Novocure: Innovation in Cancer Treatment

08/13/2020 5:00 am EST

Focus: HEALTHCARE

Carl Delfeld

Chief Analyst, Cabot Global Stocks Explorer

Novocure (NVCR) does not produce drugs but rather has an innovative process to treat cancer without chemotherapy, explains Carl Delfeld, editor of Cabot Global Stocks Explorer.

Novocure’s product, Optune, uses specially tuned electrical fields (Tumor Treating Fields) to disrupt the growth and division of cancer cells in tumors. The spread of cancer is through cellular division (mitosis) of cancer cells.  In short, a disruptive electric charge can prevent the cells from dividing.

Importantly, Novocure’s technology has succeeded in every clinical test and there are no toxic side effects. Optune treatment can also be effectively combined with drug treatment to amplify results.

Optune can now treat some types of brain cancer and mesothelioma, a tumor of the tissue that lines the heart, lungs, stomach and other organs. However, studies are underway with other cancers such as pancreatic, ovarian, liver and lung cancers, with key results due over the next few months.

The FDA approved the Optune system in 2015, and is presently sold in the U.S., Germany, Austria, Switzerland, Sweden, Israel, China, and Japan. The company has more than 180 patents and patent-pending applications protecting its intellectual property.

While founded in 2000, Novocure is still a relatively small company with a strong balance sheet, more than $300 million of cash and almost 600 employees. Sales grew during the last quarter at a 39% annual clip and Novocure anticipates posting a modest net profit for 2020.

Novocure has announced that over 100 physicians from more than 50 cancer treatment centers are now certified to prescribe Optune. As more come online, sales and profits will scale up so should the stock.

NovoCure reported quarterly net revenues of $115.9 million, representing 34% growth versus the second quarter 2019 and 14% growth versus the first quarter of 2020. In Greater China, net revenues grew 97% growth compared to the same period in 2019.

Net income for the quarter was positive — $1.7 million, compared to a net loss of $1.3 million for the same period in 2019. At the close of the quarter, the company had $346.7 million in cash, cash equivalents and short-term investments. Overall, this was very solid quarter for NovoCure, and the stock remains a buy.

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