NOVOCURE LTD, 10-Q filed on 4/30/2020
Quarterly Report
v3.20.1
Cover - shares
3 Months Ended
Mar. 31, 2020
Apr. 23, 2020
Cover [Abstract]    
Document Type 10-Q  
Document Quarterly Report true  
Document Period End Date Mar. 31, 2020  
Document Transition Report false  
Entity File Number 001-37565  
Entity Registrant Name NovoCure Limited  
Entity Incorporation, State or Country Code Y9  
Entity Tax Identification Number 98-1057807  
Entity Address, Address Line One No. 4 The Forum  
Entity Address, Address Line Two Grenville Street  
Entity Address, City or Town St. Helier  
Entity Address, Country JE  
Entity Address, Postal Zip Code JE2 4UF  
City Area Code 44 (0) 15  
Local Phone Number 3475 6700  
Title of 12(b) Security Ordinary Shares, no par value  
Trading Symbol NVCR  
Security Exchange Name NASDAQ  
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Entity Filer Category Large Accelerated Filer  
Entity Small Business false  
Entity Emerging Growth Company false  
Entity Shell Company false  
Entity Common Stock, Shares Outstanding   100,440,295
Amendment Flag false  
Document Fiscal Year Focus 2020  
Document Fiscal Period Focus Q1  
Entity Central Index Key 0001645113  
Current Fiscal Year End Date --12-31  
v3.20.1
CONSOLIDATED BALANCE SHEETS - USD ($)
$ in Thousands
Mar. 31, 2020
Dec. 31, 2019
CURRENT ASSETS:    
Cash and cash equivalents $ 181,919 $ 177,321
Short-term investments 149,349 148,769
Restricted cash 786 2,095
Trade receivables 65,139 58,859
Receivables and prepaid expenses 42,483 29,202
Inventories 22,502 23,701
Total current assets 462,178 439,947
LONG-TERM ASSETS:    
Property and equipment, net 9,778 9,342
Field equipment, net 8,467 7,684
Right-of-use assets, net 17,201 17,571
Other long-term assets 4,824 4,904
Total long-term assets 40,270 39,501
TOTAL ASSETS 502,448 479,448
CURRENT LIABILITIES:    
Trade payables 40,408 36,925
Other payables, lease liabilities and accrued expenses 43,795 49,386
Total current liabilities 84,203 86,311
LONG-TERM LIABILITIES:    
Long-term loan, net of discount and issuance costs 149,465 149,424
Deferred revenue 8,772 7,807
Long-term leases 13,274 14,140
Employee benefits 4,519 3,754
Other long-term liabilities 267 222
Total long-term liabilities 176,297 175,347
TOTAL LIABILITIES 260,500 261,658
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:    
Ordinary shares no par value, unlimited shares authorized; issued and outstanding: 100,362,973 shares and 99,528,435 shares at March 31, 2020 (unaudited) and December 31, 2019, respectively 0 0
Additional paid-in capital 892,510 871,442
Accumulated other comprehensive income (loss) (3,629) (2,767)
Retained earnings (accumulated deficit) (646,933) (650,885)
TOTAL SHAREHOLDERS' EQUITY 241,948 217,790
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 502,448 $ 479,448
v3.20.1
CONSOLIDATED BALANCE SHEETS (Parenthetical) - shares
Mar. 31, 2020
Dec. 31, 2019
Statement of Financial Position [Abstract]    
Common stock, shares issued 100,362,973 99,528,435
Common stock, shares outstanding 100,362,973 99,528,435
v3.20.1
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($)
$ in Thousands
3 Months Ended 12 Months Ended
Mar. 31, 2020
Mar. 31, 2019
Dec. 31, 2019
Income Statement [Abstract]      
Net revenues $ 101,828 $ 73,309 $ 351,318
Cost of revenues 24,496 19,814 88,606
Gross profit 77,332 53,495 262,712
Operating costs and expenses:      
Research, development and clinical trials 25,271 17,042 79,003
Sales and marketing 28,834 22,333 96,675
General and administrative 26,608 20,238 87,948
Total operating costs and expenses 80,713 59,613 263,626
Operating income (loss) (3,381) (6,118) (914)
Financial expenses (income), net 2,432 2,371 7,910
Income (loss) before income tax (5,813) (8,489) (8,824)
Income tax (9,765) 3,661 (1,594)
Net income (loss) $ 3,952 $ (12,150) $ (7,230)
Basic net income (loss) per ordinary share (in usd per share) $ 0.04 $ (0.13) $ (0.07)
Weighted average number of ordinary shares used in computing basic net income (loss) per share (in shares) 99,877,567 94,811,282 97,237,549
Diluted net income (loss) per ordinary share (in usd per share) $ 0.04 $ (0.13) $ (0.07)
Weighted average number of ordinary shares used in computing diluted net income (loss) per share (in shares) 108,100,623 94,811,282 97,237,549
v3.20.1
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($)
$ in Thousands
3 Months Ended 12 Months Ended
Mar. 31, 2020
Mar. 31, 2019
Dec. 31, 2019
Statement of Comprehensive Income [Abstract]      
Net income (loss) $ 3,952 $ (12,150) $ (7,230)
Other comprehensive income (loss), net of tax:      
Change in foreign currency translation adjustments (200) (261) (304)
Pension benefit plan (662) (81) (1,063)
Total comprehensive income (loss) $ 3,090 $ (12,492) $ (8,597)
v3.20.1
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)
Beginning balance at Dec. 31, 2018 $ 112,259   $ 757,314 $ (1,400) $ (643,655)
Beginning balance (in shares) at Dec. 31, 2018   93,254,185      
Increase (Decrease) in Stockholders' Equity [Roll Forward]          
Share-based compensation to employees 9,649   9,649    
Exercise of options 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)
Ending balance at Mar. 31, 2019 126,394   783,941 (1,742) (655,805)
Ending balance (in shares) at Mar. 31, 2019   95,692,797      
Beginning balance at Dec. 31, 2018 112,259   757,314 (1,400) (643,655)
Beginning balance (in shares) at Dec. 31, 2018   93,254,185      
Increase (Decrease) in Stockholders' Equity [Roll Forward]          
Net income (loss) (7,230)        
Ending balance at Dec. 31, 2019 217,790   871,442 (2,767) (650,885)
Ending balance (in shares) at Dec. 31, 2019   99,528,435      
Increase (Decrease) in Stockholders' Equity [Roll Forward]          
Share-based compensation to employees 16,557   16,557    
Exercise of options and vested RSUs 4,511   4,511    
Exercise of options and warrants and vested RSUs (in shares)   834,538      
Other comprehensive income (loss), net of tax benefit (862)     (862)  
Net income (loss) 3,952       3,952
Ending balance at Mar. 31, 2020 $ 241,948   $ 892,510 $ (3,629) $ (646,933)
Ending balance (in shares) at Mar. 31, 2020   100,362,973      
v3.20.1
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Parenthetical) - USD ($)
$ in Thousands
3 Months Ended
Mar. 31, 2020
Mar. 31, 2019
Statement of Stockholders' Equity [Abstract]    
Other comprehensive income (loss), tax benefit $ 0 $ 11
v3.20.1
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)
$ in Thousands
3 Months Ended 12 Months Ended
Mar. 31, 2020
Mar. 31, 2019
Dec. 31, 2019
Cash flows from operating activities:      
Net income (loss) $ 3,952 $ (12,150) $ (7,230)
Adjustments to reconcile net income (loss) to net cash used in operating activities:      
Depreciation and amortization 1,888 1,929 8,460
Asset write-downs and impairment of field equipment 6 75 398
Share-based compensation 16,557 9,649 52,416
Foreign currency remeasurement loss (gain) (7) 0 (917)
Decrease (increase) in accounts receivables (19,718) (2,036) (36,496)
Amortization of discount (premium) (539) (578) (2,176)
Decrease (increase) in inventories 1,147 (1,583) (1,159)
Decrease (increase) in other long-term assets 1,235 (86) 3,446
Increase (decrease) in accounts payables and accrued expenses (2,339) 2,246 16,883
Increase (decrease) in other long-term liabilities (225) (1,781) (7,006)
Net cash provided by (used in) operating activities 1,957 (4,315) 26,620
Cash flows from investing activities:      
Purchase of property, equipment and field equipment (3,112) (2,325) (10,485)
Proceeds from maturity of short-term investments 0 105,661 420,661
Purchase of short-term investments 0 (104,325) (461,843)
Net cash provided by (used in) investing activities (3,112) (989) (51,667)
Cash flows from financing activities:      
Proceeds from issuance of shares, net 0 0 2,467
Repayment of long-term loan (8) (8) (31)
Exercise of options and warrants 4,511 16,978 59,245
Net cash provided by (used in) financing activities 4,503 16,970 61,681
Effect of exchange rate changes on cash, cash equivalents and restricted cash (59) (261) 26
Increase (decrease) in cash, cash equivalents and restricted cash 3,289 11,405 36,660
Cash, cash equivalents and restricted cash at the beginning of the period 179,416 142,756 142,756
Cash, cash equivalents and restricted cash at the end of the period 182,705 154,161 179,416
Cash paid during the period for:      
Income taxes 2,209 3,033 11,241
Interest 3,415 3,379 13,699
Non-cash activities in accordance with of ASC-842:      
Right-of-use assets obtained in exchange for lease obligations $ 783 $ 15,733 $ 22,943
v3.20.1
Organization and Basis of Presentation
3 Months Ended
Mar. 31, 2020
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Organization and Basis of Presentation 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 delivery systems, including Optune and Optune Lua, for the treatment of solid tumors. The Company has received regulatory approval from the U.S. Food and Drug Administration (“FDA”) under the Premarket Approval (“PMA") pathway and regulatory approvals and clearances in certain other countries for Optune to treat adult patients with glioblastoma multiforme (“GBM”).  The Company also has received FDA approval under the Humanitarian Device Exemption pathway to market Optune Lua for unresectable, locally advanced or metastatic malignant pleural mesothelioma (“MPM”) in combination with standard chemotherapies.
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 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, 2019 (the “2019 10-K”) filed with the Securities and Exchange Commission on February 27, 2020.
The significant accounting policies applied in the audited annual consolidated financial statements of the Company as disclosed in the 2019 10-K are applied consistently in these unaudited interim consolidated financial statements, except as noted below:
Recently Adopted Accounting Pronouncements.
In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). ASU 2016-13 amends the impairment model to utilize an expected loss methodology in place of the currently used incurred loss methodology, which will result in the more timely recognition of losses. ASU 2016-13 also applies to employee benefit plan accounting, with an effective date of the first quarter of fiscal 2020. The Company adopted the standard effective as of January 1, 2020, and the adoption of this standard did not have an impact on the Company's consolidated financial statements.
In August 2018, FASB issued ASU 2018-15, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. The amendments in this ASU align the requirements for capitalizing implementation costs incurred in a hosting arrangement with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The implementation costs incurred in a hosting arrangement that is a service contract should be presented as a prepaid asset in the balance sheet and expensed over the term of the hosting arrangement to the same line item in the statement of income as the costs related to the hosting fees. The Company adopted the standard effective as of January 1, 2020, and the adoption of this standard did not have an impact on the Company's consolidated financial statements.
v3.20.1
Cash, Cash Equivalents and Short-Term Investments
3 Months Ended
Mar. 31, 2020
Cash, Cash Equivalents, and Short-term Investments [Abstract]  
Cash, Cash Equivalents and Short-Term investments 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,
2020
December 31,
2019
UnauditedAudited
Cash$8,192  $18,377  
Money market funds173,727  158,944  
Total cash and cash equivalents$181,919  $177,321  
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,
2020
December 31,
2019
 UnauditedAudited
Short-term investments$149,349  $148,769  
Quoted market prices were applied to determine the fair value of cash equivalents and short-term investments, therefore they are categorized as Level 1 in accordance with Accounting Standards Codification (“ASC”) 820, “Fair Value Measurements and Disclosures.” The estimated fair value of the Company’s short-term investments as of March 31, 2020 and December 31, 2019 was $149,951 and $148,738, respectively.
v3.20.1
Inventories
3 Months Ended
Mar. 31, 2020
Inventory Disclosure [Abstract]  
Inventories 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, 2020 and December 31, 2019, the Company’s inventories were composed of:
March 31,
2020
December 31,
2019
 UnauditedAudited
Raw materials$3,889  $3,912  
Work in progress7,498  6,482  
Finished products11,115  13,308  
Total$22,502  $23,701  
v3.20.1
Commitments and Contingent Liabilities
3 Months Ended
Mar. 31, 2020
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingent Liabilities 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 2030. The Company also leases motor vehicles under various operating leases, which expire on various dates, the latest of which is in 2023.
Pledged deposits and bank guarantees. As of March 31, 2020 and December 31, 2019, the Company pledged bank deposits of $1,612 and $1,557, 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 $1,387 and $1,390, respectively.
v3.20.1
Share Option Plan and ESPP
3 Months Ended
Mar. 31, 2020
Share-based Compensation, Allocation and Classification in Financial Statements [Abstract]  
Share Option Plan and ESPP SHARE OPTION PLAN AND ESPPIn 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 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 March 31, 2020, 11,430,386 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, 2020 and changes during the period then ended is presented below: 
Three months ended March 31, 2020
Unaudited
Number
of options
Weighted
average
exercise
price
Outstanding at beginning of year10,350,810  $20.40  
Granted671,530  69.37  
Exercised(291,088) 15.52  
Forfeited and canceled(6,025) 41.39  
Outstanding as of March 31, 202010,725,227  $23.58  
Exercisable options4,572,967  $16.17  
For the three months, ended March 31, 2020, options to purchase 291,088 ordinary shares were exercised, resulting in the issuance of 291,088 ordinary shares.
A summary of the status of the Company’s RSUs and PSUs as of March 31, 2020 and changes during the period then ended is presented below.
Three months ended March 31, 2020
Unaudited
Number
of RSU/PSUs
Weighted
average
grant date fair value
Unvested at beginning of year1,474,395  $30.26  
Granted (1)3,747,545  54.07  
Vested(543,450) 22.10  
Forfeited and cancelled(3,194) 52.84  
Unvested as of March 31, 20204,675,296  50.28  
(1) Represents RSUs and PSUs granted on March 3, 2020 as follows: (a) 527,041 RSUs that are expensed based on their grant date fair value of $69.37 per RSU over the service period of three years; (b) 408,539 PSUs that have a mix of service and clinical milestone vesting conditions, cliff-vest in pre-determined increments, and that have been deemed probable to vest and are therefore expensed beginning in the first quarter of 2020 based on their grant date fair value of $69.37 per PSU; (c) 108,113 PSUs that have a mix of service and clinical milestone vesting conditions, cliff-vest in pre-determined increments, and that will begin to be expensed at $69.37 per PSU when it becomes probable that the milestones will be achieved, and (d) 2,703,852 PSUs that have a mix of service, market and other milestone performance vesting conditions (including but not limited to new FDA approved indications), cliff-vest in pre-determined increments, and that will begin to be expensed at $48.16 per PSU when it becomes probable that the milestones will be achieved. The PSUs vest no earlier than three years from the date of grant and no later than six years from the date of grant. The grant date fair value of PSUs with market vesting conditions were obtained by using Monte Carlo simulations. All RSUs and PSUs are expensed 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 March 31, 2020, 4,050,089 ordinary shares were available to be purchased by eligible employees under the ESPP and 414,559 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. We assessed fair value using the following underlying assumptions: 
Three months ended March 31,Year ended December 31,
2019
20202019
UnauditedAudited
Stock Option Plans
Expected term (years)6.256.23
5.50-6.5
Expected volatility54%55%
55%-61%
Risk-free interest rate0.86%2.40%
1.73%-2.40%
Dividend yield0.00 %0.00 %0.00 %
ESPP
Expected term (years)0.500.500.50
Expected volatility47%62%
44%-62%
Risk-free interest rate1.57%2.51%
2.10%-2.51%
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 months ended March 31, 2020 and 2019 and the year ended December 31, 2019 was:
Three months ended March 31,Year ended December 31,
2019
20202019
UnauditedAudited
Cost of revenues$590  $426  $2,231  
Research, development and clinical trials3,394  1,188  7,570  
Sales and marketing3,616  1,962  11,897  
General and administrative8,957  6,073  30,718  
Total share-based compensation expense$16,557  $9,649  $52,416  
v3.20.1
Earnings Per Share
3 Months Ended
Mar. 31, 2020
Earnings Per Share [Abstract]  
Earnings Per Share EARNINGS PER 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 considered outstanding during the period, in accordance with ASC 260-10, as determined under the treasury stock method. Basic and diluted net loss per ordinary share was the same for each period presented, except for the three months ended March 31, 2020, as the inclusion of all potential dilutive shares (deriving from options, RSUs and the ESPP) outstanding would be anti-dilutive.
The calculation of diluted earnings per share includes the weighted average of potentially dilutive securities, which consists of ordinary shares underlying outstanding share options, RSUs, performance share units and the ESPP. The effect of these dilutive securities under the treasury stock method was approximately 8,223,056 shares for the three months ended March 31, 2020.
The Company excluded 352,291 share options under the treasury stock method from the computation of dilutive net income per share for the three months ended March 31, 2020 because including them would had have an anti-dilutive effect.
v3.20.1
Supplemental Information
3 Months Ended
Mar. 31, 2020
Geographic Areas, Long-Lived Assets [Abstract]  
Supplemental Information SUPPLEMENTAL INFORMATION
The Company operates in a single reportable segment.
The following table presents long-lived assets by location:
March 31,
2020
December 31,
2019
 UnauditedAudited
United States$9,562  $8,896  
Switzerland2,472  3,067  
Israel3,366  2,753  
Germany711  729  
Others2,134  1,581  
Total long-term assets$18,245  $17,026  
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
20202019
UnauditedAudited
United States$69,259  $46,604  $232,805  
EMEA:
Germany21,802  20,238  86,564  
Other EMEA2,674  2,282  8,782  
Japan6,451  3,370  17,912  
Greater China (1)1,642  815  5,255  
Total net revenues$101,828  $73,309  $351,318  

(1) Reflects revenue recognized in accordance with a License and Collaboration Agreement (the "Zai 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 (referred to in this table as “Greater China”) and also includes $90 recognized during the three months ended March 31, 2020 from reaching a clinical trial milestone during the period. The full amount of the milestone payable is $2,000 that will be recognized over the remainder of the Zai performance period ending in September 2024. For additional information, see Note 12 to the Consolidated Financial Statements in our 2019 10-K.
v3.20.1
Income Tax
3 Months Ended
Mar. 31, 2020
Income Tax Disclosure [Abstract]  
Income Tax INCOME TAXIn accordance with the changes to the U.S. tax code enacted in response to the economic impacts of COVID-19 signed into legislation on March 27, 2020 the Company recorded a net tax benefit of $11,269 in the first quarter of 2020. The benefit results from net operating loss carry-backs in the U.S.
v3.20.1
Organization and Basis of Presentation (Policies)
3 Months Ended
Mar. 31, 2020
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Recently Adopted Accounting Pronouncements
Recently Adopted Accounting Pronouncements.
In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). ASU 2016-13 amends the impairment model to utilize an expected loss methodology in place of the currently used incurred loss methodology, which will result in the more timely recognition of losses. ASU 2016-13 also applies to employee benefit plan accounting, with an effective date of the first quarter of fiscal 2020. The Company adopted the standard effective as of January 1, 2020, and the adoption of this standard did not have an impact on the Company's consolidated financial statements.
In August 2018, FASB issued ASU 2018-15, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. The amendments in this ASU align the requirements for capitalizing implementation costs incurred in a hosting arrangement with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The implementation costs incurred in a hosting arrangement that is a service contract should be presented as a prepaid asset in the balance sheet and expensed over the term of the hosting arrangement to the same line item in the statement of income as the costs related to the hosting fees. The Company adopted the standard effective as of January 1, 2020, and the adoption of this standard did not have an impact on the Company's consolidated financial statements.
v3.20.1
Cash, Cash Equivalents and Short-Term Investments (Tables)
3 Months Ended
Mar. 31, 2020
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,
2020
December 31,
2019
UnauditedAudited
Cash$8,192  $18,377  
Money market funds173,727  158,944  
Total cash and cash equivalents$181,919  $177,321  
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,
2020
December 31,
2019
 UnauditedAudited
Short-term investments$149,349  $148,769  
v3.20.1
Inventories (Tables)
3 Months Ended
Mar. 31, 2020
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, 2020 and December 31, 2019, the Company’s inventories were composed of:
March 31,
2020
December 31,
2019
 UnauditedAudited
Raw materials$3,889  $3,912  
Work in progress7,498  6,482  
Finished products11,115  13,308  
Total$22,502  $23,701  
v3.20.1
Share Option Plan and ESPP (Tables)
3 Months Ended
Mar. 31, 2020
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, 2020 and changes during the period then ended is presented below: 
Three months ended March 31, 2020
Unaudited
Number
of options
Weighted
average
exercise
price
Outstanding at beginning of year10,350,810  $20.40  
Granted671,530  69.37  
Exercised(291,088) 15.52  
Forfeited and canceled(6,025) 41.39  
Outstanding as of March 31, 202010,725,227  $23.58  
Exercisable options4,572,967  $16.17  
Schedule of RSUs and PSUs
A summary of the status of the Company’s RSUs and PSUs as of March 31, 2020 and changes during the period then ended is presented below.
Three months ended March 31, 2020
Unaudited
Number
of RSU/PSUs
Weighted
average
grant date fair value
Unvested at beginning of year1,474,395  $30.26  
Granted (1)3,747,545  54.07  
Vested(543,450) 22.10  
Forfeited and cancelled(3,194) 52.84  
Unvested as of March 31, 20204,675,296  50.28  
(1) Represents RSUs and PSUs granted on March 3, 2020 as follows: (a) 527,041 RSUs that are expensed based on their grant date fair value of $69.37 per RSU over the service period of three years; (b) 408,539 PSUs that have a mix of service and clinical milestone vesting conditions, cliff-vest in pre-determined increments, and that have been deemed probable to vest and are therefore expensed beginning in the first quarter of 2020 based on their grant date fair value of $69.37 per PSU; (c) 108,113 PSUs that have a mix of service and clinical milestone vesting conditions, cliff-vest in pre-determined increments, and that will begin to be expensed at $69.37 per PSU when it becomes probable that the milestones will be achieved, and (d) 2,703,852 PSUs that have a mix of service, market and other milestone performance vesting conditions (including but not limited to new FDA approved indications), cliff-vest in pre-determined increments, and that will begin to be expensed at $48.16 per PSU when it becomes probable that the milestones will be achieved. The PSUs vest no earlier than three years from the date of grant and no later than six years from the date of grant. The grant date fair value of PSUs with market vesting conditions were obtained by using Monte Carlo simulations. All RSUs and PSUs are expensed in accordance with ASC 718.
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. We assessed fair value using the following underlying assumptions: 
Three months ended March 31,Year ended December 31,
2019
20202019
UnauditedAudited
Stock Option Plans
Expected term (years)6.256.23
5.50-6.5
Expected volatility54%55%
55%-61%
Risk-free interest rate0.86%2.40%
1.73%-2.40%
Dividend yield0.00 %0.00 %0.00 %
ESPP
Expected term (years)0.500.500.50
Expected volatility47%62%
44%-62%
Risk-free interest rate1.57%2.51%
2.10%-2.51%
Dividend yield0.00 %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, 2020 and 2019 and the year ended December 31, 2019 was:
Three months ended March 31,Year ended December 31,
2019
20202019
UnauditedAudited
Cost of revenues$590  $426  $2,231  
Research, development and clinical trials3,394  1,188  7,570  
Sales and marketing3,616  1,962  11,897  
General and administrative8,957  6,073  30,718  
Total share-based compensation expense$16,557  $9,649  $52,416  
v3.20.1
Supplemental Information (Tables)
3 Months Ended
Mar. 31, 2020
Geographic Areas, Long-Lived Assets [Abstract]  
Schedule of Long-Lived Assets by Location
The following table presents long-lived assets by location:
March 31,
2020
December 31,
2019
 UnauditedAudited
United States$9,562  $8,896  
Switzerland2,472  3,067  
Israel3,366  2,753  
Germany711  729  
Others2,134  1,581  
Total long-term assets$18,245  $17,026  
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
20202019
UnauditedAudited
United States$69,259  $46,604  $232,805  
EMEA:
Germany21,802  20,238  86,564  
Other EMEA2,674  2,282  8,782  
Japan6,451  3,370  17,912  
Greater China (1)1,642  815  5,255  
Total net revenues$101,828  $73,309  $351,318  

(1) Reflects revenue recognized in accordance with a License and Collaboration Agreement (the "Zai 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 (referred to in this table as “Greater China”) and also includes $90 recognized during the three months ended March 31, 2020 from reaching a clinical trial milestone during the period. The full amount of the milestone payable is $2,000 that will be recognized over the remainder of the Zai performance period ending in September 2024. For additional information, see Note 12 to the Consolidated Financial Statements in our 2019 10-K.
v3.20.1
Cash, Cash Equivalents and Short-Term Investments - Summary of Cash and Cash Equivalents (Details) - USD ($)
$ in Thousands
Mar. 31, 2020
Dec. 31, 2019
Cash, Cash Equivalents, and Short-term Investments [Abstract]    
Cash $ 8,192 $ 18,377
Money market funds 173,727 158,944
Total cash and cash equivalents $ 181,919 $ 177,321
v3.20.1
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, 2020
Dec. 31, 2019
Cash, Cash Equivalents, and Short-term Investments [Abstract]    
Short-term investments $ 149,349 $ 148,769
v3.20.1
Cash, Cash Equivalents and Short-Term Investments - Additional Information (Details) - USD ($)
$ in Thousands
Mar. 31, 2020
Dec. 31, 2019
Cash, Cash Equivalents, and Short-term Investments [Abstract]    
Estimated fair value of short-term investments $ 149,951 $ 148,738
v3.20.1
Inventories - Schedule of Inventories (Details) - USD ($)
$ in Thousands
Mar. 31, 2020
Dec. 31, 2019
Inventory Disclosure [Abstract]    
Raw materials $ 3,889 $ 3,912
Work in progress 7,498 6,482
Finished products 11,115 13,308
Total $ 22,502 $ 23,701
v3.20.1
Commitments and Contingent Liabilities (Details) - USD ($)
$ in Thousands
Mar. 31, 2020
Dec. 31, 2019
Commitments and Contingencies Disclosure [Abstract]    
Pledged bank deposits $ 1,612 $ 1,557
Operating lease and other contractual commitments $ 1,387 $ 1,390
v3.20.1
Share Option Plan and ESPP - Additional Information (Details) - shares
3 Months Ended
Mar. 03, 2020
Mar. 31, 2020
Share Capital [Line Items]    
Options exercised (in shares)   291,088
Ordinary shares issued upon option exercise (in shares)   291,088
ESPP    
Share Capital [Line Items]    
Ordinary shares available for grants (in shares)   4,050,089
Shares issued under plan (in shares)   414,559
RSUs    
Share Capital [Line Items]    
Stock awards granted, vesting period (years) 3 years  
PSUs | Minimum    
Share Capital [Line Items]    
Stock awards granted, vesting period (years)   3 years
PSUs | Maximum    
Share Capital [Line Items]    
Stock awards granted, vesting period (years)   6 years
2015 Plan    
Share Capital [Line Items]    
Ordinary shares available for grants (in shares)   11,430,386
2015 Plan | Option    
Share Capital [Line Items]    
Stock awards granted, vesting period (years)   4 years
Stock awards granted, expiration period (years)   10 years
2015 Plan | RSUs    
Share Capital [Line Items]    
Stock awards granted, vesting period (years)   3 years
2015 Plan | PSUs | Minimum    
Share Capital [Line Items]    
Stock awards granted, vesting period (years)   3 years
2015 Plan | PSUs | Maximum    
Share Capital [Line Items]    
Stock awards granted, vesting period (years)   6 years
v3.20.1
Share Option Plan and ESPP - Schedule of Stock Option Plan (Details)
3 Months Ended
Mar. 31, 2020
$ / shares
shares
Number of options  
Number of options, beginning outstanding (in shares) | shares 10,350,810
Number of options, granted (in shares) | shares 671,530
Number of options, exercised (in shares) | shares (291,088)
Number of options, forfeited and canceled (in shares) | shares (6,025)
Number of options, ending outstanding (in shares) | shares 10,725,227
Number of options, exercisable options (in shares) | shares 4,572,967
Weighted average exercise price  
Weighted average exercise price, beginning outstanding (in usd per share) | $ / shares $ 20.40
Weighted average exercise price, granted (in usd per share) | $ / shares 69.37
Weighted average exercise price, exercised (in usd per share) | $ / shares 15.52
Weighted average exercise price, forfeited and canceled (in usd per share) | $ / shares 41.39
Weighted average exercise price, ending outstanding (in usd per share) | $ / shares 23.58
Weighted average exercise price, exercisable options (in usd per share) | $ / shares $ 16.17
v3.20.1
Share Option Plan and ESPP - Schedule of RSUs and PSUs (Details) - $ / shares
3 Months Ended
Mar. 03, 2020
Mar. 31, 2020
Number of RSU/PSUs    
Number of RSUs, beginning unvested (in shares)   1,474,395
Number of RSUs, granted (in shares)   3,747,545
Number of RSUs, vested (in shares)   (543,450)
Number of RSUs, forfeited and cancelled (in shares)   (3,194)
Number of RSUs, ending unvested (in shares)   4,675,296
Weighted average grant date fair value    
Weighted average grant date fair value price, beginning unvested (in usd per share)   $ 30.26
Weighted average grant date fair value price, granted (in usd per share)   54.07
Weighted average grant date fair value price, vested (in usd per share)   22.10
Weighted average grant date fair value price, forfeited and cancelled (in usd per share)   52.84
Weighted average grant date fair value price, ending unvested (in usd per share)   $ 50.28
RSUs    
Number of RSU/PSUs    
Number of RSUs, granted (in shares) 527,041  
Weighted average grant date fair value    
Weighted average grant date fair value price, granted (in usd per share) $ 69.37  
Stock awards granted, vesting period (years) 3 years  
PSUs | Minimum    
Weighted average grant date fair value    
Stock awards granted, vesting period (years)   3 years
PSUs | Maximum    
Weighted average grant date fair value    
Stock awards granted, vesting period (years)   6 years
PSUs | Share-based Compensation Award, Tranche One    
Number of RSU/PSUs    
Number of RSUs, granted (in shares) 408,539  
Weighted average grant date fair value    
Weighted average grant date fair value price, granted (in usd per share) $ 69.37  
PSUs | Share-based Compensation Award, Tranche Two    
Number of RSU/PSUs    
Number of RSUs, granted (in shares) 108,113  
Weighted average grant date fair value    
Weighted average grant date fair value price, granted (in usd per share) $ 69.37  
PSUs | Share-based Compensation Award, Tranche Three    
Number of RSU/PSUs    
Number of RSUs, granted (in shares) 2,703,852  
Weighted average grant date fair value    
Weighted average grant date fair value price, granted (in usd per share) $ 48.16  
v3.20.1
Share Option Plan and ESPP - Schedule of Fair Value Assumptions Used Only for Equity Based Awards Estimated Using Black-Scholes Option Pricing Model (Details)
3 Months Ended 12 Months Ended
Mar. 31, 2020
Mar. 31, 2019
Dec. 31, 2019
ESPP      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Expected term (years) 6 months 6 months 6 months
Expected volatility 4700.00% 6200.00%  
Expected volatility, minimum     44.00%
Expected volatility, maximum     62.00%
Risk-free interest rate 157.00% 251.00%  
Risk-free interest rate, minimum     2.10%
Risk-free interest rate, maximum     2.51%
Dividend yield 0.00% 0.00% 0.00%
Stock Option Plans      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Expected term (years) 6 years 3 months 6 years 2 months 23 days  
Expected volatility 5400.00% 5500.00%  
Expected volatility, minimum     55.00%
Expected volatility, maximum     61.00%
Risk-free interest rate 86.00% 240.00%  
Risk-free interest rate, minimum     1.73%
Risk-free interest rate, maximum     2.40%
Dividend yield 0.00% 0.00% 0.00%
Stock Option Plans | Minimum      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Expected term (years)     5 years 6 months
Stock Option Plans | Maximum      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Expected term (years)     6 years 6 months
v3.20.1
Share Option Plan and ESPP - Schedule of Non-cash Share-Based Compensation Expenses Related to Company's Equity-Based Awards (Details) - USD ($)
$ in Thousands
3 Months Ended 12 Months Ended
Mar. 31, 2020
Mar. 31, 2019
Dec. 31, 2019
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Total share-based compensation expense $ 16,557 $ 9,649 $ 52,416
Cost of revenues      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Total share-based compensation expense 590 426 2,231
Research, development and clinical trials      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Total share-based compensation expense 3,394 1,188 7,570
Sales and marketing      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Total share-based compensation expense 3,616 1,962 11,897
General and administrative      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Total share-based compensation expense $ 8,957 $ 6,073 $ 30,718
v3.20.1
Earnings Per Share (Details) - Additional Information (Details)
3 Months Ended
Mar. 31, 2020
shares
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]  
Effect of dilutive shares (in shares) 8,223,056
Stock Option Plans  
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]  
Potentially dilutive share options (in shares) 352,291
v3.20.1
Supplemental Information - Schedule of Long-Lived Assets by Location (Details) - USD ($)
$ in Thousands
Mar. 31, 2020
Dec. 31, 2019
Revenues from External Customers and Long-Lived Assets [Line Items]    
Long-term assets $ 18,245 $ 17,026
United States    
Revenues from External Customers and Long-Lived Assets [Line Items]    
Long-term assets 9,562 8,896
Switzerland    
Revenues from External Customers and Long-Lived Assets [Line Items]    
Long-term assets 2,472 3,067
Israel    
Revenues from External Customers and Long-Lived Assets [Line Items]    
Long-term assets 3,366 2,753
Germany    
Revenues from External Customers and Long-Lived Assets [Line Items]    
Long-term assets 711 729
Others    
Revenues from External Customers and Long-Lived Assets [Line Items]    
Long-term assets $ 2,134 $ 1,581
v3.20.1
Supplemental Information - Schedule of Revenues by Geographic Region (Details) - USD ($)
$ in Thousands
3 Months Ended 12 Months Ended
Mar. 31, 2020
Mar. 31, 2019
Dec. 31, 2019
Revenues from External Customers and Long-Lived Assets [Line Items]      
Net revenues $ 101,828 $ 73,309 $ 351,318
Zai License and Collaboration Agreement      
Revenues from External Customers and Long-Lived Assets [Line Items]      
Regulatory and commercial milestone payable 2,000    
Zai License and Collaboration Agreement | License | Accounting Standards Update 2014-09      
Revenues from External Customers and Long-Lived Assets [Line Items]      
Liability, revenue recognized 90    
United States      
Revenues from External Customers and Long-Lived Assets [Line Items]      
Net revenues 69,259 46,604 232,805
Germany      
Revenues from External Customers and Long-Lived Assets [Line Items]      
Net revenues 21,802 20,238 86,564
Other EMEA      
Revenues from External Customers and Long-Lived Assets [Line Items]      
Net revenues 2,674 2,282 8,782
Japan      
Revenues from External Customers and Long-Lived Assets [Line Items]      
Net revenues 6,451 3,370 17,912
Greater China      
Revenues from External Customers and Long-Lived Assets [Line Items]      
Net revenues $ 1,642 $ 815 $ 5,255
v3.20.1
Income Tax (Details) - USD ($)
$ in Thousands
3 Months Ended 12 Months Ended
Mar. 31, 2020
Mar. 31, 2019
Dec. 31, 2019
Unusual or Infrequent Item, or Both [Line Items]      
Net tax benefit $ (9,765) $ 3,661 $ (1,594)
Natural Disasters and Other Casualty Events      
Unusual or Infrequent Item, or Both [Line Items]      
Net tax benefit $ (11,269)