Earnings Call Transcript - NVCR Q1 2020

Operator, Operator

Ladies and gentlemen, thank you for standing by and welcome to the Novocure First Quarter 2020 Earnings Conference Call. I would now like to turn the conference to your speaker today, Ashley Cordova, Senior Vice President of Finance & Investor Relations. Please go ahead, ma'am.

Ashley Cordova, Senior Vice President of Finance & Investor Relations

Good morning, everyone and thank you for joining us to review Novocure's first quarter 2020 performance. On behalf of the entire Novocure team, we would like to begin by wishing you well as we collectively face the challenges of the COVID-19 pandemic. We hope that you and your loved ones are staying healthy and safe during this unprecedented time. With safety in mind, we are conducting today’s call virtually. I am joined on the phone by our Executive Chairman, Bill Doyle; our CEO, Asaf Danziger; and our CFO, Wilco Groenhuysen. Pritesh Shah, our Chief Commercial Officer; and Ely Benaim, our Chief Medical Officer are also on the call and available for Q&A. This morning first we will focus on our response to COVID-19. And then we will provide our standard updates on our first quarter performance. The slides presented today can be viewed on our website by clicking on the link for first quarter 2020 financial results located in the Events section on our Investor Relations page. Before we start, I would like to remind you that our discussions during this conference call will include forward-looking statements and actual results could differ materially from those projected in these statements. These statements involve a number of risks and uncertainties some of which are beyond our control including those risks and uncertainties described from time to time in our SEC filings. We do not intend to update publicly any forward-looking statement except as required by law. Following our prepared remarks today we will open the line for questions. Financials for the 3 months ended March 31, 2020 are available on our press release and in our 10-Q, both of which we released earlier this morning. Where appropriate, we will refer to non-GAAP financial measures to evaluate our business. Reconciliations of non-GAAP financial measures to GAAP financial measures are also included in our press release and the appendix of the supplemental slides accompanying this presentation and in our Form 8-K filed with the SEC today. These materials can be accessed from the Investor Relations page of our website. With that, I will now turn the call over to Bill Doyle.

William Doyle, Executive Chairman

Thank you, Ashley and good morning everyone. While the last 2 months have been unprecedented as we adapt to the realities of the global COVID-19 pandemic, we believe the fundamental prospects for our business are unchanged. That said, we have had to adjust the way we conduct business to adapt to the evolving COVID-19 situation. We have implemented measures across our organization to continue delivering Tumor Treating Fields therapy to patients while protecting the Novocure community around the world. In an effort to minimize the spread of the virus, we have instituted work-at-home policies for employees who are not directly involved in operations or patient support. Our global operation centers remain open, but we have segregated these centers into zones to minimize person-to-person contact. We are monitoring the elements of our global supply chain in an effort to ensure we maintain adequate inventories of all key products. Our field-based patient support teams continue to conduct in-person visits when appropriate and to leverage technology to serve our patients virtually. Our award-winning nCompass team continues to provide on-call phone and email support 24 hours a day, 7 days a week. We continue to treat current clinical trial patients and to enroll new patients at existing clinical trial sites in our six ongoing clinical trials. Notwithstanding these efforts, clinical trial enrollment has been adversely impacted by COVID-19, specifically clinical trial site expansion has been and we believe will continue to be materially delayed as sites devote significant resources to COVID-19. We believe the value of the Tumor Treating Fields platform, the resiliency of our direct-to-patient business model, and the long-term potential of our business remain intact. Over the last 20 years, we have built an organization of 850 colleagues dedicated to delivering Tumor Treating Fields, our life-extending therapy to patients with glioblastoma or mesothelioma, and dedicated to performing clinical and product development programs intended to extend survival in some of the most aggressive forms of cancer. Despite the challenges presented by COVID-19, we continue to advance our programs to achieve these goals. The company passed a number of important milestones in the first quarter with more than $100 million in net revenues, more than 3,000 active patients on therapy, and more than 500 million covered lives globally. Our financial strength allows us to continue investing in innovation, and we believe it positions us well to navigate through the substantial uncertainty affecting our industry. The need to treat patients with aggressive cancers does not lessen with COVID-19, and we are confident in our team, our strategy, and the fundamental value proposition of the Tumor Treating Fields platform. I'll share more details on our clinical pipeline later in this morning's call. But first, I'll turn the call over to Asaf to share his perspective on the quarter and recent events.

Asaf Danziger, CEO

Thank you, Bill. In Q1 2020 Novocure delivered another strong quarter of top-line growth with a record $102 million in global net revenues, up 39% versus Q1 2019. Our net revenue growth was driven by continued active patient growth and by expanding reimbursement for Optune. We ended the first quarter with 3,095 active patients on therapy, representing an 18% year-over-year increase and a 6% sequential quarterly increase. Prescription volume also grew. We received 1,409 total prescriptions in Q1, and the mix of newly diagnosed GBM prescriptions remained near 80%. We believe our Q1 performance highlights our team's ingenuity and commitment to serving our patients and their families. COVID-19 is changing how we interact with healthcare providers, but our customer engagement teams remain focused and in execution mode. We are respecting all institutional restrictions on external visitors at the cancer centers, hospitals, and research institutions we serve. While this has resulted in decreased in-person connections, in many instances it is creating new opportunities to engage customers. We were quick to develop multiple virtual engagement tools to connect with healthcare professionals and to enable information sharing. To give some examples, we recently launched a 4-part TTFields webcast series on utilizing telemedicine, delivering treatment in an outpatient setting, and managing Optune treatment remotely. We just conducted the second part of the series on Tuesday evening to connect with both GBM and MPM physicians, many of whom face competing priorities limiting their availability. We continue to host virtual speaker programs and highlight the benefits of home-based treatments, particularly for vulnerable patient populations. Our medical affairs team will lead a roundtable discussion planned to define new clinical guidelines for managing patient care in these challenging times. We have also set up virtual chat capability for our patient ambassadors who are available resources to patients, caregivers, and physicians. Maintaining access to this program is an important way to weave the Optune patient experience into the dialogue between healthcare provider teams and patients diagnosed with GBM or MPM. Beyond our sales and marketing efforts, we continue to advance our product development program intended to improve efficacy and patient usability. In response to social distancing related to COVID-19, we are currently evaluating accelerated regulatory approval options to launch our MyLink remote download capabilities sooner than originally planned. This technology will allow us to download data remotely from a patient's TTFields generator without the need for an in-person visit. We believe that our ongoing product development programs have the potential to significantly improve patient outcomes as we work to extend survival in some of the most aggressive forms of cancer. Our senior management team continues to monitor the development of COVID-19 and to ensure a coordinated response across our global sites. The situation is challenging for us all, but I can assure you we are as focused as ever on driving the commercialization and development of TTFields. With that, I will turn the call back over to Bill to share some data on our clinical trials.

William Doyle, Executive Chairman

Thank you, Asaf. We believe the Tumor Treating Fields mechanism of action is broadly applicable to solid tumor cancers. Our scientific research spans two decades and in all of our preclinical and clinical research to date, Tumor Treating Fields has demonstrated a consistent anti-cancer effect. Results from EF-19, our latest clinical trial dataset were presented earlier this week at the American Association for Cancer Research 2020 Virtual Annual Meeting One. The EF-19 study was mandated by the FDA to confirm the efficacy of Tumor Treating Fields versus best standard of care for recurrent GBM in the post-approval real-life setting. EF-19 studied Optune as monotherapy for the treatment of recurrent GBM in 192 patients compared to 117 recurrent GBM patients who received best standard of care chemotherapy in Novocure's EF-11 registration trial. In EF-19, Optune monotherapy reduced the risk of death with fewer adverse events compared to best standard of care chemotherapy. For patients who received at least one course of therapy, Optune prolonged survival by a median of 1.7 months. No new safety signals were noted. The EF-19 data confirms the effectiveness and safety of Optune and further strengthens Optune's clinical profile in the GBM indication. Our extensive preclinical and clinical evidence provides the foundation upon which we are executing a strategy to advance Tumor Treating Field through additional clinical research studies across multiple solid tumor types. We are currently conducting six clinical programs evaluating the use of Tumor Treating Fields, including four randomized Phase 3 pivotal trials: the METIS trial in brain metastases, the LUNAR trial in non-small cell lung cancer, the PANOVA-3 trial in pancreatic cancer, and the INNOVATE-3 trial in ovarian cancer. Entering the quarter, our patient enrollment projections for LUNAR and PANOVA-3 relied on increases in the number of clinical trial sites to accelerate enrollment. As we engaged METIS investigators throughout the quarter, we also initiated plans to expand the study footprint into additional countries to accelerate enrollment. The clinical trial site expansions have been materially delayed as sites devote significant resources to COVID-19. While we continue to evaluate the initiation of new clinical trial sites using a risk-based framework in accordance with local regulations and site policies, we were only able to onboard two new sites for these trials in March. We continue to work closely with institutions, local authorities, and contract research organizations to maintain engagement and to refine our processes in order to advance our clinical research studies. We have implemented virtual site initiation visits and have developed remote monitoring capabilities. Notwithstanding these efforts, we expect challenges with clinical site initiation and patient enrollment to continue at least through the second quarter. As a result of these delays, we now project final data from METIS in 2022. Additionally, we now anticipate final data from both the LUNAR and PANOVA-3 trials will be available in 2023 with planned enrollment-driven interim analysis in 2021. These projections are based on our current phase of enrollment as well as the anticipated impact of the COVID-19 pandemic on global healthcare systems. The European network for gynecological, oncological trial groups, and the GOG Foundation third-party clinical trial networks are collaborating with us on our INNOVATE-3 Phase 3 pivotal trial and facilitating enrollment at leading cancer centers. Notwithstanding delays in clinical trial site expansion related to the COVID-19 global pandemic, INNOVATE-3 patient enrollment trends continue to outpace our expectations in the first quarter, driving an acceleration in our anticipated enrollment timeline. We now expect final data from INNOVATE-3 in 2023 with an enrollment-driven interim analysis in 2021. We remain optimistic about the potential to significantly expand the addressable market for Tumor Treating Fields with readouts of key data sets anticipated over the next 3 years. We will continue to provide updates in the future as we gain clarity regarding the duration of COVID-19’s impact on the clinical trial environment. With that, I'll turn the call over to Wilco to discuss our financial results.

Wilco Groenhuysen, CFO

Thank you, Bill. Novocure ended the first quarter in a strong financial position. We continue to make progress in developing our commercial business, delivering first quarter net revenues of $102 million, representing 39% growth versus the first quarter of 2019. The year-over-year revenue growth was driven both by an 18% increase in active patients and by a 15% improvement in average net revenues booked per active patient. The increase in revenue per patient benefited from improving reimbursement rates, particularly in the United States. Access to our therapy continues to grow in our active markets, which we believe demonstrates an increasing recognition by health insurers of the value of Tumor Treating Fields. In March, the German Federal Joint Committee, or G-BA, established national reimbursement for Optune in newly diagnosed GBM, following a comprehensive benefit assessment. We consider further expansion of reimbursement in our currently active markets an important lever for continued revenue growth. Specifically, we recognized $7 million in first-quarter net revenues for Medicare beneficiaries built under the positive coverage policy. We are working for the typical administrative ramp-up with Medicare and expect our net revenues from Medicare beneficiaries to further improve as we gain experience processing claims. At the end of the quarter, half of our Medicare active patients started treatment after September 1, 2019, the effective date of the Medicare coverage policy. Moving down to P&L, gross profit in the first quarter was $77 million, reflecting a 76% gross margin. Our capital allocation priorities are unchanged and we continue to invest in innovation as part of our long-term value creation strategy. R&D expenses in the quarter totaled $25 million, up 48% versus the first quarter of 2019, reflecting our ongoing commitment to investments in clinical and product development intended to extend survival in multiple solid tumor cancers. We anticipate R&D expenses will continue to increase in future quarters as we advance these development programs. Our first-quarter SG&A expenses were $55 million, up 30% versus the first quarter of 2019, driven primarily by an increase in marketing expenses related to the launch of Optune Novo and increased personnel costs to support our growing commercial business. In the first quarter, we recorded an income tax benefit of $11 million, as a result of net operating loss carrybacks in the U.S. pursuant to changes in the U.S. tax code enacted in response to the economic impacts of COVID-19. Our net income was $4 million with $0.04 in earnings per share, a third consecutive quarter of positive net income. We also reevaluate our operating performance based on adjusted EBITDA, a non-GAAP measurement of earnings before interest, taxes, depreciation, amortization, and share-based compensation. Adjusted EBITDA increased by $10 million, or 176%, to $15 million for the 3 months ended March 31, 2020, from $5 million for the 3 months ended March 31, 2019. This improvement in fundamental financial performance was driven by top-line growth and disciplined execution. We ended the quarter with $331 million in cash, cash equivalents and short-term investments, an increase of $5 million from the prior quarter. We remain committed to improving financial, operational, and capital efficiency by maintaining a balanced focus across growth, profitability, and liquidity. Before I hand the call over to the operator for Q&A, I would like to thank everyone on the phone for their continued interest in Novocure. The aggressive cancers that we treat do not slow because of COVID-19 and we remain as focused as ever on delivering our therapy to the patients who rely on us. Innovation is one of Novocure's core values, and this innovation is tangible as we adapt in real-time to ensure patients have access to the therapy and the support they need. We continue to monitor the potential impacts of COVID-19 and will adapt our plans as needed to mitigate potential risks as we gain new knowledge. Our first-quarter performance highlights the track record of execution with progress across the commercial business and continued financial strength. We believe that the fundamental prospects of our business are unchanged and our focus is unwavering on strengthening our existing foundation and advancing clinical and product development programs intended to unlock future value. Thank you for your time this morning. With that, I will turn the call over to the operator for questions.

Operator, Operator

Thank you. Our first question comes from Larry Biegelsen with Wells Fargo. Your line is now open.

Unidentified Analyst, Analyst

Hi, everyone. Thanks for taking the questions. This is Kevin on for Larry this morning. My first one is just looking at the total TRx. It came in better than expected in Q1. And now understanding the fundamental need to treat aggressive cancers does not lessen with COVID-19, as you mentioned, I'm just curious if you could parse out how the growth was trending in January/February versus the last two weeks of March as exit growth rate. If you could provide any color by geography too, it would be helpful. I'm also curious if you could just frame up your thoughts on Rx growth you're seeing in April thus far, if you can share it. Is it roughly the same or is it fair to assume it's worse than the March rate? And then I just have one follow-up. Thank you.

William Doyle, Executive Chairman

Yes. Good morning, Kevin. This is Bill. As Ashley mentioned at the top of the call, we are all remote literally in different spots around the world. So, I'm going to be a little more directive in the Q&A than typical because we're not all in the same room. Pritesh, maybe it makes sense for you to comment on Kevin's questions related to TRx’s and trends.

Pritesh Shah, Chief Commercial Officer

Thank you for the question, Kevin. In the first quarter, we surpassed $100 million in net revenues, had over 3,000 active patients, and covered more than 500 million lives. This reinforces our capabilities as a commercial organization to treat more patients with GBM and MPM. Additionally, we received more than 1,400 prescriptions in Q1 2020, showing a 2% growth from the previous quarter and an 8% increase year-over-year. We do not analyze monthly trends in detail but report on the overall performance. Importantly, we did not observe any significant changes in our commercial business during Q1. Based on current observations, we do not expect any material impact on our commercial operations moving forward, considering we have just completed a third of the second quarter. This is the information we can provide at this time.

Unidentified Analyst, Analyst

Perfect. That’s helpful. And then just my follow-up is on the clinical update. You have three interim analyses of Phase 3 trials coming in 2021. Do you have a sense of the cadence from a timing standpoint of when each of those may hit next year? Thanks so much.

William Doyle, Executive Chairman

Yes. So, I think one of the things that's important to understand is that when we initiate a trial, we project a recruitment goal. We have a number of levers that we pull during the trial, including site engagement and site expansion. We don't today project the specific order of those trials. We will provide additional detail as we enter 2021 and the situation with COVID-19 and the situation of the trial sites becomes clear.

Unidentified Analyst, Analyst

Okay. Thank you. That’s helpful. Actually, if I could sneak one more in. I was just curious on this. You're seeing COVID impact new patient starts as you had mentioned. Does it impact active patients as well? In other words, should we expect a death in active patients in Q2, in addition to new patient starts? Any trends and behaviors different in the U.S. by geography there? Thanks so much.

William Doyle, Executive Chairman

Yes. Kevin, this is a very important point to make. When we talked to some of our colleagues in the MedTech arena, there have clearly been dramatic impacts, as even critical heart surgeries are now being considered optional and postponed. Our patients with extremely aggressive cancers are continuing their therapy. We have made real-time adjustments in how we interact with our patients and caregivers. Therefore, we do not see any interruption in our ability to treat our patients on therapy, which includes both commercial and clinical trial patients. We are maintaining patient starts, which is another important aspect to highlight. So, to reinforce what Pritesh mentioned, we do not expect to see any changes in our commercial business due to COVID-19.

Unidentified Analyst, Analyst

Perfect. Thanks for taking the questions, guys.

Operator, Operator

Thank you. Our next question comes from Vijay Kumar with Evercore ISI. Your line is now open.

Vijay Kumar, Analyst

Hey, guys. Thanks for taking my question. So, Bill, maybe one on the clinical trial timelines out there. Interestingly, so we had some push outs, but we also had some pull forwards. If we dig into it, I think the press release had LUNAR as number 3 in your bullet points, I don't know if that's an indication of timeline first half versus second half of '21. And on the ovarian side, the pull forward, why do you think the enrollment is going faster? Is this perhaps because it's a more global trial versus LUNAR? So any comments I think would be helpful.

William Doyle, Executive Chairman

Yes. Good morning, Vijay. First of all, let me clarify that the order in the press release does not affect the projected timeline. As I mentioned earlier, when we initiate these trials, we make some assumptions and projections, and we have specific variables that we manage during the trial. You provided a great example illustrating that our projections can sometimes be overestimates or underestimates. As the trials advance, we gain more clarity regarding the timing details. During typical times, we make adjustments, and as we noted, site engagement and the number of sites are areas where we've faced challenges due to COVID-19. However, in this instance, as you've pointed out, INNOVATE is indeed progressing ahead of the initial projection.

Vijay Kumar, Analyst

I have a question about script volumes. Can we assume that in April there was some impact due to patients' ability to see their treating physicians? If that's true, once the lockdowns were lifted, was there any delay in the channel kicking in? Given that this is related to cancer, I would think the recovery should be substantial. Thank you.

William Doyle, Executive Chairman

Yes. Vijay, I'll just repeat what Pritesh said earlier just to emphasize this. Unlike many or most MedTech businesses, the need to treat patients with aggressive cancers has not been affected with COVID-19. And based on what we know today, we don't anticipate a material impact to our commercial business going forward.

Vijay Kumar, Analyst

That's extremely helpful. Thanks, guys.

Operator, Operator

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

Difei Yang, Analyst

Hi. Good morning. Thanks for taking my questions. Congrats on the great first quarter. So a couple of questions. Would you give us a little bit more information with regards to what are you doing differently post-COVID to get patients started? The new patient start is phenomenal. It's very impressive. I'm just curious what are the sequence of events you did to keep that? And then secondarily, if you could give us an update on what's happening with the GBM approval in China. Are they back to work?

William Doyle, Executive Chairman

Sure. So good morning, Difei. And thanks for the congratulations and thanks for your questions. I'm going to turn the call to Pritesh to answer the questions about what we're doing differently. But I do want to congratulate our teams for moving extremely quickly to implement changes and Pritesh maybe you can describe some of the specific things that we're doing.

Pritesh Shah, Chief Commercial Officer

Sure. Thank you, Bill, and thank you for the question. I'm actually extremely proud of how quickly we've adapted. In our adaptation, a few things were leading us to take the steps that we've taken. First and foremost, we wanted to ensure safety. And second, we wanted to ensure continuity of care as patients were being treated for GBM and MPM. So in the very early days of COVID exposure, we wanted to make sure that we had options for clinicians who wanted to treat patients with Optune. And one of those options included virtual starts. And this required our teams to leverage technology to support patients across our active markets in accordance with local regulations, because we were also up against different regions and different provinces having different sets of regulations. So one way that we were able to achieve this, for example, is using the GoToMeeting platform with patients. We had our first virtual start in Hawaii, for example, where it's not quite remote, but definitely isolated from mainland in the U.S. So that gave us some experience which allowed us to then adapt to other starts that we've conducted in the virtual setting. So we continue to offer today two opportunities for patients to start treatment. One is to ensure that they can leverage this virtual platform. The second is we are still conducting live starts with full personal protective equipment. So these sort of two options are allowing us to pivot to the needs of the care team, as well as patients. On the healthcare provider front, we’re also making sure that they have the education that they need and the resources and the tools they need to support patients. On this front, we’re also engaging virtually and making sure that we're offering them opportunities to see and feel the support that we're providing. And then finally, our nCompass team remains available for the providers as well as for patients. And this is our team of individuals who are supporting patients and providers over the phone virtually as well as live over the telephone. So these are some ways that we've adapted and ensured that we're guaranteeing continuity of care for patients who really need our treatment.

William Doyle, Executive Chairman

Thanks, Pritesh. Difei, our partnership with Zai is stronger than ever. In addition to our work in GBM, they are our clinical partners and we currently have an open trial for gastric cancer in Hong Kong. Regarding the potential GBM approval in Mainland China, Zai's sentiment remains unchanged, and they are actively preparing for the commercial launch in China in the near future.

Difei Yang, Analyst

Thank you, Bill. I have a question regarding the EF-19 study. How do you plan to elaborate on the outcome of that study beyond just meeting regulatory requirements?

William Doyle, Executive Chairman

Thank you for the question. This was a trial that led to our first PMA approval based on the results from the EF-11 trial in recurrent GBM. To remind everyone, that trial compared Optune as a standalone treatment to the best standard of care chemotherapy. Optune was not used alongside chemotherapy; it was used alone. When we presented these data and received approval, it was the first time the FDA had reviewed Optune, and they required us to conduct a post-approval trial. That trial, which we discussed in the press release earlier this week, was presented at the AACR annual meeting, and we were pleased to see that the data demonstrated superiority in a real-life setting compared to the clinical trial controls. Overall, we believe this data confirms the effectiveness and safety of Optune and enhances our clinical profile. Our focus has now shifted to newly diagnosed GBM, which we believe benefits most when used in combination with chemotherapy. This further underscores the value of Optune therapy for GBM patients.

Difei Yang, Analyst

Yes. Thank you, Bill. And if I may, just the last question. Do you expect to do a similar study for newly diagnosed GBM?

William Doyle, Executive Chairman

The FDA did not require a follow-up study for newly diagnosed GBM. The next study we have planned for newly diagnosed GBM is the Trident study, which will evaluate the use of Optune with radiation compared to the use of Optune after radiation. We expect to begin enrollment in that trial shortly and will announce the first patient enrolled in the study.

Difei Yang, Analyst

Thank you, Bill.

Operator, Operator

Thank you. Our next question comes from Esther Rajavelu with Oppenheimer. Your line is now open.

Esther Rajavelu, Analyst

Good morning and thank you for taking my questions. I have a couple of inquiries. First, regarding the U.S. market, could you provide some insight on the split of Medicare patients among your active patients and in your new script numbers?

William Doyle, Executive Chairman

Sure. So thanks, Esther. I'm going to turn it to Wilco, who maybe will comment on the mix of Medicare versus commercial patients in the U.S.

Wilco Groenhuysen, CFO

Yes. Thanks, Bill. Good morning, Esther. The mix is effectively unchanged, Esther. We talked about 25% of the population in the past and that's what we're seeing today with newly diagnosed versus recurrent GBM. But it's the general population, so it's also somewhat comparable to the overall trend, I would say. I think worth noting, and that we mentioned it on the script, is that we are making considerable progress in recognizing revenue for the Medicare population, that is directly correlated with the number of active patients that started therapy after September 1 when the coverage policy became effective. And we're now at approximately 50% rate and we, of course, expect that to go up further in the near future.

Esther Rajavelu, Analyst

Thank you. In terms of the COVID-19 impact, could you share insights on the effect on enrollment in your oncology trials, which are crucial for patients? How does this compare to the impact on timelines in other ongoing oncology trials?

William Doyle, Executive Chairman

Again, we don't comment on others' trials. I mean, we read them and follow them as you do, and we see that some have stopped completely. Others have had difficulty with their follow-ups of patients, etcetera. As we said, we are continuing to treat our current clinical trial patients and we continue to enroll new patients at existing clinical trial sites in our six trials. That said, our trial sites are clearly distracted or many of them are clearly distracted for COVID-19. And that's why we changed the projections as we did this morning.

Esther Rajavelu, Analyst

Would it be accurate to say that the enrollment rate at the sites already open is acceptable, and that the delay in onboarding new sites is what’s impacting the timeline?

William Doyle, Executive Chairman

It's the delay in onboarding new sites is the principal reason for the delay. But as you can imagine, the centers vary all over the place, depending on where they are in the world and where their regions are with respect to the specifics of the pandemic. So it's not a question that has a blanket answer.

Esther Rajavelu, Analyst

Got it. And my last question, regarding the changes you're making to your infrastructure related to sales and marketing and potentially shipping products, do you see those changes as temporary, or will some of them be permanent as you consider ways to drive efficiencies?

William Doyle, Executive Chairman

Yes. First of all, I want to congratulate the entire organization, not just the commercial team, but also our clinical, operations, financial, legal, and all other departments for making significant changes. Those who do not need to be in the office are working from home, just like many of you. We have also altered our operations centers to change how we package, ship, and receive materials to reduce employee exposure. We are utilizing technology throughout the organization. To answer your question directly, many of the initiatives we have implemented have enhanced organizational efficiency and have improved our ability to scale effectively across large populations. These changes will be sustained and further developed as we move forward after the pandemic.

Esther Rajavelu, Analyst

Great. Thank you so much. Congrats.

Operator, Operator

Thank you. Our next question comes from Cory Kasimov with JPMorgan. Your line is now open.

Cory Kasimov, Analyst

Hey, good morning, guys. Thanks for taking my questions. I guess, first of all, on LUNAR, given how this treatment landscape continues to evolve. Curious to get your take on the possibility of potential breakdown of patients enrolling that are actually in the third line plus setting versus second line. Are you still expecting predominantly second line or more of a mix now? And I’ve a follow-up.

William Doyle, Executive Chairman

Yes. So, LUNAR is studying, as you know, Tumor Treating Fields with PD-1 inhibitors or docetaxel for second line treatment of non-small cell lung cancer. We absolutely understand that the landscape for non-small cell lung cancer is changing and it's competitive. That being said, Cory, I'll remind everyone what you know is that Tumor Treating Fields is designed to be used with the best standard of care pharmacology. We've never seen an accumulative toxicity and we've always seen adaptivity or synergism. So we expect that this will be used with whatever emerges as the best standard of care. The study was designed to generate data that contemplates multiple outcomes. And we believe all of them are clinically meaningful for patients, regardless of the ultimate line.

Cory Kasimov, Analyst

Okay. And then I wanted to follow-up on some of the earlier questions on your patient interactions. I mean, Optune TTFs, obviously a different type of product offering in many ways, one of which is how the company trains the patients at home rather than a physician or nurse doing it in office. So here is that approach resonating in this environment? I guess, are you finding this to be an advantage in kind of what we're all living through now or adding another layer of complexity you have to work around?

William Doyle, Executive Chairman

Yes. Cory, I'm going to pass it over to Pritesh for further comments. I want to emphasize that from the start of our commercial strategy development, we aimed to avoid selling through hospitals. Instead, we have a direct-to-patient model where we receive prescriptions, eliminating the need for hospitals or doctor's offices to hold inventory. In the current pandemic situation, where shipping, receiving, and disinfecting inventories can be challenging, our direct-to-patient business model allows us to avoid these complications. This approach, which was established for various reasons, has proven to be very beneficial. Pritesh, could you share more about our activities in the field?

Pritesh Shah, Chief Commercial Officer

Sure. Cory, thank you for that question. One of the core strengths that Optune has is that it's a patient-administered therapy and it fits well into the virtual clinic. And we're hearing this sentiment resonate back to us or expressed back to us from physician advisers at advisory board meetings as we're helping them understand how we have pivoted the patient support model continuing to lie, but also adding a virtual option. We're asking for their feedback and their feedback has been, hey, what you're doing is resonating with patients, it's working for patients. We're not hearing from patients, a disruption in the support that Novocure provides. So that gives us more confidence that the plans that we put in place are the right plans. And as Bill mentioned earlier, we're going to continue to learn from these processes and already we made some adaptations as we're learning on what works more effectively versus what our initial thoughts may have been. So we're making minor tweaks along the way. But I do think that as more and more physicians are practicing telemedicine, their needs are such that they would like products that fit into the way that they're practicing medicine. And we believe that we fit well into that model. So on that front, we're learning more. But our early experience suggests that what we've done to date allows physicians to continue thinking about Optune in a positive manner for their patients.

Cory Kasimov, Analyst

Okay, since there are many questions this morning, I'll ask a third one. Returning to the clinical trial aspect, and considering the pandemic's disruption, I'm curious about the level of physician enthusiasm to enroll patients in your ongoing non-GBM trials. Are you seeing widespread interest from the community as you open a center, or is there a significant effort required to educate, similar to the early days of GBM? Essentially, I'm trying to determine whether the delays in the clinical trials are solely due to the impact of COVID or if there are other factors that you need to navigate. Thank you.

William Doyle, Executive Chairman

Yes. So thanks, Cory. I’m going to turn it over to Ely, our Chief Medical Officer, and maybe he can talk a little bit about the clinician questions that you asked.

Ely Benaim, Chief Medical Officer

Hi. Good morning and thank you, Cory, for your call. To answer your question, it really depends on the trial as you see. There is a lot of enthusiasm in ovarian cancer, which was ramping up right before COVID-19 and continues to grow. We have also seen significant interest in all these trials. It's important to remember that we believe the acceptance of novel technology requires substantial physician education and a change in behavior, and we have observed this effectively in both commercial and clinical settings. There are many factors at play, and we have invested considerable resources to enroll ongoing trials. Generally, the impact on physicians depends on their location and how COVID-19 has affected them, which varies not only by country but also by region. Larger academic centers may be very busy, while community hospitals in the same city continue to enroll patients in trials. So, it does depend on the circumstances, but the enthusiasm is present and hinges on how occupied these investigators are. We are continuing to conduct virtual site initiation visits and monitoring the data. Our commitment to pushing forward with clinical trials remains strong, and I believe that things will improve for us once this situation passes.

Cory Kasimov, Analyst

Okay, great. Thanks for taking the questions.

William Doyle, Executive Chairman

Thanks, Cory.

Operator, Operator

Thank you. Our next question comes from Greg Fraser with SunTrust. Your line is now open.

Gregory Fraser, Analyst

Thanks. Good morning. Thanks for taking the questions. It is Greg Fraser on for Gregg Gilbert. On Optune in the U.S., can you speak to the number of active prescribers that you have and whether that number is still growing and is expanding the base of prescribers of priority?

William Doyle, Executive Chairman

Yes. So, we don't give information about specific providers. What we do say and what we do know is that if you want to think of this in terms of market penetration, we think that we're receiving scripts for about 40% as the round number of the patients in the U.S and that there is a significant continued opportunity for us to help patients. And that's really our goal is to continue to educate work with all potential prescribers. We also believe at this point in the U.S., Germany, and in our key markets, Japan, that we have complete geographic coverage. So it's no longer an issue of greater penetration of clinicians in one part of the country versus another.

Gregory Fraser, Analyst

Got it. And then sort of following up on the last question, I'm curious that the clinical trial sites are generally aligned with centers that have adopted TTF for GBM. And then on the LUNAR study, how many sites are you looking to add and can you comment on where patient enrollment has been?

William Doyle, Executive Chairman

Yes. So just quick answers. These are different clinician groups than in large part with the exception of the METIS trial compared to our GBM sites. Again, our GBM sites are virtually every site that sees GBM patients now in the U.S. So there's not a big correlation there. I will say that the enthusiasm in the new communities does, is certainly benefited by all the progress that we made in GBM. And we describe the enthusiasm of the new indications. They clearly don't know much about TTF. Just like when we started in GBM, this is completely new to these clinician groups. So we do have to do all the active education. And in answering your questions specifically, we expect to add about 130 additional sites for this trial. That’s 130 total sites. Sorry, Greg.

Operator, Operator

Our next question comes from Jason Bednar with Piper Sandler. Your line is now open.

Jason Bednar, Analyst

Thanks. Good morning, everyone. Thanks for taking the questions and for all the updates this morning. Bill, maybe going back briefly to the post-approval newly diagnosed GBM study, you mentioned in response to Difei's question earlier. I know we'll see the details when you posted, but is there anything you can talk about today with respect to maybe study size or expected blights? And then is there anything we should be mindful of with respect to the P&L once that trial launches?

William Doyle, Executive Chairman

Okay. So I think there are two things. So with respect to the EF-19 clinical study, this was one of 192 patients in the active group compared to 117 who received the best standard of care. So this was not a launch of a study. This was the completion of a study. And this was kind of a low-profile study because it was a confirmation study, but it was nonetheless exciting for us to see our ability to have yet another data set. And maybe, Pritesh, I don't know if you want to make a comment about the commercial impact of the study.

Pritesh Shah, Chief Commercial Officer

Bill, I apologize for interrupting, but my question was specifically about the new diagnosed study that will be launching in combination with radiotherapy.

William Doyle, Executive Chairman

Okay. Private study. Yes. This study has been designed, sites have been signed up, and we are currently just awaiting the first patient to enroll.

Jason Bednar, Analyst

Okay. And then just, I guess one other one for me. Maybe on a couple of your product pipeline items, the array and the new treatment playing the symmetry software. Is there anything you can discuss there with respect to launch or rollout timing and maybe has COVID impacted your launch plans for either of those items?

William Doyle, Executive Chairman

Maybe I'll let Asaf comment on the new products and where we stand. I know that our MyLink product is very much front of mind, but also the work that we're doing with the array.

Asaf Danziger, CEO

Thank you for the questions. And sorry for being mute. So we do believe that it's a significant opportunity to improve Optune efficacy and we are working on it. Our engineers are working on it for many years and we will continue to develop. We are not expecting any delay in our new development or the new launch of products, if at all it gathers around. We are planning to basically launch our MyLink sooner than we expected. So all in all, engineering is not affected by COVID in any way or shape. There are other engineering reports that suggest we're going to launch them earlier.

Operator, Operator

Thank you. I'm not showing any further questions at this time. I would now like to turn the call back over to Bill Doyle for closing remarks.

William Doyle, Executive Chairman

I want to thank everyone for their continued interest in Novocure and our therapy. Our thoughts are with all of you during these challenging times, as we know many people around the world are facing significant disruptions. Our primary focus has been on ensuring continuity of care for our patients and safeguarding the health and safety of our employees. I am very proud of the progress our team has achieved and can confirm that we do not anticipate any significant disruptions to our business operations. This is a remarkable accomplishment by our team, and we also expect no changes to the fundamental value proposition of the company. Thank you all once again for your interest in Novocure.

Operator, Operator

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.