Market cap of Israel-founded Novocure exceeds $9b

NovoCure Photo: Nasdaq

The company's electrical stimulation treatment for brain cancer can extend patients' lives by years.

The share price of Novocure Ltd. (Nasdaq: NVCR), which treats cancer using electrical stimulation, rose 3.57% on Friday to $93.72, giving a market cap of $9.2 billion, well above Teva, whose current market cap is only $7 billion.

Novocure's share price has risen 180% this year, and is no longer based on a mere dream - the company's system lengthens the life expectancy of patients for whom there was previously no treatment available, sometimes by many months. 30% of the patients treated with Novocure's system immediately following their diagnosis were still living five years after the treatment began. There are also patients living 12 and 13 years with the device, despite having been diagnosed with a form of cancer previously regarded as fatal and untreatable.

Novocure was founded in Israel, and its headquarters and R&D setup are currently located in Haifa, while the company's marketing operations are in the US. The company is managed by Israeli CEO Asaf Danziger, and its executive chairman is Bill Doyle of the US. The technology was invented by Prof. Yoram Palti from the Technion - Israel Institute of Technology after his retirement, based on his PhD thesis, which he always hoped to development further when he had more time.

The time came in 2000, when Palti began working on the product in a garage. In order to prove without a doubt that the product worked, he chose to begin with the most difficult type of cancer conceivable - glioblastoma (GBM) brain cancer. Swedish biomedical entrepreneur Lennart Perlhagen invested almost $1 million in the product when it was developed in Palti's basement; that investment is now worth hundreds of millions of dollars.

The Technion has also received income from Novocure, because Palti was a Technion employee when he invented some of the technology. Technion received a total of $7.5 million: $2 million by the date of Novocure's IPO and the rest after the company reached $250 million in cumulative revenue. The company had no investments by Israeli venture capital concerns or private Israeli investors; most of its money came from private US investors from the medical field. Novocure also received investments from Pfizer, Johnson & Johnson, Medtronic, and Becton Dickinson. The company raised a total of $350 million before its IPO and $165 million more in its IPO on Nasdaq. Investors in the IPO have already made a 320% return on their investment on paper.

$88 million sales in the quarter and an operating profit

The main reasons for the steep rise in Novocure's share price in recent months are strong results in its financial reports and substantial progress in trials confirming that this technology can be relevant to a large number of types of cancer. Novocure's leading product is an electrical stimulation helmet designed to slow development of GBM. US government agency Medicare approved insurance reimbursement for this product a month ago.

Even before Medicare approved insurance reimbursement, sales totaled $86 million in the second quarter, 40% more than in the corresponding quarter last year, with a 76% gross profit margin. Revenue in the first half of 2019 totaled $160 million, 41% more than in the corresponding period in 2018.

Novocure achieved its first-ever operating profit in the second quarter - $1.2 million. It posted net losses of $1.2 million in the second quarter and $13 million in the first half. Second quarter cash flow was $9.1 million. The company had $285 million in cash at the end of the second quarter.

Looking ahead, possibly the best news of all for Novocure was approval by the US Food and Drug Administration (FDA) for the company's product for treatment of lung cancer resulting from breathing asbestos (malignant pleural mesothelioma - MPM) in combination with chemotherapy. This is Novocure's first product designed for use as a body vest, not a helmet. It supports the company's claim that its technology can be relevant to treatment of a variety of types of cancer. Novocure is currently conducting no fewer than four Phase III trials for treatment of different types of cancer: brain secondaries (of various types of cancer), lung cancer, pancreatic cancer, and ovarian cancer.

Together with the publication of its reports for the second quarter, Novocure reported that it was preparing to enter China, and might receive marketing approval there by the end of the year.

Published by Globes, Israel business news - en.globes.co.il - on August 18, 2019

© Copyright of Globes Publisher Itonut (1983) Ltd. 2019

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NovoCure Photo: Nasdaq
NovoCure Photo: Nasdaq
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