NovoCure (NVCR 1.63%)known for its pioneering therapy Tumor Treating Fields (TTFields), reported its third quarter results on October 30. The company reported revenue of $155.1 million, up 22% year-over-year, beating analysts’ expectations of $143.95 million and indicating acceptance growing by the market for its new therapies.

Ultimately, its non-GAAP earnings per share (EPS) came in at -$0.28, which was better than the consensus forecast of around -$0.33. Although the company is still not profitable, its losses have narrowed and key developments point to a promising trajectory.

Source: Analyst estimates for the quarter provided by FactSet.

Understanding NovoCure

NovoCure specializes in TTFields therapy, which uses electric fields to disrupt the reproduction of cancer cells. Its flagship non-invasive devices, Optune Gio and Optune Lua, continue to be its key revenue drivers. Optune Gio specifically targets glioblastoma multiforme while Optune Lua focuses on metastatic non-small cell lung cancer.

Strong geographic performance, particularly in the United States and France, highlights the importance of greater international market penetration. The company’s success will depend on expanding the indications for which TTFields therapy is approved.

Quarter Highlights

This quarter, NovoCure’s revenue jumped to $155.1 million, with the U.S. market’s contribution coming in at $98.3 million. France and Japan also generated significant revenue streams of $15.2 million and $8.6 million, respectively. At the end of the quarter, there were 4,113 active patients on TTFields therapy.

While revenue increased, NovoCure reported a net loss of $30.6 million, compared to a loss of $49.5 million in the same quarter a year ago. Its gross margin improved by about 200 basis points year over year to 77%, demonstrating its cost management efforts.

Notable regulatory milestones include the approval of Optune Lua for the treatment of metastatic non-small cell lung cancer. Yet the company still faces significant hurdles in its efforts to manage its marketing spend and compete in the oncology industry.

Management reduced R&D spending by 3%, but this was offset by an increase in marketing spending. When it comes to adjusted EBITDA, NovoCure saw notable progress, going from a loss of $29.1 million to a positive profit of $1.7 million.

Looking to the future

NovoCure is expected to continue to focus on expanding the international market and improving the clinical pipeline. The unveiling of topline data from its phase 3 PANOVA-3 trial in advanced pancreatic cancer is expected in the last quarter of 2024. A positive result could potentially lead to an expanded market for the TTFields therapy.

Management anticipates further growth in 2024, based on strategic regulatory advancements. Although financial performance reflects ongoing challenges, based on current operational trends and strategies, a sustainable path to profitability remains achievable. Stakeholders should closely monitor developments regarding regulatory approvals and market expansion.