NOVOCURE INC: THE TESLA OF ONCOLOGY?

Novocure Inc, is a company that seeks to treat cancer with electric fields.  So far, the shares have produced electrifying results for investors. Can Novocure keep the good energy flowing?

Biotech Analyst John Coughlin investigates…

Founded in 2000 by Yoram Palti, Novocure is an oncology company that creates technology to fight cancer tumor growth. According to their about us section, Yoram Palti “sought to leverage his expertise in biophysics to develop a new way to treat solid tumor cancers that would destroy tumor cells while sparing healthy tissue and avoiding many of the life-altering side effects of existing cancer therapies.” This effort by Palti has set apart Novocure from other oncology companies through treating cancer with electric fields. Ever since its founding in 2000, the company now has 600 employees and “active markets, including the United States, Germany, Austria, Switzerland, Sweden, Israel, and Japan.”

Novocure’s secret?

As previously stated, Novocure has taken a new angle to fight the spread of cancer tumors through electrical fields. According to the company, “Tumor Treating Fields is a cancer therapy that uses electric fields tuned to specific frequencies to disrupt cell division, inhibiting tumor growth, and potentially causing cancer cells to die.” Aside from the other practices of chemotherapy, this new treatment takes a new angle of treatment and has shown promising results.

Created by its founder Yoram Palti, the company currently holds two patents regarding this electric field treatment. Their first patent, expiring in 2029, and the other expiring in 2031, includes Palti’s targeting certain tumors and stunting their cell division. Along with electric treatment, Novocure’s method can also be combined with other chemotherapy treatments like Paclitaxel, Doxorubicin, or Cyclophosphamide, as provided in Patent #2. 

In many modern-day chemotherapy treatments, healthy cells are sacrificed in the process of eliminating cancer cells.  According to Novcure, the Tumor Treating Fields “do not stimulate or heat tissue and targets dividing cancer cells of a specific size.” This means that the Tumor Treating Fields do minimal to no damage to healthy cells. It seems like the Tumor Treating Fields, in all aspects of therapy, triumph over other chemotherapy methods.

Electric Field Treatment Legitimacy

Like any new technology in the biotechnology space, many investors are skeptical of its legitimacy and further applications. Although Tumor Treating Fields are a “new” technology, the treatment has been met with great enthusiasm and approval from the FDA. On May 23, 2019, the company published an article titled “FDA Approves the NovoTTF-100L™ System in Combination with Chemotherapy for the Treatment of Malignant Pleural Mesothelioma” This FDA approval shows how Tumor Treating Fields can be applied to the most severe cases of cancer, and further its approval from the FDA. Within the article, the company pointed out that the “Tumor Treating Fields delivery system is the first FDA-approved mesothelioma treatment in more than 15 years.” With such a low approval rate regarding mesothelioma treatment, this approval is monumental regarding treatment for one of the most aggressive forms of cancer. 

Along with their approval in the United States, Novocure also has a wide range of foreign markets such as Germany, Austria, Switzerland, Sweden, Israel, and Japan. With doubling revenue YOY in Japan, and an established market within Europe, Novocure’s Tumor Treating Fields has been received with open arms worldwide. 

How Tumor Treating Fields are Administered

With many modern-day chemotherapy treatments in hospitals, especially difficult during Covid-19, treatment can be hard to receive in isolated patients. Although with Tumor Treating Fields, the patient can be administered treatment at home or on the go, as far away from the hospital as they would like to be. 

Possible through the Optune® delivery system, TTFields treatment can be administered easily for cancer patients. According to Nature.com, the Optune® delivery system “delivers alternating electric fields through transducer arrays placed on the patient’s shaved scalp.” This on-the-go treatment delivered through the scalp enables cancer patients to have a relatively active day, as the device is hands-free. Along with its hands-free ability, Nature.com states the Optune® delivery system weighs approximately 1.2 kg (2.7 lbs). Think of it as carrying a half-gallon of milk around in a plastic bag. With carrying little weight, cancer patients can participate in daily activities and not be held back by other chemotherapy treatments. 

Enabled by Novocure, the future of cancer treatment can be transformed into allowing cancer patients to keep an active lifestyle while battling the most aggressive forms of cancer.

Current Operations

During Covid-19, Novocure is still participating in trials for their Tumor Treating Fields. In an article published recently on July 22, 2020, titled “First Patient Enrolled in Novocure’s EF-33 Phase 2 Pilot Trial of Tumor Treating Fields Delivered Utilizing High-Intensity Transducer Arrays,” the company highlighted their use of electric field treatment for glioblastoma (GBM). If the Tumor Treating Fields show success in treating glioblastoma, then Tumor Treating Fields will gain further recognition in the cancer treatment field not only for mesothelioma but also for glioblastoma. 

Novocure’s Stock Price and Financials

Under the ticker symbol NASDAQ: ($NVCR), Novocure has seen tremendous growth since its IPO in 2015, growing +250%. Currently, the stock price trades at $67; 20% off it’s all-time highs in 2019. With a P/E ratio of 768.08, Novocure is a speculative stock, only for investors confident in the growth of Novocure’s Tumor Treating Fields. 

Although Novocure’s stock may be overbought, its financials are more appetizing than the stock price. In their Q1 financial report, Novocure reported a 39% increase in revenue from 2019 to 2020. Currently, Novocure has established markets within the EMEA (Europe, the Middle East, and Africa), and the United States. Cumulatively, these two regions bring in $95 million worth of revenue and have seen tremendous growth over the past three years. Along with their established markets, Novocure is expanding its reach to Japan, which has seen a 100% increase in revenue YOY from $3 million in Q1 2019 to $6 million in Q1 2020. If Japan can become a more established market to Novocure, company revenue will increase dramatically. 

Concluding Remarks

Novocure is one of the only companies in the biotechnology industry that lives up to its technology’s hype. Within a growing technological world and growing space for possible cancer treatments, Novcure will continue to gain recognition through its Tumor Treating Fields. With the company seeing tremendous financial growth in the United States and other foreign markets, Novocure will continue to expand production and international influence. For all of the reasons stated above, Novocure is a BUY, for its incredible technology and original products. 

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