Good afternoon, everyone. I'm Larry Biegelsen, the medical device analyst at Wells Fargo. It's my pleasure to host this session with Novocure. With us, we have Bill Doyle, Executive Chairman, Ashley Cordova, the CFO. In terms of format, it's gonna be a fireside chat. If anybody has a question, please raise your hand. We'll come around. Bill and Ashley, thanks so much for being here.
Thank you, Larry.
Thank you for having us.
Thanks for having us.
Of course. So let's start with the INNOVATE-3 top-line results that you guys released, I don't know, about a week ago. Bill, maybe just provide us with your perspective on the data.
Sure. So, you know, for those of you who follow us, you know that we announced that our INNOVATE-3 phase III trial in late-stage ovarian cancer did not meet its primary endpoint. This was clearly a disappointment for us. We enter into all of our phase III programs with the intent to succeed. And it was also disappointing, given how strong our phase II results were in the same cancer. So let me give a little perspective if I can, Larry, on this. So, just to remind everyone, when a woman is diagnosed with ovarian cancer, they're treated today with chemotherapy, typically a platinum-based chemotherapy and increasingly with a PARP inhibitor in the first line.
Approximately 80% of the women, so the vast majority, will respond to that therapy. 20% crash right through and, you know, that's a population for whom, you know, we need a solution. But then the women will recur, and then they're rechallenged on the same chemotherapy and PARP inhibitor. They'll recur, and ultimately, at some point, they will stop responding to that chemotherapy or chemotherapy plus PARP. Those were the patients that we enrolled in our study. So INNOVATE-3 was a study, again, for patients near the end of their treatment journey, who had failed up to five prior lines of chemotherapy. In our phase II trial, the majority of the women had only failed one or two prior lines.
It turns out in this trial, again, because we allowed women who had failed up to five lines, the majority of patients who were recruited were in the other end, were in the tail end. And what we have seen now, and, you know, we've seen this in GBM, we can talk about it in lung, we can ... We see it in ovarian that for patients to derive real meaningful benefit with Tumor Treating Fields, they need to start at the earlier end of the journey.
What we did see in the trial, and we mentioned this in the press release and we'll describe it in future presentations and publications, for those women who entered the trial after only failing one prior line of therapy, which is about 10% of the patients in this trial, we saw a statistically significant benefit for those women, clinically meaningful and statistically significant on a relatively small patient population. What does it tell us? It tells us that the thesis is intact. You know, the Tumor Treating Fields platform works. It works when it's used early, not late, and this is not a therapy when a patient is near the end. Our plan is to continue to analyze the data. There's a lot that we're learning here. We're the KOLs.
Remember, this was a trial that was done in conjunction with the two cooperative groups, ENGOT in Europe and GOG in the U.S, are fully engaged. They see the positive signals, and we'll assess and we'll move forward. I do wanna say the one exception to everything I just said, and this, you know, relates back to LUNAR. In the late stage, where we see the benefit is when we combine with immune checkpoint inhibitors, so immunotherapy, and this makes sense. We have a regional therapy. It works as an antimitotic when we can encompass, you know, most of the cancer earlier on, warmer. Except now, we combine with immunotherapy, and the combination creates a systemic benefit. So, you know, so where do I see the future?
Just like in GBM, I see the future to, you know, we have no added systemic toxicity. Bring Tumor Treating Fields as early in the treatment journey as possible, with either chemotherapy or better yet, immunotherapy. If you have to, for whatever reasons, treat later in the patient journey, it better be with immunotherapy.
Okay. 10% of patients is what? Remind me the sample size.
It's around 50, so there were 540 patients in that trial.
25 and 25, and you're seeing stat sig difference.
Yes.
You didn't put the stat in the press release. Did you stat sig? You saw it-
No, we talk, we talk about the meaningful benefit.
Meaningful, you didn't say sig. I guess, without doing... Do you, are you gonna do another study? I mean, is there— do you have the resource, time and resources and-
We're gonna go to the FDA.
... You're gonna, so the second part, yeah, my question is, you, you're gonna go to the FDA with this data and see-
Show them, talk to them about it. This is a patient population with tremendous unmet need. You know, there's nothing for them. I do not wanna raise the expectation that this will be fileable, although it's not a zero probability. But we're gonna talk to them about what the right next steps are for this program.
How committed are you to this program right now, given the time and cost to run another trial?
So, maybe I'll get at that. I wanna back into the answer to that question. What do I mean by back in? So where are we, you know, heads down focused? We are heads down focused on continuing to grow our GBM business. We had the best six months ever, you know, the first half of this year. We're doing that through a variety of levers. You know, first, it's just better execution on the ground. Post-COVID, we shook up our organization, getting people, you know, out of their kitchens and into the field. We have new leadership. We're also fully staffed now across all territories in the U.S.
We had a transition period in Germany, where we were going from billing on a named patient basis through national coverage. We had to really focus on in-label versus out-of-label. We're through the worst of that, and that will now continue to improve in Germany. So that's a benefit. Our first big geographical expansion is now fully launched, underway. I'm talking about France. And that launch has gone, you know... Hopefully, if this would be the case, but based on prior experience, it's been our best launch yet in France, and we'll start to see revenue toward the end of this year from France. And you know, next up will be Italy and Spain there.
You know, I did bring my show and tell, which we've talked about, but these are our new GBM arrays. These are lighter, more flexible, and have the potential to deliver more energy because they dissipate the heat much better. We pilot launched these in Sweden and Austria. The pilot launch went phenomenally well, I mean, absolutely met our expectations. Patients love them. Right now we're in the process of rolling out to the rest of Europe, and they'll come to the U.S. sometime next year. This has, again, the potential to improve compliance, deliver more energy, and it extend the benefit.
Of course, you know, based on our subscription model of billing, you know, every month a patient survives is great for the patient, but it also means more revenue just on our, our existing base. So long-winded way to get at your question about ovarian, heads down on GBM. Second, heads down, to launch in lung. Lung is a very large indication with huge unmet need, again, in metastatic disease after platinum failure. You know, kind of a similar scenario that I described in ovarian, except in this case, because our, our trial recruited patients right after failure, we were successful. So we have successful data we have filed in Europe. We're close to filing in the U.S.
We would expect and are preparing to launch, starting in Germany, early next year, to be followed by the U.S. So that's a key focus. And then we have the upcoming readouts, the fully enrolled trials in brain mets from non-small cell lung cancer. I'll put that with our non-small cell lung cancer program, and then followed by pancreatic, in first line pancreatic. So those are the... You know, if I had to rank order, those are the focus areas. So to answer your question, we need to really now look at the data in ovarian. We have to go to the FDA.
We have to discuss what would be the next steps, and then come back and figure out where that fits, you know, given what we hope will be a very successful launch in lung. The one thing I didn't mention is a clinical trial program in lung to bring lung to the first line, and then what hopefully will be a launch in pancreatic. So, you know, I covered a lot of ground to answer your question, but the succinct answer is, finish the data analysis, and then with our KOLs, go to the FDA and talk about what should come next.
Okay. All right. A lot of follow-up questions here in 23.5 minutes for me.
Yeah.
I'm just gonna hit some, you know, big topics. One, you know, given the results, are you planning to make any changes to your strategy or how you operate the business to preserve cash?
I'm gonna start, and I'm gonna turn it over to Ashley. So our mission and strategy has not changed in the 23 years I've been involved. Our mission is to bring this therapy to all the patients who can benefit. Our strategy is to expand in the markets where we have approvals and reimbursement. I talked about what we're doing in GBM and what we're going to be doing in lung. Second leg of the strategy is to engage in a robust clinical program to bring it to more indications. There are some implications there that I'll let Ashley describe. And then third, keep improving the technology. Keep delivering more energy, keep making it more comfortable, so patients can comply, and keep patenting, so that we can maintain our, you know, our exclusivity through IP protection.
With that, Ashley, why don't you talk about, you know-
Yeah. I mean, just to directly answer the question, we're always looking at this, right? So GBM is a strong business that generates about $100 million in cash on an annual basis that we're able to invest back in R&D. We have a strong balance sheet, but we recognize that we need to be focused on that cash run rate, and we are. That's the first message I would like everybody to take away. Practically, what this means, as Bill noted, we're committed to continuing to invest in GBM, driving leverage there, but making sure we drive growth. We're committed to launching in lung. That will take some working capital and some sales force build-out, so we're making sure that we're reserving the capital needed to do that. And then what remains, we're pumping right back into our pipeline.
We believe that with our current balance sheet, we can run about five randomized phase III trials at once. We would like to run more than five, and so practically, what does this mean? This means we're limited to about five trials right now. Where do we go with those five trials? We go earlier in the treatment journey in diseases where we have the opportunity to expand the eligible patient population, and we have established efficacy. That means LUNAR-2, LUNAR-3. It means KEYNOTE-D58. It's these trials that we've been talking about that take Tumor Treating Fields earlier in GBM and lung, and ideally add them on top of an IO. As certain trials roll off, we will be ready to roll the next one on. So as LUNAR rolls off, we rolled on LUNAR-2.
As INNOVATE-3 rolls off, we'll roll on LUNAR-3, but we feel like the current run rate of R&D can sustain about five trials. And as we look ahead, you know, we'll be eager to, to open up additional trials when capital-
The five include METIS and-
It includes... Yeah, it includes four fully loaded phase III trials that we've talked about, plus TRIDENT. That is a large, you know, a multinational randomized trial as well.
I got it. And Ashley, again, I'm going to jump around here.
Sure.
But on GBM, just want to get it out of the way, because there's a lot of other questions on LUNAR and stuff. But because you talked about France, you talked about some positive momentum this, the beginning of this year, Bill did. Ashley, you've been good. You don't give guidance, but you comment on consensus. Consensus in 2023, I think it's down, you know, sales down 5% year-over-year, and then 2024, looks like consensus says 8% revenue growth. Anything you want people to calibrate?
Yeah. Again, so we'll anchor people to active patients, because remember, active patients is that unit driver of our core business, and as we go through reimbursement transitions, revenue can have some noise in it. We saw that when we look at year-over-year comps, 2023 versus 2022, because we had about $40 million of aged Medicare claims in that baseline. That's what's driving the decrease year-over-year. We've been transparent about that. When we look ahead, that's not on our comps moving forward, so as active patient grows, you know, as active patient trends grow, you should expect revenue to grow. That is a very reasonable assumption, and we are focused on driving that active patient growth.
It's both through geographical expansion, France, I think, is the most tangible success there to date, but we are seeing very promising green shoots, as Bill noted, in the US market, too, from the focus of our CNS franchise.
Okay, so I asked you about 2023 and 2024 on, on top line. You don't, I didn't hear you highlight any disconnect.
Again, I think we're at a point now where active patient growth will drive revenue growth, and I think these assumptions are, you know, within the realm of reason that we see.
Okay. Moving on, jumping around, I just want to hit some highlights here. So, any read-through, Bill, from INNOVATE-3 to PANOVA-3, on top of the taxane, but earlier in the treatment paradigm, obviously a different tumor type. People are worried about PANOVA-3 because of what they saw in INNOVATE-3 and also in LUNAR. It wasn't statistically significant on top of docetaxel. So how are you feeling about PANOVA-3?
Yeah. So I, you know, I'll start with the caveat. Different tumor, you know, different disease. It's fully enrolled. We'll see the data at the end of next year, okay? So I have to start with that. That said, if you were to ask me, based on what we've seen in LUNAR, which was second or third line after platinum failure, or what we saw in INNOVATE, which was up to fifth line after platinum failure, you know, if I could design today PANOVA, I would design it exactly the way it's designed, which is first line, locally advanced pancreatic cancer. So in terms of the, if you will, the boundary conditions, this is exactly where we would want to use Tumor Treating Fields in the disease course.
I don't think it's, you know, what I—and let me say what I'm not saying. The other would be if for some reason we were treating pancreatic cancer after, you know, chemo, first chemotherapy failure as a salvage. That is not this trial, Larry. This is a first-line trial. And so I think, you know, I'm very optimistic, and I'm also optimistic about the market here, too. The reason that we're in the first line is because nothing has worked here. Chemotherapies have a hard time getting to the pancreas cancer because of the pressure differences in the stromal tissue. You know, we're able to treat and get our energy, get our Tumor Treating Fields to this cancer.
And, you know, with success here, you know, knock on wood, there's a tremendous market opportunity here as well.
So I heard you talk about launches coming up. You included pancreatic. Maybe I didn't hear, but maybe I missed it, but I didn't hear brain metastases.
Oh.
and that comes first.
Yeah. So part of the reason maybe you didn't hear me say it is the infrastructure that we need there is already in place. Because we're treating GBM, the doctors who treat these brain mets are the same doctors, so it wouldn't be a new sales force. It, you know, it would be more of an add-on. So I didn't mean to imply that we're not enthusiastic about METIS, but the launch preparation is just much more incremental for that indication.
You talked about, you know, where Tumor Treating Fields works, and if it's metastasized, you know, earlier, if it's localized or metastasized, you talked about being tougher if it's metastasized. But does that change brain-- METIS is basically lung cancer metastasized in the brain.
Yeah.
Does that, does that impact how you're thinking about METIS, what you said earlier?
So, uh-
I didn't say that very articulately.
No, no, but I know what you're saying.
Yeah.
So this is the way I would describe that: so, metastases trials, and METIS included, is a bit of an outlier. So all of our other trials, the endpoint is overall survival, and we're looking at the extension of life of the patient. When you're looking at the effect on metastases, the patient still has a primary disease that is, you know, progressing or not with the other therapy that they have on board, and we're just treating the mets. So in the case of METIS, the endpoint is progression of the mets. It's not overall survival. So a bit of an outlier.
And what I think that means practically is that, there's a large population of lung cancer patients who get brain metastases, but it's a more heterogeneous population, many of whom won't seek treatment because they'll be near the end of their, you know, again, the end of their journey. Now, it's still so big that it's multiples of GBM, even if you're treating, you know, 10% of the population or 20% of the population. That's different, again, than first-line pancreatic, where we would... or even first-line GBM, where in that first-line setting, we would expect the vast majority of those patients to be seeking therapy and to be seeking the best therapy available.
So it's just a little bit of a different dynamic, where I still believe that we'll have a very nice market, but we're not going to treat, you know, 90% of the people with brain mets because, again, many of them will be, you know, near the end. Where pancreatic, I think we have the opportunity, again, based on, you know, the data that we'll see, but with good data, to treat, you know, a very large percentage of the population.
Okay, switching gears to LUNAR. So the LUNAR trial was just published in Lancet Oncology. The editorial said the data are unlikely to be treatment-changing, and docetaxel's dominance in relapsed non-small cell lung cancer might be threatened by datopotamab. What's your view?
So again, I want to remind everybody that we are. We had outstanding. First of all, we met the primary endpoint with. And the design of the trial was adding Tumor Treating Fields either to docetaxel or physician's choice immunotherapy. And we hit the primary endpoint, statistically significant and clinically meaningful. We also had two powered secondary endpoints that were roughly 50% of the patient population, where we showed dramatic improvement when added to immunotherapy, and we saw a trend, but not statistically significant, when added to docetaxel. Also, remember, no, as usual with Tumor Treating Fields, no systemic toxicity. So we're now out in the market, educating physicians, and talking to them about their patients based on our data.
And what we are hearing, and, you know, I'll say first and foremost, is that we don't expect to treat 100% of these patients. But what the doctors are telling us is that when they look at these recurrent patients, they look at them, and they can divide them up into the patients who are really crashing, you know, through with terrible spread disease. And then there's another category that, you know, they characterize as 30%-40% that they call the smoldering recurrence. These are the patients that they will keep on their immunotherapies and add Tumor Treating Fields to.
And then over in the docetaxel side, for the younger patients who can comply with our therapy, who really want to give it everything, the trend and the fact that it's going to be on label says: "What do I have to lose to add this? I know there can be benefit." So we're hearing that the population that's on immunotherapy, and that population keeps growing even without us, we're going to get those patients, and we're gonna get a chunk of the patients on docetaxel.
So the immunotherapy smoldering patients, that's not what was studied in LUNAR, right? There was no. These were not rechallenged immunotherapy patients, the ones that responded. You can't promote off-label, and I'm not saying you will, but what about how are payers going to respond to that?
Again, we have to engage in the payer conversations. We are working to generate more data in that area. But I think these are gonna be used, they're gonna be paid for, and we're gonna see the benefit.
It would be in-label, I wanna be clear on that.
Yeah.
Our label will be all you have to have done is failed platinum and metastatic non-small cell lung cancer.
Okay.
That's how the trial was designed.
Okay.
Immunotherapy rechallenge will be in-label.
You know, people have been... In LUNAR, people have been asking for additional data. World Lung, you know, you have an abstract presenting in a week or so, or a couple days-
Yep, couple days.
with the PD-L1 status, and it shows a strong benefit in patients that have a PD-L1 status between one and 100, but it's borderline statistically significant. How do you think clinicians, regulators, and payers are gonna view that data?
So I'm gonna take it in the reverse order. Let's start with regulators. 'Cause I get asked this question: "Is this approvable?" I think the answer is, I'm getting asked these questions by people who haven't gone through the regulatory process. This is a clinical trial that was successful in its primary endpoint, intent to treat population with no added toxicity. That's, you know, very close to a slam dunk, okay? Now, in terms of will clinicians use it, they're gonna look at all these data, and remember, we're now in small patient populations. But the benefit that we're seeing in and patients who are high, PD-L1 expressers, they're the 20% that do very well on immunotherapy alone. It's that middle group that does okay and then fails.
That's what we're showing at World Lung, we're the tremendous beneficiaries. There's no reason to believe, by the way, that somehow rechallenge is gonna prevent that benefit from occurring. We create immunogenic cell death. We expose the immune system to the, to the antigen, so the immune therapy can do its work, and that's what we're seeing in this patient population. Those are the patients who I think based on these data, are gonna be the, you know, the patients who are the obvious first choices to get this therapy. And if you don't express it at all, those are the patients who should be on docetaxel with TT fields to get... You know, if they're young enough to comply. If they can't comply, they shouldn't be on Tumor Treating Fields therapy. That's the other aspect here.
If you're so far along that you can't get, you know, a good dose every day, then it's not the right therapy to start.
You think you'll have a panel, FDA panel?
You know, you never know, but in the cases where you meet the endpoint and there's no toxicity, those are not typically cases that go to panel.
Okay. Recurrent GBM, you did, you did have a panel and that did not hit the primary endpoint, but case in point, it got approved.
Correct.
Okay. And why haven't you shown the data, the PD-L1 patients with the PD-L1 status versus patients without PD-L1 status? I know you've said they look the same, but in terms of additional data that-
Well, this is the rollout.
People want to see.
That's this weekend at World Lung, you know, that-
No, no, no, but that's-
We're showing it.
You're not showing the overall-
There's no material difference there in the top line, is I think what we've said.
Okay.
We're showing the relevant kind of data that we have.
Yeah, you're showing it by the different segments.
Okay, so you're asking a different question.
Right.
Let me underline for everybody because, you know, we did. You know, there are some elements of the bear thesis here that I'd like to dispel. In this trial, because it occurred—it started at a time when PD-L1 status was not routinely measured. For the patients early on in the trial, we didn't have those measurements, and then as it became routine, we started measuring it. And what— At the end of the day, we had the PD-L1 status on 60% of the total patients and 80% of the patients in the U.S. And the thesis was somehow that 40% that we didn't have the measurements would have skewed the data. That that—even though everything else was well-balanced, those 40% could have been all super expressers-
Right
... and that would have
Right.
If we take just the 60% for whom we have the measurements, the curves are exactly the same.
As overall?
As overall. So just pretend we didn't have those 40% of the patients.
You've shown that data?
We've described it.
No plan to show it?
I mean-
I mean, you have all the information you need.
There's no difference. And by the way, the converse of that is, if we take the 40% for whom we don't have the data, it's also exactly the same. So there is no statistical anomaly in these data. That's a pure red herring, Larry.
Okay. But you said that you want to dispel one aspect of the bear thesis, and I'm just curious-
I just dispelled it.
I know.
Those curves are identical.
Well, put it on your website. I'm, I'm just curious. I believe you, but why not just put the data out there?
I mean, we
Yeah, I mean, there's really no there there, is what we're trying to say.
Okay.
I would say in our clinician discussions, this is not something that we're talking about, so this does feel unique to the investment.
Okay. But, Bill, what are some of the other things? Are there more data coming-
Yeah
... that you think could just, you know, convert the skeptics?
Well-
Clinicians and investors.
Our focus is, you know, first and foremost on clinicians. You know, I think approvals, the approvals will, will-- should help investors because, you know, that's who we're talking to. You know, we're leaning into the launch. You know, that's ultimately, you know, we'll start to see, you know, patients on therapy next year. In terms of data, you know, one of the next important, you know, data sets is going to be the, the results of the function of compliance, right? That we know, and that will be published, so we'll, we'll start to see dose response and, and those sorts of things that, I think are always very, very telling, which are the, you know, how well did patients do as a function of their time on, on Tumor Treating Fields?
On the docetaxel part, where you said that why not kind of try it? How do you think payers are going to respond to that? So I can understand a patient saying, "Hey, why not?" Or a doctor, but a payer might say, "This was, you know, not statistically significant. You're charging $10,000-$12,000 a month. That's why not.
So this study hit on the primary endpoint. That's. Now, no payer in the world says, "Yeah, please, we want to pay for everything," you know? But when we have these discussions about the therapy on label, that's the way that, you know, we have the discussions. And the other thing I'll remind you, which is our unique business model, which is that we are paid per month on therapy. So if a payer or a clinician decides that, you know, a younger, healthier, it's not just young, but a, you know, a healthier, active patient should be on the therapy with docetaxel. If it doesn't work, they're only going to pay for a month or two of therapy.
If it does extremely well for them, then they pay, you know, sort of the full load, and that's one of the things that's different than a drug where, you know, they have to pay the whole amount upfront for, you know, maybe 20% of the population that benefits or 30% of the population that benefits. We have a built-in risk share, if you will, with the payers, and that. That's a discussion that they get, and they understand. So, you know, the patients with docetaxel that they pay for will sort of be, by definition, the ones that do well.
Less than two minutes left. I want to give you the last word, Ashley and Bill. What else? You know, what is the other—what are the other controversies you wanted to spell?
Well, Ashley, maybe I'll give it to you first, and then I'll-
No, I just want to say that we are kind of laser-focused on execution now as we look to growing GBM, as we look to preparing for lung launch, and as we look to advancing the pipeline both on the clinical side and the product development side. I think, you know, we're kind of very focused internally, and it's, it's in fact, despite the, the kind of noise and the stock valuation, it's a very exciting and kind of focusing-focused and energizing time to be at Novocure right now. And we look forward to sharing updates with it as we progress. That's where I would land.
Yeah, and you know, I'll come back, Larry, to the conversation we just had. I think right now we're the biggest disconnect between Novocure and our customers, and the market is on the potential of the lung business. I think it's that simple. By the way, we're getting no value for the pipeline at all, and you know, I hope I've reinforced why there should be tremendous potential in brain mets and in pancreatic cancer, and in the future of lung, bringing it to first line. But we believe that we're going to have a hard time not stumbling into a business that's bigger by multiple than our GBM business in metastatic lung. It's not going to be Keytruda.
It's not going to be $26 billion, but there are patients, either who are going to be rechallenged with immunotherapy or who are going to have our therapy added to their chemotherapy that we will be treating and we'll be paid for that.
All right, perfect. Thanks so much for being here.