UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________________________________________
FORM 10-Q
(Mark One)
						
☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934	
For the quarterly period ended March 31, 2022
or
						
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934	
For the transition period from                       to
Commission File Number 001-37565
NovoCure Limited
(Exact Name of Registrant as Specified in Its Charter)
									
Jersey		98-1057807	
(State or Other Jurisdiction of		(I.R.S. Employer	
Incorporation or Organization)		Identification No.)	
No. 4 The Forum
Grenville Street
St. Helier, Jersey JE2 4UF
(Address of principal executive offices, including zip code)
+44 (0) 15 3475 6700
(Registrant’s Telephone Number, Including Area Code)
Not Applicable
(Former Name, Former Address and Former Fiscal Year, If Changed Since Last Report)
_______________________________________________________
Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:
									
Title of each class	Trading Symbol(s)	Name of each exchange on which registered	
Ordinary Shares, no par value	NVCR	The Nasdaq Stock Market LLC	
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes ☒    No  ☐.
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
															
Large accelerated filer	☒		Accelerated filer	☐	
				
Non-accelerated filer	☐		Smaller reporting company	☐	
					
			Emerging growth company	☐	
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐    
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒.
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
									
Class		Outstanding as of April 22, 2022	
Ordinary shares, no par value	 	104,586,094 Shares	

	

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
In addition to historical facts or statements of current condition, this report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements contained in this report are based on our current plans, expectations, hopes, beliefs, intentions or strategies concerning future developments and their impact on us. Forward-looking statements contained in this report constitute our expectations or forecasts of future events as of the date this report was filed with the Securities and Exchange Commission (the “SEC”) and are not statements of historical fact. You can identify these statements by the fact that they do not relate strictly to historical or current facts. Such statements may include words such as “anticipate,” “will,” “estimate,” “expect,” “project,” “intend,” “should,” “plan,” “believe,” “hope” and other words and terms of similar meaning in connection with any discussion of, among other things, future operating or financial performance, strategic initiatives and business strategies, regulatory or competitive environments, our intellectual property and research and development related to our Tumor Treating Fields devices marketed under various brand names, including Optune and Optune Lua, and software and systems to support and optimize the delivery of Tumor Treating Fields (collectively, our “Products”). In particular, these forward-looking statements include, among others, statements about:
•our research and development, clinical study and commercialization activities and projected expenditures;
•the further commercialization of our Products for current and future indications;
•our business strategies and the expansion of our sales and marketing efforts in the United States and in other countries;
•the market acceptance of our Products for current and future indications by patients, physicians, third-party payers and others in the healthcare and scientific community;
•our plans to pursue the use of our Products for the treatment of solid tumor cancers other than glioblastoma multiforme (“GBM”) and malignant pleural mesothelioma (“MPM”);
•our estimates regarding revenues, expenses, capital requirements and needs for additional financing;
•our ability to obtain regulatory approvals for the use of our Products in indications other than GBM and MPM;
•our ability to acquire from third-party suppliers the supplies needed to manufacture our Products;
•our ability to manufacture adequate supply of our Products;
•our ability to secure and maintain adequate coverage from third-party payers to reimburse us for our Products for current and future indications;
•our ability to receive payment from third-party payers for use of our Products for current and future indications;
•our ability to maintain and develop our intellectual property position;
•our ability to manage the risks associated with business disruptions caused by natural disasters, extreme weather events, pandemics such as the COVID-19 pandemic, including the emergence of variant strains, or international conflict and other disruptions outside of our control;
•our cash needs; and
•our prospects, financial condition and results of operations.
These forward-looking statements involve a number of risks and uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. Factors which may cause such differences to occur include those risks and uncertainties set forth under Part I, Item 1A., “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 filed on February 24, 2022, as well as other risks and uncertainties set forth from time to time in the reports we file with the SEC. In our prior filings, references to NovoTTF-100L now refer
i

to Optune Lua. We do not intend to update publicly any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by law.

TRADEMARKS
This Quarterly Report on Form 10-Q includes trademarks of NovoCure Limited and other persons. All trademarks or trade names referred to herein are the property of their respective owners.
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NovoCure Limited
Quarterly Report on Form 10-Q
TABLE OF CONTENTS
									
		Page	
Cautionary Note Regarding Forward Looking Statements	i	
Trademarks	ii	
 	
PART I—FINANCIAL INFORMATION	
 	
Item 1.	Financial Statements	2	
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14	
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	22	
Item 4.	Controls and Procedures	22	
 	
PART II—OTHER INFORMATION	
 	
Item 1.	Legal Proceedings	23	
Item 1A.	Risk Factors	23	
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	23	
Item 3.	Defaults Upon Senior Securities	23	
Item 4.	Mine Safety Disclosures	23	
Item 5.	Other Information	23	
Item 6.	Exhibits	24	
 	
 	Signatures	25	

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PART I—FINANCIAL INFORMATION

Item 1.  Financial Statements

NOVOCURE LIMITED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS	
U.S. dollars in thousands (except share data)	
	March 31,
2022		December 31, 2021	
	Unaudited		Audited	
ASSETS				
CURRENT ASSETS:				
Cash and cash equivalents	$	190,739 			$	208,802 		
Short-term investments	741,562 			728,898 		
Restricted cash	889 			807 		
Trade receivables, net	100,965 			93,567 		
Receivables and prepaid expenses	17,343 			17,025 		
Inventories	29,084 			24,427 		
Total current assets	1,080,582 			1,073,526 		
LONG-TERM ASSETS:				
Property and equipment, net	25,072 			22,693 		
Field equipment, net	12,792 			12,923 		
Right-of-use assets	19,937 			18,267 		
Other long-term assets	11,827 			12,086 		
Total long-term assets	69,628 			65,969 		
TOTAL ASSETS	$	1,150,210 			$	1,139,495 		
				
The accompanying notes are an integral part of these unaudited consolidated financial statements.	
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NOVOCURE LIMITED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS	
U.S. dollars in thousands (except share data)	
	March 31,
2022		December 31, 2021	
	Unaudited		Audited	
LIABILITIES AND SHAREHOLDERS' EQUITY				
CURRENT LIABILITIES:				
Trade payables	$	69,186 			$	72,600 		
Other payables, lease liabilities and accrued expenses	58,613 			70,002 		
Total current liabilities	127,799 			142,602 		
LONG-TERM LIABILITIES:				
Long-term debt, net	563,026 			562,216 		
Deferred revenue	5,511 			6,477 		
Long-term leases	14,813 			12,997 		
Employee benefit liabilities	3,024 			4,543 		
Other long-term liabilities	156 			166 		
Total long-term liabilities	586,530 			586,399 		
TOTAL LIABILITIES	714,329 			729,001 		
COMMITMENTS AND CONTINGENCIES				
				
SHAREHOLDERS' EQUITY:				
Share capital -				
Ordinary shares no par value, unlimited shares authorized; issued and outstanding:
104,559,088 shares and 103,971,263 shares at March 31, 2022 (unaudited) and December 31, 2021, respectively	— 			— 		
Additional paid-in capital	1,127,782 			1,099,589 		
Accumulated other comprehensive income (loss)	(1,328)			(3,169)		
Retained earnings (accumulated deficit)	(690,573)			(685,926)		
TOTAL SHAREHOLDERS' EQUITY	435,881 			410,494 		
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	1,150,210 			$	1,139,495 		
The accompanying notes are an integral part of these unaudited consolidated financial statements.
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NOVOCURE LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS	
U.S. dollars in thousands (except share and per share data)	
	Three months ended March 31,		Year ended December 31,	
	2022		2021		2021	
	Unaudited		Audited	
Net revenues	$	137,547 			$	134,695 			$	535,031 		
Cost of revenues	27,727 			26,385 			114,877 		
Gross profit	109,820 			108,310 			420,154 		
						
Operating costs and expenses:						
Research, development and clinical studies	42,234 			45,916 			201,303 		
Sales and marketing	37,884 			31,357 			137,057 		
General and administrative	30,508 			31,125 			126,127 		
Total operating costs and expenses	110,626 			108,398 			464,487 		
						
Operating income (loss)	(806)			(88)			(44,333)		
Financial expenses (income), net	1,709 			2,646 			7,742 		
						
Income (loss) before income tax	(2,515)			(2,734)			(52,075)		
Income tax	2,132 			1,394 			6,276 		
Net income (loss)	$	(4,647)			$	(4,128)			$	(58,351)		
						
Basic net income (loss) per ordinary share	$	(0.04)			$	(0.04)			$	(0.56)		
Weighted average number of ordinary shares used in computing basic net income (loss) per share	104,186,120 			102,633,545 			103,433,274 		
						
Diluted net income (loss) per ordinary share	$	(0.04)			$	(0.04)			$	(0.56)		
Weighted average number of ordinary shares used in computing diluted net income (loss) per share	104,186,120 			102,633,545 			103,433,274 		
The accompanying notes are an integral part of these unaudited consolidated financial statements.
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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)	
U.S. dollars in thousands	
	Three months ended March 31,		Year ended December 31,	
	2022		2021		2021	
	Unaudited		Audited	
Net income (loss)	$	(4,647)			$	(4,128)			$	(58,351)		
Other comprehensive income (loss), net of tax:						
Change in foreign currency translation adjustments	330 			(268)			302 		
Pension benefit plan	1,511 			2,152 			361 		
Total comprehensive income (loss)	$	(2,806)			$	(2,244)			$	(57,688)		

																														
NOVOCURE LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY	
U.S. dollars in thousands (except share data)	
	Ordinary shares		Additional
paid-in
capital		Accumulated
other
comprehensive
loss		Retained earnings (accumulated
deficit)		Total shareholders'
equity	
										
Balance as of December 31, 2021 (audited)	103,971,263 			$	1,099,589 			$	(3,169)			$	(685,926)			$	410,494 		
										
Share-based compensation to employees	— 			25,045 			— 			— 			25,045 		
Exercise of options and vested RSUs	587,825 			3,148 			— 			— 			3,148 		
Other comprehensive income (loss), net of tax benefit of $0	— 			— 			1,841 			— 			1,841 		
Net income (loss)	— 			— 			— 			(4,647)			(4,647)		
Balance as of March 31, 2022 (Unaudited)	104,559,088 			$	1,127,782 			$	(1,328)			$	(690,573)			$	435,881 		

	

	

	

	

																														

	Ordinary shares		Additional
paid-in
capital		Accumulated
other
comprehensive
loss		Retained earnings (accumulated
deficit)		Total shareholders'
equity	
										
Balance as of December 31, 2020 (audited)	102,334,276 			$	1,111,435 			$	(3,832)			$	(631,077)			$	476,526 		
										
Share-based compensation to employees	— 			18,863 			— 			— 			18,863 		
Exercise of options and vested RSUs	853,184 			7,961 			— 			— 			7,961 		
Cumulative effect adjustment resulting from ASU 2020-06 early adoption	— 			(132,474)			— 			3,502 			(128,972)		
Other comprehensive income (loss), net of tax benefit of $0	— 			— 			1,884 			— 			1,884 		
Net income (loss)	— 			— 			— 			(4,128)			(4,128)		
Balance as of March 31, 2021 (Unaudited)	103,187,460 			$	1,005,785 			$	(1,948)			$	(631,703)			$	372,134 		

	

	

	

	

The accompanying notes are an integral part of these unaudited consolidated financial statements.
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NOVOCURE LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS	
U.S. dollars in thousands	
	Three months ended March 31,		Year ended December 31,	
	2022		2021		2021	
	Unaudited		Audited	
Cash flows from operating activities:						
Net income (loss)	$	(4,647)			$	(4,128)			$	(58,351)		
Adjustments to reconcile net income (loss) to net cash used in operating activities:						
Depreciation and amortization	2,610 			2,370 			10,251 		
Accrued Interest	(221)			— 			(94)		
Asset write-downs and impairment of field equipment	135 			176 			649 		
Share-based compensation	25,045 			18,863 			94,900 		
Foreign currency remeasurement loss (gain)	249 			2,157 			3,231 		
Decrease (increase) in accounts receivables	(7,461)			4,624 			5,270 		
Amortization of discount (premium)	684 			603 			3,101 		
Decrease (increase) in inventories	(4,804)			(1,296)			2,483 		
Decrease (increase) in other long-term assets	1,863 			1,432 			4,519 		
Increase (decrease) in accounts payables and accrued expenses	(14,809)			(2,626)			27,777 		
Increase (decrease) in other long-term liabilities	(2,331)			(4,394)			(10,980)		
Net cash provided by (used in) operating activities	$	(3,687)			$	17,780 			$	82,756 		
	
Cash flows from investing activities:						
Purchase of property, equipment and field equipment	$	(5,093)			$	(3,981)			$	(24,170)		
Proceeds from maturity of short-term investments	279,000 			608,000 			958,000 		
Purchase of short-term investments	(291,317)			(549,848)			(1,078,664)		
Net cash provided by (used in) investing activities	$	(17,410)			$	54,171 			$	(144,834)		
	
Cash flows from financing activities:						
Proceeds from issuance of shares, net	$	— 			$	— 			$	4,546 		
	
Repayment of long-term debt	(7)			(6)			(26)		
Exercise of options	3,148 			7,961 			21,182 		
Net cash provided by (used in) financing activities	$	3,141 			$	7,955 			$	25,702 		
	
Effect of exchange rate changes on cash, cash equivalents and restricted cash	$	(25)			$	(102)			$	(188)		
						
Increase (decrease) in cash, cash equivalents and restricted cash	(17,981)			79,804 			(36,564)		
Cash, cash equivalents and restricted cash at the beginning of the period	209,609 			246,173 			246,173 		
						
Cash, cash equivalents and restricted cash at the end of the period	$	191,628 			$	325,977 			$	209,609 		

	

Supplemental cash flow activities:						
Cash paid during the period for:						
Income taxes paid (refunded), net	$	1,173 			$	(2,405)			$	3,110 		
Interest paid	$	1 			$	1 			$	101 		
Non-cash activities:						
Right-of-use assets obtained in exchange for lease liabilities	$	3,580 			$	284 			$	5,387 		
The accompanying notes are an integral part of these unaudited consolidated financial statements.
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NOVOCURE LIMITED AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share data)

NOTE 1: ORGANIZATION AND BASIS OF PRESENTATION
Organization. NovoCure Limited (including its consolidated subsidiaries, the "Company") was incorporated in the Bailiwick of Jersey and is principally engaged in the development, manufacture and commercialization of Tumor Treating Fields ("TTFields") devices, including Optune and Optune Lua (collectively, our "Products"), for the treatment of solid tumor cancers. The Company currently markets Optune in the United States ("U.S."), Germany, Japan and certain other countries. The Company currently markets Optune Lua in the U.S. and European Union. The Company also has a License and Collaboration Agreement (the "Zai Agreement") with Zai Lab (Shanghai) Co., Ltd. ("Zai") to market Optune in China, Hong Kong, Macau and Taiwan ("Greater China"). See Note 12 to the Consolidated Financial Statements in the 2021 10-K.
During the year ended December 31, 2019, the Company implemented changes to its corporate entity operating structure, including transferring certain intellectual property to its Swiss subsidiary, primarily to align corporate entities with the Company’s evolving operations and business model. As of January 1, 2022, the effective place of daily management and control of the Company moved to Switzerland and the Company has become a Swiss tax resident.
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 ("GAAP") 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, 2021 (the "2021 10-K") filed with the Securities and Exchange Commission on February 24, 2022.
The significant accounting policies applied in the audited annual consolidated financial statements of the Company as disclosed in the 2021 10-K are applied consistently in these unaudited interim consolidated financial statements, except as noted below:
Short-term investments
The Company accounts for investments in debt securities in accordance with ASC 320, "Investments—Debt and Equity Securities."
Management determines the appropriate classification of its investments at the time of purchase and reevaluates such determinations at each balance sheet date. The Company classifies part of its debt securities as available-for-sale and the rest of the balance as held-to-maturity since the Company has the intent and ability to hold the securities to maturity.
Available-for-sale debt securities are carried at fair value, with the unrealized gains and losses, net of tax, reported in accumulated other comprehensive income (loss) in shareholders’ equity. Realized gains and losses on sale of investments are included in financial income, net and are derived using the specific identification method for determining the cost of securities sold.
The amortized cost of debt securities is adjusted for amortization of premiums and accretion of discounts to maturity. Such amortization together with interest on securities is included in financial income, net.
Each reporting period, the Company evaluates whether declines in fair value below amortized cost are due to expected credit losses, as well as the Company’s ability and intent to hold the investment until a forecasted recovery occurs. Allowance for credit losses on available-for-sale debt securities are recognized in the Company’s consolidated statements of income, and any remaining unrealized losses, net of taxes, are included in accumulated other comprehensive income (loss) in stockholders’ equity.
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Held-to-maturity debt securities are stated at amortized cost of which is adjusted for amortization of premiums and accretion of discounts to maturity and any credit losses. Such amortization and interest are included in the consolidated statement of operations as financial income or expenses, as appropriate.

NOTE 2: CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS
Cash equivalents include items almost as liquid as cash, with maturity periods of three months or less when purchased. As of March 31, 2022 and December 31, 2021, the Company’s cash and cash equivalents were composed of:

	March 31,
2022		December 31,
2021	
	Unaudited		Audited	
Cash	$	8,376 			$	3,139 		
Money market funds	92,071 			64,668 		
Corporate debt securities	2,580 			— 		
Certificate of deposits, notes and term deposits	87,712 			140,995 		
Total cash and cash equivalents	$	190,739 			$	208,802 		
Short-term investments include items with maturity dates between three months and one year when purchased. As of March 31, 2022 and December 31, 2021, the Company’s short-term investments were:

	March 31,
2022		December 31,
2021	
 	Unaudited		Audited	
U.S. Treasury bills	$	24,857 			$	199,981 		
Other government and governmental agency notes	34,786 			— 		
Corporate debt securities	196,274 			104,823 		
Certificate of deposits, notes and term deposits	485,645 			424,094 		
Total short-term investments	$	741,562 			$	728,898 		
The Company invests in marketable U.S. Treasury Bills (“T-bills”), other government and governmental agency notes, term deposits, notes, certificate of deposits, money market funds and corporate debt securities that are classified as "held-to-maturity" or "available for sale" securities. These investments are presented as cash and cash equivalents or short-term investments, according their maturity periods.
The estimated fair value of the Company’s short-term investments as of March 31, 2022 and December 31, 2021 was $741,562 and $728,906, respectively. As of March 31, 2022 and December 31, 2021, amounts of $24,857 and $199,988, respectively were categorized as Level 1 and the remaining balance as level 2 in accordance with ASC 820, “Fair Value Measurements and Disclosures”.

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, 2022 and December 31, 2021, the Company’s inventories were composed of:
												
	March 31,
2022		December 31,
2021	
 	Unaudited		Audited	
Raw materials	$	1,831 			$	1,485 		
Work in progress	14,010 			8,274 		
Finished products	13,243 			14,668 		
Total	$	29,084 			$	24,427 		

NOTE 4: COMMITMENTS AND CONTINGENT LIABILITIES
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Operating Leases. The facilities of the Company are leased under various operating lease agreements for periods, including options for extensions, ending no later than 2044. The Company also leases motor vehicles under various operating leases, which expire on various dates, the latest of which is in 2025.
Pledged deposits and bank guarantees. As of March 31, 2022 and December 31, 2021, the Company pledged bank deposits of $2,344 and $2,350, respectively, to cover bank guarantees in respect of its leases of operating facilities and obtained bank guarantees for the fulfillment of the Company’s lease and other contractual commitments of $2,692 and $2,698, respectively.
Senior secured revolving credit facility. On November 6, 2020, the Company entered into a three-year $150,000 senior secured revolving credit facility with a syndicate of relationship banks. For additional information, see Note 12(c) to the Consolidated Financial Statements in the 2021 10-K. As of March 31, 2022, the Company had no outstanding balance borrowed under the facility.

NOTE 5: CONVERTIBLE NOTE
On November 5, 2020, the Company issued $575,000 aggregate principal amount of 0% Convertible Senior Notes due 2025 (the “Notes”).
The Notes mature on November 1, 2025, unless earlier repurchased, redeemed or converted as set forth in the Notes. As of March 31, 2022, the conditions allowing holders of the Notes to convert were not met. The Notes are therefore not convertible as of March 31, 2022 and are classified as long-term liability.
For additional information, see Note 10(a) to the Consolidated Financial Statements in the 2021 10-K.
The net carrying amount of the liability of the Notes as of March 31, 2022 and December 31, 2021 are as follows:

	March 31,
2022		December 31,
2021	
	Unaudited		Audited	
Liability component, net:				
Principal amount	$	575,000 			$	575,000 		
Unamortized issuance costs	(11,974)			(12,784)		
Net carrying amount of liability component (1)	$	563,026 			$	562,216 		
(1) An effective interest rate determines the fair value of the Notes, therefore they are categorized as Level 3 in accordance with ASC 820, "Fair Value Measurements and Disclosures." The estimated fair value of the net carrying amount of liability component of the Notes as of March 31, 2022 and December 31, 2021 were $454,285 and $467,469, respectively.
Finance expense related to the Notes was as follows:

	Three months ended March 31,		Year ended December 31,
2021	
	2022		2021			
	Unaudited		Audited	
Amortization of debt issuance costs	810 			709 			3,339 		
Total finance expense recognized	$	810 			$	709 			$	3,339 		

NOTE 6: SHARE OPTION PLANS AND ESPP
In September 2015, the Company adopted the 2015 Omnibus Incentive Plan (the “2015 Plan”). Under the 2015 Plan, the Company can issue various types of equity compensation awards such as share options, restricted shares, performance shares, restricted share units (“RSUs”), performance-based share units (“PSUs”), long-term cash awards and other share-based awards.
Options granted under the 2015 Plan generally have a two-year or four-year vesting period and expire ten years after the date of grant. Options granted under the 2015 Plan that are canceled or forfeited before expiration become
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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, 2022, 17,070,368 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, 2022 and changes during the period then ended is presented below:

	Three months ended March 31, 2022	
	Unaudited	
	Number
of options		Weighted
average
exercise
price	
Outstanding at beginning of year	8,549,322 			$	33.09 		
Granted	575,246 			80.59 		
Exercised	(175,650)			18.14 		
Forfeited and canceled	(13,467)			77.31 		
Outstanding as of March 31, 2022	8,935,451 			$	36.38 		
				
Exercisable options	5,787,733 			$	24.15 		
For the three months ended March 31, 2022, options to purchase 175,650 ordinary shares were exercised, resulting in the issuance of 175,650 ordinary shares.
A summary of the status of the Company’s RSUs and PSUs as of March 31, 2022 and changes during the period then ended is presented below.

	Three months ended March 31, 2022	
	Unaudited	
	Number
of RSU/PSUs		Weighted
average
grant date fair value	
Unvested at beginning of year	4,459,107 			$	65.56 		
Granted	964,555 			80.59 		
Vested	(412,175)			84.05 		
Forfeited and cancelled	(15,928)			99.97 		
Unvested as of March 31, 2022 (1)	4,995,559 			66.83 		

(1) Includes PSUs that have a mix of service, market and other milestone performance vesting conditions which are vested upon achievements of performance milestones which are not probable, as of March 31, 2022, in accordance with ASC 718 as follows:
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	 March 31, 2022	
	Number of
PSUs		Fair value at grant date per PSU		Total fair value at grant date	
	2,703,852 			$	48.16 			$	130,218 		
	108,113 			69.37 			7,500 		
	124,701 			80.59 			10,050 		
	17,712 			84.68 			1,500 		
	10,532 			94.94 			1,000 		
	189,626 			$	114.26 			21,667 		
	3,154,536 					$	171,935 		
These PSUs will be expensed over the performance period when the vesting conditions become probable in accordance with ASC 718.
In September 2015, the Company adopted an employee share purchase plan (“ESPP”) to encourage and enable eligible employees to acquire ownership of the Company’s ordinary shares purchased through accumulated payroll deductions on an after-tax basis. In the United States, the ESPP is intended to be an “employee stock purchase plan” within the meaning of Section 423 of the Internal Revenue Code and the provisions of the ESPP are construed in a manner consistent with the requirements of such section. As of March 31, 2022, 4,954,997 ordinary shares were available to be purchased by eligible employees under the ESPP.
The fair value of share-based awards was estimated using the Black-Scholes model for all equity grants. For market condition awards, the Company also applied the Monte-Carlo simulation model. We assessed fair value using the following underlying assumptions: 

	Three months ended March 31,		Year ended December 31,
2021	
	2022		2021			
	Unaudited		Audited	
Stock Option Plans						
Expected term (years)	5.33-5.83		5.86-6.00		5.50-6	
Expected volatility	60%-62%		60%-60%		60%-63%	
Risk-free interest rate	1.58%-1.61%		0.85%-0.88%		0.78%-1.27%	

	
Dividend yield	0.00 	%		0.00 	%		0.00 	%	
ESPP						
Expected term (years)	0.50		0.50		0.50	
Expected volatility	51 	%		54 	%		54%-81%	
Risk-free interest rate	0.19 	%		0.09 	%		0.05%-0.09%	

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, 2022 and 2021 and the year ended December 31, 2021 was:
																		
	Three months ended March 31,		Year ended December 31,
2021	
	2022		2021			
	Unaudited		Audited	
Cost of revenues	$	952 			$	733 			$	3,471 		
Research, development and clinical studies	6,801 			5,124 			27,597 		
Sales and marketing	6,655 			4,471 			22,673 		
General and administrative	10,637 			8,535 			41,159 		
Total share-based compensation expense	$	25,045 			$	18,863 			$	94,900 		

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NOTE 7: Basic and diluted net income (loss) per ordinary share
Basic net income (loss) per share is computed based on the weighted average number of ordinary shares outstanding during each period. Diluted net income per share is computed based on the weighted average number of ordinary shares outstanding during the period, plus potential dilutive shares (deriving from options, RSUs, PSUs, convertible notes and the ESPP) considered outstanding during the period, in accordance with ASC 260-10, as determined under the if-converted method.
The following table sets forth the computation of the Company’s basic and diluted net income (loss) per ordinary share:
																		
 	Three months ended March 31,		Year ended December 31,
2021	
 	2022		2021			
	Unaudited		Audited	
Net income (loss) attributable to ordinary shares as reported used in computing basic and diluted net income (loss) per share	$	(4,647)			$	(4,128)			$	(58,351)		
						
Weighted average number of ordinary shares used in computing basic net income (loss) per share	104,186,120 			102,633,545 			103,433,274 		
Potentially dilutive shares that were excluded from the computation of basic net income (loss) per share:						
Options	— 			— 			— 		
Restricted share units	— 			— 			— 		
ESPP	— 			— 			— 		
Weighted average number of ordinary shares used in computing diluted net income (loss) per share	104,186,120 			102,633,545 			103,433,274 		
						
Weighted anti-dilutive shares outstanding which were not included in the diluted calculation	7,874,118 			9,734,269 			8,524,922 		
						
Basic net income (loss) per ordinary share	$	(0.04)			$	(0.04)			$	(0.56)		
						
Diluted net income (loss) per ordinary share	$	(0.04)			$	(0.04)			$	(0.56)		

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NOTE 8: SUPPLEMENTAL INFORMATION
The Company operates in a single reportable segment.
The following table presents long-lived assets by location:

	March 31,
2022		December 31,
2021	
 	Unaudited		Audited	
United States	$	24,336 			$	23,263 		
Israel	5,933 			5,297 		
Switzerland	4,625 			4,085 		
Japan	955 			799 		
Germany	812 			1,020 		
Others	1,203 			1,152 		
Total	$	37,864 			$	35,616 		
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,
2021	
	2022		2021			
	Unaudited		Audited	
United States	$	97,416 			$	85,908 			$	353,110 		
EMEA:						
Germany	19,238 			26,364 			93,939 		
Other EMEA	7,775 			8,619 			30,577 		
Japan	8,750 			8,278 			34,640 		
Greater China (1)	4,368 			5,526 			22,765 		
Total net revenues	$	137,547 			$	134,695 			$	535,031 		
(1) For additional information, see Note 12 to the Consolidated Financial Statements in the 2021 10-K.

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Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations
Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to provide information to assist you in better understanding and evaluating our financial condition and results of operations. We encourage you to read this MD&A in conjunction with our unaudited consolidated financial statements and the notes thereto for the period ended March 31, 2022 included in Part I, Item 1 of this Quarterly Report on Form 10-Q. This discussion contains forward-looking statements that involve risks and uncertainties. Please refer to the information under the heading “Cautionary Note Regarding Forward-Looking Statements” elsewhere in this report. References to the words “we,” “our,” “us,” and the “Company” in this report refer to NovoCure Limited, including its consolidated subsidiaries.

Critical Accounting Policies and Estimates
In accordance with U.S. generally accepted accounting principles (“GAAP”), in preparing our financial statements, we must make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of net revenues and expenses during the reporting period. We develop and periodically change these estimates and assumptions based on historical experience and on various other factors that we believe are reasonable under the circumstances. Actual results may differ from these estimates.
The critical accounting policies requiring estimates, assumptions and judgments that we believe have the most significant impact on our consolidated financial statements can be found in our 2021 10-K. For additional information, see Note 1 to our unaudited consolidated financial statements in Part I, Item 1 of this Quarterly Report. There were no other material changes to our critical accounting policies and estimates as compared to the critical accounting policies and estimates described in our 2021 10-K.

Overview
We are a global oncology company with a proprietary platform technology called Tumor Treating Fields ("TTFields"), which are electric fields tuned to specific frequencies that disrupt cancer cell division. Our key priorities are to drive commercial adoption of Optune and Optune Lua, our commercial TTFields devices, and to advance clinical and product development programs intended to extend overall survival in some of the most aggressive forms of cancer.
Optune is approved by the U.S. Food and Drug Administration ("FDA") under the Premarket Approval ("PMA") pathway for the treatment of adult patients with newly diagnosed glioblastoma ("GBM") together with temozolomide, a chemotherapy drug, and for adult patients with GBM following confirmed recurrence after chemotherapy as monotherapy treatment. We also have a CE certificate to market Optune for the treatment of GBM in the European Union ("EU"), as well as approval or local registration in the United Kingdom ("UK"), Japan and certain other countries. Optune Lua is approved by the FDA under the Humanitarian Device Exemption ("HDE") pathway to treatment malignant pleural mesothelioma ("MPM") together with standard chemotherapies. We have also received CE certification in the EU and approval or local registration to market Optune Lua in certain other countries. We market Optune and Optune Lua in multiple countries around the globe with the majority of our revenues coming from the use of Optune in the U.S., Germany and Japan. We are actively evaluating opportunities to expand our international footprint.
We believe the physical mechanism of action behind TTFields therapy may be broadly applicable to solid tumor cancers. Currently, we are conducting phase 3 pivotal studies evaluating the use of TTFields in non-small cell lung cancer ("NSCLC"), ovarian cancer, brain metastases from non-small cell lung cancer ("brain metastases") and pancreatic cancer. In 2021, we completed patient enrollment in our phase 3 pivotal NSCLC and ovarian cancer studies with data anticipated in 2022 and 2023, respectively. Additionally, we have multiple ongoing phase 2 pilot studies evaluating the use of TTFields. These studies are in gastric cancer, for which patient enrollment is complete, and stage 3 NSCLC, as well as testing the potential incremental survival benefit of TTFields delivered using high-intensity arrays versus standard arrays. We are also currently conducting a global phase 4 post-marketing study testing the potential survival benefit of initiating Optune concurrent with radiation therapy versus following radiation therapy in patients with newly diagnosed GBM. We anticipate expanding our clinical pipeline over time to study the safety and efficacy of TTFields for additional solid tumor indications and combinations with other cancer treatment modalities.

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In March 2022, we announced that an independent data monitoring committee ("DMC") conducted a pre-specified interim analysis for the phase 3 pivotal INNOVATE-3 study for the treatment of platinum-resistant ovarian cancer. As part of the interim analysis, the DMC reviewed the safety data for all enrolled patients and completed an analysis of overall survival on the first 540 patients randomized in the study. The interim analysis did not indicate a need to increase the patient sample size and the DMC recommended that the study should continue to final analysis as planned. The INNOVATE-3 study accrued 540 patients as of October 2021 and data will be reviewed in 2023, following an 18 month follow-up period.
The table below presents the current status of the ongoing clinical studies in our oncology pipeline and anticipated timing of final data.

Our therapy is delivered through a medical device and we continue to advance our Products with the intention to extend survival and maintain quality of life for patients. We have several product development programs underway that are designed to optimize TTFields delivery to the target tumor and enhance patient ease of use. Our intellectual property portfolio contains hundreds of issued patents and numerous patent applications pending worldwide. We believe we possess global commercialization rights to our Products in oncology and are well-positioned to extend those rights into the future as we continue to find innovative ways to improve our Products.
In 2018, we granted Zai Lab (Shanghai) Co., Ltd. ("Zai") a license to commercialize Optune in China, Hong Kong, Macau and Taiwan ("Greater China") under a License and Collaboration Agreement (the "Zai Agreement"). The Zai Agreement also establishes a development partnership intended to accelerate the development of TTFields in multiple solid tumor cancer indications. For additional information, see Note 12 to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021 (the "2021 10-K").
We view our operations and manage our business in one operating segment. For the three months ended March 31, 2022, our net revenues were $137.5 million. Our net loss for the three months ended March 31, 2022 was $4.6 million. As of March 31, 2022, we had an accumulated deficit of $690.6 million. Our net loss resulted primarily from net revenue growth which was more than offset by increasing investments in sales and marketing initiatives that support our growing commercial business, geographic expansion and pre-commercial activities associated with potential future indication launches.
Impact of COVID-19
In March 2020, the World Health Organization (“WHO”) declared COVID-19 a global pandemic. Since the pandemic began, we have been following the guidance of the WHO, the U.S. Centers for Disease Control and Prevention, and local health authorities in all of our active markets and we have adjusted the way we conduct business to adapt to
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the evolving situation. The COVID-19 pandemic did not have a material impact on our financial results through the first quarter of 2022. The pandemic has had and is having an impact on our day-to-day operations, which varies by region based on factors such as geographical spread, stage of containment and recurrence of the pandemic in each region. We believe the prolonged disruption caused by COVID-19 is resulting in increased volatility across global health care systems, such as fluctuations in patient volumes and changes in patterns of care in certain regions, which is currently impacting and might continue to impact our business and clinical studies in the future. For example, outside the U.S., localized lockdowns are causing disruptions in the ability to monitor clinical studies. In the first quarter of 2022 we were impacted by staff disruptions and turnover internally and at treatment sites, clinical study sites and third-party providers, either directly as a result of illness or indirectly as a result of vaccine mandates and other changes in terms of employment. TTFields is an emerging modality in cancer care and requires significant educational effort to drive awareness and acceptance of our therapy. We have relied heavily on virtual engagement to manage these educational efforts since the onset of the pandemic, which poses challenges to our ability to effectively communicate and engage with our customers and partners around the world.
Given the aggressive nature of the cancers that we treat, we believe that the fundamental value proposition of the TTFields platform remains unchanged. We continue to evaluate and plan for the potential effects of COVID-19 on our business moving forward. The extent to which the COVID-19 pandemic may impact our business and clinical studies in the future will depend on further developments, which are highly uncertain and cannot be predicted with confidence. The COVID-19 pandemic may also have the effect of heightening many of the other risks described in our risk factors disclosed in our 2021 10-K.

Commentary on Results of Operations
Net revenues. Our revenues are primarily derived from patients using our Products in our active markets. We charge for treatment with our Products on a monthly basis. Our potential net revenues per patient are determined by our ability to secure payment, the monthly fee we collect and the number of months that the patient remains on therapy.
We also receive revenues pursuant to the Zai Agreement. For additional information regarding the Zai Agreement, see Note 12 to the Consolidated Financial Statements in our 2021 10-K.
Cost of revenues. We contract with third parties to manufacture our Products. Our cost of revenues is primarily comprised of the following:

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

Results of Operations
The following discussion provides an analysis of our results of operations and reasons for material changes therein for the three months ended March 31, 2022 as compared to the three months ended March 31, 2021. The tables contained in this section report U.S. dollars in thousands (except share, patient, and prescription data).
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The following table sets forth our consolidated statements of operations data:

	Three months ended March 31,	
	2022		2021	
	Unaudited	
Net revenues	$	137,547 			$	134,695 		
Cost of revenues	27,727 			26,385 		
Gross profit	109,820 			108,310 		
				
Operating costs and expenses:				
Research, development and clinical studies	42,234 			45,916 		
Sales and marketing	37,884 			31,357 		
General and administrative	30,508 			31,125 		
Total operating costs and expenses	110,626 			108,398 		
				
Operating income (loss)	(806)			(88)		
Financial expenses (income), net	1,709 			2,646 		
				
Income (loss) before income taxes	(2,515)			(2,734)		
Income taxes	2,132 			1,394 		
Net income (loss)	$	(4,647)			$	(4,128)		
				
Basic net income (loss) per ordinary share	$	(0.04)			$	(0.04)		
Weighted average number of ordinary shares used in computing basic net income (loss) per share	104,186,120 			102,633,545 		
Diluted net income (loss) per ordinary share	$	(0.04)			$	(0.04)		
Weighted average number of ordinary shares used in computing diluted net income (loss) per share	104,186,120 			102,633,545 		
				
The following table details the share-based compensation expense included in costs and expenses:

	Three months ended March 31,	
	2022		2021	
	Unaudited	
Cost of revenues	$	952 			$	733 		
Research, development and clinical studies	6,801 			5,124 		
Sales and marketing	6,655 			4,471 		
General and administrative	10,637 			8,535 		
Total share-based compensation expense	$	25,045 			$	18,863 		

Key performance indicators
We believe certain commercial operating statistics are useful to investors in evaluating our commercial business as they help our management team and investors evaluate and compare the adoption of our Products from period to period. The number of active patients on therapy is our principal revenue driver. An "active patient" is a patient who
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is receiving treatment under a commercial prescription order as of the measurement date, including patients who may be on a temporary break from treatment and who plan to resume treatment in less than 60 days. Prescriptions are a leading indicator of demand. A "prescription received" is a commercial order for Optune or Optune Lua that is received from a physician certified to treat patients with our Products for a patient not previously on Optune or Optune Lua. Orders to renew or extend treatment are not included in this total.
The following table includes certain commercial operating statistics for and as of the end of the periods presented.
												
	March 31,	
Operating statistics	2022		2021	
Active patients at period end				
North America (1)	2,257 			2,183 		
EMEA:				
Germany	529 			594 		
Other EMEA	436 			406 		
Japan	327 			271 		
Total	3,549 			3,454 		

	Three months ended March 31,	
 	2022		2021	
Prescriptions received in period				
North America (1)	935 			917 		
EMEA:				
Germany	220 			248 		
Other EMEA	127 			134 		
Japan	102 			103 		
Total	1,384 			1,402 		
(1) North America includes data for the United States and Canada for the first quarter of 2022 and the United States only for all other periods.
There were 10 active MPM patients on therapy as of March 31, 2022 and 9 MPM prescriptions were received in the three months ended March 31, 2022.
Three months ended March 31, 2022 compared to three months ended March 31, 2021

	Three months ended March 31,	
	2022		2021		% Change	
Net revenues	$	137,547 			$	134,695 			2 	%	
Net revenues. Net revenues increased 2% to $137.5 million for the three-month period ended March 31, 2022 from $134.7 million for the same period in 2021. The increase resulted primarily from an increase of 95 active patients in our currently active markets, representing 3% growth. Additionally, for the quarter ended March 31, 2022, net revenue per active patient per month was positively impacted by increased collections for previously denied and appealed claims in the U.S., offset by a negative impact in Germany following contract negotiations with several large German payers. We continue to actively appeal and pursue previously denied claims, but the cadence and size of these collections are impossible to predict.

	Three months ended March 31,	
	2022		2021		% Change	
Cost of revenues	$	27,727 			$	26,385 			5 	%	
Cost of revenues. Our cost of revenues increased by 5% to $27.7 million for the three months ended March 31, 2022 from $26.4 million for the same period in 2021. For the three month period, the increase in cost of revenues
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was primarily due to the cost of shipping transducer arrays to a higher volume of commercial patients and increasing shipments of equipment to Zai Lab. We continue to focus on opportunities to increase efficiencies and scale within our supply chain. This includes evaluating new materials, manufacturers, and processes that could lead to lower costs.
Gross margin was 80% for the three months ended March 31, 2022 and 80% for the three months ended March 31, 2021. Excluding sales to Zai, cost of revenues per active patient per month was $2,413 for the three months ended March 31, 2022, virtually unchanged from $2,415 for the same period in 2021, with increasing supply chain efficiencies offsetting the impact of broader economic challenges. Cost of revenues per active patient is calculated by dividing the cost of revenues for the quarter less equipment sales to Zai for the quarter by the average of the active patients at the end of the prior quarter and the ending active patients in the current quarter. This quarterly figure is then divided by three to estimate the monthly cost of revenues per active patient. Sales to Zai are deducted because they are sold at cost and in anticipation of future royalties from Zai, and Zai patient counts are not included in our active patient population. Product sales to Zai totaled $1.9 million for the three months ended March 31, 2022 compared to $1.5 million for the three months ended March 31, 2021.
Operating Expenses.

	Three months ended March 31,	
	2022		2021		% Change	
Research, development and clinical studies	$	42,234 			$	45,916 			(8)	%	
Sales and marketing	37,884 			31,357 			21 	%	
General and administrative	30,508 			31,125 			(2)	%	
Total operating expenses	$	110,626 			$	108,398 			2 	%	
Research, development and clinical study expenses. Research, development and clinical study expenses decreased 8% to $42.2 million for the three-month period ended March 31, 2022 from $45.9 million in the same period in 2021, primarily driven by a reduction in direct clinical study costs. Direct clinical study costs historically represent approximately 30% of total research and development expenses and can fluctuate quarter-to-quarter, dependent on the amount of clinical research organization services delivered and clinical materials procured within a given quarter.
Sales and marketing expenses. Sales and marketing expenses increased 21% to $37.9 million for the three-month periods ended March 31, 2022 from $31.4 million for the same period in 2021. For the three month period, the change was primarily due to an increase in market research and strategic planning activities intended to enhance our commercial capabilities in anticipation of potential future approvals in new indications, including NSCLC and ovarian cancer. Additionally, we are investing in market access capabilities in order to evaluate opportunities, identify optimal access pathways, and successfully gain reimbursement in new geographies.
General and administrative expenses. General and administrative expenses decreased 2% to $30.5 million for the three months ended March 31, 2022 from $31.1 million for the same period in 2021. For the three month periods, the change was primarily due to a decrease in personnel costs.

	Three months ended March 31,	
	2022		2021		% Change	
Financial expenses (income), net	$	1,709 			$	2,646 			(35)	%	
Financial expenses, net. Financial expenses decreased 35% to $1.7 for the three months ended March 31, 2022 from $2.6 for the same period in 2021. For the three month periods, the decrease was primarily due to increased interest income and foreign exchange rate fluctuations.
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	Three months ended March 31,	
	2022		2021		% Change	
Income taxes	$	2,132 			$	1,394 			53 	%	
Income taxes. Income taxes increased by $0.7 million, or 53% to $2.1 million for the three months ended March 31, 2022 compared to a tax expense of $1.4 million for the same period in 2021. For the three months ended March 31, 2022 the increase reflects a change in the mix of applicable statutory tax rates in active jurisdictions.
Non-GAAP financial measures
We also measure our performance using a non-GAAP measurement of earnings before interest, taxes, depreciation, amortization and shared-based compensation (“Adjusted EBITDA”). We believe Adjusted EBITDA is useful to investors in evaluating our operating performance because it helps investors evaluate and compare the results of our operations from period to period by removing the impact of earnings attributable to our capital structure, tax rate and material non-cash items, specifically share-based compensation.
We calculate Adjusted EBITDA as operating income before financial expenses and income taxes, net of depreciation, amortization and share-based compensation. The following table reconciles net income (loss), which is the most directly comparable GAAP operating performance measure, to Adjusted EBITDA.

	Three months ended March 31,	
	2022		2021		% Change	
Net income (loss)	$	(4,647)			$	(4,128)			13 	%	
Add: Income tax	2,132 			1,394 			53 	%	
Add: Financial expenses (income), net	1,709 			2,646 			(35)	%	
Add: Depreciation and amortization	2,610 			2,370 			10 	%	
EBITDA	$	1,804 			$	2,282 			(21)	%	
Add: Share-based compensation	25,045 			18,863 			33 	%	
Adjusted EBITDA	$	26,849 			$	21,145 			27 	%	
Adjusted EBITDA for the three months ended March 31, 2022 was $26.8 million. Net income was roughly flat compared to the same period in 2021, which reflects an increase in net revenue generated in the period, offset by investments in research and development, sales and marketing, and other operational activities intended to maximize future growth opportunities. Adjusted EBITDA increased by 27% from $21.1 million for the same period in 2021, which was primarily driven by a change in the mix of cash and non-cash based expenses in the form of share-based compensation.

Liquidity and Capital Resources
We have incurred significant losses and cumulative negative cash flows from operations since our founding in 2000. As of March 31, 2022, we had an accumulated deficit of $690.6 million. To date, we have primarily financed our operations through the issuance and sale of equity and the proceeds from long-term loans.
At March 31, 2022, we had $932.3 million in cash, cash equivalents and short-term investments, a decrease of $5.4 million compared to $937.7 million at December 31, 2021. We believe our cash, cash equivalents and short-term investments as of March 31, 2022 are sufficient for our operations for at least the next 12 months based on our existing business plan and our ability to control the timing of significant expense commitments. We expect that our research, development and clinical study expenses, sales and marketing expenses and general and administrative expenses will continue to increase over the next several years and may outpace our gross profit. As a result, we may need to raise additional capital to fund our operations.
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The following summary of our cash flows for the periods indicated has been derived from our unaudited consolidated financial statements, which are included elsewhere in this Quarterly Report:

	Three months ended March 31,					
	2022		2021		Change		% Change	
Net cash provided by (used in) operating activities	$	(3,687)			$	17,780 			$	(21,467)			(121)	%	
Net cash provided by (used in) investing activities	(17,410)			54,171 			(71,581)			(132)	%	
Net cash provided by financing activities	3,141 			7,955 			(4,814)			(61)	%	
Effect of exchange rate changes on cash and cash equivalents	(25)			(102)			77 			(75)	%	
Net increase (decrease) in cash, cash equivalents and restricted cash	$	(17,981)			$	79,804 			$	(97,785)			(123)	%	
Operating activities. Net cash used in or provided by operating activities represents our net income (loss) for the periods presented, share-based compensation and depreciation and amortization. Operating cash flows are also impacted by changes in working capital.
Net cash provided by operating activities decreased by $21.5 million from $17.8 million net cash provided by operating activities for the three months ended March 31, 2021 to $3.7 million net cash used in operating activities for the three months ended March 31, 2022. This decrease was a result of net income being roughly flat compared to the same period in 2021, with a $27.8 million increase in working capital, including a $12.2 million decrease in accounts payables and accrued expenses, $12.1 million increase in accounts receivables and $3.5 million increase in inventories, partially offset by a $6.2 million change in the mix from cash to non-cash based expenses.
Investing activities. Our investing activities consist primarily of investments in and redemptions of our short-term investments as well as investments in property and equipment.
Net cash used in investing activities was $17.4 million for the three months ended March 31, 2022, compared to $54.2 million provided by investing activities for the three months ended March 31, 2021. The net cash used in investing activities for the three months ended March 31, 2022 was primarily attributable to $12.3 million of net purchase of short-term investments, and the purchase of $5.1 million of property and equipment. The net cash provided by investing activities for the three months ended March 31, 2021 was primarily attributable to $58.2 million of net proceeds from maturity of short-term investments, partially offset by the purchase of $4.0 million of property and equipment.
Financing activities. To date, our primary financing activities have been the sale of equity and the proceeds from long-term loans. Net cash provided by financing activities was $3.1 million for the three months ended March 31, 2022, as compared to $8.0 million provided by financing activities for the three months ended March 31, 2021. The net cash provided by financing activities for the three months ended March 31, 2022 and March 31, 2021 included proceeds from the exercise of options under the Company's stock option plan.
Convertible Notes
On November 5, 2020, we issued $575.0 million aggregate principal amount of 0% Convertible Senior Notes due 2025 (the “Notes”). The Notes are senior unsecured obligations. The Notes do not bear regular interest, and the principal amount of the Notes will not accrete. The Notes are convertible at an initial conversion rate of 5.9439 ordinary shares per $1,000 principal amount of the Notes, which is equivalent to an initial conversion price of approximately $168.24 per ordinary share. The Notes are convertible at the option of the holders upon the satisfaction of certain other conditions and during certain periods, and if the Company exercises its right to redeem the Notes as permitted or required by the indenture. On or after August 1, 2025 until the close of the business on the business day immediately preceding the maturity date, holders may convert all or any portion of their Notes at the conversion rate at any time irrespective of the foregoing conditions.
In January 2021, we irrevocably elected to settle all conversions of Notes by a combination of cash and our ordinary shares and that the cash portion per $1,000 principal amount of Notes for all conversion settlements shall be $1,000. Accordingly, from and after the date of the election, upon conversion of any Notes, holders of Notes will
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receive, with respect to each $1,000 principal amount of Notes converted, cash in an amount up to $1,000 and the balance of the conversion value, if any, in our ordinary shares
For more information, see Note 10a. to the Consolidated Financial Statements in the 2021 10-K.
Term loan credit facility
On November 6, 2020, we entered into a new three-year $150.0 million senior secured revolving credit facility with a syndicate of relationship banks (the "2020 Credit Facility"). We may, subject to certain conditions and limitations, increase the revolving credit commitments outstanding under the 2020 Credit Facility or incur new incremental term loans in an aggregate principal amount not to exceed an additional $100.0 million.
The commitments under the 2020 Credit Facility are guaranteed by certain of our subsidiaries and secured by a first lien on our and certain of our subsidiaries’ assets. Outstanding loans bear interest per annum at a sliding scale based on the our secured leverage ratio from 2.75% to 3.25% above the applicable interbank borrowing reference rate for the currency in which the loan is denominated. Additionally, the 2020 Credit Facility contains a fee for the unused revolving credit commitments at a sliding scale based on our secured leverage ratio from 0.35% to 0.45%. The 2020 Credit Facility contains financial covenants requiring maintenance of a minimum fixed charge coverage ratio and specifying a maximum senior secured net leverage ratio, as well as customary events of default which include a change of control. As of March 31, 2022, we were in compliance with such covenants.
As of March 31, 2022, we had no outstanding balance borrowed under the 2020 Credit Facility.

Contractual Obligations and Commitments
There have been no material changes from the information disclosed in our 2021 10-K.

Off-Balance Sheet Arrangements
We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements as defined under U.S. Securities and Exchange Commission (“SEC”) rules.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk
There have been no material changes from the information disclosed in our 2021 10-K.

Item 4.  Controls and Procedures
Evaluation of Disclosure Controls and Procedures
As required by Rule 13a-15(b) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), our management, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures as of March 31, 2022. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate, to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of March 31, 2022, our Chief Executive Officer and Chief Financial Officer have concluded that, as of March 31, 2022, our disclosure controls and procedures were effective at the reasonable assurance level.
Changes in Internal Control over Financial Reporting
There has been no change in our internal control over financial reporting during the quarter ended March 31, 2022 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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PART II—OTHER INFORMATION

Item 1.  Legal Proceedings
From time to time, we are involved in various legal proceedings, claims, investigations and litigation that arise in the ordinary course of our business. Litigation is inherently uncertain. Accordingly, we cannot predict with certainty the outcome of these matters. After considering a number of factors, including (but not limited to) the views of legal counsel, the nature of contingencies to which the Company is subject and prior experience, management believes that the ultimate disposition of these legal actions will not materially affect its consolidated financial position or results of operations.

Item 1A.  Risk Factors
There have been no material changes to our risk factors disclosed in Part I, Item 1A “Risk Factors” in the 2021 10-K.

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds
None.

Item 3.  Defaults Upon Senior Securities
None.

Item 4.  Mine Safety Disclosures
Not applicable.

Item 5.  Other Information
None.
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Item 6.  Exhibits
EXHIBIT INDEX
																																	
Exhibit
Number				Incorporated by Reference		Filed
Herewith	
		Exhibit Description		Form		Date		Number			
10.1		Employment Agreement, dated as of April 1, 2022, by and between NovoCure USA LLC and Todd Longsworth#		8-K		April 7, 2022		10.1			
31.1		Certification of Principal Executive Officer Required Under Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as amended								X	
31.2		Certification of Principal Financial Officer Required Under Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as amended								X	
32.1*		Certification of Principal Executive Officer Required Under Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended, and 18 U.S.C. §1350								X	
32.2*		Certification of Principal Financial Officer Required Under Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended, and 18 U.S.C. §1350								X	
101.INS		Inline XBRL Instance Document								X	
101.SCH		Inline XBRL Taxonomy Extension Schema Document								X	
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document								X	
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document								X	
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document								X	
101.PRE		Inline XBRL Extension Presentation Linkbase Document								X	
104		Cover Page Interactive Date File (formatted as Inline XBRL and contained in Exhibit 101)								X	
____________________________________________
*    The certifications attached as Exhibits 32.1 and 32.2 that accompany this Quarterly Report on Form 10-Q are not deemed filed with the Securities and Exchange Commission and are not to be incorporated by reference into any filing of NovoCure Limited under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Form 10-Q, irrespective of any general incorporation language contained in such filing.

#    Compensation plans and arrangements for executive officers and others.

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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		NovoCure Limited	
		 	
Date: April 28, 2022		/s/ Ashley Cordova	
		Ashley Cordova
Chief Financial Officer
(principal financial and accounting officer
and duly authorized officer)	

25

Exhibit 31.1
CERTIFICATIONS
I, Asaf Danziger, certify that:
1.I have reviewed this Quarterly Report on Form 10-Q of NovoCure Limited;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact  necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting.
5.The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
(a)all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b)any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting.

Date: April 28, 2022		
		
/s/ Asaf Danziger		
Asaf Danziger		
Chief Executive Officer and Director		

Exhibit 31.2
CERTIFICATIONS
I, Ashley Cordova, certify that:
1.I have reviewed this Quarterly Report on Form 10-Q of NovoCure Limited;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact  necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting.
5.The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
(a)all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b)any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting.

Date: April 28, 2022		
		
/s/ Ashley Cordova		
Ashley Cordova		
Chief Financial Officer		
(Principal Accounting and Financial Officer)		

Exhibit 32.1
NOVOCURE LIMITED
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of NovoCure Limited (the "Company") on Form 10-Q for the quarter ended March 31, 2022, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Asaf Danziger, Chief Executive Officer (Principal Executive Officer) of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:
(1)The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

/s/ Asaf Danziger		
Asaf Danziger		
Chief Executive Officer		
(Principal Executive Officer)		
Date:  April 28, 2022
A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff on request.
This certification accompanies the Report to which it relates, is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of NovoCure Limited under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made before or after the date of the Report), irrespective of any general incorporation language contained in such filing.

Exhibit 32.2
NOVOCURE LIMITED
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of NovoCure Limited (the "Company") on Form 10-Q for the quarter ended March 31, 2022, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Ashley Cordova, Chief Financial Officer (Principal Financial and Accounting Officer) of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:
(1)The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

/s/ Ashley Cordova		
Ashley Cordova		
Chief Financial Officer		
(Principal Financial and Accounting Officer)		
Date:  April 28, 2022
A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff on request.
This certification accompanies the Report to which it relates, is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of NovoCure Limited under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made before or after the date of the Report), irrespective of any general incorporation language contained in such filing.