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
September 30, 2022included 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.
We are a global oncology company with a proprietary platform technology called Tumor Treating Fields ("TTFields"), which are electric fields that exert physical forces to kill cancer cells via a variety of mechanisms. 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"), Japanand 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., Germanyand Japan. We are actively evaluating opportunities to expand our international footprint. As a highly versatile first-in-class modality, TTFields therapy has significant potential for broad applicability across solid tumor types and lines of therapy. 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. 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 have completed recruitment of the pivotal Phase 3 LUNAR study in
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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 2021and data will be reviewed in 2023, following an 18 month follow-up period.
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. Today, we announced data from the EF-33 pilot study evaluating the safety and preliminary efficacy of a higher intensity array design in 25 patients diagnosed with recurrent GBM. Among those patients whoused Optune as directed with higher intensity arrays for at least one month, median progression-free survival was 4.5 months. This compares to 2.2 months from our pivotal EF-11 study in recurrent GBM. Further, alongside the increased dosage, EF-33 patients reported no TTFields-related toxicity. We now expect to complete enrollment in our phase 3 pivotal METIS study for the treatment of brain metastases from NSCLC in the first quarter of 2023. This will begin the final patient's 12-month follow-up period and we anticipate top-line data in the first quarter of 2024.
The table below shows the current status of the ongoing clinical trials in our oncology pipeline and the expected timing of data read-out.
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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 19
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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, Macauand 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 nine months ended September 30, 2022, our net revenues were $131.0 millionand $409.4 million, respectively. Our net loss for the three and nine months ended September 30, 2022were $26.6 millionand $55.2 million, respectively. As of September 30, 2022, we had an accumulated deficit of $741.2 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.
Effects of COVID-19
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 third 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.
Effects of the implementation of the Medical Devices Ordinance
As a result of the implementation of the Medical Device Regulation ("MDR"), our notified body (as well as many other notified bodies throughout the European Economic Area ("EEA") has suffered a significant backlog in issuing CE Certificate renewals. That may affect our ability to obtain a renewal of our CE Certificate for Optune before the current CE Certificate expires in
October 2022. In the event of a gap between expiration of the current CE Certificate and issuance of the renewal, we are able to continue to sell and market CE marked Optune from current inventories in the EEA and Switzerlandunder the expired CE Certificate. We have been assured in writing from the notified body that our renewal application has passed technical review and no issues are expected while the certification team completes the renewal. We are proactively procuring an adequate supply of Optune to ensure the avoidance of any material disruption in the event that there is a gap between expiration of the current CE Certificate and issuance of the renewal. 20
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Commentary on the earnings situation
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 revenue under the Zai Accord. Please see Note 12 to the Consolidated Financial Statements in our 2021 10-K for more information on the Zai Agreement.
cost of revenue. We use third parties to manufacture our products. Our cost of sales essentially breaks down as follows:
• Depreciation costs for field equipment, including the electric field generator used by patients; and
•Personnel and overhead costs such as facilities, freight and depreciation of property, plant and equipment associated with the management of our inventory, warehousing and order processing 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.
The following discussion provides an analysis of our results of operations and reasons for material changes therein for the three and nine months ended
September 30, 2022as compared to the three and nine months ended September 30, 2021. The tables contained in this section report U.S.dollars in thousands (except share, patient, and prescription data).
The table below shows our consolidated income statement data:
Table of Contents Three months ended September 30, Nine months ended September 30, 2022 2021 2022 2021 Unaudited Unaudited Net revenues $ 130,998
$ 133,606 $ 409,411 $ 401,818Cost of revenues 29,749 30,206 85,979 85,190 Gross profit 101,249 103,400 323,432 316,628 Operating costs and expenses: Research, development and clinical studies 51,956 48,141 151,265 144,372 Sales and marketing 41,395 32,580 124,029 98,075 General and administrative 32,509 31,231 94,683 95,116 Total operating costs and expenses 125,860 111,952 369,977 337,563 Operating income (loss) (24,611) (8,552) (46,545) (20,935) Financial expenses (income), net (1,194) 1,981 2,743 5,567 Income (loss) before income taxes (23,417) (10,533) (49,288) (26,502) Income taxes 3,159 2,591 5,943 5,391 Net income (loss) $ (26,576) $ (13,124) $ (55,231) $ (31,893)Basic net income (loss) per ordinary share $ (0.25) $ (0.13)$ (0.53) $ (0.31)Weighted average number of ordinary shares used in computing basic net income (loss) per share 104,884,583 103,731,147 104,552,803 103,281,380 Diluted net income (loss) per ordinary share $ (0.25) $ (0.13)$ (0.53) $ (0.31)Weighted average number of ordinary shares used in computing diluted net income (loss) per share 104,884,583 103,731,147 104,552,803 103,281,380
The following table shows the stock-based compensation expense included in costs and expenses:
Three months ended September Nine months ended September 30, 30, 2022 2021 2022 2021 Unaudited Unaudited Cost of revenues
$ 1,013 $ 808 $ 2,994 $ 2,368Research, development and clinical studies 7,430 7,761 21,855 21,390 Sales and marketing 7,686 5,806 21,143 16,706 General and administrative 10,176 11,383 31,181 32,038
Total expense for stock-based compensation
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
whois receiving treatment under a commercial prescription order as of the measurement date, including patients whomay be on a temporary break from treatment and whoplan to resume treatment in less than 60 days. Prescriptions 22
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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 contains certain commercial operating statistics for and at the end of the periods presented.
September 30, Operating statistics 2022 2021 Active patients at period end North America (1) 2,181 2,223 EMEA: Germany 468 562 Other EMEA 417 425 Japan 354 292 Total 3,420 3,502 Three months ended September 30, Nine months ended September 30, 2022 2021 2022 2021 Prescriptions received in period North America (1) 978 931 2,867 2,815 EMEA: Germany 214 220 650 705 Other EMEA 118 119 363 391 Japan 79 110 276 321 Total 1,389 1,380 4,156 4,232 (1)
North Americaincludes data for the United Statesand Canadafor the second half of 2021 and all of 2022, and the United Statesonly for the first half of 2021.
To date, 12 active MPM patients have been on therapy
Three and nine months ended
Three months ended September 30, Nine months ended September 30, 2022 2021 % Change 2022 2021 % Change Net revenues
$ 130,998 $ 133,606(2) % $ 409,411 $ 401,8182 % Net revenues. Net revenues decreased 2% to $131.0 millionfor the three month period ending September 30, 2022from $133.6 millionfor the same period in 2021, and increased 2% to $409.4 millionfor the nine month period ended September 30, 2022from $401.8 millionfor the same period in 2021. For the three month period ending September 30, 2022, the decrease resulted primarily from a reduction in German approval rates as a result of updated coverage criteria and the impact of foreign exchange rate fluctuations. For the nine month period ending September 30, 2022, the increase in net revenues resulted primarily from an increase in collections from previously denied and appealed claims in the U.S.offset by a reduction in current period German net revenues and prior period accounts receivable to reflect updated coverage criteria. We continue to actively appeal and pursue previously denied claims, but the cadence and size of these collections are impossible to predict. We believe the claims which are most accessible will largely be exhausted this year and the remaining outstanding claims will take a greater level of time and effort to collect in the future. 23
Table of Contents Three months ended September 30, Nine months ended September 30, 2022 2021 % Change 2022 2021 % Change Cost of revenues
$ 29,749 $ 30,206(2) % $ 85,979 $ 85,1901 % Cost of revenues. Our cost of revenues for the three month period ended September 30, 2022decreased 2% to $29.7 million, from $30.2 millionfor the same period in 2021. Cost of revenues for the nine months ended September 30, 2022increased by 1% to $86.0 millionfrom $85.2 millionfor the same period in 2021. For the three month period ended September 30, 2022, the decrease in cost of revenues was primarily driven by decreased shipments to Zai. For the nine month period ended September 30, 2022, the increase in cost of revenues was primarily a result of increased shipments to Zai. 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 77% for the three months ended September 30, 2022compared to 77% for the three months ended September 30, 2021. Gross margin was 79% for the nine months ended September 30, 2022and 79% for the nine months ended September 30, 2021. Excluding sales to Zai, cost of revenues per active patient per month was $2,543for the three months ended September 30, 2022, an increase of 2% from $2,485for the same period in 2021, due to increased investments intended to expand capacity in advance of future potential launches in new indications. 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 $3.5 millionand $8.8 millionfor the three and nine months ended September 30, 2022compared to $4.2 millionand $8.0 millionfor the three and nine months ended September 30, 2021. Operating Expenses. Three months ended September 30, Nine months ended September 30, 2022 2021 % Change 2022 2021 % Change Research, development and clinical studies $ 51,956 $ 48,1418 % $ 151,265 $ 144,3725 % Sales and marketing 41,395 32,580 27 % 124,029 98,075 26 % General and administrative 32,509 31,231 4 % 94,683 95,116 - % Total operating expenses $ 125,860 $ 111,95212 % $ 369,977 $ 337,56310 % Research, development and clinical study expenses. Research, development and clinical study expenses increased 8% to $52.0 millionfor the three month period ended September 30, 2022from $48.1 millionfor the same period in 2021, and increased 5% to $151.3 millionfor the nine month period ended September 30, 2022from $144.4 millionin the same period in 2021. For both the three and nine month periods, the change was primarily driven by an increase in direct clinical study costs, preclinical costs associated with the design of future trials, and costs associated with regulatory affairs. Sales and marketing expenses. Sales and marketing expenses increased 27% to $41.4 millionfor the three months ended September 30, 2022from $32.6 millionfor the same period in 2021, and increased 26% to $124.0 millionfor the nine month period ended September 30, 2022from $98.1 millionfor the same period in 2021. For the three and nine month period ended September 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 increased 4% to $32.5 millionfor the three months ended September 30, 2022from $31.2 millionfor the same period in 2021, and totaled $94.7 millionfor the nine month period ended September 30, 2022, virtually unchanged from $95.1 millionfor the same period in 2021. For the three month period, the change was primarily due to an increase in information technology and 24
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Investing in the supply chain to improve operational capabilities ahead of potential future launches in new indications.
Three months ended September 30, Nine months ended September 30, 2022 2021 % Change 2022 2021 % Change Financial expenses (income), net
$ (1,194) $ 1,981(160) % $ 2,743 $ 5,567(51) % Financial expenses, net. Financial expenses decreased 160% to financial income of $1.2 millionfor the three months ended September 30, 2022from $2.0 millionfor the same period in 2021, and decreased 51% to $2.7for the nine months ended September 30, 2022from $5.6for the same period in 2021. For the three and nine month periods, the decrease was primarily due to increased interest income partially offset by increased foreign exchange rate fluctuations. Foreign exchange rate expenses increased to $2.5 millionfor the three months ended September 30, 2022from $0.9 millionexpenses for the same period in 2021, and increased 272% to $7.7 millionfor the nine months ended September 30, 2022from $2.8 millionfor the same period in 2021. Three months ended September 30, Nine months ended September 30, 2022 2021 % Change 2022 2021 % Change Income taxes $ 3,159 $ 2,59122 % $ 5,943 $ 5,39110 % Income taxes. Income taxes increased 22% to $3.2 millionfor the three months ended September 30, 2022from $2.6 millionfor the same period in 2021, and was increased by 10% to $5.9 millionfrom $5.4 millionfor the nine months ended September 30, 2022compared to the same period in 2021. For the three and nine months ended September 30, 2022the 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. 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 September 30, Nine months ended September 30, 2022 2021 % Change 2022 2021 % Change Net income (loss)
$ (26,576) $ (13,124)102 % $ (55,231) $ (31,893)73 % Add: Income tax 3,159 2,591 22 % 5,943 5,391 10 % Add: Financial expenses (income), net (1,194) 1,981 (160) % 2,743 5,567 (51) % Add: Depreciation and amortization 2,659 2,734 (3) % 7,924 7,584 4 % EBITDA $ (21,952) $ (5,818)277 % $ (38,621) $ (13,351)189 % Add: Share-based compensation 26,305 25,758 2 % 77,173 72,502 6 % Adjusted EBITDA $ 4,353 $ 19,940(78) % $ 38,552 $ 59,151(35) % Adjusted EBITDA decreased by 78% to $4.4 millionfor the three months ended September 30, 2022from $19.9 millionfor the same period in 2021, and decreased by 35% to $38.6 millionfor the nine months ended September 30, 2022from $59.2 millionfor 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. 25
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liquidity and capital resources
Since our inception in 2000, we have suffered significant losses and accumulated negative cash flows from operations
September 30, 2022, we had $970.3 millionin cash, cash equivalents and short-term investments, an increase of $32.6 millioncompared to $937.7 millionat December 31, 2021. We believe our cash, cash equivalents and short-term investments as of September 30, 2022are 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 shown is derived from our unaudited consolidated financial statements included elsewhere in this quarterly report:
Nine months ended September
2022 2021 Change % Change Net cash provided by (used in) operating activities
$ 34,495 $ 68,352 $ (33,857)(50) % Net cash provided by (used in) investing activities (11,897) 354,256 (366,153) (103) % Net cash provided by financing activities 12,081 22,050 (9,969) (45) % Effect of exchange rate changes on cash and cash equivalents (252) (139) (113) 81 % Net increase (decrease) in cash, cash equivalents and restricted cash $ 34,427 $ 444,519 $ (410,092)(92) %
operational activities. Net cash used or provided for operating activities represents our net income (loss) for the periods presented, stock-based compensation, and depreciation and amortization. Operating cash flow is also affected by changes in working capital.
Net cash provided by operating activities decreased by
$33.9 millionfrom $68.4 millionnet cash provided by operating activities for the nine months ended September 30, 2021to $34.5 millionnet cash provided by operating activities for the nine months ended September 30, 2022. This decrease was a result of net income decreasing by $23.3 millioncompared to the same period in 2021 and a $12.2 milliondecrease in net cash provided by working capital, including a $14.3 milliondecrease in accounts payables and accrued expenses, a $6.2 millionincrease in inventories and a $4.2 milliondecrease in accounts receivables, partially offset by a $1.6 millionchange in the mix from cash to non-cash based expenses.
investment activity. Our investing activities consist primarily of investing in and redeeming our short-term investments and investing in property, plant and equipment.
Net cash used in investing activities was
$11.9 millionfor the nine months ended September 30, 2022, compared to $354.3 millionprovided by investing activities for the nine months ended September 30, 2021. The net cash used in investing activities for the nine months ended September 30, 2022was primarily attributable to $3.0 millionof net proceeds from maturity of short-term investments, offset by the purchase of $14.9 millionof property and equipment. The net cash provided by investing activities for the nine months ended September 30, 2021was primarily attributable to $364.2 millionof net proceeds from maturity of short-term investments, partially offset by the purchase of $9.9 millionof 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 $12.1 millionfor the nine months ended September 30, 2022, as compared to $22.1 millionprovided by financing activities for the nine months ended September 30, 2021. The net cash provided by financing activities for the nine months ended September 30, 2022and September 30, 2021included 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. 26
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November 5, 2020, we issued $575.0 millionaggregate 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 $1,000principal amount of the Notes, which is equivalent to an initial conversion price of approximately $168.24per 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, 2025until 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 $1,000principal 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 $1,000principal amount of Notes converted, cash in an amount up to $1,000and the balance of the conversion value, if any, in our ordinary shares
See Note 10a for more information. to the consolidated financial statements 2021 10-K.
Term loan credit facility On
November 6, 2020, we entered into a new three-year $150.0 millionsenior 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 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 September 30, 2022, we were in compliance with such covenants.
Contractual Obligations and Commitments
There were no material changes from the information published 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.
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