A year ago, the cancer treatment company Novocure was for a moment the largest Israeli company on the Nasdaq, with a value of $22 billion. Since then, the entire biomed market has been hit hard and, like other companies, Novocure is also trading down 69% from the record, to $7.4 billion, despite that its business was not harmed. The company continues to grow, and still loses money, but that too was expected to happen, as long as the company invests in developing opportunities in new types of cancer.
Novocure has developed an innovative cancer treatment, using electric fields that prevent cell culture. The company’s growth rate shows that it is starting to reach saturation in terms of exhausting its existing markets, the market for glioblastoma brain cancer and a certain type of lung cancer that is usually caused by asbestos, in the US. It has the possibility to grow by geographical expansion, or into other types of cancer, or upgrade Its existing treatment will be more effective, so that it will gain a wider market share and patients will also live longer, meaning that they will use the device for longer. It plans to attack on all these fronts at the same time.
In the second quarter of 2022, the company’s revenues grew by 6% to 140.9 million dollars. 108.2 million came from the US, 18.5 from Europe, 8.3 million from Japan and 5.9 million from China.
The company states that in Germany, there has been a decrease in the number of users of the product due to a change in the indemnity policy. Such an event indicates that although Novocure prolongs the lives of cancer patients, not all health authorities see its product as mandatory for use by all patients. In other words, obtaining clear results of life extension in clinical trials is only the beginning, in a world where life-prolonging treatments for cancer and the expenses of the insurance companies are multiplying. Even after such a tremendous achievement, the life extension should be particularly significant, compared to other competitors in the same field, so that the company can collect the insurance indemnity. The next experiments of the company will be tested in this parameter.
Novocure stated in its conference call that it now has a good understanding of which patients will be able to receive the indemnity in Germany, and with this understanding it believes that it will be able to continue to increase its activity in the German market.
The gross profit was 80%, and R&D expenses were 57.1 million dollars, an increase of 13% due to an increase in the amount of advanced experiments performed by the company. Marketing costs also increased by 31%, compared to the corresponding period. The loss was 24 million dollars.
The company has 948 million dollars in cash, so compared to some of the recent biomed companies, its stock is not affected by the fear that it will have to raise specifically in the coming period, of the slowdown in the market.
The next milestone is expected in the first quarter of 2023, results of the company’s clinical trial in non-small cell lung cancer. This market should be relatively large compared to the markets the company is targeting today.
Later this year, information is expected to be received from the company’s phase II trial in the treatment of GBM brain cancer, using higher intensity fields. Results from a phase III trial in ovarian cancer and brain metastases are expected in 2023. Results from a pancreatic cancer trial are expected in 2024.