Good day, and welcome to the NovoCure Q3 2026 earnings call. At this time, all participants are in listen only mode. After the speaker's presentation, there will be a question and answer session. To ask a question, you will need to press star one one on your touchtone telephone. Please note this call may be recorded. I would now like to turn the call over to Adam Daney. Please go ahead.
Morning, and thank you for joining us to review NovoCure's third quarter 2026 performance. I'm joined on the phone today by our Executive Chairman, Bill Doyle, CEO, Frank Leonard, Chief Innovation and Medical Officer, Uri Weinberg, and CFO, Christoph Brackmann. For your reference, slides accompanying this earnings release can be found on our website, www.novocure.com, on the investor relations page under quarterly results. 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, and are 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.
Where appropriate, we' ll refer to non-GAAP financial measures to evaluate our business and 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 non-cash 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 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-Q filed with the SEC today. These materials can be accessed from the investor relations page of our website. Following our prepared remarks, we will open the line for questions. I will now turn the call over to our Executive Chairman, Bill Doyle.
Thank you, Adam. This morning, NovoCure reported results for the third quarter of 2026. This quarter was marked by solid execution, with continued momentum in our Optune Gio business and our promising launch of Optune Lua in Japan. We reached a record number of active patients on therapy, generated record high quarterly net revenue, and made strong progress on our path to profitability. We experienced headwinds in our Optune Pax launch this quarter, but remain committed to establishing TTFields therapy in the evolving PDAC standard of care. As we enter the final months of the year, we' re on track to achieve our 2026 goals, and we believe we are well positioned to drive this positive momentum into 2027. I will begin this morning with a review of our Optune Gio and Optune Mya programs.
Frank will provide an update on Optune Pax and Optune Lua, and Christoph will conclude our prepared remarks with a review of our third quarter financial results and updated guidance. We will then open the line for questions. Q3 was another strong quarter for our Optune Gio business. We finished the period with 4,729 GBM patients on therapy, an 11% increase year-over-year, and our highest GBM active patient count to date. A notable feature of this growth cycle is the mix of contributions from both new and established markets. We continue to believe many more patients can benefit from Optune Gio, and we'r e determined to find the avenues to reach them.
Each of our active markets has opportunities to increase adoption in GBM, and our country-level teams are focused on improving outreach and targeting to connect with physicians and patients at the optimal points in their treatment journeys. Optune Gio is a standard of care for newly diagnosed GBM, established on the foundation of the best-in-class clinical data for overall survival. We are working to extend survival further.
Our phase III KEYNOTE-D58 clinical trial is evaluating adding the immunotherapy pembrolizumab to Optune Gio and low dose chemotherapy in diagnosed glioblastoma. We've been pleased with the strong interest in D58 since launch, as physicians are eager to see whether concomitant use of TTFields and immunotherapy can improve survival in GBM further. D58 remains on track to complete enrollment by year end, and we look forward to sharing more information from this trial in the periods ahead.
Turning to Optune Mya, our PMA application for the treatment of brain metastases from non-small cell lung cancer is under review with the FDA. As a reminder, this application is based on the data from the phase III METIS trial, which showed a doubling in time to intracranial progression in patients on the TTF arm compared to control. We continue to expect a final decision on our PMA application by year end, with a potential launch in early 2027. As with our other launches, we expect to establish reimbursement within two years of launch.
NovoCure continues to grow and evolve. We' ve reignited growth in our core GBM business and launched Optune Lua and Pax in multiple countries, with Mya expected to follow. We've established the infrastructure to service larger patient populations and have initiated structural changes to accelerate our transition to profitability. I'll now pass the call to Frank to discuss the ongoing launches of Optune Pax and Lua.
Thank you, Bill. We believe that we have multiple drivers of long-term growth, including increasing adoption of Optune Gio, successfully launching new indications like Optune Pax and Mya, and pursuing opportunistic launches such as the Optune Lua launch in Japan. We are two and a half quarters into our launch of Optune Pax, and we finished the third quarter with 276 active patients on therapy and generated $3.7 million in net revenue. We have seen momentum slow in the U.S. due to the introduction of daraxonrasib. Our ability to access practices to detail Optune Pax is significantly limited at this time. We acknowledge the challenges in the Optune Pax launch, and we will continue to evolve our tactics to ensure we maintain our share of voice in our approved indication, which is different than the approved indication for daraxonrasib.
We will also continue to monitor the details of the daraxonrasib launch and invest appropriately in relation to the market realities. We look forward to the upcoming annual update of the NCCN guidelines for the treatment of pancreatic cancer, and we'll update our marketing materials accordingly. Most importantly, we will work closely with our physician collaborators to establish the best next set of clinical trials to establish TTFields more firmly as a standard of care for PDAC. We' re specifically eager to generate data focused on concomitant use of TTFields and KRAS inhibitors. The initial step in this effort will be through two small safety and feasibility trials. The PANOVA-5 trial will explore the concomitant use of Optune Pax, gemcitabine, nab-paclitaxel, and Verastem's KRAS G12D inhibitor, VS-7375, in our approved locally advanced setting.
We are excited to collaborate with Verastem in this effort and expect to initiate this study in the first half of 2027. The PANOVA-6 trial will explore concomitant use of Optune Pax and daraxonrasib in the metastatic setting, which we also expect to initiate in the first half of 2027. Moving to Optune Lua, we continue to see momentum in our launch in Japan.
We finished the quarter with 255 Optune Lua active patients and $8 million net revenue globally, with 110 active patients and $4 million in net revenue contributed by Japan. Second-line use of immune checkpoint inhibitors is standard of care in Japan, which overlaps well with our label and the strongest outcomes from the LUNAR trial data. In addition to the promising commercial landscape, the negotiated monthly price for Optune Lua in Japan is approximately in line with our global price for Optune Gio.
Optune Pax was also approved by Japanese regulators earlier this year, with reimbursement likely in the first half of 2027. Together with our growing Optune Gio business, we expect Japan will eventually be our second-largest market behind the U.S. As Bill said earlier, we focused in recent years on diversifying and expanding our growth drivers. We' re beginning to see those drivers contribute, specifically in our continued Optune Gio growth and Optune Lua launch in Japan. We expect Optune Pax to return to growth in the coming quarters, and with these drivers in place, as well as enhanced controls on operating expenses. We believe we' re well-positioned to make material strides forward in our path to profitability next year. I will now pass the call over to Christoph to review our third quarter financials.
Thank you, Frank. This was a very strong commercial quarter. We generated $193 million in net revenue, an increase of 16% year-over-year. This includes contributions of $8 million and $4 million from Optune Lua and Optune Pax, respectively. The increase in net revenue was primarily driven by a 19% year-over-year increase in active patients, as well as a one-time benefit of $4 million from increased approval rates in the U.S. and Germany.
We also experienced a $2 million headwind from foreign exchange rates in the quarter. Based on our strong commercial performance this quarter, we are raising our revenue guidance. We now expect 2026 net revenue between $736 million and $743 million, representing 12%-13% growth. This includes net revenues from Optune Lua and Optune Pax collectively between $30 million and $34 million. Gross margin for the quarter was 77%, compared to 73% in Q3 of last year.
An important aspect in our pursuit of profitability is optimizing our supply chain efficiency as we treat larger patient populations, and we continue to see progress on these initiatives. We expect to maintain our gross margin in the mid to high 70s through the final quarter of 2026. Turning to our operating expenses. Research and development costs this quarter were $58 million, an increase of 8% year-over-year. The increase was primarily driven by expenses related to our KEYNOTE D58 trial as we finalize enrollment. R&D expenses can fluctuate quarter to quarter, largely around clinical activity or services delivered in the period. We' re confident that we can keep R&D costs roughly at or below current levels for the foreseeable future. Sales and marketing expenses in the quarter were $53 million, a decrease of 9% from the same period last year.
The change was primarily driven by lower share-based compensation and lower general marketing expenses in the quarter. As we look ahead to Q4 in 2027, we intend to largely leverage our existing sales forces. We do expect to make limited incremental marketing investments intended to support the launches of Optune Pax and Optune Mya. General and administrative expenses for the quarter were $44 million, a decrease of 5% year-over-year. The primary driver of the decrease was lower share-based compensation expenses. We have made the G&A investments required to support larger patient populations, and our aim is to maintain the current level of G&A with minimal increases due to inflation. Net loss in the quarter was $10 million compared to a $37 million loss for Q3 of last year, and loss per share was $0.09.
Our EBITDA loss in the quarter was $2 million compared to a loss of $32 million in Q3 of 2025. Adjusted EBITDA, which removes the impact from share-based compensation, was positive $16 million this quarter, compared to a negative $3 million of last year. We' re updating our full-year adjusted EBITDA guidance today to a range of $24 million-$34 million. Our cash and investment balance as of September 30th was $463 million. Our focus on profitability has been a key performance metric for the entire organization in 2026, and we' re pleased with the progress made this quarter. The third quarter marked a new record high net revenue generated and our strongest EBITDA and adjusted EBITDA quarter in over four years. The investments necessary to launch new indications and support larger patient populations have largely been made.
As we continue to gain traction across our commercial portfolio, we believe there's significant P&L leverage to be realized. Achieving adjusted EBITDA positivity this year is an important first step in the profitability journey, and we look forward to updating you on our progress and future objectives in the coming months. With that, we will now open the line for your questions.
Thank you. If you would like to ask a question, please press star one one. If your question has been answered and you would like to remove yourself from the queue, press star one one again. Our first question comes from Vijay Kumar with Evercore ISI. Your line is open.
Hey, guys. Thank you for taking my question. Frank, maybe my first one on Pax trends. I know in the past you have said, "Look, this is not like a drug launch. Don't expect script volumes similar to drugs." I understand that, but sequential step down here on patients and script volumes, right? If you could just elaborate on what happened in the quarter, how are we thinking about Pax launch? I think that will be helpful.
Yeah. Thank you, Vijay, for the question. It's clear we had a record quarter overall in terms of our commercial execution, as Christoph just detailed. Really strong progress across Gio around the world, as well as our Japan launch. But it is clear to us that we face significant challenges in the U.S. Pax launch this quarter.
To give a little bit of color, I think we all need to think about just the sheer volume of patients now coming into practices and asking for daraxonrasib. That has an immediate effect on a practice in a few different ways. One is that immediately the insurance appeals start, and I think as some on the line are tracking, the journey for daraxonrasib through the insurance process is just starting. On the other side, as the patients progress on therapy, they do see a lot of skin irritation.
What we face in terms of getting into practices right now is really just a share of voice issue as we see it right now, that the practices are just a bit overwhelmed. They are overwhelmed with appeals. They are overwhelmed with skin irritation. But we do see that continued interest when we engage with clinicians in explaining Optune Pax. To look ahead, we are committed to this market. We still see strong recognition of the clinical value of Optune Pax as a first-line treatment in locally advanced pancreatic cancer. We are eager to see this early disruption, kind of the practice disruption, settle down in the coming quarters and give us a chance to really get back in there and earn the patients that could really benefit from Tumor Treating Fields.
Understood. Maybe Christoph, one for you. Adjusted EBITDA performance here in the quarter was really a standout. Sustainability of this level of sequential improvements in adjusted EBITDA, and what is the path followed when you think about adjusted EBITDA trends?
Yeah. Thank you, Vijay. Yeah. You said it. We had a very strong quarter of financial performance, both across all lines really on the P&L, right? Starting with revenue growth, very strong revenue growth based on active patient growth, but also with some one-time benefit. We had strong gross margin, relatively lower cost to previous quarters, and all of that culminated in a record high EBITDA and adjusted EBITDA.
So, the first comment is, as we said in the past, we are really committed to this path of profitability, and we always said it is three steps. Step one is to get adjusted EBITDA breakeven. Step two is then cash flow breakeven. Step three is net income breakeven. We' re very happy that we passed the first step, and we are committed to adjusted EBITDA breakeven, if you look at it on a full-year basis.
Now, I would caution, we will have some fluctuations quarter to quarter. You can also take from our guidance for adjusted EBITDA that we are not just straight line projecting a quarter-over-quarter increase, but we gave ourselves some room. One is on, we have a range on revenue for our guidance, but then two is also now with Q4 coming up. It's typically a difficult quarter to estimate because we' re getting ready for launches for next year. In short, we' re committed to adjusted EBITDA breakeven. We' re committed to really focus on the next goal is cash flow breakeven. But I wouldn't want to commit to a straight line on a quarter-to-quarter basis.
Understood. Thank you.
Thank you. Our next question comes from Larry Biegelsen with Wells Fargo. Your line is open.
Good morning. Thanks for taking the question. So one on 2027, one on Pax. Frank, I think at our healthcare conference, you talked about striving for double-digit growth in 2027. Is that still the case? Can you talk about the headwinds and tailwinds behind the outlook? Thank you.
Thanks, Larry. Yes. As we've talked about the future of NovoCure, what we have aspired to be is a company that produces double-digit top-line growth and returns to profitability, as Christoph just outlined. We were really pleased in this quarter to have delivered double-digit growth, both when you look at all products together, but even in the Gio franchise, where existing markets like the U.S. were growing strong, and we found new markets to continue building, like Spain. I think that our commercial organization is really firing on all cylinders right now. Where there's opportunity, they're taking it, and I think I'm quite proud of those results. Yes, that's our vision, is we remain committed to delivering that top-line double-digit growth into the future.
That's helpful. Japan was obviously very strong again this quarter. What are your expectations for Lua and Pax? Just remind us of the timeline for reimbursement there. We saw obviously you got approval. Remind us why this is an exciting opportunity. Thanks.
Yes. Thank you, Larry. I realize I missed the very end of your I didn't answer the very end of your first question either. In terms of possible tailwinds or real tailwinds for the company overall, our business in Japan is definitely one of those tailwinds. We have launched Optune Lua successfully, continued to build our active patient volume through the year, this year. We are already looking ahead to next year, where we have our national symposium with all of the relevant physicians who treat non-small cell lung cancer in Japan coming into Tokyo to do a symposium just focused on Optune Lua in January. We see that strong continued interest for Lua to continue growing in Japan.
Optune Pax was just approved for regulatory approval in the quarter, and we expect to have reimbursement early in 2027, first quarter of 2027, which would then allow us to begin the launch in Optune Pax. As a reminder for both of these products, we were able to reset our price levels with the MHLW in Japan. Both Lua is already priced at a higher level than our Gio product in Japan. We're hopeful that we'll be able to achieve a similar outcome for the Pax product as it comes to market. The last thing I'll say is just to remind everyone in Japan, historically, our business in Japan has appeared relatively small relative to the rest of the company because the incidence of GBM is very low in Japan.
That's not the case for lung cancer, and in fact, in pancreatic cancer, it's actually a higher incidence than in the U.S. So these are real sizable markets with strong physician interest, and we are very excited for our Pax launch in Japan.
All right. Perfect. Thanks so much.
Thank you.
Thank you. Our next question comes from Jason Bednar with Piper Sandler. Your line is open.
Good morning, everyone. I will ask the obligatory question here on Optune Pax as well. Just curious, Frank, I guess what are you able to control with the process here? When we think about the accounts you had that were initial users of Pax, are they still using or did prescribing activity more or less dry up after the approval? Sorry, I'm going to add another one. Is this an issue you think of practices simply being overwhelmed, and they don't have time? Or are you seeing just a lot of practices putting both locally advanced and metastatic PDAC patients on therapy?
Okay. Thank you, Jason. I'll jump in on the second part of this. That's obviously our focus right now is trying to understand what has caused the slowdown in prescribing patterns. We're looking at it both quantitatively in terms of buying data and qualitatively in terms of speaking with physicians. First and foremost, what I want to highlight is that we are not seeing patients leaving Optune Pax in substantial numbers to start daraxonrasib.
When we look at qualitative and quantitative data as well, we don't see strong signals that daraxonrasib is being used widespread in first line, except in the patients where they can't tolerate standard chemotherapy. That leads us back to the hypothesis that we see the practices as just being simply overwhelmed right now, and that' s what is limiting our ability to get in.
As we spoke briefly about earlier in the call, this is, again, this is a device-based launch. Practices need training, they need support, they need help educating the patient. So we do see this as a bit of. Right now, we see it as an issue with the noise of getting into the practice. What can we control? I think first and foremost, as an organization, we remain committed to this indication, and our teams know we're committed to the indication, and we are continuing to get as much as we can to get to our physicians. On that front, I would highlight, one of the really promising signals that I picked up recently is I just came back from the ESMO conference in Madrid. We had incredible engagements with physicians across all of our indications.
But when I look back at the numbers from the booth of unsolicited inquiries, the number one product that led to inquiries in our booth was Optune Pax. So, that's where we feel that recognition of the clinical value is still there. It is up to us to execute with our teams in the field, getting that message out, and highlighting the different indication, different stage of treatment that our product is approved for. Lastly, as we announced yesterday and spoke about today, we are going to continue building the evidence to support and consolidate our status as a valuable and standard of care treatment for PDAC.
Great. Very helpful and very clear. One follow-up quick and then a separate question. I'm not sure if I caught where you are at with respect to commercial payers on Optune Pax. I'm sorry if I missed that, but refresh me there. On R&D, obviously a little bit of a step-up in the quarter, but you're coming to the close of KEYNOTE D58. How should we think about R&D trending as we move beyond 2026, once that KEYNOTE D58 trial ends? I know you got a couple earlier-stage trials, but those should be far cheaper than KEYNOTE D58.
Yeah. Jason, I'll start and then I will turn it over to Christoph. In terms of our payer engagement in the U.S., the next major milestone for us is to secure inclusion in the NCCN guidelines. The NCCN guidelines for pancreatic cancer are typically published once a year, either at the end of the year or early in the new year. We have submitted. We understand that we've been reviewed, and we are eagerly waiting for those results to be published. That will trigger additional engagement with payers where we've already had and reported on our one success with Elevance, where we now have a coverage policy in place. Christoph, I' ll turn it over to you to talk about any other emerging trends with payers as well as the R&D question.
Yeah. I think on the payer side, as you noted, I think the real next milestone is NCCN guideline. Apart from that, we are having the discussions with the payer on the commercial side on the inclusion in medical policies. Obviously, this is a function of, one, the number of patients on therapy that helps us to, in essence, build pressure with payers, and then two, the guideline inclusion is an important factor for that as well.
On the R&D question, Jason, from a big-picture perspective, 2026, we had larger phase III trials roll off, as you know, and then we had particular D58. Now being close to full enrollment is really at the, let's say, highest level of activity, and from that also from a spend intensity perspective at the highest level. That essentially replaced the studies that we had that were rolling off.
For 2027, we expect D58, but also LUNAR-2 to still be a significant portion of our spend. As we said, we expect our R&D expenses flat to slightly declining. Going beyond that timeframe, as large phase III trials roll off, namely D58 and LUNAR-2, we would expect our R&D expense to go down if we do not replace it with other larger trials.
All right. Understood. Thank you both.
Thank you. Our next question comes from Jessica Fye with JP Morgan. Your line is open.
Hey, guys. Thanks for taking the question. This is Tan Manning on for Jess. I have a question around the updated total revenue guidance. When I was calculating, I saw that your revised annual revenue guidance now implies $185 million-$192 million in Q4 revenue, which is below the $193 million revenue recorded in Q3. Can you talk about what assumptions are driving this sequential step down?
Yeah, I can take this. Maybe I share a bit more thoughts on our revenue guidance in general. First, Q3 was really a very successful quarter in terms of net revenue, adding about $9 million of revenues to what we had as a record quarter in Q2, right? Thinking about Q4 revenue guidance, if we do in Q4 what we did in Q3, less the $4.4 million one-time revenue in Q3 that we pointed out, that essentially gets you to $740 million, which is around the midpoint of our guidance. That was the thinking here, and then we accounted for some potential risks on collections aside and some opportunities that we have.
Great. Thank you.
Thank you. Our next question comes from Kevin DeGeeter with Ladenburg Thalmann. Your line is open.
Hey, great. Thanks for taking our question. I actually had one on the Verastem collaboration or a clinical trial you announced yesterday. From the NovoCure perspective, what's the more important learning from that study? Is it really appreciating the patient anti-tumor clinical benefit of a combination with the KRAS inhibitor? Or is it really learning more about how the skin toxicities play together? I just want to understand, I guess this is a NovoCure-funded study, from your perspective, what are we trying to learn?
Excellent. Thank you for the question. I'll start off, and then I'll turn it over to my colleague, Dr. Weinberg, to speak to some of the specifics of the trial. First, I just want to note that we are very pleased to have this collaboration in place with Verastem. We think that this asset has the potential to be best in class, and we are excited to work with them.
I would also highlight that I think this trial being done in locally advanced pancreatic cancer, first-line, which is our FDA-approved indication, is strong validation of Tumor Treating Fields as an effective therapy in that indication already. That really drove our ability to get a top-tier partner to work with us on a study here. So my thanks to our partner, our collaborators at Verastem. I will turn it over to Dr. Weinberg to talk a little bit about what we hope to see, and how it dovetails off some of the things we've already seen in preclinical research.
Thank you. The PANOVA-5 study is going to focus on our approved indication in pancreatic cancer, namely locally advanced unresectable patients. It will incorporate Verastem's G12D VS-7375 inhibitor, KRAS inhibitor, concomitantly with gemcitabine, nab-paclitaxel, and of course, Optune Pax. This study will include around 25 patients. We have also announced that we' re opening the PANOVA-6 study that will use daraxonrasib in its approved indication of metastatic pancreatic adenocarcinoma concomitantly with Optune Pax, enrolling a similar number of patients. We are being very attentive to the developments in the field and dynamic in our approach to that, considering everything that we have done in pancreatic cancer so far. These two smaller single-arm studies intend to give the first experience showing feasibility and tolerability and toxicity of the concomitant use of Optune Pax with KRAS inhibition in the disease.
As you mentioned, the first and foremost goal of these two studies is to give physicians with the right level of confidence and experience to see the feasibility of this. We will learn about toxicity, but we are not particularly concerned about this considering the local nature of our therapy and the nature of the skin toxicity that we observed so far in pancreatic adenocarcinoma. I would just remind everybody that preclinically, we have seen a very important activity of TTFields affecting downstream transcription factors to KRAS, which suggests that the concomitant use of our device with KRAS inhibitors of any kind might be very interesting and even could be synergistic, hopefully.
Great. Thanks for taking our question.
Thank you. I'm showing no other questions. I'd like to turn the call over to Bill Doyle for closing remarks.
Thank you very much. I'd like to conclude today with a big thank you to the NovoCure team. This was an exceptionally strong quarter. As Frank noted, it was strong across the board. Our emerging markets performed very well. Importantly, our established markets really showed growth across the board. We've said for years that there are many more patients who can benefit from Tumor Treating Fields than have been currently prescribed, and our teams have begun to figure out the ways to get to those patients and their clinicians at the moments that decisions are made so that they can benefit from the therapy, and we saw it in the numbers.
We're focused on Pax, as you described. There's a tremendous amount of change in the pancreatic market. We're all aware of this. As Frank described in detail, it's creating quite a bit of work within the practices. That work involves learning how to use the new therapy, learning how to guide patients through the reimbursement process. We also know that the KRAS therapies are not cures. We're going to see a wave of recurrence later this year as well, if the data that we've seen in the clinical trials bears out, which we expect it to.
That's where we're really going to see, I think, the opportunity to, one, get back into the practices, but really find the sweet spot for Tumor Treating Fields in this emerging landscape, along with the activities that Uri described, really studying the concomitant use of the therapies together. Then finally, we are a company that's committed to profitability. I think we have shown tangible progress on that path over the last few quarters. We're very pleased to be able to increase our guidance, both in terms of revenue, but importantly, in terms of adjusted EBITDA today. So thank you very much for your interest in NovoCure, and we look forward to our next report.
Thank you for your participation. This does conclude the program. You may now disconnect. Good day.