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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 June 30, 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 July 22, 2022
Ordinary shares, no par value |  | 104,738,581 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.
ii

Table of Contents
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 | 17
Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 26
Item 4. | Controls and Procedures | 26
PART II—OTHER INFORMATION
Item 1. | Legal Proceedings | 27
Item 1A. | Risk Factors | 27
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 27
Item 3. | Defaults Upon Senior Securities | 27
Item 4. | Mine Safety Disclosures | 27
Item 5. | Other Information | 27
Item 6. | Exhibits | 28
| Signatures | 29

1

Table of Contents
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements

NOVOCURE LIMITED AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands (except share data)
| June 30, 2022 |  | December 31, 2021
| Unaudited |  | Audited
ASSETS |  |  |
CURRENT ASSETS: |  |  |
Cash and cash equivalents | $ | 367,014 |  |  | $ | 208,802 |
Short-term investments | 581,503 |  |  | 728,898 |
Restricted cash | 749 |  |  | 807 |
Trade receivables, net | 97,563 |  |  | 93,567 |
Receivables and prepaid expenses | 18,195 |  |  | 17,025 |
Inventories | 29,531 |  |  | 24,427 |
Total current assets | 1,094,555 |  |  | 1,073,526 |
LONG-TERM ASSETS: |  |  |
Property and equipment, net | 26,561 |  |  | 22,693 |
Field equipment, net | 12,377 |  |  | 12,923 |
Right-of-use assets | 18,281 |  |  | 18,267 |
Other long-term assets | 10,898 |  |  | 12,086 |
Total long-term assets | 68,117 |  |  | 65,969 |
TOTAL ASSETS | $ | 1,162,672 |  |  | $ | 1,139,495 |
The accompanying notes are an integral part of these unaudited consolidated financial statements.

2

Table of Contents

NOVOCURE LIMITED AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands (except share data)
| June 30, 2022 |  | December 31, 2021
| Unaudited |  | Audited
LIABILITIES AND SHAREHOLDERS' EQUITY |  |  |
CURRENT LIABILITIES: |  |  |
Trade payables | $ | 79,910 |  |  | $ | 72,600 |
Other payables, lease liabilities and accrued expenses | 55,489 |  |  | 70,002 |
Total current liabilities | 135,399 |  |  | 142,602 |
LONG-TERM LIABILITIES: |  |  |
Long-term debt, net | 563,846 |  |  | 562,216 |
Deferred revenue | 4,541 |  |  | 6,477 |
Long-term leases | 13,377 |  |  | 12,997 |
Employee benefit liabilities | 3,598 |  |  | 4,543 |
Other long-term liabilities | 239 |  |  | 166 |
Total long-term liabilities | 585,601 |  |  | 586,399 |
TOTAL LIABILITIES | 721,000 |  |  | 729,001 |
COMMITMENTS AND CONTINGENCIES |  |  |
SHAREHOLDERS' EQUITY: |  |  |
Share capital - |  |  |
Ordinary shares no par value, unlimited shares authorized; issued and outstanding: 104,727,685 shares and 103,971,263 shares at June 30, 2022 (unaudited) and December 31, 2021, respectively | — |  |  | — |
Additional paid-in capital | 1,158,348 |  |  | 1,099,589 |
Accumulated other comprehensive income (loss) | (2,095) |  |  | (3,169) |
Retained earnings (accumulated deficit) | (714,581) |  |  | (685,926) |
TOTAL SHAREHOLDERS' EQUITY | 441,672 |  |  | 410,494 |
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ | 1,162,672 |  |  | $ | 1,139,495 |

The accompanying notes are an integral part of these unaudited consolidated financial statements.
3

Table of Contents

NOVOCURE LIMITED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS
U.S. dollars in thousands (except share and per share data)
| Three months ended June 30, |  | Six months ended June 30, |  | Year ended December 31,
| 2022 |  | 2021 |  | 2022 |  | 2021 |  | 2021
| Unaudited |  | Unaudited |  | Audited
Net revenues | $ | 140,866 |  |  | $ | 133,517 |  |  | $ | 278,413 |  |  | $ | 268,212 |  |  | $ | 535,031 |
Cost of revenues | 28,503 |  |  | 28,599 |  |  | 56,230 |  |  | 54,984 |  |  | 114,877 |
Gross profit | 112,363 |  |  | 104,918 |  |  | 222,183 |  |  | 213,228 |  |  | 420,154 |
Operating costs and expenses: |  |  |  |  |  |  |  |  |
Research, development and clinical studies | 57,075 |  |  | 50,315 |  |  | 99,309 |  |  | 96,231 |  |  | 201,303 |
Sales and marketing | 44,750 |  |  | 34,138 |  |  | 82,634 |  |  | 65,495 |  |  | 137,057 |
General and administrative | 31,666 |  |  | 32,760 |  |  | 62,174 |  |  | 63,885 |  |  | 126,127 |
Total operating costs and expenses | 133,491 |  |  | 117,213 |  |  | 244,117 |  |  | 225,611 |  |  | 464,487 |
Operating income (loss) | (21,128) |  |  | (12,295) |  |  | (21,934) |  |  | (12,383) |  |  | (44,333) |
Financial expenses (income), net | 2,228 |  |  | 940 |  |  | 3,937 |  |  | 3,586 |  |  | 7,742 |
Income (loss) before income tax | (23,356) |  |  | (13,235) |  |  | (25,871) |  |  | (15,969) |  |  | (52,075) |
Income tax | 652 |  |  | 1,406 |  |  | 2,784 |  |  | 2,800 |  |  | 6,276 |
Net income (loss) | $ | (24,008) |  |  | $ | (14,641) |  |  | $ | (28,655) |  |  | $ | (18,769) |  |  | $ | (58,351) |
Basic net income (loss) per ordinary share | $ | (0.23) |  |  | $ | (0.14) |  |  | $ | (0.27) |  |  | $ | (0.18) |  |  | $ | (0.56) |
Weighted average number of ordinary shares used in computing basic net income (loss) per share | 104,627,789 |  |  | 103,484,866 |  |  | 104,408,164 |  |  | 103,061,557 |  |  | 103,433,274 |
Diluted net income (loss) per ordinary share | $ | (0.23) |  |  | $ | (0.14) |  |  | $ | (0.27) |  |  | $ | (0.18) |  |  | $ | (0.56) |
Weighted average number of ordinary shares used in computing diluted net income (loss) per share | 104,627,789 |  |  | 103,484,866 |  |  | 104,408,164 |  |  | 103,061,557 |  |  | 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 June 30, |  | Six months ended June 30, |  | Year ended December 31,
| 2022 |  | 2021 |  | 2022 |  | 2021 |  | 2021
| Unaudited |  | Unaudited |  | Audited
Net income (loss) | $ | (24,008) |  |  | $ | (14,641) |  |  | $ | (28,655) |  |  | $ | (18,769) |  |  | $ | (58,351) |
Other comprehensive income (loss), net of tax: |  |  |  |  |  |  |  |  |
Change in foreign currency translation adjustments | 680 |  |  | 413 |  |  | 1,010 |  |  | 145 |  |  | 302 |
Unrealized gain (loss) from debt securities | (769) |  |  | — |  |  | (769) |  |  | — |  |  | — |
Pension benefit plan | (678) |  |  | 416 |  |  | 833 |  |  | 2,568 |  |  | 361 |
Total comprehensive income (loss) | $ | (24,775) |  |  | $ | (13,812) |  |  | $ | (27,581) |  |  | $ | (16,056) |  |  | $ | (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 |
Share-based compensation to employees | — |  |  | 25,823 |  |  | — |  |  | — |  |  | 25,823 |
Proceeds from issuance of shares | 46,709 |  |  | 2,759 |  |  | — |  |  | — |  |  | 2,759 |
Exercise of options and vested RSUs | 121,888 |  |  | 1,984 |  |  | — |  |  | — |  |  | 1,984 |
Other comprehensive income (loss), net of tax benefit of $0 | — |  |  | — |  |  | (767) |  |  | — |  |  | (767) |
Net income (loss) | — |  |  | — |  |  | — |  |  | (24,008) |  |  | (24,008) |
Balance as of June 30, 2022 (Unaudited) | 104,727,685 |  |  | $ | 1,158,348 |  |  | $ | (2,095) |  |  | $ | (714,581) |  |  | $ | 441,672 |

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| 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 |
Share-based compensation to employees | — |  |  | 27,881 |  |  | — |  |  | — |  |  | 27,881 |
Proceeds from issuance of shares | 17,291 |  |  | 2,371 |  |  | — |  |  | — |  |  | 2,371 |
Exercise of options and vested RSUs | 436,487 |  |  | 8,695 |  |  | — |  |  | — |  |  | 8,695 |
Other comprehensive income (loss), net of tax benefit of $0 | — |  |  | — |  | 829 |  |  | — |  |  | 829 |
Net income (loss) | — |  |  | — |  | — |  |  | (14,641) |  |  | (14,641) |
Balance as of June 30, 2021 (Unaudited) | 103,641,238 |  |  | $ | 1,044,732 |  |  | $ | (1,119) |  |  | $ | (646,344) |  |  | $ | 397,269 |

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 June 30, |  | Six months ended June 30, |  | Year ended December 31,
| 2022 |  | 2021 |  | 2022 |  | 2021 |  | 2021
| Unaudited |  | Unaudited |  | Audited
Cash flows from operating activities: |  |  |  |  |  |  |  |  |
Net income (loss) | $ | (24,008) |  |  | $ | (14,641) |  |  | $ | (28,655) |  |  | $ | (18,769) |  |  | $ | (58,351) |
Adjustments to reconcile net income (loss) to net cash used in operating activities: |  |  |  |  |  |  |  |  |
Depreciation and amortization | 2,654 |  |  | 2,480 |  |  | 5,264 |  |  | 4,850 |  |  | 10,251 |
Accrued Interest | (602) |  |  | — |  |  | (823) |  |  | — |  |  | (94) |
Asset write-downs and impairment of field equipment | 216 |  |  | 178 |  |  | 351 |  |  | 354 |  |  | 649 |
Share-based compensation | 25,823 |  |  | 27,881 |  |  | 50,868 |  |  | 46,744 |  |  | 94,900 |
Foreign currency remeasurement loss (gain) | 943 |  |  | 372 |  |  | 1,192 |  |  | 2,529 |  |  | 3,231 |
Decrease (increase) in accounts receivables | 2,257 |  |  | 3,026 |  |  | (5,204) |  |  | 7,649 |  |  | 5,270 |
Amortization of discount (premium) | 827 |  |  | 925 |  |  | 1,511 |  |  | 1,528 |  |  | 3,101 |
Decrease (increase) in inventories | (209) |  |  | 1,663 |  |  | (5,013) |  |  | 367 |  |  | 2,483 |
Decrease (increase) in other long-term assets | 2,356 |  |  | 1,584 |  |  | 4,219 |  |  | 3,016 |  |  | 4,519 |
Increase (decrease) in accounts payables and accrued expenses | 7,649 |  |  | 5,122 |  |  | (7,160) |  |  | 2,496 |  |  | 27,777 |
Increase (decrease) in other long-term liabilities | (2,144) |  |  | (2,418) |  |  | (4,475) |  |  | (6,812) |  |  | (10,980) |
Net cash provided by (used in) operating activities | $ | 15,762 |  |  | $ | 26,172 |  |  | $ | 12,075 |  |  | $ | 43,952 |  |  | $ | 82,756 |
Cash flows from investing activities: |  |  |  |  |  |  |  |  |
Purchase of property, equipment and field equipment | $ | (4,131) |  |  | $ | (2,618) |  |  | $ | (9,224) |  |  | $ | (6,599) |  |  | $ | (24,170) |
Proceeds from maturity of short-term investments | 437,034 |  |  | — |  |  | 716,034 |  |  | 608,000 |  |  | 958,000 |
Purchase of short-term investments | (277,146) |  |  | — |  |  | (568,463) |  |  | (549,848) |  |  | (1,078,664) |
Net cash provided by (used in) investing activities | $ | 155,757 |  |  | $ | (2,618) |  |  | $ | 138,347 |  |  | $ | 51,553 |  |  | $ | (144,834) |
Cash flows from financing activities: |  |  |  |  |  |  |  |  |
Proceeds from issuance of shares, net | $ | 2,759 |  |  | $ | 2,371 |  |  | $ | 2,759 |  |  | $ | 2,371 |  |  | $ | 4,546 |
Repayment of long-term debt | (7) |  |  | (7) |  |  | (14) |  |  | (13) |  |  | (26) |
Exercise of options | 1,984 |  |  | 8,695 |  |  | 5,132 |  |  | 16,656 |  |  | 21,182 |
Net cash provided by (used in) financing activities | $ | 4,736 |  |  | $ | 11,059 |  |  | $ | 7,877 |  |  | $ | 19,014 |  |  | $ | 25,702 |
Effect of exchange rate changes on cash, cash equivalents and restricted cash | $ | (120) |  |  | $ | (3) |  |  | $ | (145) |  |  | $ | (105) |  |  | $ | (188) |
Increase (decrease) in cash, cash equivalents and restricted cash | 176,135 |  |  | 34,610 |  |  | 158,154 |  |  | 114,414 |  |  | (36,564) |
Cash, cash equivalents and restricted cash at the beginning of the period | 191,628 |  |  | 325,977 |  |  | 209,609 |  |  | 246,173 |  |  | 246,173 |
Cash, cash equivalents and restricted cash at the end of the period | $ | 367,763 |  |  | $ | 360,587 |  |  | $ | 367,763 |  |  | $ | 360,587 |  |  | $ | 209,609 |

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NOVOCURE LIMITED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. dollars in thousands
Supplemental cash flow activities: |  |  |  |  |  |  |  |  |
Cash paid during the period for: |  |  |  |  |  |  |  |  |
Income taxes paid (refunded), net | $ | 1,854 |  |  | $ | 2,490 |  |  | $ | 3,027 |  |  | $ | 85 |  |  | $ | 3,110 |
Interest paid | $ | 1 |  |  | $ | 1 |  |  | $ | 2 |  |  | $ | 2 |  |  | $ | 101 |
Non-cash activities: |  |  |  |  |  |  |  |  |
Right-of-use assets obtained in exchange for lease liabilities | $ | 279 |  |  | $ | 665 |  |  | $ | 3,859 |  |  | $ | 949 |  |  | $ | 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").
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 filed with the Securities and Exchange Commission on February 24, 2022 (the "2021 10-K").
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 ("AFS") and the rest of the balance as held-to-maturity ("HTM") when 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, and short-term investments include items with maturity dates between three months and one year when purchased. As of June 30, 2022 and December 31, 2021, the Company’s cash and cash equivalents and short-term investments were composed of:

| June 30, 2022
| Fair value level |  | Adjusted cost basis |  | Unrealized gains |  | Unrealized losses |  | Fair market value |  | Recorded basis |  | Cash and cash equivalents |  | Short-term investments
Cash |  |  | $ | 7,173 |  |  | $ | — |  |  | $ | — |  |  | $ | 7,173 |  |  | $ | 7,173 |  |  | $ | 7,173 |  |  | $ | — |
Money market funds | Level 1 |  | 217,498 |  |  | — |  |  | — |  |  | 217,498 |  |  | 217,498 |  |  | 217,498 |  |  | — |
Certificate of deposits and term deposits | Level 2 |  | 486,770 |  |  | — |  |  | — |  |  | 486,770 |  |  | 486,770 |  |  | 140,829 |  |  | 345,941 |
AFS securities (1) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. Treasury bills | Level 1 |  | 547 |  |  | — |  |  | (10) |  |  | 537 |  |  | 537 |  |  | — |  |  | 537 |
Government and governmental agencies | Level 2 |  | 7,786 |  |  | — |  |  | (32) |  |  | 7,754 |  |  | 7,754 |  |  | — |  |  | 7,754 |
Corporate debt securities | Level 2 |  | 139,567 |  |  | 11 |  |  | (738) |  |  | 138,840 |  |  | 138,840 |  |  | 1,514 |  |  | 137,326 |
|  |  | $ | 147,900 |  |  | $ | 11 |  |  | $ | (780) |  |  | $ | 147,131 |  |  | $ | 147,131 |  |  | $ | 1,514 |  |  | $ | 145,617 |
HTM securities (2) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Corporate debt securities | Level 2 |  | $ | 89,945 |  |  | $ | — |  |  | $ | (213) |  |  | $ | 89,732 |  |  | $ | 89,945 |  |  | $ | — |  |  | $ | 89,945 |
|  |  | $ | 89,945 |  |  | $ | — |  |  | $ | (213) |  |  | $ | 89,732 |  |  | $ | 89,945 |  |  | $ | — |  |  | $ | 89,945 |
Total |  |  | $ | 949,286 |  |  | $ | 11 |  |  | $ | (993) |  |  | $ | 948,304 |  |  | $ | 948,517 |  |  | $ | 367,014 |  |  | $ | 581,503 |

| December 31, 2021
| Fair value level |  | Adjusted cost basis |  | Unrealized gains |  | Unrealized losses |  | Fair market value |  | Recorded basis |  | Cash and cash equivalents |  | Short-term investments
Cash |  |  | $ | 3,139 |  |  | $ | — |  |  | $ | — |  |  | $ | 3,139 |  |  | $ | 3,139 |  |  | $ | 3,139 |  |  | $ | — |
Money market funds | Level 1 |  | 64,668 |  |  | — |  |  | — |  |  | 64,668 |  |  | 64,668 |  |  | 64,668 |  |  | — |
Certificate of deposits, notes and term deposits | Level 2 |  | 565,089 |  |  | — |  |  | — |  |  | 565,089 |  |  | 565,089 |  |  | 140,995 |  |  | 424,094 |
HTM securities (2) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. Treasury bills | Level 1 |  | 199,981 |  |  | 8 |  |  | — |  |  | 199,989 |  |  | 199,981 |  |  | — |  |  | 199,981 |
Corporate debt securities | Level 2 |  | 104,823 |  |  | — |  |  | — |  |  | 104,823 |  |  | 104,823 |  |  | — |  |  | 104,823 |
|  |  | $ | 304,804 |  |  | $ | 8 |  |  | $ | — |  |  | $ | 304,812 |  |  | $ | 304,804 |  |  | $ | — |  |  | $ | 304,804 |
Total |  |  | $ | 937,700 |  | 937700408.11 | $ | 8 |  |  | $ | — |  |  | $ | 937,708 |  |  | $ | 937,700 |  |  | $ | 208,802 |  |  | $ | 728,898 |

(1) Changes in fair value of AFS securities are recorded in other comprehensive income. If unrealized loss is identified as credit loss, this loss will be recorded as finance expenses.
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(2) Changes in fair value of HTM securities are presented for disclosure purposes as required by ASC 320 and are recorded as finance expenses only if the unrealized loss is identified as a credit loss.
As of June 30, 2022 and December 31, 2021, all investments and equivalents mature in one year or less.
Unrealized losses from debt securities are primarily attributable to changes in interest rates. The Company does not believe any remaining unrealized losses represent impairments based on the evaluation of available evidence.
Debt securities with continuous unrealized losses for less than 12 months and their related fair values were as follows:

| June 30, 2022
| Less than 12 months
| Fair value |  | Unrealized loss
U.S. Treasury bills | $ | 537 |  |  | $ | (10) |
Government and governmental agencies | 7,754 |  |  | (32) |
Corporate debt securities | 132,264 |  |  | (738) |
Total | $ | 140,555 |  |  | $ | (780) |

As of June 30, 2022, no continuous unrealized losses for 12 months or greater was identified.
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 June 30, 2022 and December 31, 2021, the Company’s inventories were composed of:

| June 30, 2022 |  | December 31, 2021
| Unaudited |  | Audited
Raw materials | $ | 2,545 |  |  | $ | 1,485 |
Work in progress | 11,573 |  |  | 8,274 |
Finished products | 15,413 |  |  | 14,668 |
Total | $ | 29,531 |  |  | $ | 24,427 |

NOTE 4: 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 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 June 30, 2022 and December 31, 2021, the Company pledged bank deposits of $2,319 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 $2,642 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 June 30, 2022, the Company had no outstanding balance borrowed under the facility.
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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 June 30, 2022, the conditions allowing holders of the Notes to convert were not met. The Notes are therefore not convertible as of June 30, 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 amounts of the liability of the Notes as of June 30, 2022 and December 31, 2021 are as follows:

| June 30, 2022 |  |  |  | December 31, 2021
| Unaudited |  |  |  | Audited
Liability component, net: |  |  |  |  |
Principal amount | $ | 575,000 |  |  |  |  | $ | 575,000 |
Unamortized issuance costs | (11,154) |  |  |  |  | (12,784) |
Net carrying amount of liability component (1) | $ | 563,846 |  |  |  |  | $ | 562,216 |

(1) An effective market 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 values of the net carrying amount of liability component of the Notes as of June 30, 2022 and December 31, 2021 were $430,776 and $467,469, respectively.
Finance expense related to the Notes was as follows:

| Three months ended June 30, |  | Six months ended June 30, |  | Year ended December 31, 2021
| 2022 |  | 2021 |  | 2022 |  | 2021 |
| Unaudited |  | Unaudited |  | Audited
Amortization of debt issuance costs | 820 |  |  | 976 |  |  | 1,630 |  |  | 1,685 |  |  | 3,339 |
Total finance expense recognized | $ | 820 |  |  | $ | 976 |  |  | $ | 1,630 |  |  | $ | 1,685 |  |  | $ | 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 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 June 30, 2022, 16,945,169 ordinary shares were available for grant under the 2015 Plan.
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A summary of the status of the Company’s option plans as of June 30, 2022 and changes during the period then ended is presented below:

| Six months ended June 30, 2022
| Unaudited
| Number of options |  | Weighted average exercise price
Outstanding at beginning of year | 8,549,322 |  |  | $ | 33.09 |
Granted | 665,007 |  |  | 80.67 |
Exercised | (269,961) |  |  | 18.78 |
Forfeited and canceled | (68,591) |  |  | 79.17 |
Outstanding as of June 30, 2022 | 8,875,777 |  |  | $ | 36.74 |
Exercisable options | 7,189,164 |  |  | $ | 24.86 |

For the six months ended June 30, 2022, options to purchase 269,961 ordinary shares were exercised, resulting in the issuance of 269,961 ordinary shares.
A summary of the status of the Company’s RSUs and PSUs as of June 30, 2022 and changes during the period then ended is presented below.

| Six months ended June 30, 2022
| Unaudited
| Number of RSU/PSUs |  | Weighted average grant date fair value
Unvested at beginning of year | 4,459,107 |  |  | $ | 65.56 |
Granted | 1,104,033 |  |  | 81.04 |
Vested | (439,752) |  |  | 84.86 |
Forfeited and cancelled | (64,844) |  |  | 95.64 |
Unvested as of June 30, 2022 (1) | 5,058,544 |  |  | 66.88 |

(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 June 30, 2022, in accordance with ASC 718 as follows:

| June 30, 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 |
| 7,605 |  |  | $ | 87.66 |  |  | 667 |
| 10,532 |  |  | 94.94 |  |  | 1,000 |
| 189,626 |  |  | $ | 114.26 |  |  | 21,667 |
| 3,162,141 |  |  |  |  | $ | 172,602 |

These PSUs will be expensed over the performance period when the vesting conditions become probable in accordance with ASC 718.
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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 June 30, 2022, 4,908,288 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:

| Six months ended June 30, |  | Year ended December 31, 2021
| 2022 |  | 2021 |
| Unaudited |  | Audited
Stock Option Plans |  |  |  |  |
Expected term (years) | 5.33-5.83 |  | 5.50-6.00 |  | 5.50-6.00
Expected volatility | 60%-62% |  | 60%-62% |  | 60%-63%
Risk-free interest rate | 1.58%-3.04% |  | 0.85%-1.02% |  | 0.78%-1.27%
Dividend yield | 0.00 | % |  | 0.00 | % |  | 0.00 | %
ESPP |  |  |  |  |
Expected term (years) | 0.50 |  | 0.50 |  | 0.50
Expected volatility | 51.00 | % |  | 54.00 | % |  | 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 and six months ended June 30, 2022 and 2021 and the year ended December 31, 2021 was:

| Three months ended June 30, |  | Six months ended June 30, |  | Year ended December 31, 2021
| 2022 |  | 2021 |  | 2022 |  | 2021 |
| Unaudited |  | Unaudited |  | Audited
Cost of revenues | $ | 1,029 |  |  | $ | 827 |  |  | $ | 1,981 |  |  | $ | 1,560 |  |  | $ | 3,471 |
Research, development and clinical studies | 7,624 |  |  | 8,505 |  |  | 14,425 |  |  | 13,629 |  |  | 27,597 |
Sales and marketing | 6,802 |  |  | 6,429 |  |  | 13,457 |  |  | 10,900 |  |  | 22,673 |
General and administrative | 10,368 |  |  | 12,120 |  |  | 21,005 |  |  | 20,655 |  |  | 41,159 |
Total share-based compensation expense | $ | 25,823 |  |  | $ | 27,881 |  |  | $ | 50,868 |  |  | $ | 46,744 |  |  | $ | 94,900 |

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.
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The following table sets forth the computation of the Company’s basic and diluted net income (loss) per ordinary share:

| Three months ended June 30, |  | Six months ended June 30, |  | Year ended December 31, 2021
| 2022 |  | 2021 |  | 2022 |  | 2021 |
| Unaudited |  | Unaudited |  | Audited
Net income (loss) attributable to ordinary shares as reported used in computing basic and diluted net income (loss) per share | $ | (24,008) |  |  | $ | (14,641) |  |  | $ | (28,655) |  |  | $ | (18,769) |  |  | $ | (58,351) |
Weighted average number of ordinary shares used in computing basic net income (loss) per share | 104,627,789 |  |  | 103,484,866 |  |  | 104,408,164 |  |  | 103,061,557 |  |  | 103,433,274 |
Weighted average number of ordinary shares used in computing diluted net income (loss) per share | 104,627,789 |  |  | 103,484,866 |  |  | 104,408,164 |  |  | 103,061,557 |  |  | 103,433,274 |
Weighted anti-dilutive shares outstanding which were not included in the diluted calculation | 7,746,398 |  |  | 9,098,788 |  |  | 7,790,467 |  |  | 9,363,037 |  |  | 8,524,922 |
Basic net income (loss) per ordinary share | $ | (0.23) |  |  | $ | (0.14) |  |  | $ | (0.27) |  |  | $ | (0.18) |  |  | $ | (0.56) |
Diluted net income (loss) per ordinary share | $ | (0.23) |  |  | $ | (0.14) |  |  | $ | (0.27) |  |  | $ | (0.18) |  |  | $ | (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:

| June 30, 2022 |  | December 31, 2021
| Unaudited |  | Audited
United States | $ | 25,754 |  |  | $ | 23,263 |
Israel | 6,094 |  |  | 5,297 |
Switzerland | 4,316 |  |  | 4,085 |
Japan | 975 |  |  | 799 |
Germany | 697 |  |  | 1,020 |
Others | 1,102 |  |  | 1,152 |
Total | $ | 38,938 |  |  | $ | 35,616 |

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

| Three months ended June 30, |  | Six months ended June 30, |  | Year ended December 31, 2021
| 2022 |  | 2021 |  | 2022 |  | 2021 |
| Unaudited |  | Unaudited |  | Audited
United States | $ | 108,203 |  |  | $ | 87,139 |  |  | $ | 205,619 |  |  | $ | 173,047 |  |  | $ | 353,110 |
EMEA: |  |  |  |  |  |  |  |  |
Germany | 10,347 |  |  | 25,362 |  |  | 29,585 |  |  | 51,726 |  |  | 93,939 |
Other EMEA | 8,111 |  |  | 7,335 |  |  | 15,886 |  |  | 15,954 |  |  | 30,577 |
Japan | 8,272 |  |  | 8,750 |  |  | 17,022 |  |  | 17,028 |  |  | 34,640 |
Greater China (1) | 5,933 |  |  | 4,931 |  |  | 10,301 |  |  | 10,457 |  |  | 22,765 |
Total net revenues | $ | 140,866 |  |  | $ | 133,517 |  |  | $ | 278,413 |  |  | $ | 268,212 |  |  | $ | 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 June 30, 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 for the treatment of adult patients with 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 NSCLC, and pancreatic cancer. In 2021, we completed patient enrollment in our phase 3 pivotal NSCLC and ovarian cancer studies. Additionally, we have multiple ongoing or recently completed phase 2 pilot studies evaluating the use of TTFields. These studies are in gastric cancer 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.
We completed enrollment of the phase 3 pivotal LUNAR trial in November 2021, which began the final patient’s 12-month follow-up period and our clinical operations and data collection efforts remain on track. Given feedback we received from all interested parties, we recognized a pivotal data release the final week of the year is not ideal for
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investigators, clinicians, investors, or potential patients. For that reason, we are moving the top-line data announcement to early Q1 2023.
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.
In May 2022, we entered into a clinical trial collaboration agreement with MSD, a tradename of Merck & Co., Inc., ("MSD") to conduct a double-blind, placebo-controlled study of TTFields concomitant with pembrolizumab and maintenance temozolomide for the treatment of newly diagnosed GBM. We intend to engage the FDA in pre-submission discussions in the near-term regarding the parameters of the KEYNOTE D58 trial protocol design.
In June 2022, we announced results of the phase 2 pilot EF-31 study evaluating the use of TTFields together with standard-of-care (chemotherapy alone or in combination with trastuzumab for HER2-positive patients) as first-line treatment for gastric cancer. Initial analysis was conducted with a median follow-up period of 8.6 months. The primary endpoint, confirmed objective response rate, was 50%. Median progression-free survival was 7.8 months. Duration of response was 10.3 months. Median overall survival had not yet been reached with a one-year survival rate of 72%. We look forward to further exploration of these potential benefits as we look ahead to a randomized phase 3 clinical study.
In June 2022, we announced the first patient has been enrolled in the phase 2 pilot KEYNOTE B36 study, conducted in collaboration with MSD. KEYNOTE B36 is designed to evaluate the safety and effectiveness of TTFields together with pembrolizumab for the treatment of locally advanced or metastatic intrathoracic NSCLC that expresses PD-L1.
In June 2022, by mutual agreement with GT Medical Technologies, Inc., we suspended indefinitely our joint plans to conduct a phase 2 pilot study to test the safety and effectiveness of neo-adjuvant TTFields followed by resection, GammaTile Therapy, and adjuvant TTFields for recurrent GBM.
The table below presents the current status of the ongoing clinical studies in our oncology pipeline and anticipated timing of data readout.
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
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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 and six months ended June 30, 2022, our net revenues were $140.9 million and $278.4 million, respectively. Our net loss for the three and six months ended June 30, 2022 were $24.0 million and $28.7 million, respectively. As of June 30, 2022, we had an accumulated deficit of $714.6 million. Our net loss resulted primarily from net revenue growth which was more than offset by increasing investments in research, development and clinical trial initiatives and sales and marketing initiatives that support our ongoing exploration of the benefits of TTFields across numerous cancer indications, as well as 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 the evolving situation. The COVID-19 pandemic did not have a material impact on our financial results through the second 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. 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
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•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 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 and six months ended June 30, 2022 as compared to the three and six months ended June 30, 2021. The tables contained in this section report U.S. dollars in thousands (except share, patient, and prescription data).
The following table sets forth our consolidated statements of operations data:

| Three months ended June 30, |  | Six months ended June 30,
| 2022 |  | 2021 |  | 2022 |  | 2021
| Unaudited |  | Unaudited
Net revenues | $ | 140,866 |  |  | $ | 133,517 |  |  | $ | 278,413 |  |  | $ | 268,212 |
Cost of revenues | 28,503 |  |  | 28,599 |  |  | 56,230 |  |  | 54,984 |
Gross profit | 112,363 |  |  | 104,918 |  |  | 222,183 |  |  | 213,228 |
Operating costs and expenses: |  |  |  |  |  |  |
Research, development and clinical studies | 57,075 |  |  | 50,315 |  |  | 99,309 |  |  | 96,231 |
Sales and marketing | 44,750 |  |  | 34,138 |  |  | 82,634 |  |  | 65,495 |
General and administrative | 31,666 |  |  | 32,760 |  |  | 62,174 |  |  | 63,885 |
Total operating costs and expenses | 133,491 |  |  | 117,213 |  |  | 244,117 |  |  | 225,611 |
Operating income (loss) | (21,128) |  |  | (12,295) |  |  | (21,934) |  |  | (12,383) |
Financial expenses (income), net | 2,228 |  |  | 940 |  |  | 3,937 |  |  | 3,586 |
Income (loss) before income taxes | (23,356) |  |  | (13,235) |  |  | (25,871) |  |  | (15,969) |
Income taxes | 652 |  |  | 1,406 |  |  | 2,784 |  |  | 2,800 |
Net income (loss) | $ | (24,008) |  |  | $ | (14,641) |  |  | $ | (28,655) |  |  | $ | (18,769) |
Basic net income (loss) per ordinary share | $ | (0.23) |  |  | $ | (0.14) |  |  | $ | (0.27) |  |  | $ | (0.18) |
Weighted average number of ordinary shares used in computing basic net income (loss) per share | 104,627,789 |  |  | 103,484,866 |  |  | 104,408,164 |  |  | 103,061,557 |
Diluted net income (loss) per ordinary share | $ | (0.23) |  |  | $ | (0.14) |  |  | $ | (0.27) |  |  | $ | (0.18) |
Weighted average number of ordinary shares used in computing diluted net income (loss) per share | 104,627,789 |  |  | 103,484,866 |  |  | 104,408,164 |  |  | 103,061,557 |

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The following table details the share-based compensation expense included in costs and expenses:

| Three months ended June 30, |  | Six months ended June 30,
| 2022 |  | 2021 |  | 2022 |  | 2021
| Unaudited |  | Unaudited
Cost of revenues | $ | 1,029 |  |  | $ | 827 |  |  | $ | 1,981 |  |  | $ | 1,560 |
Research, development and clinical studies | 7,624 |  |  | 8,505 |  |  | 14,425 |  |  | 13,629 |
Sales and marketing | 6,802 |  |  | 6,429 |  |  | 13,457 |  |  | 10,900 |
General and administrative | 10,368 |  |  | 12,120 |  |  | 21,005 |  |  | 20,655 |
Total share-based compensation expense | $ | 25,823 |  |  | $ | 27,881 |  |  | $ | 50,868 |  |  | $ | 46,744 |

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 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.

| June 30,
Operating statistics | 2022 |  | 2021
Active patients at period end |  |  |
North America (1) | 2,229 |  |  | 2,206 |
EMEA: |  |  |
Germany | 458 |  |  | 571 |
Other EMEA | 421 |  |  | 419 |
Japan | 346 |  |  | 291 |
Total | 3,454 |  |  | 3,487 |

| Three months ended June 30, |  | Six months ended June 30,
| 2022 |  | 2021 |  | 2022 |  | 2021
Prescriptions received in period |  |  |  |  |  |  |
North America (1) | 954 |  |  | 967 |  |  | 1,889 |  |  | 1,884 |
EMEA: |  |  |  |  |  |  |
Germany | 216 |  |  | 237 |  |  | 436 |  |  | 485 |
Other EMEA | 118 |  |  | 138 |  |  | 245 |  |  | 272 |
Japan | 95 |  |  | 108 |  |  | 197 |  |  | 211 |
Total | 1,383 |  |  | 1,450 |  |  | 2,767 |  |  | 2,852 |

(1) North America includes data for the United States and Canada for 2022 and the United States only for 2021.
There were 8 active MPM patients on therapy as of June 30, 2022 and 11 MPM prescriptions were received in the three months ended June 30, 2022.
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Three and six months ended June 30, 2022 compared to three and six months ended June 30, 2021

| Three months ended June 30, |  | Six months ended June 30,
| 2022 |  | 2021 |  | % Change |  | 2022 |  | 2021 |  | % Change
Net revenues | $ | 140,866 |  |  | $ | 133,517 |  |  | 6 | % |  | $ | 278,413 |  |  | $ | 268,212 |  |  | 4 | %

Net revenues. Net revenues increased 6% to $140.9 million for the three month period ending June 30, 2022 from $133.5 million for the same period in 2021, and increased 4% to $278.4 million for the six month period ended June 30, 2022 from $268.2 million for the same period in 2021. The increase resulted primarily from an increase in active patients in the U.S. and Japan and increased collections for previously denied and appealed claims in the U.S. The increase was partially offset by a reduction in German active patient numbers and approval rates as a result of updated coverage criteria, and the impact of foreign exchange rate fluctuations.
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 June 30, |  | Six months ended June 30,
| 2022 |  | 2021 |  | % Change |  | 2022 |  | 2021 |  | % Change
Cost of revenues | $ | 28,503 |  |  | $ | 28,599 |  |  | — | % |  | $ | 56,230 |  |  | $ | 54,984 |  |  | 2 | %

Cost of revenues. Our cost of revenues for the three month period ended June 30, 2022 was $28.5 million, virtually unchanged from $28.6 million for the same period in 2021. Cost of revenues for the six months ended June 30, 2022 increased by 2% to $56.2 million from $55.0 million for the same period in 2021. For the six month period ended June 30, 2022, the increase in cost of revenues was primarily driven by increased shipments to Zai and the cost of shipping arrays to a higher average volume of commercial patients, offset by lower manufacturing costs per array. 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 June 30, 2022 compared to 79% for the three months ended June 30, 2021.Gross margin was 80% for the six months ended June 30, 2022 and 79% for the six months ended June 30, 2021. Excluding sales to Zai, cost of revenues per active patient per month was $2,391 for the three months ended June 30, 2022, a decrease of 5% from $2,520 for the same period in 2021, with increasing supply chain optimization and cost reduction initiatives more than 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 $3.4 million and $5.3 million for the three and six months ended June 30, 2022 compared to $2.4 million and $3.9 million for the three and six months ended June 30, 2021.
Operating Expenses.

| Three months ended June 30, |  | Six months ended June 30,
| 2022 |  | 2021 |  | % Change |  | 2022 |  | 2021 |  | % Change
Research, development and clinical studies | $ | 57,075 |  |  | $ | 50,315 |  |  | 13 | % |  | $ | 99,309 |  |  | $ | 96,231 |  |  | 3 | %
Sales and marketing | 44,750 |  |  | 34,138 |  |  | 31 | % |  | 82,634 |  |  | 65,495 |  |  | 26 | %
General and administrative | 31,666 |  |  | 32,760 |  |  | (3) | % |  | 62,174 |  |  | 63,885 |  |  | (3) | %
Total operating expenses | $ | 133,491 |  |  | $ | 117,213 |  |  | 14 | % |  | $ | 244,117 |  |  | $ | 225,611 |  |  | 8 | %

Research, development and clinical study expenses. Research, development and clinical study expenses increased 13% to $57.1 million for the three month period ended June 30, 2022 from $50.3 million for the same period in 2021, and increased 3% to $99.3 million for the six month period ended June 30, 2022 from $96.2 million in the same period in 2021, primarily driven by an increase in direct clinical study costs for both the three and six month
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periods. Direct clinical study costs 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 31% to $44.7 million for the three months ended June 30, 2022 from $34.1 million for the same period in 2021, and increased 26% to $82.6 million for the six month period ended June 30, 2022 from $65.5 million for the same period in 2021. For the three and six month period ended June 30, 2022, 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 3% to $31.7 million for the three months ended June 30, 2022 from $32.8 million for the same period in 2021, and decreased 3% to $62.2 million for the six months ended June 30, 2022 from $63.9 million for the same period in 2021. For the three and six month periods, the change was primarily due to a decrease in personnel costs.

| Three months ended June 30, |  | Six months ended June 30,
| 2022 |  | 2021 |  | % Change |  | 2022 |  | 2021 |  | % Change
Financial expenses (income), net | $ | 2,228 |  |  | $ | 940 |  |  | 137 | % |  | $ | 3,937 |  |  | $ | 3,586 |  |  | 10 | %

Financial expenses, net. Financial expenses increased 137% to $2.2 million for the three months ended June 30, 2022 from $0.9 million for the same period in 2021, and increased 10% to $3.9 for the six months ended June 30, 2022 from $3.6 for the same period in 2021. For the three and six month periods, the increase was primarily due to increased foreign exchange rate fluctuations offset by interest income. Foreign exchange rate expenses increased to $3.4 million for the three months ended June 30, 2022 from income of $0.3 million for the same period in 2021, and increased 166% to $4.8 million for the six months ended June 30, 2022 from $1.8 million for the same period in 2021.

| Three months ended June 30, |  | Six months ended June 30,
| 2022 |  | 2021 |  | % Change |  | 2022 |  | 2021 |  | % Change
Income taxes | $ | 652 |  |  | $ | 1,406 |  |  | (54) | % |  | $ | 2,784 |  |  | $ | 2,800 |  |  | (1) | %

Income taxes. Income taxes decreased 54% to $0.7 million for the three months ended June 30, 2022 from $1.4 million for the same period in 2021, and was unchanged at $2.8 million for the six months ended June 30, 2022 compared to the same period in 2021. For the three months ended June 30, 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.
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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 June 30, |  | Six months ended June 30,
| 2022 |  | 2021 |  | % Change |  | 2022 |  | 2021 |  | % Change
Net income (loss) | $ | (24,008) |  |  | $ | (14,641) |  |  | 64 | % |  | $ | (28,655) |  |  | $ | (18,769) |  |  | 53 | %
Add: Income tax | 652 |  |  | 1,406 |  |  | (54) | % |  | 2,784 |  |  | 2,800 |  |  | (1) | %
Add: Financial expenses (income), net | 2,228 |  |  | 940 |  |  | 137 | % |  | 3,937 |  |  | 3,586 |  |  | 10 | %
Add: Depreciation and amortization | 2,654 |  |  | 2,480 |  |  | 7 | % |  | 5,264 |  |  | 4,850 |  |  | 9 | %
EBITDA | $ | (18,474) |  |  | $ | (9,815) |  |  | 88 | % |  | $ | (16,670) |  |  | $ | (7,533) |  |  | 121 | %
Add: Share-based compensation | 25,823 |  |  | 27,881 |  |  | (7) | % |  | 50,868 |  |  | 46,744 |  |  | 9 | %
Adjusted EBITDA | $ | 7,349 |  |  | $ | 18,066 |  |  | (59) | % |  | $ | 34,198 |  |  | $ | 39,211 |  |  | (13) | %

Adjusted EBITDA decreased by 59% to $7.3 million for the three months ended June 30, 2022 from $18.1 million for the same period in 2021, and decreased by 13% to $34.2 million for the six months ended June 30, 2022 from $39.2 million for the same period in 2021. The changes in both periods were primarily due to a decrease in net income driven by increased investment in research, development and clinical studies and sales and marketing intended to maximize future growth opportunities.
Liquidity and Capital Resources
We have incurred significant losses and cumulative negative cash flows from operations since our founding in 2000. As of June 30, 2022, we had an accumulated deficit of $714.6 million. To date, we have primarily financed our operations through the issuance and sale of equity and the proceeds from long-term loans.
At June 30, 2022, we had $948.5 million in cash, cash equivalents and short-term investments, an increase of $10.8 million compared to $937.7 million at December 31, 2021. We believe our cash, cash equivalents and short-term investments as of June 30, 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.
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:

| Six months ended June 30, |  |  |  |
| 2022 |  | 2021 |  | Change |  | % Change
Net cash provided by (used in) operating activities | $ | 12,075 |  |  | $ | 43,952 |  |  | $ | (31,877) |  |  | (73) | %
Net cash provided by (used in) investing activities | 138,347 |  |  | 51,553 |  |  | 86,794 |  |  | 168 | %
Net cash provided by financing activities | 7,877 |  |  | 19,014 |  |  | (11,137) |  |  | (59) | %
Effect of exchange rate changes on cash and cash equivalents | (145) |  |  | (105) |  |  | (40) |  |  | 38 | %
Net increase (decrease) in cash, cash equivalents and restricted cash | $ | 158,154 |  |  | $ | 114,414 |  |  | $ | 43,740 |  |  | 38 | %

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.
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Net cash provided by operating activities decreased by $31.9 million from $44.0 million net cash provided by operating activities for the six months ended June 30, 2021 to $12.1 million net cash provided by operating activities for the six months ended June 30, 2022. This decrease was a result of net income decreasing by $9.9 million compared to the same period in 2021, with a $24.4 million increase in working capital, including a $9.7 million decrease in accounts payables and accrued expenses, $12.9 million increase in accounts receivables and $5.4 million increase in inventories, partially offset by a $2.4 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 provided by investing activities was $138.3 million for the six months ended June 30, 2022, compared to $51.6 million provided by investing activities for the six months ended June 30, 2021. The net cash provided by investing activities for the six months ended June 30, 2022 was primarily attributable to $147.6 million of net proceeds from maturity of short-term investments, offset by the purchase of $9.2 million of property and equipment. The net cash provided by investing activities for the six months ended June 30, 2021 was primarily attributable to $58.2 million of net proceeds from maturity of short-term investments, partially offset by the purchase of $6.6 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 $7.9 million for the six months ended June 30, 2022, as compared to $19.0 million provided by financing activities for the six months ended June 30, 2021. The net cash provided by financing activities for the six months ended June 30, 2022 and June 30, 2021 included proceeds from the issuance of shares as well as proceeds from the exercise of options under the Company's employee stock purchase plan and 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 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
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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 June 30, 2022, we were in compliance with such covenants.
As of June 30, 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 June 30, 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 June 30, 2022, our Chief Executive Officer and Chief Financial Officer have concluded that, as of June 30, 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 June 30, 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 |
3.1 |  | Amended and Restated Articles of Association of NovoCure Limited adopted 8 June 2022 |  | 8-K |  | June 14, 2022 |  | 3.1 |  |
10.1 |  | Clinical Trial Collaboration and Supply Agreement dated May 18, 2022 by and among Novocure GmbH, Merck International GmbH and MSD International Business GmbH* |  | 8-K |  | May 18, 2022 |  | 10.1 |  |
10.2 |  | Non-Employee Director Compensation Program effec tive April 26, 2022# |  |  |  |  |  |  |  | X
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

____________________________________________
* Certain identified information has been excluded from this exhibit because it is both (I) not material and (II) would likely cause competitive harm to the Company if publicly disclosed. Omitted information is marked with brackets. Additionally, certain exhibits and schedules have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company agrees to furnish supplementally to the SEC a copy of any omitted information, exhibits or schedules upon request.
** 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: July 28, 2022 |  | /s/ Ashley Cordova
|  | Ashley Cordova Chief Financial Officer (principal financial and accounting officer and duly authorized officer)

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