NOVOCURE LTD, 10-Q filed on 5/2/2019
Quarterly Report
v3.19.1
Document and Entity Information - shares
3 Months Ended
Mar. 31, 2019
Apr. 25, 2019
Document Document And Entity Information [Abstract]    
Document Type 10-Q  
Amendment Flag false  
Document Period End Date Mar. 31, 2019  
Document Fiscal Year Focus 2019  
Document Fiscal Period Focus Q1  
Trading Symbol NVCR  
Entity Registrant Name Novocure Ltd  
Entity Central Index Key 0001645113  
Current Fiscal Year End Date --12-31  
Entity Filer Category Large Accelerated Filer  
Entity Small Business false  
Entity Emerging Growth Company false  
Entity Common Stock, Shares Outstanding   95,766,474
v3.19.1
CONSOLIDATED BALANCE SHEETS - USD ($)
$ in Thousands
Mar. 31, 2019
Dec. 31, 2018
CURRENT ASSETS:    
Cash and cash equivalents $ 152,067 $ 140,622
Short-term investments 104,535 105,256
Restricted cash 2,094 2,134
Trade receivables 39,220 36,523
Receivables and prepaid expenses 13,619 14,279
Inventories 24,138 22,555
Total current assets 335,673 321,369
LONG-TERM ASSETS:    
Property and equipment, net 8,421 8,442
Field equipment, net 7,266 6,924
Right-of-use assets, net 13,920 0
Other long-term assets 4,975 3,058
Total long-term assets 34,582 18,424
TOTAL ASSETS 370,255 339,793
CURRENT LIABILITIES:    
Trade payables 29,943 26,708
Other payables, lease liabilities and accrued expenses 41,005 37,852
Total current liabilities 70,948 64,560
LONG-TERM LIABILITIES:    
Long-term loan, net of discount and issuance costs 149,305 149,268
Deferred revenue 9,407 9,929
Employee benefit liabilities 2,823 2,683
Long-term lease liabilities 11,015 0
Other long-term liabilities 363 1,094
Total long-term liabilities 172,913 162,974
TOTAL LIABILITIES 243,861 227,534
COMMITMENTS AND CONTINGENCIES 0 0
SHAREHOLDERS' EQUITY:    
Ordinary shares no par value, unlimited shares authorized; issued and outstanding: 95,692,797 shares and 93,254,185 shares at March 31, 2019 (unaudited) and December 31, 2018, respectively 0 0
Additional paid-in capital 783,941 757,314
Accumulated other comprehensive income (loss) (1,742) (1,400)
Retained earnings (accumulated deficit) (655,805) (643,655)
Total shareholders' equity 126,394 112,259
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 370,255 $ 339,793
v3.19.1
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares
3 Months Ended 12 Months Ended
Mar. 31, 2019
Dec. 31, 2018
Statement Of Financial Position [Abstract]    
Common stock, par value
Common stock, shares authorized Unlimited Unlimited
Common stock, shares issued 95,692,797 93,254,185
Common stock, shares outstanding 95,692,797 93,254,185
v3.19.1
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($)
$ in Thousands
3 Months Ended 12 Months Ended
Mar. 31, 2019
Mar. 31, 2018
Dec. 31, 2018
Income Statement [Abstract]      
Net revenues $ 73,309 $ 52,125 $ 248,069
Cost of revenues 19,814 18,238 80,048
Gross profit 53,495 33,887 168,021
Operating costs and expenses:      
Research, development and clinical trials 17,042 11,104 50,574
Sales and marketing 22,333 18,135 77,663
General and administrative 20,238 17,325 73,456
Total operating costs and expenses 59,613 46,564 201,693
Operating income (loss) (6,118) (12,677) (33,672)
Financial expenses (income), net 2,371 4,853 12,270
Income (loss) before income taxes (8,489) (17,530) (45,942)
Income taxes 3,661 3,194 17,617
Net income (loss) $ (12,150) $ (20,724) $ (63,559)
Basic and diluted net income (loss) per ordinary share $ (0.13) $ (0.23) $ (0.69)
Weighted average number of ordinary shares used in computing basic and diluted net income (loss) per share 94,811,282 89,985,612 91,828,043
v3.19.1
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($)
$ in Thousands
3 Months Ended 12 Months Ended
Mar. 31, 2019
Mar. 31, 2018
Dec. 31, 2018
Statement Of Income And Comprehensive Income [Abstract]      
Net income (loss) $ (12,150) $ (20,724) $ (63,559)
Other comprehensive income (loss), net of tax:      
Change in foreign currency translation adjustments (261) 10 27
Pension benefit plan (81) 5 (84)
Total comprehensive income (loss) $ (12,492) $ (20,709) $ (63,616)
v3.19.1
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY - USD ($)
$ in Thousands
Total
Ordinary Shares
Additional Paid-in Capital
Accumulated Other Comprehensive Loss
Retained Earnings (Accumulated Deficit)
Balance at Dec. 31, 2017 $ 113,564   $ 697,165 $ (1,343) $ (582,258)
Balance (in shares) at Dec. 31, 2017   89,478,032      
Share-based compensation to employees 8,520   8,520    
Exercise of options and warrants and vested RSUs 2,581   2,581    
Exercise of options and warrants and vested RSUs (in shares)   920,869      
Cumulative effect adjustment on retained earnings (*) [1] 2,162       2,162
Other comprehensive income (loss), net of tax benefit 15     15  
Net income (loss) (20,724)       (20,724)
Balance at Mar. 31, 2018 106,118   708,266 (1,328) (600,820)
Balance (in shares) at Mar. 31, 2018   90,398,901      
Balance at Dec. 31, 2017 113,564   697,165 (1,343) (582,258)
Balance (in shares) at Dec. 31, 2017   89,478,032      
Net income (loss) (63,559)        
Balance at Dec. 31, 2018 112,259   757,314 (1,400) (643,655)
Balance (in shares) at Dec. 31, 2018   93,254,185      
Share-based compensation to employees 9,649   9,649    
Exercise of options and warrants and vested RSUs 16,978   16,978    
Exercise of options and warrants and vested RSUs (in shares)   2,438,612      
Other comprehensive income (loss), net of tax benefit (342)     (342)  
Net income (loss) (12,150)       (12,150)
Balance at Mar. 31, 2019 $ 126,394   $ 783,941 $ (1,742) $ (655,805)
Balance (in shares) at Mar. 31, 2019   95,692,797      
[1] Resulting from the adoption of ASC 606.
v3.19.1
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Parenthetical) - USD ($)
$ in Thousands
3 Months Ended
Mar. 31, 2019
Mar. 31, 2018
Statement Of Stockholders Equity [Abstract]    
Other comprehensive income (loss), tax benefit $ 11 $ 5
v3.19.1
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)
$ in Thousands
3 Months Ended 12 Months Ended
Mar. 31, 2019
Mar. 31, 2018
Dec. 31, 2018
Cash flows from operating activities:      
Net income (loss) $ (12,150) $ (20,724) $ (63,559)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:      
Depreciation and amortization 1,929 2,203 9,006
Asset write-downs and impairment of field equipment 75 49 407
Share-based compensation to employees 9,649 8,520 39,846
Decrease (increase) in trade receivables (2,697) (1,672) (4,151)
Amortization of discount (premium) (578) 2,427 1,022
Decrease (increase) in receivables and prepaid expenses 661 (1,834) (6,174)
Decrease (increase) in inventories (1,583) 1,638 (529)
Decrease (increase) in other long-term assets (1,899) (620) (949)
Decrease (increase) in right of use assets, net 1,813    
Increase (decrease) in trade payables 3,235 2,213 9,503
Increase (decrease) in other payables and accrued expenses (989) (8,300) 4,210
Increase (decrease) in employee benefit liabilities, net 43 76 133
Increase (decrease) in long-term lease liability (577)    
Increase (decrease) in other long-term liabilities (1,247) (800) 9,370
Net cash provided by (used in) operating activities (4,315) (16,824) (1,865)
Cash flows from investing activities:      
Purchase of property and equipment (860) (737) (2,916)
Purchase of field equipment (1,465) (1,370) (3,795)
Proceeds from maturity of short-term investments 105,661 45,000 255,000
Purchase of short-term investments (104,325) (44,750) (253,782)
Net cash provided by (used in) investing activities (989) (1,857) (5,493)
Cash flows from financing activities:      
Proceeds from issuance of shares, net     1,835
Proceeds from long-term loan, net   149,150 149,150
Repayment of long-term loan   (100,000) (100,000)
Repayment of other long-term loan (8) (17) (84)
Exercise of options and warrants 16,978 2,581 18,468
Net cash provided by (used in) financing activities 16,970 51,714 69,369
Effect of exchange rate changes on cash and cash equivalents (261) 10 27
Increase (decrease) in cash, cash equivalents and restricted cash 11,405 33,043 62,038
Cash, cash equivalents and restricted cash at beginning of period 142,756 80,718 80,718
Cash, cash equivalents and restricted cash at the end of the period 154,161 113,761 142,756
Cash paid during the period for:      
Income taxes 3,033 3,758 20,350
Interest 3,379 $ 3,009 $ 13,334
Non-cash activities upon implementation of ASC-842:      
Right of use assets obtained in exchange for lease obligations: $ 15,733    
v3.19.1
Organization and Basis of Presentation
3 Months Ended
Mar. 31, 2019
Organization Consolidation And Presentation Of Financial Statements [Abstract]  
Organization and Basis of Presentation

 

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 Optune for the treatment of solid tumors. The Company has regulatory approvals and clearances in certain countries for Optune to treat adult patients with glioblastoma (“GBM”).  

Financial statement preparation. The accompanying 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 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 consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in these consolidated financial statements and accompanying notes. Actual results could differ materially from those estimates. These 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, 2018 (the “2018 10-K”) filed with the Securities and Exchange Commission on February 28, 2019.

The significant accounting policies applied in the audited annual consolidated financial statements of the Company as disclosed in the 2018 10-K are applied consistently in these unaudited interim consolidated financial statements, except as noted below:

Recently Adopted Accounting Pronouncements. In 2016, the FASB issued ASU No. 2016-02, "Leases (Topic 842)", which amends the existing standards for lease accounting, requiring lessees to recognize most leases on their balance sheets. The new standard establishes a right-of-use model that requires a lessee to recognize a right-of-use asset and lease liability on the balance sheet for all leases with a term longer than 12 months. Leases will be classified as finance or operating. The standard is effective for interim and annual reporting periods beginning after December 15, 2018.

 

The provisions of ASU 2016-02 are to be applied using a modified retrospective approach. In July 2018, the FASB issued ASU No. 2018-11, "Targeted Improvements - Leases (Topic 842)." This update provides an additional (and optional) transition method to adopt the new leases standard. Under this method, an entity initially applies the new leases standard at the adoption date and recognizes a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. Consequently, the prior comparative period’s financials will remain the same as those previously presented. The Company adopted the new standard as of January 1, 2019 and it has also elected to adopt the package of practical expedients permitted in ASC 842.

The consolidated financial statements for the three months ended March 31, 2019 are presented under the new standard, while comparative year and periods presented are not adjusted and continue to be reported in accordance with Topic 840, Leases.

v3.19.1
Cash, Cash Equivalents and Short-Term Investments
3 Months Ended
Mar. 31, 2019
Cash Cash Equivalents And Short Term Investments [Abstract]  
Cash, Cash equivalents and Short-Term investments

NOTE 2: CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS

 

Cash equivalents include items almost as liquid as cash, such as certificates of deposit and time deposits with maturity periods of three months or less when purchased.

 

 

March 31,

 

 

December 31,

 

 

 

2019

 

 

2018

 

 

 

Unaudited

 

 

Audited

 

Cash

 

$

9,104

 

 

$

9,197

 

Money market funds

 

 

142,963

 

 

 

131,425

 

Total cash and cash equivalents

 

$

152,067

 

 

$

140,622

 

 

The Company invests in marketable U.S. Treasury Bills (“T-bills”) that are classified as held-to-maturity securities. The amortized cost and recorded basis of the T-bills are presented as short-term investments.

 

 

 

March 31,

 

 

December 31,

 

 

 

2019

 

 

2018

 

 

 

Unaudited

 

 

Audited

 

Short-term investments

 

$

104,535

 

 

$

105,256

 

 

The estimated fair value of the Company’s short-term investments as of March 31, 2019 and December 31, 2018 was $104,547 and $105,266, respectively.

v3.19.1
Inventories
3 Months Ended
Mar. 31, 2019
Inventory Disclosure [Abstract]  
Inventories

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 March 31, 2019 and December 31, 2018, the Company’s inventories were composed of:

 

 

 

March 31,

 

 

December 31,

 

 

 

2019

 

 

2018

 

 

 

Unaudited

 

 

Audited

 

Raw materials

 

$

1,526

 

 

$

870

 

Work in progress

 

 

8,176

 

 

 

8,667

 

Finished products

 

 

14,436

 

 

 

13,018

 

Total

 

$

24,138

 

 

$

22,555

 

 

v3.19.1
Commitments Rights of Use and Contingent Liabilities
3 Months Ended
Mar. 31, 2019
Commitments And Contingencies Disclosure [Abstract]  
Commitments, Rights of Use and Contingent Liabilities

NOTE 4: COMMITMENTS, RIGHTS OF USE AND CONTINGENT LIABILITIES

Operating Leases and Rights of Use. The facilities of the Company are leased under various operating lease agreements for periods, including options for extensions, ending no later than 2029. The Company also leases motor vehicles under various operating leases, which expire on various dates, the latest of which is in 2022.

Under ASU No. 2016-02, “Leases (Topic 842), all leases with durations greater than 12 months, including non-cancelable operating leases, are now recognized on the balance sheet. The aggregated present value of lease agreements, net of deferred rent, are recorded as a long-term asset titled right-of-use assets. The corresponding lease liabilities are split between other payables within current liabilities and long-term lease liabilities within long-term liabilities. The lease liabilities are presented without consideration for deferred rent.

Upon implementation of ASC-842, effective January 1, 2019, the Company recorded an increase in right-of-use assets obtained in exchange for lease obligations of $15,733 on our opening balance sheet. Lease and rental payments for the three months ended March 31, 2019, totaled $1,740. Future minimum lease payments under non-cancelable operating leases as of March 31, 2019, are as follows:

 

 

 

March 31,

 

 

 

2019

 

 

 

Unaudited

 

Future minimum lease payments:

 

 

 

 

2019 (excluding the three months ended March 31, 2019)

 

$

3,216

 

2020

 

 

3,766

 

2021

 

 

3,475

 

2022

 

 

2,503

 

2023

 

 

1,655

 

Thereafter

 

 

3,258

 

Total future minimum lease payments

 

$

17,873

 

Less imputed interest

 

 

(3,090

)

Net present value of future minimum lease payments

 

$

14,783

 

 

 

 

 

 

Presented as of March 31, 2019:

 

 

 

 

Short-term lease liabilities

 

$

3,768

 

Long-term lease liabilities

 

 

11,015

 

Net present value of future minimum lease payments

 

$

14,783

 

 

 

 

 

 

Weighted average of remaining operating lease term

 

 

6.38

 

 

 

 

 

 

Weighted average of operating lease discount rate

 

 

7.46

%

 

The right-of-use assets are presented net of $863 in deferred rents.

Pledged deposits and bank guarantees. As of March 31, 2019 and December 31, 2018, the Company pledged bank deposits of $1,134 and $1,143, 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 $1,294 and $1,299, respectively.

v3.19.1
Share Capital
3 Months Ended
Mar. 31, 2019
Share Based Compensation Allocation And Classification In Financial Statements [Abstract]  
Share Capital

NOTE 5: SHARE CAPITAL

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 stock units (“RSUs”), performance units, long-term cash awards and other share-based awards.

Options granted under the 2015 Plan generally have a four-year vesting period and expire ten years after the date of grant. Options granted under the 2015 Plan that are cancelled or forfeited before expiration become available for future grants. RSUs granted under the 2015 Plan generally vest over a three-year period. RSUs granted under the 2015 Plan that are cancelled before expiration become available for future grants. As of March 31, 2019, 12,649,222 ordinary shares were available for grant under the 2015 Plan.

A summary of the status of the Company’s option plans as of March 31, 2019 and changes during the period then ended is presented below: 

 

 

 

Three months ended March 31, 2019

 

 

 

Unaudited

 

 

 

Number

of options

 

 

Weighted

average

exercise

price

 

Outstanding at beginning of year

 

 

14,438,215

 

 

$

13.56

 

Granted

 

 

751,471

 

 

 

47.04

 

Exercised

 

 

(2,047,421

)

 

 

8.38

 

Forfeited and cancelled

 

 

(40,258

)

 

 

14.47

 

Outstanding as of March 31, 2019

 

 

13,102,007

 

 

$

16.29

 

 

 

 

 

 

 

 

 

 

Exercisable options

 

 

5,852,344

 

 

$

12.79

 

 

 

 

 

 

 

 

 

 

For the three months, ended March 31, 2019, options to purchase 2,047,421 ordinary shares were exercised, resulting in the issuance of 2,047,421 ordinary shares.

A summary of the status of the Company’s RSUs as of March 31, 2019 and changes during the period then ended is presented below: 

 

 

 

Three months ended March 31, 2019

 

 

 

Unaudited

 

 

 

Number

of RSUs

 

 

Weighted

average

grant date fair value

price

 

Unvested at beginning of year

 

 

1,613,197

 

 

$

14.04

 

Granted

 

 

486,506

 

 

 

47.04

 

Vested

 

 

(391,191

)

 

 

12.09

 

Forfeited and cancelled

 

 

(3,837

)

 

 

21.15

 

Unvested as of March 31, 2019

 

 

1,704,675

 

 

$

23.89

 

 

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 will be construed in a manner consistent with the requirements of such section. The Company began its offerings under the ESPP on August 1, 2016. As of March 31, 2019, 3,122,410 ordinary shares were available to be purchased by eligible employees under the ESPP and 347,193 shares had been issued 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, with the following underlying assumptions: 

 

 

 

Three months ended March 31,

 

Year ended

December 31,

 

 

2019

 

2018

 

2018

 

 

Unaudited

 

Audited

Stock Option Plans

 

 

 

 

 

 

Expected term (years)

 

6.23

 

6.25

 

5.50-6.25

Expected volatility

 

55%

 

55%

 

52%-55%

Risk-free interest rate

 

2.40%

 

2.77%

 

2.70%-2.99%

Dividend yield

 

0.00%

 

0.00%

 

0.00%

ESPP

 

 

 

 

 

 

Expected term (years)

 

0.50

 

0.50

 

0.50

Expected volatility

 

62%

 

53%

 

45%-53%

Risk-free interest rate

 

2.51%

 

1.61%

 

1.61%-2.14%

Dividend yield

 

0.00%

 

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 months ended March 31, 2019 and 2018 and the year ended December 31, 2018 was:

 

 

 

Three months ended March 31,

 

 

Year ended

December 31,

 

 

 

2019

 

 

2018

 

 

2018

 

 

 

Unaudited

 

 

Audited

 

Cost of revenues

 

$

426

 

 

$

164

 

 

$

1,261

 

Research, development and clinical trials

 

 

1,188

 

 

 

906

 

 

 

4,709

 

Sales and marketing

 

 

1,962

 

 

 

1,436

 

 

 

7,393

 

General and administrative

 

 

6,073

 

 

 

6,014

 

 

 

26,483

 

Total share-based compensation expense

 

$

9,649

 

 

$

8,520

 

 

$

39,846

 

v3.19.1
Supplemental Information
3 Months Ended
Mar. 31, 2019
Geographic Areas Long Lived Assets [Abstract]  
Supplemental Information

NOTE 6: SUPPLEMENTAL INFORMATION

The Company operates in a single reportable segment.

The following table presents long-lived assets by location:

 

 

 

March 31,

 

 

December 31,

 

 

 

2019

 

 

2018

 

 

 

Unaudited

 

 

Audited

 

United States

 

$

7,973

 

 

$

8,289

 

Switzerland

 

 

2,939

 

 

 

2,513

 

Israel

 

 

2,428

 

 

 

2,236

 

Germany

 

 

958

 

 

 

1,054

 

Others

 

 

1,389

 

 

 

1,274

 

Total

 

$

15,687

 

 

$

15,366

 

 

The Company’s revenues by geographic region, based on the customer’s location, are summarized as follows:

 

 

 

Three months ended March 31,

 

 

Year ended

December 31,

 

 

 

2019

 

 

2018

 

 

2018

 

 

 

Unaudited

 

 

Audited

 

United States

 

$

46,604

 

 

$

37,802

 

 

$

168,414

 

EMEA (*)

 

 

22,520

 

 

 

13,874

 

 

 

72,485

 

Japan

 

 

3,370

 

 

 

449

 

 

 

6,351

 

Greater China (1)

 

 

815

 

 

 

-

 

 

 

819

 

Total

 

$

73,309

 

 

$

52,125

 

 

$

248,069

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(*) including Germany

 

$

21,287

 

 

$

13,358

 

 

$

67,849

 

 

(1)

Reflects revenue recognized in accordance with a License and Collaboration Agreement between us and Zai Lab (Shanghai) Co., Ltd. (“Zai”), dated September 10, 2018, pursuant to which Zai is commercializing Optune in China, Hong Kong, Macau and Taiwan (“Greater China”). For additional information, see Note 12 to the Consolidated Financial Statements in our 2018 10-K.

v3.19.1
Organization and Basis of Presentation (Policies)
3 Months Ended
Mar. 31, 2019
Organization Consolidation And Presentation Of Financial Statements [Abstract]  
Recently Adopted Accounting Pronouncements

Recently Adopted Accounting Pronouncements. In 2016, the FASB issued ASU No. 2016-02, "Leases (Topic 842)", which amends the existing standards for lease accounting, requiring lessees to recognize most leases on their balance sheets. The new standard establishes a right-of-use model that requires a lessee to recognize a right-of-use asset and lease liability on the balance sheet for all leases with a term longer than 12 months. Leases will be classified as finance or operating. The standard is effective for interim and annual reporting periods beginning after December 15, 2018.

 

The provisions of ASU 2016-02 are to be applied using a modified retrospective approach. In July 2018, the FASB issued ASU No. 2018-11, "Targeted Improvements - Leases (Topic 842)." This update provides an additional (and optional) transition method to adopt the new leases standard. Under this method, an entity initially applies the new leases standard at the adoption date and recognizes a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. Consequently, the prior comparative period’s financials will remain the same as those previously presented. The Company adopted the new standard as of January 1, 2019 and it has also elected to adopt the package of practical expedients permitted in ASC 842.

The consolidated financial statements for the three months ended March 31, 2019 are presented under the new standard, while comparative year and periods presented are not adjusted and continue to be reported in accordance with Topic 840, Leases.

v3.19.1
Cash, Cash Equivalents and Short-Term Investments (Tables)
3 Months Ended
Mar. 31, 2019
Cash Cash Equivalents And Short Term Investments [Abstract]  
Summary of Cash and Cash Equivalents

 

Cash equivalents include items almost as liquid as cash, such as certificates of deposit and time deposits with maturity periods of three months or less when purchased.

 

 

March 31,

 

 

December 31,

 

 

 

2019

 

 

2018

 

 

 

Unaudited

 

 

Audited

 

Cash

 

$

9,104

 

 

$

9,197

 

Money market funds

 

 

142,963

 

 

 

131,425

 

Total cash and cash equivalents

 

$

152,067

 

 

$

140,622

 

Summary of Amortized Cost and Recorded Basis of T-bills in Short-Term Investments

The Company invests in marketable U.S. Treasury Bills (“T-bills”) that are classified as held-to-maturity securities. The amortized cost and recorded basis of the T-bills are presented as short-term investments.

 

 

 

March 31,

 

 

December 31,

 

 

 

2019

 

 

2018

 

 

 

Unaudited

 

 

Audited

 

Short-term investments

 

$

104,535

 

 

$

105,256

 

v3.19.1
Inventories (Tables)
3 Months Ended
Mar. 31, 2019
Inventory Disclosure [Abstract]  
Schedule of Inventories

Inventories are stated at the lower of cost or net realizable value. The weighted average methodology is applied to determine cost. As of March 31, 2019 and December 31, 2018, the Company’s inventories were composed of:

 

 

 

March 31,

 

 

December 31,

 

 

 

2019

 

 

2018

 

 

 

Unaudited

 

 

Audited

 

Raw materials

 

$

1,526

 

 

$

870

 

Work in progress

 

 

8,176

 

 

 

8,667

 

Finished products

 

 

14,436

 

 

 

13,018

 

Total

 

$

24,138

 

 

$

22,555

 

 

v3.19.1
Commitments Rights of Use and Contingent Liabilities (Tables)
3 Months Ended
Mar. 31, 2019
Commitments And Contingencies Disclosure [Abstract]  
Schedule of Future Minimum Lease Payments under Non-Cancelable Operating Lease Future minimum lease payments under non-cancelable operating leases as of March 31, 2019, are as follows:

 

 

 

March 31,

 

 

 

2019

 

 

 

Unaudited

 

Future minimum lease payments:

 

 

 

 

2019 (excluding the three months ended March 31, 2019)

 

$

3,216

 

2020

 

 

3,766

 

2021

 

 

3,475

 

2022

 

 

2,503

 

2023

 

 

1,655

 

Thereafter

 

 

3,258

 

Total future minimum lease payments

 

$

17,873

 

Less imputed interest

 

 

(3,090

)

Net present value of future minimum lease payments

 

$

14,783

 

 

 

 

 

 

Presented as of March 31, 2019:

 

 

 

 

Short-term lease liabilities

 

$

3,768

 

Long-term lease liabilities

 

 

11,015

 

Net present value of future minimum lease payments

 

$

14,783

 

 

 

 

 

 

Weighted average of remaining operating lease term

 

 

6.38

 

 

 

 

 

 

Weighted average of operating lease discount rate

 

 

7.46

%

 

v3.19.1
Share Capital (Tables)
3 Months Ended
Mar. 31, 2019
Share Based Compensation Allocation And Classification In Financial Statements [Abstract]  
Schedule of Stock Option Plans

A summary of the status of the Company’s option plans as of March 31, 2019 and changes during the period then ended is presented below: 

 

 

 

Three months ended March 31, 2019

 

 

 

Unaudited

 

 

 

Number

of options

 

 

Weighted

average

exercise

price

 

Outstanding at beginning of year

 

 

14,438,215

 

 

$

13.56

 

Granted

 

 

751,471

 

 

 

47.04

 

Exercised

 

 

(2,047,421

)

 

 

8.38

 

Forfeited and cancelled

 

 

(40,258

)

 

 

14.47

 

Outstanding as of March 31, 2019

 

 

13,102,007

 

 

$

16.29

 

 

 

 

 

 

 

 

 

 

Exercisable options

 

 

5,852,344

 

 

$

12.79

 

 

 

 

 

 

 

 

 

 

Schedule of RSU's

A summary of the status of the Company’s RSUs as of March 31, 2019 and changes during the period then ended is presented below: 

 

 

 

Three months ended March 31, 2019

 

 

 

Unaudited

 

 

 

Number

of RSUs

 

 

Weighted

average

grant date fair value

price

 

Unvested at beginning of year

 

 

1,613,197

 

 

$

14.04

 

Granted

 

 

486,506

 

 

 

47.04

 

Vested

 

 

(391,191

)

 

 

12.09

 

Forfeited and cancelled

 

 

(3,837

)

 

 

21.15

 

Unvested as of March 31, 2019

 

 

1,704,675

 

 

$

23.89

 

Schedule of Fair Value Assumptions Used for All Equity Based Awards Estimated Using Black-Scholes Option Pricing Model

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, with the following underlying assumptions: 

 

 

 

Three months ended March 31,

 

Year ended

December 31,

 

 

2019

 

2018

 

2018

 

 

Unaudited

 

Audited

Stock Option Plans

 

 

 

 

 

 

Expected term (years)

 

6.23

 

6.25

 

5.50-6.25

Expected volatility

 

55%

 

55%

 

52%-55%

Risk-free interest rate

 

2.40%

 

2.77%

 

2.70%-2.99%

Dividend yield

 

0.00%

 

0.00%

 

0.00%

ESPP

 

 

 

 

 

 

Expected term (years)

 

0.50

 

0.50

 

0.50

Expected volatility

 

62%

 

53%

 

45%-53%

Risk-free interest rate

 

2.51%

 

1.61%

 

1.61%-2.14%

Dividend yield

 

0.00%

 

0.00%

 

0.00%

Schedule of Non-cash Share-based Compensation Expense Related to Company's Equity-Based Awards

The total non-cash share-based compensation expense related to all of the Company’s equity-based awards recognized for the three months ended March 31, 2019 and 2018 and the year ended December 31, 2018 was:

 

 

 

Three months ended March 31,

 

 

Year ended

December 31,

 

 

 

2019

 

 

2018

 

 

2018

 

 

 

Unaudited

 

 

Audited

 

Cost of revenues

 

$

426

 

 

$

164

 

 

$

1,261

 

Research, development and clinical trials

 

 

1,188

 

 

 

906

 

 

 

4,709

 

Sales and marketing

 

 

1,962

 

 

 

1,436

 

 

 

7,393

 

General and administrative

 

 

6,073

 

 

 

6,014

 

 

 

26,483

 

Total share-based compensation expense

 

$

9,649

 

 

$

8,520

 

 

$

39,846

 

v3.19.1
Supplemental Information (Tables)
3 Months Ended
Mar. 31, 2019
Geographic Areas Long Lived Assets [Abstract]  
Schedule of Long-Lived Assets by Location

The following table presents long-lived assets by location:

 

 

 

March 31,

 

 

December 31,

 

 

 

2019

 

 

2018

 

 

 

Unaudited

 

 

Audited

 

United States

 

$

7,973

 

 

$

8,289

 

Switzerland

 

 

2,939

 

 

 

2,513

 

Israel

 

 

2,428

 

 

 

2,236

 

Germany

 

 

958

 

 

 

1,054

 

Others

 

 

1,389

 

 

 

1,274

 

Total

 

$

15,687

 

 

$

15,366

 

Schedule of Revenues by Geographic Region

The Company’s revenues by geographic region, based on the customer’s location, are summarized as follows:

 

 

 

Three months ended March 31,

 

 

Year ended

December 31,

 

 

 

2019

 

 

2018

 

 

2018

 

 

 

Unaudited

 

 

Audited

 

United States

 

$

46,604

 

 

$

37,802

 

 

$

168,414

 

EMEA (*)

 

 

22,520

 

 

 

13,874

 

 

 

72,485

 

Japan

 

 

3,370

 

 

 

449

 

 

 

6,351

 

Greater China (1)

 

 

815

 

 

 

-

 

 

 

819

 

Total

 

$

73,309

 

 

$

52,125

 

 

$

248,069

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(*) including Germany

 

$

21,287

 

 

$

13,358

 

 

$

67,849

 

 

(1)

Reflects revenue recognized in accordance with a License and Collaboration Agreement between us and Zai Lab (Shanghai) Co., Ltd. (“Zai”), dated September 10, 2018, pursuant to which Zai is commercializing Optune in China, Hong Kong, Macau and Taiwan (“Greater China”). For additional information, see Note 12 to the Consolidated Financial Statements in our 2018 10-K.

v3.19.1
Cash, Cash Equivalents and Short-Term Investments - Summary of Cash and Cash Equivalents (Details) - USD ($)
$ in Thousands
Mar. 31, 2019
Dec. 31, 2018
Cash And Cash Equivalents [Abstract]    
Cash $ 9,104 $ 9,197
Money market funds 142,963 131,425
Total cash and cash equivalents $ 152,067 $ 140,622
v3.19.1
Cash, Cash Equivalents and Short-Term Investments - Summary of Amortized Cost And Recorded Basis of T-bills in Short Term Investments (Details) - USD ($)
$ in Thousands
Mar. 31, 2019
Dec. 31, 2018
Investments Debt And Equity Securities [Abstract]    
Short-term investments $ 104,535 $ 105,256
v3.19.1
Cash, Cash Equivalents and Short-Term Investments - Additional Information (Details) - USD ($)
$ in Thousands
Mar. 31, 2019
Dec. 31, 2018
Investments Debt And Equity Securities [Abstract]    
Estimated fair value of short-term investments $ 104,547 $ 105,266
v3.19.1
Inventories - Schedule of Inventories (Details) - USD ($)
$ in Thousands
Mar. 31, 2019
Dec. 31, 2018
Inventory Disclosure [Abstract]    
Raw materials $ 1,526 $ 870
Work in progress 8,176 8,667
Finished products 14,436 13,018
Total $ 24,138 $ 22,555
v3.19.1
Commitments, Rights of Use and Contingent Liabilities - Additional Information (Details) - USD ($)
$ in Thousands
3 Months Ended
Mar. 31, 2019
Dec. 31, 2018
Loss Contingencies [Line Items]    
Operating lease expiration description The facilities of the Company are leased under various operating lease agreements for periods, including options for extensions, ending no later than 2029.  
Operating lease, extistence of option to extend true  
Increase in right-of-use assets obtained in exchange for lease obligations $ 15,733  
Lease and rental payments 1,740  
Deferred rent 863  
Pledged bank deposits 1,134 $ 1,143
Operating lease and other contractual commitments $ 1,294 $ 1,299
Motor Vehicles    
Loss Contingencies [Line Items]    
Operating lease expiration description The Company also leases motor vehicles under various operating leases, which expire on various dates, the latest of which is in 2022.  
Maximum    
Loss Contingencies [Line Items]    
Operating lease agreements, expiration year 2029  
Maximum | Motor Vehicles    
Loss Contingencies [Line Items]    
Operating lease agreements, expiration year 2022