the full year. Our cash and investment balance at the end of Q4 was $448 million. In the fourth quarter, we repaid $561 million of convertible notes in cash. We believe our current funds available, coupled with diligent expense management, will provide the necessary bridge as we bring new revenue streams online. Therefore, we have decided not to go beyond the $200 million already drawn from our current credit facility. As we look ahead to 2026, we are determined to make material progress towards our goal of driving profitable growth in the coming years. This morning, we issued adjusted EBITDA guidance of negative $20 million to breakeven for full year 2026. Overall, this reflects an acceleration of our plans to achieve adjusted EBITDA breakeven, driven by both our expectations of revenue growth as well as diligent expense management across the organization. With that, I'll turn the call back to the operator for Q&A.

[Operator Instructions] Our first question comes from Jason Bednar with Piper Sandler.

Congratulations on the recent approval of Optune Pax. There's probably too many topics to choose from this morning. There's a lot going on here. But why don't I start first with the guidance? This is obviously a first for NovoCure, glad to see it. So can you talk about why it made sense now to give the guidance versus past years? And then can you break out some of the contributions included within the revenue guide around maybe things like you're assuming with new international markets? I think you called out Spain, Czechia, and Canada. And then as well as whether you're assuming anything in the revenue and EBITDA guide from previously denied claims.

Thanks, Jason. This is Frank. I'll start with top line, and then I'll hand it to Christoph to go into some of the assumptions. First, I just want to also say thanks for the recognition of the many positive headlines we had in the last quarter and closing out 2025. It certainly has been an exciting time here at NovoCure. Jason, as I came into the role as CEO, one of the things we did is really try to spend as much time with our investor community as possible. One of the core messages that we've heard is that we need to speak more clearly in terms of setting expectations of what we can accomplish in the coming year. And we're taking that first step today with guidance where we really want to send the signal first at the top line that we are committed to returning the company to steady growth. And this is the first year where the Optune Pax will build a foundation that we can make even stronger going out to 2027. Two is that we're sending a very clear signal that we want to drive to adjusted EBITDA breakeven as a possibility this year because we've heard the message loudly and clearly that we need to have both growth and profitability. And lastly, I think I just would emphasize that as a company, we're trying to send a signal that we're moving up the maturity curve. We've been a public company for 10 years. We think this is a necessary and important step to take right now. So Christoph?

Yes. Thank you. So yes, on the specifics on guidance or the underlying assumptions, on the revenue side, there's really 3 areas that we are thinking of in terms of growth. There's our GBM business in established markets where we expect growth in the low to mid-single-digit growth -- mid-single-digit range. Then we have GBM in newer markets. So an example of this would be Spain or Czech or also the recent approval in Canada that we announced. Now these will be modest contributions in 2026 as we ramp in 2026 in those markets. And then the third bucket of growth would be new indications. And yes, that's also where -- as you can see, we say we are expecting contributions in the range of $15 million to $25 million. So growth over prior year connected to the launches that we have with Optune Lua in Japan and Optune Pax in the U.S., as well in other markets.

Our next question comes from Vijay Kumar with Evercore ISI.

This is Kevin on for Vijay. Just one on Optune Gio. It looks like the guidance assumes a low to mid-single-digit revenue growth. My understanding is that this market, over the long term, is more of a mid-single-digit growth type of market. Is this just conservatism embedded in the guidance? Or are you seeing a change in the market growth rate?

Thank you for the question, Kevin. No, we are not seeing -- we're not signaling a conservatism or a moderation. We're trying to signal that we believe the -- number one, we believe there are still many patients who will benefit from Optune Gio with glioblastoma. As a reminder, we think in our mature markets, we're on average, about 40% of the patients are getting a prescription for Optune Gio. And we think based on the data that we've already generated, that number should be significantly higher. And so the range is really intended to reiterate our ability that we've shown last year to grow in that mid-single digits range, but at the same time, to provide that guidance of a band that reflects all of the assumptions that could come into revenue, including -- just including the various puts and takes on when revenue comes online.

Our next question comes from Larry Biegelsen with Wells Fargo.

Congrats on the Pax approval as well coming in earlier than expected. So on that product, can you just talk about, based on the approved label, how do you think the device will be prescribed? And specifically, what are the lessons learned from the lung launch that you can apply here to ensure success? And I have a follow-up regarding the guidance.

Yes. Thanks, Larry. This is Frank. I'll start, and I might turn it to Christoph at the end to just comment on the market size itself. So first, we're very pleased with the approval for Optune Pax, both the label that we received as well as the timing. And I think that the quality of the data that we brought to the FDA should really be underlined in that sense that we were able to secure this 180-day review cycle. Optune Pax is being approved for locally advanced pancreatic cancer in a first-line setting in concurrent use with nab-paclitaxel plus gemcitabine. And so I want to emphasize that's a first-line patient with locally advanced disease, so still focal disease. We think this is a highly motivated patient population. It's a population also that has had really very limited treatment options to date. And we think this fits very nicely with our overall value proposition to physicians and to patients, that we can bring this unique physical approach to layer on top of the existing systemic therapies that, quite frankly, have not been successful enough in pancreatic cancer. So to answer the question directly, we believe within that label, that really is the core population that we can pursue first, and we're very happy that that is because we believe it's a highly motivated patient and a highly motivated physician. And Christophe, could you comment a bit on the market assumptions?

Yes, sure. So we estimate the TAM for locally advanced pancreatic cancer in the U.S. to be 15,000 patients on an annual basis. This is down from about 60,000 patients being diagnosed with PDAC on an annual basis, and then about 1/3 is in the locally advanced pancreatic setting.

Our next question comes from Jonathan Chang with Leerink Partners.

This is Albert Aginis on for Jonathan Chang. Congrats on the approval of Optune Pax. Regarding that topic, how much sales force are you allocating for Optune Pax? Do you foresee or have you recruited new commercial team members to accommodate for this launch? Or is it more of a reallocation of the current commercial team?

Thanks, Albert, for the question. We are very pleased that we have an established team that we've trained over the last 2 years to detail our Optune Lua product. That team that's already in the field and fully established is being -- repurpose is probably the wrong word, but I should say, tasked now with leading our pancreatic launch. So we're not adding incremental sales headcount at this time. We are simply leveraging the team that we have.

Our next question comes from Emily Bodnar with H.C. Wainwright.

Congrats on the Optune Pax approval. So you guided to the $15 million to $25 million in revenue for Optune Lua and Optune Pax this year. I'm curious if you could kind of give some more detail into how we should be thinking about revenue contribution, specifically for Optune Pax this year, as you're kind of getting reimbursement plans in place? And then maybe a follow-up to the prior question. How much of your sales and marketing force that you already have is kind of in place for HCPs that are going to be covering locally advanced pancreatic patients based on your GBM and non-small cell lung cancer launches?

Excellent. Thanks, Emily. I'll start, and I'll turn it over to Christoph. Just as a reminder for everyone, as we launch in a new indication, we do, as a medical device, need to go through a process of working with the payers to establish coverage policies and in some cases, having updates to our contracts with the payers in the United States to then move towards a position where we have a more direct correlation between active patients and revenue. At the start, we will start all of the patients, and we'll begin working through an appeals process, just as we've done with glioblastoma and lung before, and it's a process that we're quite familiar with, and we're confident we're going to be able to work through it. But that will mean that in this launch period, you will see revenue not correlate directly with active patients because there will be a lag as we establish the coverage policies and the payment policies with payers in the United States. I'll flag that as always, for us, one of the most critical steps in that process is to secure an inclusion in the NCCN guidelines for the treatment of locally advanced pancreatic cancer. We have submitted that application, and we're hopeful to be included soon. And we think that will be one of the material steps this year towards securing the coverage policies that will drive some revenue this year, but ultimately, it will be revenue that will come next year. Christoph?

Yes. I think the only thing to add to what you said, Frank, maybe would be that similar to what we said for Optune Lua, we expect it will take us about 1 to 2 years to get coverage on a more routine basis for commercial payers. And that's also connected to the launch success, right? The more patients that we have on therapy, the easier we'll get to get coverage policies.

And Christoph, there was also a question about sales and marketing expenses.

Yes. So in terms of sales and marketing expense, as we -- I mean, as Frank alluded to earlier, we are basically reusing this field force. So when we built the field force for NACLC last year and earlier, basically, we thought of it as a Torso-focused field force. And so from a field force perspective, there is no incremental -- very small incremental spend, if any, incremental spend on the pancreatic launch will be on the marketing side. Part of that already we had in Q4 of last year.

That concludes today's question-and-answer session. I'd like to turn the call back to Bill Doyle for closing remarks.

So in closing, I'd like to underline that 2025 was a year of strong execution at NovoCure with record net revenue and record active patients. We're very pleased with our 2 Phase III presentations and publications and the 2 PMAs submitted, which we think really create the foundation for success in the future. We're set to maintain that momentum with a catalyst-rich 2026. We're pleased to have already received the PMA approval for PANOVA for Optune Pax, and to have submitted the regulatory filings in the EU and Japan. And we're looking forward to the top-line results from PANOVA-4 and TRIDENT. On the commercial side, we expect to maintain our momentum as has been discussed on this call, and we're really excited to bring our products to patients in new markets, particularly Spain, Czechia, and in British Columbia. We've really tried to emphasize to everyone today that we're focused on driving to profitability. As Frank said, 10 years in the public markets, we're ready to guide, and we're ready to make that one of our primary goals. We see a path to profitability and, in fact, the potential to reach adjusted EBITDA breakeven this year. With that, I'd like to end by thanking you all for your continued interest and focus on NovoCure. And in particular, I need to thank my colleagues. 2025 was a year of accomplishment and change as we position the company for the exciting future that we see ahead of us.

This concludes today's conference call. Thank you for participating. You may now disconnect.