0001645113-23-000047.txt : 20231026 0001645113-23-000047.hdr.sgml : 20231026 20231026070257 ACCESSION NUMBER: 0001645113-23-000047 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 57 CONFORMED PERIOD OF REPORT: 20230930 FILED AS OF DATE: 20231026 DATE AS OF CHANGE: 20231026 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NovoCure Ltd CENTRAL INDEX KEY: 0001645113 STANDARD INDUSTRIAL CLASSIFICATION: SURGICAL & MEDICAL INSTRUMENTS & APPARATUS [3841] IRS NUMBER: 000000000 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-37565 FILM NUMBER: 231347447 BUSINESS ADDRESS: STREET 1: NO. 4 THE FORUM STREET 2: GRENVILLE STREET CITY: ST. HELIER STATE: Y9 ZIP: JE2 4UF BUSINESS PHONE: 44 (0)15 3475 6700 MAIL ADDRESS: STREET 1: NO. 4 THE FORUM STREET 2: GRENVILLE STREET CITY: ST. HELIER STATE: Y9 ZIP: JE2 4UF FORMER COMPANY: FORMER CONFORMED NAME: Novocure Ltd DATE OF NAME CHANGE: 20150615 10-Q 1 nvcr-20230930.htm 10-Q nvcr-20230930
false2023Q30001645113--12-31P3YP1Y0M23D00016451132023-01-012023-09-3000016451132023-10-20xbrli:shares00016451132023-09-30iso4217:USD00016451132022-12-3100016451132023-07-012023-09-3000016451132022-07-012022-09-3000016451132022-01-012022-09-3000016451132022-01-012022-12-31iso4217:USDxbrli:shares0001645113us-gaap:CommonStockMember2022-12-310001645113us-gaap:AdditionalPaidInCapitalMember2022-12-310001645113us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-12-310001645113us-gaap:RetainedEarningsMember2022-12-310001645113us-gaap:AdditionalPaidInCapitalMember2023-01-012023-03-3100016451132023-01-012023-03-310001645113us-gaap:CommonStockMember2023-01-012023-03-310001645113us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-01-012023-03-310001645113us-gaap:RetainedEarningsMember2023-01-012023-03-310001645113us-gaap:CommonStockMember2023-03-310001645113us-gaap:AdditionalPaidInCapitalMember2023-03-310001645113us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-03-310001645113us-gaap:RetainedEarningsMember2023-03-3100016451132023-03-310001645113us-gaap:AdditionalPaidInCapitalMember2023-04-012023-06-3000016451132023-04-012023-06-300001645113us-gaap:CommonStockMember2023-04-012023-06-300001645113us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-04-012023-06-300001645113us-gaap:RetainedEarningsMember2023-04-012023-06-300001645113us-gaap:CommonStockMember2023-06-300001645113us-gaap:AdditionalPaidInCapitalMember2023-06-300001645113us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-06-300001645113us-gaap:RetainedEarningsMember2023-06-3000016451132023-06-300001645113us-gaap:AdditionalPaidInCapitalMember2023-07-012023-09-300001645113us-gaap:CommonStockMember2023-07-012023-09-300001645113us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-07-012023-09-300001645113us-gaap:RetainedEarningsMember2023-07-012023-09-300001645113us-gaap:CommonStockMember2023-09-300001645113us-gaap:AdditionalPaidInCapitalMember2023-09-300001645113us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-09-300001645113us-gaap:RetainedEarningsMember2023-09-300001645113us-gaap:CommonStockMember2021-12-310001645113us-gaap:AdditionalPaidInCapitalMember2021-12-310001645113us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-12-310001645113us-gaap:RetainedEarningsMember2021-12-3100016451132021-12-310001645113us-gaap:AdditionalPaidInCapitalMember2022-01-012022-03-3100016451132022-01-012022-03-310001645113us-gaap:CommonStockMember2022-01-012022-03-310001645113us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-01-012022-03-310001645113us-gaap:RetainedEarningsMember2022-01-012022-03-310001645113us-gaap:CommonStockMember2022-03-310001645113us-gaap:AdditionalPaidInCapitalMember2022-03-310001645113us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-03-310001645113us-gaap:RetainedEarningsMember2022-03-3100016451132022-03-310001645113us-gaap:AdditionalPaidInCapitalMember2022-04-012022-06-3000016451132022-04-012022-06-300001645113us-gaap:CommonStockMember2022-04-012022-06-300001645113us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-04-012022-06-300001645113us-gaap:RetainedEarningsMember2022-04-012022-06-300001645113us-gaap:CommonStockMember2022-06-300001645113us-gaap:AdditionalPaidInCapitalMember2022-06-300001645113us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-06-300001645113us-gaap:RetainedEarningsMember2022-06-3000016451132022-06-300001645113us-gaap:AdditionalPaidInCapitalMember2022-07-012022-09-300001645113us-gaap:CommonStockMember2022-07-012022-09-300001645113us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-07-012022-09-300001645113us-gaap:RetainedEarningsMember2022-07-012022-09-300001645113us-gaap:CommonStockMember2022-09-300001645113us-gaap:AdditionalPaidInCapitalMember2022-09-300001645113us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-09-300001645113us-gaap:RetainedEarningsMember2022-09-3000016451132022-09-300001645113us-gaap:CashMember2023-09-300001645113us-gaap:CashAndCashEquivalentsMemberus-gaap:CashMember2023-09-300001645113us-gaap:FairValueInputsLevel1Memberus-gaap:MoneyMarketFundsMember2023-09-300001645113us-gaap:CashAndCashEquivalentsMemberus-gaap:FairValueInputsLevel1Memberus-gaap:MoneyMarketFundsMember2023-09-300001645113us-gaap:CertificatesOfDepositMemberus-gaap:FairValueInputsLevel2Member2023-09-300001645113us-gaap:CashAndCashEquivalentsMemberus-gaap:CertificatesOfDepositMemberus-gaap:FairValueInputsLevel2Member2023-09-300001645113us-gaap:CertificatesOfDepositMemberus-gaap:FairValueInputsLevel2Memberus-gaap:ShortTermInvestmentsMember2023-09-300001645113us-gaap:FairValueInputsLevel1Memberus-gaap:USTreasurySecuritiesMember2023-09-300001645113us-gaap:FairValueInputsLevel1Memberus-gaap:ShortTermInvestmentsMemberus-gaap:USTreasurySecuritiesMember2023-09-300001645113us-gaap:USGovernmentAgenciesDebtSecuritiesMemberus-gaap:FairValueInputsLevel2Member2023-09-300001645113us-gaap:USGovernmentAgenciesDebtSecuritiesMemberus-gaap:FairValueInputsLevel2Memberus-gaap:ShortTermInvestmentsMember2023-09-300001645113us-gaap:FairValueInputsLevel2Memberus-gaap:CorporateDebtSecuritiesMember2023-09-300001645113us-gaap:CashAndCashEquivalentsMemberus-gaap:FairValueInputsLevel2Memberus-gaap:CorporateDebtSecuritiesMember2023-09-300001645113us-gaap:FairValueInputsLevel2Memberus-gaap:ShortTermInvestmentsMemberus-gaap:CorporateDebtSecuritiesMember2023-09-300001645113us-gaap:CashAndCashEquivalentsMember2023-09-300001645113us-gaap:ShortTermInvestmentsMember2023-09-300001645113us-gaap:CashMember2022-12-310001645113us-gaap:CashAndCashEquivalentsMemberus-gaap:CashMember2022-12-310001645113us-gaap:FairValueInputsLevel1Memberus-gaap:MoneyMarketFundsMember2022-12-310001645113us-gaap:CashAndCashEquivalentsMemberus-gaap:FairValueInputsLevel1Memberus-gaap:MoneyMarketFundsMember2022-12-310001645113us-gaap:CertificatesOfDepositMemberus-gaap:FairValueInputsLevel2Member2022-12-310001645113us-gaap:CashAndCashEquivalentsMemberus-gaap:CertificatesOfDepositMemberus-gaap:FairValueInputsLevel2Member2022-12-310001645113us-gaap:CertificatesOfDepositMemberus-gaap:FairValueInputsLevel2Memberus-gaap:ShortTermInvestmentsMember2022-12-310001645113us-gaap:FairValueInputsLevel1Memberus-gaap:USTreasurySecuritiesMember2022-12-310001645113us-gaap:FairValueInputsLevel1Memberus-gaap:ShortTermInvestmentsMemberus-gaap:USTreasurySecuritiesMember2022-12-310001645113us-gaap:USGovernmentAgenciesDebtSecuritiesMemberus-gaap:FairValueInputsLevel2Member2022-12-310001645113us-gaap:USGovernmentAgenciesDebtSecuritiesMemberus-gaap:FairValueInputsLevel2Memberus-gaap:ShortTermInvestmentsMember2022-12-310001645113us-gaap:FairValueInputsLevel2Memberus-gaap:CorporateDebtSecuritiesMember2022-12-310001645113us-gaap:CashAndCashEquivalentsMemberus-gaap:FairValueInputsLevel2Memberus-gaap:CorporateDebtSecuritiesMember2022-12-310001645113us-gaap:FairValueInputsLevel2Memberus-gaap:ShortTermInvestmentsMemberus-gaap:CorporateDebtSecuritiesMember2022-12-310001645113us-gaap:CashAndCashEquivalentsMember2022-12-310001645113us-gaap:ShortTermInvestmentsMember2022-12-310001645113us-gaap:AssetPledgedAsCollateralMember2023-09-3000016451132022-11-012022-11-300001645113us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember2023-09-300001645113us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember2022-12-31iso4217:EUR0001645113us-gaap:RevolvingCreditFacilityMember2020-11-062020-11-060001645113us-gaap:RevolvingCreditFacilityMember2020-11-060001645113us-gaap:RevolvingCreditFacilityMember2023-01-012023-09-300001645113us-gaap:RevolvingCreditFacilityMember2023-09-300001645113us-gaap:RevolvingCreditFacilityMembersrt:MinimumMemberus-gaap:LineOfCreditMember2020-11-062020-11-06xbrli:pure0001645113us-gaap:RevolvingCreditFacilityMembersrt:MaximumMemberus-gaap:LineOfCreditMember2020-11-062020-11-060001645113nvcr:A0ConvertibleSeniorNotesDue2025Memberus-gaap:ConvertibleDebtMember2020-11-050001645113nvcr:A0ConvertibleSeniorNotesDue2025Memberus-gaap:ConvertibleDebtMember2023-09-300001645113nvcr:A0ConvertibleSeniorNotesDue2025Memberus-gaap:ConvertibleDebtMember2022-12-310001645113nvcr:A0ConvertibleSeniorNotesDue2025Memberus-gaap:ConvertibleDebtMember2023-07-012023-09-300001645113nvcr:A0ConvertibleSeniorNotesDue2025Memberus-gaap:ConvertibleDebtMember2022-07-012022-09-300001645113nvcr:A0ConvertibleSeniorNotesDue2025Memberus-gaap:ConvertibleDebtMember2023-01-012023-09-300001645113nvcr:A0ConvertibleSeniorNotesDue2025Memberus-gaap:ConvertibleDebtMember2022-01-012022-09-300001645113nvcr:A0ConvertibleSeniorNotesDue2025Memberus-gaap:ConvertibleDebtMember2022-01-012022-12-310001645113nvcr:TwoThousandFifteenPlanMemberus-gaap:EmployeeStockOptionMembersrt:MinimumMember2023-01-012023-09-300001645113nvcr:TwoThousandFifteenPlanMemberus-gaap:EmployeeStockOptionMembersrt:MaximumMember2023-01-012023-09-300001645113nvcr:TwoThousandFifteenPlanMemberus-gaap:EmployeeStockOptionMember2023-01-012023-09-300001645113nvcr:TwoThousandFifteenPlanMemberus-gaap:RestrictedStockUnitsRSUMember2023-01-012023-09-300001645113nvcr:TwoThousandFifteenPlanMembersrt:MinimumMembernvcr:PerformanceBasedShareUnitsPSUsMember2023-01-012023-09-300001645113nvcr:TwoThousandFifteenPlanMembersrt:MaximumMembernvcr:PerformanceBasedShareUnitsPSUsMember2023-01-012023-09-300001645113nvcr:TwoThousandFifteenPlanMember2023-09-300001645113us-gaap:EmployeeStockMember2023-01-012023-09-300001645113nvcr:RestrictedStockUnitsRSUsAndPerformanceBasedShareUnitsPSUsMember2022-12-310001645113nvcr:RestrictedStockUnitsRSUsAndPerformanceBasedShareUnitsPSUsMember2023-01-012023-09-300001645113nvcr:RestrictedStockUnitsRSUsAndPerformanceBasedShareUnitsPSUsMember2023-09-300001645113nvcr:PerformanceBasedShareUnitsPSUsMembernvcr:AwardOneMember2023-09-300001645113nvcr:PerformanceBasedShareUnitsPSUsMembernvcr:AwardOneMember2023-01-012023-09-300001645113nvcr:AwardTwoMembernvcr:PerformanceBasedShareUnitsPSUsMember2023-09-300001645113nvcr:AwardTwoMembernvcr:PerformanceBasedShareUnitsPSUsMember2023-01-012023-09-300001645113nvcr:AwardThreeMembernvcr:PerformanceBasedShareUnitsPSUsMember2023-09-300001645113nvcr:AwardThreeMembernvcr:PerformanceBasedShareUnitsPSUsMember2023-01-012023-09-300001645113nvcr:PerformanceBasedShareUnitsPSUsMembernvcr:AwardFourMember2023-09-300001645113nvcr:PerformanceBasedShareUnitsPSUsMembernvcr:AwardFourMember2023-01-012023-09-300001645113nvcr:PerformanceBasedShareUnitsPSUsMembernvcr:AwardFiveMember2023-09-300001645113nvcr:PerformanceBasedShareUnitsPSUsMembernvcr:AwardFiveMember2023-01-012023-09-300001645113nvcr:PerformanceBasedShareUnitsPSUsMembernvcr:AwardSixMember2023-09-300001645113nvcr:PerformanceBasedShareUnitsPSUsMembernvcr:AwardSixMember2023-01-012023-09-300001645113nvcr:PerformanceBasedShareUnitsPSUsMember2023-09-300001645113nvcr:PerformanceBasedShareUnitsPSUsMember2023-01-012023-09-300001645113us-gaap:EmployeeStockMember2023-09-300001645113us-gaap:EmployeeStockOptionMembersrt:MinimumMember2023-01-012023-09-300001645113us-gaap:EmployeeStockOptionMembersrt:MaximumMember2023-01-012023-09-300001645113us-gaap:EmployeeStockOptionMembersrt:MinimumMember2022-01-012022-09-300001645113us-gaap:EmployeeStockOptionMembersrt:MaximumMember2022-01-012022-09-300001645113us-gaap:EmployeeStockOptionMembersrt:MinimumMember2022-01-012022-12-310001645113us-gaap:EmployeeStockOptionMembersrt:MaximumMember2022-01-012022-12-310001645113us-gaap:EmployeeStockOptionMember2023-01-012023-09-300001645113us-gaap:EmployeeStockOptionMember2022-01-012022-09-300001645113us-gaap:EmployeeStockOptionMember2022-01-012022-12-310001645113us-gaap:EmployeeStockMember2022-01-012022-09-300001645113us-gaap:EmployeeStockMember2022-01-012022-12-310001645113nvcr:CostOfRevenueMember2023-07-012023-09-300001645113nvcr:CostOfRevenueMember2022-07-012022-09-300001645113nvcr:CostOfRevenueMember2023-01-012023-09-300001645113nvcr:CostOfRevenueMember2022-01-012022-09-300001645113nvcr:CostOfRevenueMember2022-01-012022-12-310001645113us-gaap:ResearchAndDevelopmentExpenseMember2023-07-012023-09-300001645113us-gaap:ResearchAndDevelopmentExpenseMember2022-07-012022-09-300001645113us-gaap:ResearchAndDevelopmentExpenseMember2023-01-012023-09-300001645113us-gaap:ResearchAndDevelopmentExpenseMember2022-01-012022-09-300001645113us-gaap:ResearchAndDevelopmentExpenseMember2022-01-012022-12-310001645113nvcr:SalesAndMarketingMember2023-07-012023-09-300001645113nvcr:SalesAndMarketingMember2022-07-012022-09-300001645113nvcr:SalesAndMarketingMember2023-01-012023-09-300001645113nvcr:SalesAndMarketingMember2022-01-012022-09-300001645113nvcr:SalesAndMarketingMember2022-01-012022-12-310001645113us-gaap:GeneralAndAdministrativeExpenseMember2023-07-012023-09-300001645113us-gaap:GeneralAndAdministrativeExpenseMember2022-07-012022-09-300001645113us-gaap:GeneralAndAdministrativeExpenseMember2023-01-012023-09-300001645113us-gaap:GeneralAndAdministrativeExpenseMember2022-01-012022-09-300001645113us-gaap:GeneralAndAdministrativeExpenseMember2022-01-012022-12-310001645113us-gaap:EmployeeStockOptionMember2023-07-012023-09-300001645113us-gaap:EmployeeStockOptionMember2022-07-012022-09-300001645113us-gaap:EmployeeStockOptionMember2023-01-012023-09-300001645113us-gaap:EmployeeStockOptionMember2022-01-012022-09-300001645113us-gaap:EmployeeStockOptionMember2022-01-012022-12-310001645113nvcr:RestrictedStockUnitsRSUsAndPerformanceBasedShareUnitsPSUsMember2023-07-012023-09-300001645113nvcr:RestrictedStockUnitsRSUsAndPerformanceBasedShareUnitsPSUsMember2022-07-012022-09-300001645113nvcr:RestrictedStockUnitsRSUsAndPerformanceBasedShareUnitsPSUsMember2023-01-012023-09-300001645113nvcr:RestrictedStockUnitsRSUsAndPerformanceBasedShareUnitsPSUsMember2022-01-012022-09-300001645113nvcr:RestrictedStockUnitsRSUsAndPerformanceBasedShareUnitsPSUsMember2022-01-012022-12-310001645113us-gaap:EmployeeStockMember2023-07-012023-09-300001645113us-gaap:EmployeeStockMember2022-07-012022-09-300001645113us-gaap:EmployeeStockMember2023-01-012023-09-300001645113us-gaap:EmployeeStockMember2022-01-012022-09-300001645113us-gaap:EmployeeStockMember2022-01-012022-12-310001645113country:US2023-09-300001645113country:US2022-12-310001645113country:IL2023-09-300001645113country:IL2022-12-310001645113country:CH2023-09-300001645113country:CH2022-12-310001645113country:JP2023-09-300001645113country:JP2022-12-310001645113country:DE2023-09-300001645113country:DE2022-12-310001645113nvcr:OthersCountriesMember2023-09-300001645113nvcr:OthersCountriesMember2022-12-310001645113country:US2023-07-012023-09-300001645113country:US2022-07-012022-09-300001645113country:US2023-01-012023-09-300001645113country:US2022-01-012022-09-300001645113country:US2022-01-012022-12-310001645113country:DE2023-07-012023-09-300001645113country:DE2022-07-012022-09-300001645113country:DE2023-01-012023-09-300001645113country:DE2022-01-012022-09-300001645113country:DE2022-01-012022-12-310001645113country:JP2023-07-012023-09-300001645113country:JP2022-07-012022-09-300001645113country:JP2023-01-012023-09-300001645113country:JP2022-01-012022-09-300001645113country:JP2022-01-012022-12-310001645113country:CN2023-07-012023-09-300001645113country:CN2022-07-012022-09-300001645113country:CN2023-01-012023-09-300001645113country:CN2022-01-012022-09-300001645113country:CN2022-01-012022-12-310001645113nvcr:OthersCountriesMember2023-07-012023-09-300001645113nvcr:OthersCountriesMember2022-07-012022-09-300001645113nvcr:OthersCountriesMember2023-01-012023-09-300001645113nvcr:OthersCountriesMember2022-01-012022-09-300001645113nvcr:OthersCountriesMember2022-01-012022-12-310001645113nvcr:PriteshShahMember2023-07-012023-09-300001645113nvcr:PriteshShahMember2023-09-30

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________________________________________
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2023
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                       to
Commission File Number 001-37565
NovoCure Limited
(Exact Name of Registrant as Specified in Its Charter)
Jersey98-1057807
(State or Other Jurisdiction of(I.R.S. Employer
Incorporation or Organization)Identification No.)
No. 4 The Forum
Grenville Street
St. Helier, Jersey JE2 4UF
(Address of principal executive offices, including zip code)
+44 (0) 15 3475 6700
(Registrant’s Telephone Number, Including Area Code)
Not Applicable
(Former Name, Former Address and Former Fiscal Year, If Changed Since Last Report)
_______________________________________________________
Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Ordinary Shares, no par valueNVCRThe Nasdaq Stock Market LLC
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes ☒    No  ☐.
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐    
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  .
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
ClassOutstanding as of October 20, 2023
Ordinary shares, no par value 
106,861,113 Shares




CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
In addition to historical facts or statements of current condition, this report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements contained in this report are based on our current plans, expectations, hopes, beliefs, intentions or strategies concerning future developments and their impact on us. Forward-looking statements contained in this report constitute our expectations or forecasts of future events as of the date this report was filed with the Securities and Exchange Commission (the “SEC”) and are not statements of historical fact. You can identify these statements by the fact that they do not relate strictly to historical or current facts. Such statements may include words such as “anticipate,” “will,” “estimate,” “expect,” “project,” “intend,” “should,” “plan,” “believe,” “hope” and other words and terms of similar meaning in connection with any discussion of, among other things, future operating or financial performance, strategic initiatives and business strategies, regulatory or competitive environments, our intellectual property and research and development related to our Tumor Treating Fields devices marketed under various brand names, including Optune and Optune Lua, and software and systems to support and optimize the delivery of Tumor Treating Fields (collectively, our “Products”). In particular, these forward-looking statements include, among others, statements about:
our research and development, clinical study and commercialization activities and projected expenditures;
the further commercialization of our Products for current and future indications;
our business strategies and the expansion of our sales and marketing efforts;
the market acceptance of our Products for current and future indications by patients, physicians, third-party payers and others in the healthcare and scientific community;
our plans to pursue the use of our Products for the treatment of solid tumor cancers other than glioblastoma multiforme (“GBM”) and malignant pleural mesothelioma (“MPM”);
our estimates regarding revenues, expenses, capital requirements and needs for additional financing;
our ability to obtain regulatory approvals for the use of our Products in indications other than GBM and MPM;
our ability to acquire from third-party suppliers the supplies needed to manufacture our Products;
our ability to manufacture adequate supply of our Products;
our ability to secure and maintain adequate coverage from third-party payers to reimburse us for our Products for current and future indications;
our ability to receive payment from third-party payers for use of our Products for current and future indications;
our ability to obtain, maintain, develop protect, defend or enforce our intellectual property position;
our ability to manage the risks associated with business disruptions caused by natural disasters, extreme weather events, pandemics such as the COVID-19 pandemic, including the emergence of variant strains, or international conflict and other disruptions outside of our control;
our cash needs; and
our prospects, financial condition and results of operations.
These forward-looking statements involve a number of risks and uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. Factors which may cause such differences to occur include those risks and uncertainties set forth under Part I, Item 1A., “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 filed on February 23, 2023, as well as other risks and uncertainties set forth from time to time in the reports we file with the SEC. In our prior filings, references to NovoTTF-100L now refer to Optune Lua. We do not intend to update publicly any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by law.
i


TRADEMARKS
This Quarterly Report on Form 10-Q includes trademarks of NovoCure Limited and other persons. All trademarks or trade names referred to herein are the property of their respective owners.
ii

NovoCure Limited
Quarterly Report on Form 10-Q

1

PART I—FINANCIAL INFORMATION
Item 1.  Financial Statements
NOVOCURE LIMITED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands (except share data)
September 30,
2023
December 31, 2022
UnauditedAudited
ASSETS
CURRENT ASSETS:
Cash and cash equivalents$154,860 $115,326 
Short-term investments766,388 854,099 
Restricted cash1,652 508 
Trade receivables, net65,133 86,261 
Receivables and prepaid expenses23,163 25,959 
Inventories36,806 29,376 
Total current assets1,048,002 1,111,529 
LONG-TERM ASSETS:
Property and equipment, net45,564 32,678 
Field equipment, net11,357 12,684 
Right-of-use assets29,014 23,596 
Other long-term assets12,416 11,161 
Total long-term assets98,351 80,119 
TOTAL ASSETS$1,146,353 $1,191,648 
The accompanying notes are an integral part of these unaudited consolidated financial statements.
2

NOVOCURE LIMITED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands (except share data)
September 30,
2023
December 31, 2022
UnauditedAudited
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Trade payables$79,668 $85,197 
Other payables, lease liabilities and accrued expenses77,493 73,580 
Total current liabilities157,161 158,777 
LONG-TERM LIABILITIES:
Long-term debt, net567,986 565,509 
Deferred revenues 2,878 
Long-term leases22,054 18,762 
Employee benefit liabilities5,373 4,404 
Other long-term liabilities75 148 
Total long-term liabilities595,488 591,701 
TOTAL LIABILITIES752,649 750,478 
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Share capital -
Ordinary shares no par value, unlimited shares authorized; issued and outstanding:
106,748,270 shares and 105,049,411 shares at September 30, 2023 (unaudited) and December 31, 2022, respectively
  
Additional paid-in capital1,334,120 1,222,063 
Accumulated other comprehensive income (loss)(1,992)(2,433)
Retained earnings (accumulated deficit)(938,424)(778,460)
TOTAL SHAREHOLDERS' EQUITY393,704 441,170 
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY$1,146,353 $1,191,648 
The accompanying notes are an integral part of these unaudited consolidated financial statements.
3

NOVOCURE LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
U.S. dollars in thousands (except share and per share data)
Three months ended September 30,Nine months ended September 30,Year ended December 31,
20232022202320222022
UnauditedUnauditedAudited
Net revenues$127,321 $130,998 $375,554 $409,411 $537,840 
Cost of revenues32,092 29,749 95,724 85,979 114,867 
Gross profit95,229 101,249 279,830 323,432 422,973 
Operating costs and expenses:
Research, development and clinical studies53,623 51,956 168,754 151,265 206,085 
Sales and marketing57,964 41,395 167,621 124,029 173,658 
General and administrative41,887 32,509 124,609 94,683 132,753 
Total operating costs and expenses153,474 125,860 460,984 369,977 512,496 
Operating income (loss)(58,245)(24,611)(181,154)(46,545)(89,523)
Financial income (expenses), net10,023 1,194 27,948 (2,743)7,677 
Income (loss) before income tax(48,222)(23,417)(153,206)(49,288)(81,846)
Income tax1,263 3,159 6,758 5,943 10,688 
Net income (loss)$(49,485)$(26,576)$(159,964)$(55,231)$(92,534)
Basic and diluted net income (loss) per ordinary share$(0.46)$(0.25)$(1.51)$(0.53)$(0.88)
Weighted average number of ordinary shares used in computing basic and diluted net income (loss) per share106,772,814 104,884,583 106,219,194 104,552,803 104,660,476 
The accompanying notes are an integral part of these unaudited consolidated financial statements.
4

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
U.S. dollars in thousands
Three months ended September 30,Nine months ended September 30,Year ended December 31,
20232022202320222022
UnauditedUnauditedAudited
Net income (loss)$(49,485)$(26,576)$(159,964)$(55,231)$(92,534)
Other comprehensive income (loss), net of tax:
Change in foreign currency translation adjustments826 541 1,655 1,550 1,425 
Unrealized gain (loss) from debt securities15 (127)440 (896)(445)
Pension benefit plan(852)(625)(1,654)209 (244)
Total comprehensive income (loss)$(49,496)$(26,787)$(159,523)$(54,368)$(91,798)

NOVOCURE LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
U.S. dollars in thousands (except share data)
Ordinary sharesAdditional
paid-in
capital
Accumulated
other
comprehensive
loss
Retained earnings (accumulated
deficit)
Total shareholders'
equity
Balance as of December 31, 2022 (audited)105,049,411 $1,222,063 $(2,433)$(778,460)$441,170 
Share-based compensation to employees— 39,084 — — 39,084 
Exercise of options and vested RSUs1,137,751 5,211 — — 5,211 
Other comprehensive income (loss), net of tax benefit of $0
— — (258)— (258)
Net income (loss)— — — (53,061)(53,061)
Balance as of March 31, 2023 (Unaudited)106,187,162 $1,266,358 $(2,691)$(831,521)$432,146 
Share-based compensation to employees— 32,740 — — 32,740 
Proceeds from issuance of shares81,730 2,883 — — 2,883 
Exercise of options and vested RSUs336,439 4,622 — 4,622 
Other comprehensive income (loss), net of tax benefit of $0
— — 710 — 710 
Net income (loss)— — — (57,418)(57,418)
Balance as of June 30, 2023 (Unaudited)106,605,331 $1,306,603 $(1,981)$(888,939)$415,683 
Share-based compensation to employees— 26,346 — — 26,346 
Exercise of options and vested RSUs142,939 1,171 — — 1,171 
Other comprehensive income (loss), net of tax benefit of $0
— — (11)— (11)
Net income (loss)— — — (49,485)(49,485)
Balance as of September 30, 2023 (Unaudited)106,748,270 $1,334,120 $(1,992)$(938,424)$393,704 

5



Ordinary sharesAdditional
paid-in
capital
Accumulated
other
comprehensive
loss
Retained earnings (accumulated
deficit)
Total shareholders'
equity
Balance as of December 31, 2021 (audited)103,971,263 $1,099,589 $(3,169)$(685,926)$410,494 
Share-based compensation to employees— 25,045 — — 25,045 
Exercise of options and vested RSUs587,825 3,148 — — 3,148 
Other comprehensive income (loss), net of tax benefit of $0
— — 1,841 — 1,841 
Net income (loss)— — — (4,647)(4,647)
Balance as of March 31, 2022 (Unaudited)104,559,088 $1,127,782 $(1,328)$(690,573)$435,881 
Share-based compensation to employees— 25,823 — — 25,823 
Proceeds from issuance of shares46,709 2,759 — — 2,759 
Exercise of options and vested RSUs121,888 1,984 — — 1,984 
Other comprehensive income (loss), net of tax benefit of $0
— (767)— (767)
Net income (loss)— — (24,008)(24,008)
Balance as of June 30, 2022 (Unaudited)104,727,685 $1,158,348 $(2,095)$(714,581)$441,672 
Share-based compensation to employees— 26,305 — — 26,305 
Exercise of options and vested RSUs215,256 4,211 — — 4,211 
Other comprehensive income (loss), net of tax benefit of $0
— — (211)— (211)
Net income (loss)— — — (26,576)(26,576)
Balance as of September 30, 2022 (Unaudited)104,942,941 $1,188,864 $(2,306)$(741,157)$445,401 

The accompanying notes are an integral part of these unaudited consolidated financial statements.
6

NOVOCURE LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. dollars in thousands
 Three months ended September 30,Nine months ended September 30,Year ended December 31,
20232022202320222022
UnauditedUnauditedAudited
Cash flows from operating activities:
Net income (loss)$(49,485)$(26,576)$(159,964)$(55,231)$(92,534)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization2,803 2,659 8,246 7,924 10,624 
Accrued Interest480 1 530 (822)(2,216)
Asset write-downs and impairment of field equipment112 163 374 514 955 
Share-based compensation26,346 26,305 98,170 77,173 106,955 
Foreign currency remeasurement loss (gain)1,398 (141)2,185 1,051 (3,256)
Decrease (increase) in accounts receivables2,642 11,522 24,094 6,318 2,547 
Amortization of discount (premium)(6,691)232 (15,822)1,743 (1,536)
Decrease (increase) in inventories(4,080)2,952 (8,250)(2,061)(4,342)
Decrease (increase) in other long-term assets3,971 1,665 3,585 5,885 7,107 
Increase (decrease) in accounts payables and accrued expenses6,265 5,265 (3,992)(1,895)14,257 
Increase (decrease) in other long-term liabilities(3,075)(1,627)(7,934)(6,104)(7,773)
Net cash provided by (used in) operating activities$(19,314)$22,420 (58,778)34,495 30,788 
Cash flows from investing activities:
Purchase of property, equipment and field equipment$(7,253)$(5,703)(20,272)(14,927)(21,358)
Proceeds from maturity of short-term investments275,549 358,729 916,433 1,074,763 1,179,289 
Purchase of short-term investments(251,038)(503,270)(810,513)(1,071,733)(1,297,888)
Net cash provided by (used in) investing activities$17,258 $(150,244)85,648 (11,897)(139,957)
Cash flows from financing activities:
Proceeds from issuance of shares, net$ $ 2,883 2,759 5,224 
Repayment of long-term debt (7)(10)(21)(28)
Exercise of options1,171 4,211 11,004 9,343 10,295 
Net cash provided by (used in) financing activities$1,171 $4,204 13,877 12,081 15,491 
Effect of exchange rate changes on cash, cash equivalents and restricted cash$(97)$(107)(69)(252)(97)
Increase (decrease) in cash, cash equivalents and restricted cash(982)(123,727)40,678 34,427 (93,775)
Cash, cash equivalents and restricted cash at the beginning of the period157,494 367,763 115,834 209,609 209,609 
Cash, cash equivalents and restricted cash at the end of the period$156,512 $244,036 $156,512 $244,036 $115,834 
7

NOVOCURE LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. dollars in thousands
Supplemental cash flow activities:
Cash paid during the period for:
Income taxes paid (refunded), net$1,202 $907 $8,745 $3,933 $5,480 
Interest paid$ $1 $1 $3 $41 
Reconciliation of cash, cash equivalents and restricted cash:
Cash and cash equivalents$154,860 $243,805 $154,860 $243,805 $115,326 
Restricted cash1,652 231 1,652 231 508 
Total cash, cash equivalents and restricted cash$156,512 $244,036 $156,512 $244,036 $115,834 
Non-cash activities:
Right-of-use assets obtained in exchange for lease liabilities$4,693 $2,828 $10,477 $6,687 $12,117 
The accompanying notes are an integral part of these unaudited consolidated financial statements.
8

NOVOCURE LIMITED AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share data)
NOTE 1: ORGANIZATION AND BASIS OF PRESENTATION
Organization. NovoCure Limited (including its consolidated subsidiaries, the "Company") was incorporated in the Bailiwick of Jersey and is principally engaged in the development, manufacture and commercialization of Tumor Treating Fields ("TTFields") devices, including Optune and Optune Lua (collectively, our "Products"), for the treatment of solid tumor cancers. The Company markets Optune and Optune Lua in multiple countries around the globe with the majority of revenues coming from the use of Optune in the U.S., Germany and Japan. The Company also has a License and Collaboration Agreement (the "Zai Agreement") with Zai Lab (Shanghai) Co., Ltd. ("Zai") to market Optune in China, Hong Kong, Macau and Taiwan ("Greater China").
Financial statement preparation. The accompanying unaudited consolidated financial statements include the accounts of the Company and intercompany accounts and transactions have been eliminated. In the opinion of the Company’s management, the unaudited consolidated financial statements reflect all adjustments, which are normal and recurring in nature, necessary for fair financial statement presentation for the periods presented. The preparation of these unaudited consolidated financial statements in conformity with U.S. generally accepted accounting principles ("GAAP") requires management to make estimates and assumptions that affect the amounts reported in these unaudited consolidated financial statements and accompanying notes. Actual results could differ materially from those estimates. These unaudited consolidated financial statements and accompanying notes should be read in conjunction with the Company’s annual consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022 (the "2022 10-K") filed with the Securities and Exchange Commission on February 23, 2023.
The significant accounting policies applied in the audited annual consolidated financial statements of the Company as disclosed in the 2022 10-K are applied consistently in these unaudited interim consolidated financial statements.
Concentration Risks. The Company's cash, cash equivalents, short-term investments and trade receivables are potentially subject to a concentration of risk. Cash, cash equivalents and short-term investments are invested at top tier financial institutions globally and the total value invested at any one institution is limited pursuant to the Company's investment policy. These investments may be in excess of insured limitations or not insured in certain jurisdictions. Generally, these investments may be redeemed upon demand according to the terms of the securities.

The Company's trade receivables are due from numerous governments and federal and state agencies that are paid from their respective budgets, and from hundreds of health insurance companies. The Company does not believe that there are significant default risks associated with these governments, agencies and health insurance companies based upon the Company's historical experience.

The Company has no off-balance sheet concentrations of credit risk such as foreign exchange contracts, option contracts or other foreign hedging arrangements.


9

NOTE 2: CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS
Cash equivalents include items almost as liquid as cash, with maturity periods of three months or less when purchased, and short-term investments include items with maturity dates between three months and one year when purchased. As of September 30, 2023 and December 31, 2022, the Company’s cash and cash equivalents and short-term investments were composed of:
September 30, 2023
Unaudited
Fair value levelAdjusted cost basisUnrealized gainsUnrealized lossesFair market valueRecorded basisCash and cash equivalentsShort-term investments (2)
Cash$8,636 $— $— $8,636 $8,636 $8,636 $— 
Money market fundsLevel 1141,224 — — 141,224 141,224 141,224 — 
Certificate of deposits and term depositsLevel 2163,820 — — 163,820 163,820 5,000 158,820 
HTM securities (1)
U.S. Treasury billsLevel 1$109,595 $15 $(14)109,596 109,595 $— $109,595 
Government and governmental agenciesLevel 2$24,596 $ $(15)24,581 24,596 $— $24,596 
Corporate debt securitiesLevel 2$473,377 $83 $(281)473,179 473,377 $ $473,377 
$607,568 $98 $(310)$607,356 $607,568 $ $607,568 
Total$921,248 $98 $(310)$921,036 $921,248 $154,860 $766,388 

December 31, 2022
Audited
Fair value levelAdjusted cost basisUnrealized gainsUnrealized lossesFair market valueRecorded basisCash and cash equivalentsShort-term investments
Cash$9,697 $— $— $9,697 $9,697 $9,697 $— 
Money market fundsLevel 1105,629 — — 105,629 105,629 105,629 — 
Certificate of deposits and term depositsLevel 2316,946 — — 316,946 316,946  316,946 
HTM securities (1)
U.S. Treasury billsLevel 1$188,030 $8 $(540)187,498 188,030 $— $188,030 
Government and governmental agenciesLevel 2$44,357 $12 $(12)44,357 44,357 $— $44,357 
Corporate debt securitiesLevel 2$304,766 $1,066 $(587)305,245 304,766 $ $304,766 
$537,153 $1,086 $(1,139)$537,100 $537,153 $ $537,153 
Total$969,425 $1,086 $(1,139)$969,372 $969,425 $115,326 $854,099 
10

(1)    Changes in fair value of held-to-maturity ("HTM") securities are presented for disclosure purposes as required by ASC 320 "Investments — Debt Securities" and are recorded as finance expenses only if the unrealized loss is identified as a credit loss.
(2)    Pursuant to a bank guaranty, $15,862 of short-term investments are pledged. See Note 4.
In November 2022, the Company transferred all of its available-for-sale portfolio to HTM as part of the Company's investment strategy. Such transfers are made at fair value at the date of transfer. The net unrealized loss on these securities at the date of transfer was $911. These securities continue to be reported in accumulated comprehensive income (loss) and are amortized over the remaining lives of the securities as an adjustment to the yield. As of September 30, 2023 and December 31, 2022, the unamortized unrealized loss balances were $5 and $445, respectively, and are reported in accumulated other comprehensive income (loss).
In accordance with ASC 820, "Fair Value Measurements and Disclosures," the Company measures its money market funds at fair value. The fair value of the money market funds and HTM securities, which is presented for disclosure purposes, is classified within Level 1 or Level 2. This is because these assets are valued using quoted market prices or alternative pricing sources and models utilizing market observable inputs.
As of September 30, 2023 and December 31, 2022, all investments mature in one year or less.
Unrealized losses from debt securities are primarily attributable to changes in interest rates. The Company does not believe any remaining unrealized losses represent impairments based on the evaluation of available evidence.

NOTE 3: INVENTORIES
Inventories are stated at the lower of cost or net realizable value. The weighted average methodology is applied to determine cost. As of September 30, 2023 and December 31, 2022, the Company’s inventories were composed of:
September 30,
2023
December 31,
2022
 UnauditedAudited
Raw materials$10,382 $4,314 
Work in progress7,518 9,321 
Finished products18,906 15,741 
Total$36,806 $29,376 

NOTE 4: COMMITMENTS AND CONTINGENT LIABILITIES
Operating Leases. The facilities of the Company are leased under various operating lease agreements for periods, including options for extensions, ending no later than 2044. The Company also leases motor vehicles under various operating leases, which expire on various dates, the latest of which is in 2026.
Pledged deposits and bank guarantees. As of September 30, 2023 and December 31, 2022, the Company pledged bank deposits of $2,643 and $2,296, respectively, to cover bank guarantees in respect of its leases of operating facilities and obtained bank guarantees for the fulfillment of the Company’s lease and other contractual commitments of $2,991 and $2,459, respectively. In addition, €15,000 ($15,862) of the Company's short term investments are pledged to a bank as guarantee for the Company's due execution of cash concentration agreements.
Senior secured revolving credit facility. On November 6, 2020, the Company entered into a three-year $150,000 senior secured revolving credit facility ("2020 Credit Facility") with a syndicate of relationship banks. On February 17, 2023, the Company gave irrevocable notice to the administrative agent under the 2020 Credit Facility that the Company terminated all commitments, effective February 22, 2023. This effectively terminated the 2020 Credit Facility, as the Company's ability to borrow and the Company's obligations to comply with all covenants ended on such date. The liens and guaranties in favor of the lenders are released. There was no early termination fee payable and the Company had no outstanding balance borrowed under the 2020 Credit Facility.
11

The commitments under the 2020 Credit Facility were guaranteed by certain of the Company's subsidiaries and secured by a first lien on the Company's and certain of its subsidiaries’ assets. Outstanding loans bore interest per annum at a sliding scale based on a secured leverage ratio from 2.75% to 3.25% above the applicable interbank borrowing reference rate for the currency in which the loan is denominated. Additionally, the 2020 Credit Facility contained a fee for the unused revolving credit commitments at a sliding scale based on our secured leverage ratio from 0.35% to 0.45%. The 2020 Credit Facility contained financial covenants requiring maintenance of a minimum fixed charge coverage ratio and specifying a maximum senior secured net leverage ratio, as well as customary events of default which include a change of control, which are no longer applicable.
Legal Proceedings. In June 2023, a putative class action lawsuit was filed against the Company, its Executive Chairman and its Chief Executive Officer. The complaint, which purports to be brought on behalf of a class of persons and/or entities who purchased or otherwise acquired ordinary shares of the Company from January 5, 2023 through June 5, 2023, allege material misstatements and/or omissions in the Company’s public statements with respect to the results from its phase 3 LUNAR clinical trial. The Company believes that the action is without merit and plans to defend the lawsuit vigorously. As of September 30, 2023, the Company has not accrued any amounts in respect of this claim, as it believes liability is not probable and the amount of any potential liability cannot be reasonably estimated.
NOTE 5: CONVERTIBLE NOTE
On November 5, 2020, the Company issued $575,000 aggregate principal amount of 0% Convertible Senior Notes due 2025 (the “Notes”).
The Notes mature on November 1, 2025, unless earlier repurchased, redeemed or converted as set forth in the Notes. As of September 30, 2023, the conditions allowing holders of the Notes to convert were not met. The Notes are therefore not convertible as of September 30, 2023 and are classified as long-term liability.
The net carrying amount of the liability of the Notes as of September 30, 2023 and December 31, 2022 are as follows:
September 30,
2023
December 31,
2022
UnauditedAudited
Liability component, net:
Principal amount$575,000 $575,000 
Unamortized issuance costs (7,014)(9,491)
Net carrying amount of liability component (1)$567,986 $565,509 
(1) An effective interest rate determines the fair value of the Notes, therefore they are categorized as Level 3 in accordance with ASC 820. The estimated fair value of the net carrying amount of liability component of the Notes as of September 30, 2023 and December 31, 2022 were $480,791 and $455,091, respectively.
The net carrying amount of the liability is represented by the principal amount of the Notes, less total issuance costs plus any amortization of issuance costs. The total issuance costs upon issuance of the Notes were $16,561 and are amortized to interest expense using the effective interest rate method over the contractual term of the Notes. Interest expense is recognized at an annual effective interest rate of 0.59% over the contractual term of the Notes.

Finance expense related to the Notes was as follows:
Three months ended September 30,Nine months ended September 30,Year ended December 31,
2022
2023202220232022
UnauditedUnauditedAudited
Amortization of debt issuance costs
836 831 2,477 2,461 3,293 
Total finance expense recognized
$836 $831 $2,477 $2,461 $3,293 
12

NOTE 6: SHARE OPTION PLANS AND ESPP
In September 2015, the Company adopted the 2015 Omnibus Incentive Plan (the “2015 Plan”). Under the 2015 Plan, the Company can issue various types of equity compensation awards such as share options, restricted shares, performance shares, restricted share units (“RSUs”), performance-based share units (“PSUs”), long-term cash awards and other share-based awards.
Options granted under the 2015 Plan generally have a two-year or four-year vesting period and expire ten years after the date of grant. Options granted under the 2015 Plan that are canceled or forfeited before expiration become available for future grants. RSUs granted under the 2015 Plan generally vest over a three-year period. PSUs granted under the 2015 Plan generally vest between a three- and six-year period as performance targets are attained. RSUs and PSUs granted under the 2015 Plan that are canceled before expiration become available for future grants. As of September 30, 2023, 18,729,954 ordinary shares were available for grant under the 2015 Plan.
A summary of the status of the Company’s option plans as of September 30, 2023 and changes during the period then ended is presented below:
Nine months ended September 30, 2023
Unaudited
Number
of options
Weighted
average
exercise
price
Outstanding at beginning of year8,786,364 $37.27 
Granted942,643 66.90 
Exercised(787,569)13.94 
Forfeited and canceled(321,556)73.09 
Outstanding as of September 30, 20238,619,882 $41.31 
Exercisable options6,810,232 $31.18 
For the nine months ended September 30, 2023, options to purchase 787,569 ordinary shares were exercised, resulting in the issuance of 787,569 ordinary shares.
A summary of the status of the Company’s RSUs and PSUs as of September 30, 2023 and changes during the period then ended is presented below.
Nine months ended September 30, 2023
Unaudited
Number
of RSU/PSUs
Weighted
average
grant date fair value
Unvested at beginning of year5,377,459 $66.87 
Granted1,457,681 70.39 
Vested(829,560)84.94 
Forfeited and cancelled(178,399)86.51 
Unvested as of September 30, 2023 (1)5,827,181 64.60 

(1) Includes PSUs that have a mix of service, market and other milestone performance vesting conditions which are vested upon achievements of performance milestones that are not probable as of September 30, 2023, in accordance with ASC 718 "Compensation — Stock Compensation" as follows:
13

 September 30, 2023
Number of
PSUs
Fair value at grant date per PSUTotal fair value at grant date
2,703,852 $48.16 $130,218 
220,533 76.97 16,974 
249,402 80.59 20,099 
15,210 87.66 1,333 
10,532 94.94 1,000 
161,912 114.26 18,500 
3,361,441 $188,127 
These PSUs will be expensed over the performance period when the vesting conditions become probable in accordance with ASC 718.
In September 2015, the Company adopted an employee share purchase plan (“ESPP”) to encourage and enable eligible employees to acquire ownership of the Company’s ordinary shares purchased through accumulated payroll deductions on an after-tax basis. In the United States, the ESPP is intended to be an “employee stock purchase plan” within the meaning of Section 423 of the Internal Revenue Code and the provisions of the ESPP are construed in a manner consistent with the requirements of such section. As of September 30, 2023, 4,787,003 ordinary shares were available to be purchased by eligible employees under the ESPP.
The fair value of share-based awards was estimated using the Black-Scholes model for all equity grants. For market condition awards, the Company also applied the Monte-Carlo simulation model. The Company assessed fair value using the following underlying assumptions: 
Nine months ended September 30,Year ended December 31,
2022
20232022
UnauditedAudited
Stock Option Plans
Expected term (years)
5.50-6.00
5.33-5.83
5.33-5.83
Expected volatility
63%-67%
60%-62%
60%-62%
Risk-free interest rate
3.48%-4.16%
1.58%-3.04%
1.58%-4.23%
Dividend yield0.00 %0.00 %0.00 %
ESPP
Expected term (years)0.500.500.50
Expected volatility
56%-122%
51%-77%
51%-77%
Risk-free interest rate
4.76%-5.38%
0.19%-2.52%
0.19%-2.52%
Dividend yield0.00 %0.00 %0.00 %
The total non-cash share-based compensation expense related to all of the Company’s equity-based awards recognized for the three and nine months ended September 30, 2023 and 2022, and the year ended December 31, 2022 was:
14

Three months ended September 30,Nine months ended September 30,Year ended December 31,
2022
2023202220232022
UnauditedUnauditedAudited
Cost of revenues$1,511 $1,013 $5,540 $2,994 $4,690 
Research, development and clinical studies6,683 7,430 26,999 21,855 30,790 
Sales and marketing8,973 7,686 30,830 21,143 28,826 
General and administrative9,179 10,176 34,801 31,181 42,649 
Total share-based compensation expense$26,346 $26,305 $98,170 $77,173 $106,955 

NOTE 7: Basic and diluted net income (loss) per ordinary share
Basic net income (loss) per share is computed based on the weighted average number of ordinary shares outstanding during each period. Diluted net income per share is computed based on the weighted average number of ordinary shares outstanding during the period, plus potential dilutive shares (deriving from options, RSUs, PSUs, convertible notes and the ESPP) considered outstanding during the period, in accordance with ASC 260-10 "Earnings Per Share", as determined under the if-converted method.
The following table sets forth the computation of the Company’s basic and diluted net income (loss) per ordinary share:
 Three months ended September 30,Nine months ended September 30,Year ended December 31,
2022
 2023202220232022
UnauditedUnauditedAudited
Net income (loss) attributable to ordinary shares as reported used in computing basic and diluted net income (loss) per share$(49,485)$(26,576)$(159,964)$(55,231)$(92,534)
Weighted average number of ordinary shares used in computing diluted net income (loss) per share106,772,814 104,884,583 106,219,194 104,552,803 104,660,476 
Potentially anti-dilutive shares that were excluded from the computation of basic net income (loss) per share:
Options6,250,189 6,440,190 6,354,627 6,695,719 6,387,275 
RSUs and PSUs
2,590,322 827,789 1,470,542 920,364 822,421 
ESPP96,444 21,462 150,930 52,601 62,910 
Weighted anti-dilutive shares outstanding which were not included in the diluted calculation8,936,955 7,289,441 7,976,099 7,668,684 7,272,606 
Basic and diluted net income (loss) per ordinary share$(0.46)$(0.25)$(1.51)$(0.53)$(0.88)


15

NOTE 8: SUPPLEMENTAL INFORMATION
The Company operates in a single reportable segment.
The following table presents long-lived assets by location:
September 30,
2023
December 31,
2022
 UnauditedAudited
United States$38,482 $30,012 
Israel8,100 7,180 
Switzerland6,327 5,084 
Japan965 1,063 
Germany1,039 762 
Others2,008 1,261 
Total long lived assets$56,921 $45,362 
The Company’s revenues by geographic region, based on the customer’s location, are summarized as follows:
Three months ended September 30,Nine months ended September 30,Year ended December 31,
2022
2023202220232022
UnauditedUnauditedAudited
United States$86,243 $102,651 $258,429 $308,270 $406,894 
Germany14,683 6,780 45,547 36,366 46,120 
Japan7,588 7,865 24,118 24,887 32,781 
Greater China (1)6,756 6,164 18,822 16,465 21,332 
Others12,051 7,538 28,638 23,423 30,713 
Total net revenues$127,321 $130,998 $375,554 $409,411 $537,840 
(1) For additional information, see Note 12 to the Consolidated Financial Statements in the 2022 10-K.

16

Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations
Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to provide information to assist you in better understanding and evaluating our financial condition and results of operations. We encourage you to read this MD&A in conjunction with our unaudited consolidated financial statements and the notes thereto for the period ended September 30, 2023 included in Part I, Item 1 of this Quarterly Report on Form 10-Q. This discussion contains forward-looking statements that involve risks and uncertainties. Please refer to the information under the heading “Cautionary Note Regarding Forward-Looking Statements” elsewhere in this report. References to the words “we,” “our,” “us,” and the “Company” in this report refer to NovoCure Limited, including its consolidated subsidiaries.
Critical Accounting Policies and Estimates
In accordance with U.S. generally accepted accounting principles (“GAAP”), in preparing our financial statements, we must make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of net revenues and expenses during the reporting period. We develop and periodically change these estimates and assumptions based on historical experience and on various other factors that we believe are reasonable under the circumstances. Actual results may differ from these estimates.
The critical accounting policies requiring estimates, assumptions and judgments that we believe have the most significant impact on our consolidated financial statements can be found in our 2022 10-K. For additional information, see Note 1 to our unaudited consolidated financial statements in Part I, Item 1 of this Quarterly Report. There were no other material changes to our critical accounting policies and estimates as compared to the critical accounting policies and estimates described in our 2022 10-K.
Overview
We are a global oncology company with a proprietary platform technology called Tumor Treating Fields ("TTFields"), which are electric fields that exert physical forces to kill cancer cells via a variety of mechanisms. Our key priorities are to drive commercial adoption of Optune, our commercial TTFields device, and to advance clinical and product development programs intended to extend overall survival in some of the most aggressive forms of cancer.
Optune is approved by the U.S. Food and Drug Administration ("FDA") under the Premarket Approval ("PMA") pathway for the treatment of adult patients with newly diagnosed glioblastoma ("GBM") together with temozolomide, a chemotherapy drug, and for adult patients with GBM following confirmed recurrence after chemotherapy as monotherapy treatment. We also have a CE certificate to market Optune for the treatment of GBM in the European Union ("EU"), as well as approval or local registration in the United Kingdom ("UK"), Japan, Canada and certain other countries. Optune Lua is approved by the FDA under the Humanitarian Device Exemption ("HDE") pathway to treat malignant pleural mesothelioma ("MPM") together with standard chemotherapies. We have also received CE certification in the EU and approval or local registration to market Optune Lua in certain other countries. We market Optune and Optune Lua in multiple countries around the globe with the majority of our revenues coming from the use of Optune in the U.S., Germany and Japan. In March 2023, we announced the availability and reimbursement of Optune together with temozolomide for the treatment of adult patients with newly diagnosed GBM in France and we are now treating patients. We are actively evaluating opportunities to expand our international footprint.
We believe the physical mechanisms of action behind TTFields therapy may be broadly applicable to solid tumor cancers and are conducting a number of phase 2 and phase 3 trials exploring application in cancers of the brain, torso and abdomen. We are designing several additional phase 2 and phase 3 trials in partnership with oncology leaders to further explore the capabilities of TTFields. We anticipate expanding our clinical pipeline over time to study the safety and efficacy of TTFields for additional solid tumor indications and combinations with other cancer treatment modalities.
Thoracic Cancer Program Updates
In June 2023, we presented positive results from the phase 3 LUNAR study evaluating the use of TTFields together with standard therapies for the treatment of metastatic NSCLC following platinum-failure. The LUNAR study met its primary endpoint with a statistically significant and clinically meaningful 3-month improvement in median overall survival ("OS") with TTFields therapy added to standard therapies (HR=0.74, P=0.035). Patients randomized to receive TTFields together with standard therapies demonstrated median OS of 13.2 months compared to 9.9
17

months in patients treated with standard therapies alone. Patients randomized to receive TTFields and physician’s choice immune checkpoint inhibitor ("ICI") (n=66) demonstrated a median OS of 18.5 months, a profound extension compared to the median OS of 10.8 months demonstrated by patients that received ICI alone (n=68; HR=0.63; P=0.03). Patients randomized to receive TTFields and docetaxel (n=71) had a positive survival trend with a median OS of 11.1 months vs 8.7 months (n=71). TTFields therapy was well-tolerated with no added systemic toxicities and few grade 3 (no grade 4 or 5) device-related adverse events. In August 2023, the data from the LUNAR study were published in The Lancet Oncology, and additional data detailing the LUNAR study have since been presented at multiple medical congresses. These data are expected to serve as the basis for a PMA submission to the FDA in the second half of 2023.
In March 2023, we announced the final patient enrolled in the phase 3 METIS study evaluating the efficacy of TTFields therapy following stereotactic radiosurgery for the treatment of patients with brain metastases from NSCLC. Following the completion of enrollment, patients will be followed for a minimum of 12 months with top-line data anticipated in the first quarter of 2024.
We are planning to launch several additional trials intended to further explore the use of TTFields therapy in the treatment of NSCLC. In July 2023, the FDA accepted the investigation device exemption for the LUNAR-2 clinical trial ("LUNAR-2"), a randomized, phase 3 study testing the safety and effectiveness of TTFields concomitant with pembrolizumab and platinum-based chemotherapy in patients with metastatic NSCLC. The two primary endpoints of LUNAR-2 are overall survival and progression-free survival. LUNAR-2 is designed to accrue 734 patients with a 21-month follow-up following the enrollment of the last patient.
Abdominal Cancer Program Updates
In July 2023, we announced that an independent data monitoring committee ("DMC") conducted a pre-specified interim analysis for the phase 3 PANOVA-3 study for the treatment of unresectable, locally advanced pancreatic cancer. As part of the interim analysis, the DMC reviewed the safety and efficacy data for all locally advanced pancreatic cancer patients enrolled in the study. The interim analysis resulted in a DMC recommendation that the study should continue to final analysis. The PANOVA-3 study accrued 556 patients as of February 2023 and data will be reviewed in 2024, following an 18-month follow-up period.
In August 2023, the first patient was enrolled in the phase 2 PANOVA-4 study evaluating the safety and efficacy of TTFields therapy together with atezolizumab, gemcitabine and nab-paclitaxel in the treatment of metastatic pancreatic cancer. The PANOVA-4 study is designed to enroll 76 patients with a 12-month follow-up following the enrollment of the last patient. This study is the result of a clinical study collaboration with Roche.
In August 2023, we announced that the phase 3 INNOVATE-3 study for the treatment of platinum-resistant ovarian cancer did not meet its primary endpoint of overall survival at the final analysis. Consistent with previously reported studies, TTFields therapy was well-tolerated with no added systemic toxicities. An exploratory subgroup analysis suggested a potential survival benefit in patients who received only one prior line of therapy. Full evaluation of the data from the INNOVATE-3 trial, including subgroup analyses, is ongoing and we will work with trial investigators to share the full results with the scientific community in the future.

18

The table below presents the current status of the ongoing clinical studies in our pipeline and anticipated timing of data.Q3 2023 Pipeline v3.jpg
Our therapy is delivered through a medical device and we continue to advance our Products with the intention to extend survival and maintain quality of life for patients. We have several product development programs underway that are designed to optimize TTFields delivery to the target tumor and enhance patient ease of use. One of these initiatives is the launch of new arrays, which are thinner, lighter and more flexible. We have obtained a CE Mark and have begun rolling out our new arrays in multiple European countries. We plan to submit for regulatory approval in the U.S. via a PMA supplement by year-end 2023.
Our intellectual property portfolio contains hundreds of issued patents and numerous patent applications pending worldwide. We believe we possess global commercialization rights to our Products in oncology and are well-positioned to extend those rights into the future as we continue to find innovative ways to improve our Products.
In 2018, we granted Zai Lab (Shanghai) Co., Ltd. ("Zai") a license to commercialize Optune in China, Hong Kong, Macau and Taiwan ("Greater China") under a License and Collaboration Agreement (the "Zai Agreement"). The Zai Agreement also establishes a development partnership intended to accelerate the development of TTFields in multiple solid tumor cancer indications. For additional information, see Note 12 to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022 (the "2022 10-K").
We view our operations and manage our business in one operating segment. For the three and nine months ended September 30, 2023, our net revenues were $127.3 million and $375.6 million, respectively. Our net loss for the three and nine months ended September 30, 2023 was $49.5 million and $160.0 million, respectively. As of September 30, 2023, we had an accumulated deficit of $938.4 million. Our net loss resulted primarily from increasing investments designed to support our commercial business, geographic expansion and pre-commercial activities associated with potential future indication launches.
Impact of COVID-19
On May 5, 2023, the World Health Organization (“WHO”) declared the end of the COVID-19 pandemic as a public health emergency of international concern, however the WHO maintains that the virus remains a global health threat. Since the pandemic began, we have followed the guidance of the WHO, the U.S. Centers for Disease Control and Prevention, and local health authorities in all of our active markets and will continue to do so. The COVID-19 pandemic did not have a material impact on our financial results through the third quarter of 2023. The pandemic is not having a direct impact on our day-to-day operations; however, we are still observing lingering impacts that might continue to impact our business and clinical studies in the future. For example, in many locations staffing levels at clinical trial sites have not returned to pre-pandemic levels, and our ability to conduct and monitor clinical studies may be impacted.
Given the aggressive nature of the cancers that we treat, we believe that the fundamental value proposition of the TTFields platform remains unchanged. We continue to evaluate and plan for the potential effects of a possible COVID-19 resurgence on our business moving forward. The extent to which the COVID-19 pandemic may impact our business and clinical studies in the future will depend on further developments, which are highly uncertain and
19

cannot be predicted with confidence. The COVID-19 pandemic may also have the effect of heightening many of the other risks described in our risk factors disclosed in our 2022 10-K.
Impact of Current Events
On September 30, 2023, President Biden signed into law a continuing resolution that allowed the U.S. government to continue to be funded and operating through November 17, 2023. If full appropriations or continuing resolutions are not enacted, it is likely that some U.S. Food and Drug Administration functions would be required to stop working until they are funded. As a result, the review process for new products and clinical trials could be delayed.
On October 7, 2023, the State of Israel was attacked by and subsequently declared war on Hamas. As of the date of this filing, we believe that there is no immediate risk to our business facilities or operations. Our supply chain teams are working to increase stock levels to mitigate distribution and service risks from our suppliers in Israel.
Commentary on Results of Operations
Net revenues. Our revenues are primarily derived from patients using our Products in our active markets. We charge for treatment with our Products on a monthly basis. Our potential net revenues per patient are determined by our ability to secure payment, the monthly fee we collect and the number of months that the patient remains on therapy.
We also receive revenues pursuant to the Zai Agreement. For additional information regarding the Zai Agreement, see Note 12 to the Consolidated Financial Statements in our 2022 10-K.
Cost of revenues. We contract with third parties to manufacture our Products. Our cost of revenues is primarily comprised of the following:

disposable arrays;
depreciation expense for the field equipment, including the electric field generator used by patients;
patient support and other personnel costs; and
overhead costs, such as facilities, freight and depreciation of property, plant and equipment associated with managing our inventory, warehousing and order fulfillment functions.
Operating expenses. Our operating expenses consist of research, development and clinical studies, sales and marketing and general and administrative expenses. Personnel costs are a significant component for each category of operating expenses and consist of wages, benefits and bonuses. Personnel costs also include share-based compensation.
Financial income (expenses), net. Financial income (expenses), net primarily consists of interest income from cash balances and short-term investments, credit facility interest expense and related debt issuance costs, and gains (losses) from foreign currency transactions. Our reporting currency is the U.S. dollar. We have historically held substantially all of our cash balances in U.S. dollar denominated accounts to minimize the risk of translational currency exposure.

Results of Operations
The following discussion provides an analysis of our results of operations and reasons for material changes therein for the three and nine months ended September 30, 2023 as compared to the three and nine months ended September 30, 2022. The tables contained in this section report U.S. dollars in thousands (except share, patient, and prescription data). The following table sets forth our consolidated statements of operations data:
20

Three months ended September 30,Nine months ended September 30,
2023202220232022
UnauditedUnaudited
Net revenues$127,321 $130,998 $375,554 $409,411 
Cost of revenues32,092 29,749 95,724 85,979 
Gross profit95,229 101,249 279,830 323,432 
Operating costs and expenses:
Research, development and clinical studies53,623 51,956 168,754 151,265 
Sales and marketing57,964 41,395 167,621 124,029 
General and administrative41,887 32,509 124,609 94,683 
Total operating costs and expenses153,474 125,860 460,984 369,977 
Operating income (loss)(58,245)(24,611)(181,154)(46,545)
Financial income (expenses), net10,023 1,194 27,948 (2,743)
Income (loss) before income taxes(48,222)(23,417)(153,206)(49,288)
Income taxes1,263 3,159 6,758 5,943 
Net income (loss)$(49,485)$(26,576)$(159,964)$(55,231)
Basic and diluted net income (loss) per ordinary share$(0.46)$(0.25)$(1.51)$(0.53)
Weighted average number of ordinary shares used in computing basic and diluted net income (loss) per share106,772,814 104,884,583 106,219,194 104,552,803 
The following table details the share-based compensation expense included in costs and expenses:
Three months ended September 30,Nine months ended September 30,
2023202220232022
UnauditedUnaudited
Cost of revenues$1,511 $1,013 $5,540 $2,994 
Research, development and clinical studies6,683 7,430 26,999 21,855 
Sales and marketing8,973 7,686 30,830 21,143 
General and administrative9,179 10,176 34,801 31,181 
Total share-based compensation expense$26,346 $26,305 $98,170 $77,173 

Key performance indicators
We believe certain commercial operating statistics are useful to investors in evaluating our commercial business as they help our management team and investors evaluate and compare the adoption of our Products from period to period. The number of active patients on therapy is our principal revenue driver. An "active patient" is a patient who is receiving treatment under a commercial prescription order as of the measurement date, including patients who may be on a temporary break from treatment and who plan to resume treatment in less than 60 days. Prescriptions are a leading indicator of demand. A "prescription received" is a commercial order for Optune or Optune Lua that is received from a physician certified to treat patients with our Products for a patient not previously on Optune or Optune Lua. Orders to renew or extend treatment are not included in this total.

21

The following table includes certain commercial operating statistics for and as of the end of the periods presented.
September 30,
Operating statistics20232022
Active patients at period end
United States (1)2,179 2,181 
Germany492 468 
Japan353 354 
Others615 417 
Total3,639 3,420 
Three months ended September 30,Nine months ended September 30,
 2023202220232022
Prescriptions received in period
United States (1)920 978 2,952 2,867 
Germany163 214 575 650 
Japan85 79 249 276 
Others299 118 743 363 
Total1,467 1,389 4,519 4,156 
(1) United States includes data for Canada for 2022. For 2023, Canada is included in "Others".
There were 17 active MPM patients on therapy as of September 30, 2023 and 18 MPM prescriptions were received in the three months ended September 30, 2023.
Three and nine months ended September 30, 2023 compared to three and nine months ended September 30, 2022
Three months ended September 30,Nine months ended September 30,
20232022% Change20232022% Change
Net revenues$127,321 $130,998 (3)%$375,554 $409,411 (8)%
Net revenues. Net revenues decreased 3% to $127.3 million for the three months ending September 30, 2023 from $131.0 million for the same period in 2022, and decreased 8% to $375.6 million for the nine-month period ended September 30, 2023 from $409.4 million for the same period in 2022. For the three months ended September 30, 2023, the decrease primarily resulted from $14.5 million in reduced collections from denied or appealed claims in the U.S., partially offset by an increase of $7.9 million resulting from improved reimbursement approval rates in Germany and $4.2 million from our launch in France. For the nine month period ended September 30, 2023, the decrease resulted primarily from $41.9 million in reduced collections from denied or appealed claims in the U.S., partially offset by an increase of $9.2 million resulting from improved reimbursement approval rates in Germany and $4.2 million from our launch in France.
We believe the outstanding denied and appealed claims that were most accessible were largely exhausted in 2022 and the remaining outstanding claims will take time to collect. As a result, we expect future net revenue to more closely reflect core drivers: number of active patients on therapy, duration of therapy, and net realized price per month. We continue to actively appeal and pursue the remaining previously denied claims, but the cadence and size of these collections are difficult to predict.
Three months ended September 30,Nine months ended September 30,
20232022% Change20232022% Change
Cost of revenues$32,092 $29,749 %$95,724 $85,979 11 %
Cost of revenues. Our cost of revenues for the three months ended September 30, 2023 was $32.1 million, an increase of 8% from $29.7 million for the same period in 2022, and $95.7 million for the nine months ended September 30, 2023, an increase of 11% from $86.0 million for the same period in 2022. For the three and nine
22

months ended September 30, 2023, the increase in cost of revenues was primarily due to increased costs of $2.1 million and $8.6 million, respectively, in patient support capacity in anticipation of treating larger patient populations in new cancer indications and expansion into new geographic regions.
Excluding sales to Zai, cost of revenues per active patient per month was $2,599 for the three months ended September 30, 2023, an increase of 2% from $2,543 for the same period in 2022, primarily due to increased patient support capacity and the ongoing launch of next generation arrays. Cost of revenues per active patient is calculated by dividing the cost of revenues for the quarter less equipment sales to Zai for the quarter by the average of the active patients at the end of the prior quarter and the ending active patients in the current quarter. This quarterly figure is then divided by three to estimate the monthly cost of revenues per active patient. Sales to Zai are deducted because they are sold at cost and in anticipation of future royalties from Zai, and Zai patient counts are not included in our active patient population. Product sales to Zai totaled $4.0 million and $10.3 million for the three and nine months ended September 30, 2023 compared to $3.5 million and $8.8 million for the three and nine months ended September 30, 2022.
Gross margin was 75% for the three months ended September 30, 2023 compared to 77% for the three months ended September 30, 2022. Gross margin was 75% for the nine months ended September 30, 2023 and 79% for the nine months ended September 30, 2022. We expect that our gross margins will continue to be impacted by current and future product enhancements, such as the ongoing launch of next generation arrays. We continue to focus on opportunities to increase efficiencies and scale within our supply chain. This includes evaluating new materials, manufacturers, and processes that could lead to lower costs.
Operating Expenses.
Three months ended September 30,Nine months ended September 30,
20232022% Change20232022% Change
Research, development and clinical studies$53,623 $51,956 %$168,754 $151,265 12 %
Sales and marketing57,964 41,395 40 %167,621 124,029 35 %
General and administrative41,887 32,509 29 %124,609 94,683 32 %
Total operating expenses$153,474 $125,860 22 %$460,984 $369,977 25 %
Research, development and clinical study expenses. Research, development and clinical study expenses increased 3% to $53.6 million for the three months ended September 30, 2023 from $52.0 million for the same period in 2022, and increased 12% to $168.8 million for the nine-month period ended September 30, 2023 from $151.3 million in the same period in 2022. For the three months ended September 30, 2023, the change resulted primarily from an increase in quality assurance, regulatory affairs, product development, and safety costs in anticipation of clinical trial launches and regulatory filings. For the nine months ended September 30, 2023, the increase was primarily driven by a $12.2 million increase in quality assurance, regulatory affairs, product development, and safety costs and an increase of $5.1 million in other personnel expenses. Total research and development expenses can fluctuate quarter-to-quarter dependent upon the amount of clinical research organization services delivered, clinical materials procured and the number of trials actively underway within a given quarter.
Sales and marketing expenses. Sales and marketing expenses increased 40% to $58.0 million for the three months ended September 30, 2023 from $41.4 million for the same period in 2022, and increased 35% to $167.6 million for the nine-month period ended September 30, 2023 from $124.0 million for the same period in 2022. For the three and nine months ended September 30, 2023, these changes were primarily due to increases of $11.7 million and $24.4 million, respectively, in costs associated with geographic expansion and pre-launch activities intended to increase awareness in TTFields in anticipation of future approvals in new indications, as well as increased personnel costs of $1.3 million and $9.7 million, respectively.
General and administrative expenses. General and administrative expenses increased 29% to $41.9 million for the three-month period ended September 30, 2023 from $32.5 million for the same period in 2022, and increased 32% to $124.6 million for the nine months ended September 30, 2023 from $94.7 million for the same period in 2022. For the three and nine months ended September 30, 2023, these changes were primarily due to increases in personnel and project expenses to support potential new indication launches, new geographic launches, supply chain expansion and information technology enhancements of $9.4 million and $29.9 million, respectively.
23

Three months ended September 30,Nine months ended September 30,
20232022% Change20232022% Change
Financial income (expenses), net$10,023 $1,194 739 %$27,948 $(2,743)(1,119)%
Financial income (expenses), net. Financial income increased 739% to $10 million in income for the three months ended September 30, 2023 from $1.2 million of income for the same period in 2022 and financial income increased 1,119% to $27.9 million in income for the nine months ended September 30, 2023 from $2.7 million in expenses for the same period in 2022. For the three-month period ending September 30, 2023, the change from 2022 was primarily due to $8.0 million in increased interest income and $0.8 million in reduced foreign exchange rate expenses. For the nine-month period ending September 30, 2023, the change from 2022 was primarily due to $26.5 million in increased interest income and $4.6 million in reduced foreign exchange expenses.
Three months ended September 30,