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NovoCure Limited (NASDAQ:NVCR)
Q3 2019 Earnings Call
Oct 31, 2019, 8:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Ladies and gentlemen, thank you for standing by and welcome to the Novocure, Third Quarter 2019 Earnings Conference Call. [Operator Instructions]. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions]. I would now like to hand the conference over to your speaker today, Ms. Ashley Cordova, Senior Vice President of Finance and Investor Relations. Ma'am, you may begin.

Ashley Cordova -- Senior Vice President of Finance and Investor Relations

Good morning everyone and thank you for joining us to review Novocure's Third Quarter 2019 Performance. I am joined today by our Executive Chairman, Bill Doyle; our CEO, Asaf Danziger; our CFO, Wilco Groenhuysen; our Chief Commercial Officer, Pritesh Shah and our Chief Medical Officer, Ely Benaim who will join us for Q&A. The slides presented today can be viewed on our website www.novocure.com by clicking on the link for third quarter 2019 financial results located in the Events section on our Investor Relations page.

Before we start, I would like to remind you that our discussions during this conference call will include forward-looking statements and actual results could differ materially from those projected in these statements. These statements involve a number of risks and uncertainties, some of which are beyond our control, including those risks and uncertainties described from time to time in our SEC filings.

We do not intend to update publicly any forward-looking statements except as required by law. Following our prepared remarks today, we will open the line for questions. Financials for the three and nine months ended September 30th, 2019, are available on our press release and in our 10-Q, both of which we released earlier this morning.

With that, I will now turn the call over to Bill Doyle.

William F. Doyle -- Executive Chairman

Thank you, Ashley, and good morning everyone. Q3 2019 was a remarkable quarter for Novocure. We made significant progress in developing our commercial business, delivering our first quarter ever of positive net income.

In addition to 42% revenue growth, we reported positive EPS of $0.02 and generated $15 million in cash flow from operations. With multiple levers to deliver continued near-term revenue growth, cash flow from our GBM business provides the financial flexibility and stability to ensure we can make the appropriate investments in our clinical pipeline and technology development to drive significant future value creation.

The Tumor Treating Fields platform is building momentum. We continue to enroll four phase 3 pivotal trials, creating a significant market expansion opportunity treating some of the most aggressive forms of cancer. I'll speak to our clinical progress later on this morning's call, but first, I'll ask Asaf to review recent commercial developments. Asaf?

Asaf Danziger -- Chief Executive Officer

Thank you, Bill. Our GBM business delivered another strong quarter of top line growth. Net revenues were a record $92 million, up 42% versus the prior year. Prescriptions for newly diagnosed GBM continued to grow, representing 82% of the third quarter total. We ended the quarter with 2,750 active GBM patients on therapy, our 19th consecutive quarter of active patient growth since the initial presentation of our EF-14 data. Our reimbursement rates for GBM also continued to improve.

Last quarter, we received the FDA approval under the HDE pathway for the NovoTTF-100L system in combination with standard chemotherapy for treatment of malignant pleural mesothelioma or MPM, our first FDA approved torso indication. Our initial launch efforts are focused on certification training and supporting the required IRB approval process at approximately 40 centers where we believe a majority of US MPM patients are treated.

By the end of the quarter, we certified radiation oncologists, at ten high volume centers and two centers, successfully completed the IRB approval process. With the start of our first MPM commercial patients in late September for the first time ever, our third quarter active patient total includes an active patient treated for MPM.

Certifications are ongoing and we have a dedicated team focused on developing this business. We look forward to providing further updates on future calls. Often, we have discussed geographical expansion as an additional lever for near-term growth and as an available investment in our commercial infrastructure prior to future potential launches in multiple solid tumor indications.

I'm pleased to announce that we will enter our second big five EU market, expanding our commercial operations into France. Our initial focus will be developing KOL and patient advocacy relationships in GBM and establishing a path to reimbursement.

These are critical first steps to building the foundation to launch GBM and to prepare for the potential significant market expansion opportunity in other indications over the next five years. Zai Lab, our partner in Greater China also continues to make great progress. Zai formally launched Optune for GBM in Hong Kong in February and the launch has outperformed our expectations.

We view Zai's initial success in Hong Kong as an encouraging sign of Optune's compelling clinical profile and the unmet medical need it addresses ahead of the anticipated commercial launch in Mainland China. The regulatory review of Optune in Mainland China is on track. The Chinese national medical product administration designated Optune for GBM, an innovative medical device in August and has accepted the marketing authorization application.

Zai is pursuing a clinical trial waiver for the GBM indication in China. And should a clinical trial waiver be granted, intends to launch Optune in China before year-end. With that, I will turn the call over to Wilco to review our financials.

Wilco Groenhuysen -- Chief Financial Officer

Novocure ended the third quarter in a strong financial position. We made significant progress in developing our commercial business, delivering another quarter of record net revenues. I am proud to report that the third quarter also marked the first quarter ever of positive net income.

Third quarter net revenues were $92.1 million growing 42% year-over-year and growing 6% quarter-over-quarter. In fact, Q3 marked the third consecutive quarter in 2019 of greater than 40% year-over-year revenue growth. Trailing 12 month net revenues now exceeds $320 million. In addition to continued active patient growth, we have seen a sustained improvement in the net revenues booked per active patient. Our revenue per patient benefited from continued improvements in reimbursement rates for both the US and EMEA.

In addition, we recognized the initial benefit from Medicare with $0.5 million in third quarter net revenues from beneficiaries built under the newly defined coverage policy, effective September 1st, 2019. Moving into the fourth quarter, our team is focused on working through the typical administrative ramp up to ensure we realize the full revenue benefit from Medicare as soon as possible. Gross profit in the quarter was $69.2 million, reflecting a 75% gross margin.

Gross margin continues to benefit from ongoing efficiency initiatives and increasing scale. We continue to invest in research and development with $18.8 million in R&D expenses in the quarter, up 44% versus the third quarter of 2018. This was primarily driven by an increase in clinical trial and personnel expenses for our Phase 3 pivotal trials and an increase in costs associated with medical affairs, regulatory and engineering.

Our third quarter, SG&A expenses were $46.5 million, up 23% versus the third quarter of 2018, driven primarily by increased marketing expenses and personnel costs to support our growing commercial business. In the third quarter, we recorded an income tax benefit of $1.5 million as a result of R&D credits claimed in the United States.

Our net income was $1.9 million with $0.02 in earnings per share. Cash flow from operations was $14.9 million. We ended the third quarter with $312.6 million in cash, cash equivalents and short-term investments, an increase of $28 million from the prior quarter.

Revenue and operating margins for the GBM business continued to fund the investments in our clinical pipeline and technology development. Moving forward, we are committed to balancing improved operating efficiency with investments for sustainable, long-term success.

In summary, we are pleased with the sustained revenue growth and the level of the investment and profitability in the third quarter. We are confident this momentum will carry us through the remainder of 2019 and into 2020.

With that, I will hand the call back to Bill for an update on our pipeline.

William F. Doyle -- Executive Chairman

Thank you, Wilco. Tumor Treating Fields is backed by a considerable volume of compelling preclinical and clinical data. There is a growing body of evidence supporting the broad applicability of tumor treating fields across multiple solid tumor cancers in combination with various therapies. I am pleased to report the results from our STELLAR trial were recently published in The Lancet Oncology, one of the world's leading clinical oncology research journals. The STELLAR trial studied the use of Tumor Treating Fields, delivered via the NovoTTF-100L system in combination with pemetrexed plus cisplatin/carboplatin as a first-line treatment for patients with unresectable locally advanced or metastatic malignant pleural mesothelioma.

The STELLAR trial demonstrated an impressive median overall survival of 18.2 months when tumor treating fields was added to standard chemotherapies. Tumor Treating Fields platform is building momentum with an increasing presence at key oncology conferences globally, including 80 presentations in the third quarter alone. Highlights include the first presentation of in-vitro data studying tumor treating fields in combination with FOLFOX chemotherapy in gastric cancer and the presentation of in-vitro and in-vivo data studying Tumor Treating Fields in combination with sorafenib in liver cancer.

In both studies, combining tumor treating fields with chemotherapy enhance treatment efficacy based on cancer cell count, apoptosis induction and overall effect. Also results were presented by external authors expanding the preclinical evidence that tumor Treating Fields activate the innate immune system, providing a strong rationale for studying Tumor Treating Fields in combination with immune checkpoint inhibitors.

These data, aligned with our research to date showing tumor treating fields to be additive to or synergistic with other anti-cancer agents, without evidence of any dose limiting cumulative toxicity. We believe there is a growing appreciation for the potential value of Tumor Treating Fields across the broader oncology landscape.

In all tumor cell lines we have tested, Tumor Treating Fields has a consistent effect and we have not found a tumor cell line that does not respond to Tumor Treating Fields. In addition to our ongoing preclinical and clinical programs, we have a significant opportunity to improve Optune efficacy and ease of use through product engineering and development.

Guided by data published in the Red Journal earlier this year, showing the higher doses of tumor treating fields improves survival of newly diagnosed GBM patients. Our engineering teams are working to design and develop enhancements to our transducer arrays and our transducer array layout mapping software intended to increased tumor treating field intensity and enhance [Phonetic] the efficacy.

We look forward to providing further updates on future calls. We are determined to provide tumor treating fields therapy to cancer patients with a variety of solid tumor types, who may benefit from the treatment. Our teams continue to make progress enrolling patients in randomized Phase 3 pivotal trials in brain metastases, lung cancer, pancreatic cancer and ovarian cancer, and in our phase 2 pilot study in liver cancer. If approved, the indications are late-stage pipeline will create a more than 20-fold increase in the US addressable market alone.

Novocure is a global commercial oncology Company. In the third quarter, commercial execution drove strengthening financial performance and our first ever quarter of positive net income. Our proprietary Tumor Treating Fields cancer therapy platform is building momentum, marked by our third consecutive quarter in 2019 of greater than 40% year-over-year revenue growth.

We see a bright future for Novocure and our focus is unwavering on disciplined execution, intended to deliver both sustainable near-term revenue growth from existing indications and significant long-term shareholder value creation through pipeline and product developments.

Thank you for your time this morning. With that, I'll turn the call over to the operator for questions.

Questions and Answers:

Operator

Thank you. [Operator Instructions]. And our first question comes from Vijay Kumar from Evercore ISI. Your line is open.

Vijay Kumar -- Evercore ISI -- Analyst

Hey guys, congrats on a nice revenue front this morning. Maybe I'll start on the revenue front quick housekeeping question, Wilco, based on your comments, it looks like the reimbursement trends we're seeing here, this is sustainable. Is that the right way to read through and just when you look at the reimbursement per patients in the US?

Wilco Groenhuysen -- Chief Financial Officer

Yeah. We believe it is sustainable as we said in other calls earlier on, we've made significant improvement in reimbursement per patients now with Medicare reimbursement kicking in, with the first $0.5 million recognized in the third quarter, and remember that only related to September billings and we would improve further improvement in billings per active patient.

Vijay Kumar -- Evercore ISI -- Analyst

And there was no true-up or catch-up payments in 3Q. Correct?

Wilco Groenhuysen -- Chief Financial Officer

No material catch-up payments.

Vijay Kumar -- Evercore ISI -- Analyst

That's helpful. And then, you know, well, one on the script volumes, I know you guys have had the new GBM versus recurrent GBM. Maybe could you parse out what the new GBM script trend was in the Q, because it overall seems a little light and I'm just curious when the recurrent GBM dynamic could annualize in -- you know, given new GBM as 80%-plus. Should we be thinking about next year these trends wash away and you should see a clean script volume for next year?

Wilco Groenhuysen -- Chief Financial Officer

I think you're tempting us into guiding. We do believe that the trend we've seen in newly diagnosed scripts as a percentage of total and the improvement that we've seen over the last few quarters resulting in 82% in the third quarter is likely to further improve. To what extent, it is difficult to predict that right now. But it is -- it is a consistent trend that we see no signs of discontinuation.

Vijay Kumar -- Evercore ISI -- Analyst

In -- maybe one last one on China before I let others jump on, it looks like it's incremental comments here on Zai Labs getting possibly a trial waiver in China. If they do get a trial waiver maybe could you size the China opportunity for us? How big is that market or how should we be thinking about revenue ramp in China?

Wilco Groenhuysen -- Chief Financial Officer

Yeah. So we continue to be extremely pleased with our partnership with Zai Lab, as we mentioned in the prepared remarks, the launch in Hong Kong has gone extremely well and the work toward approval in Mainland China is also going extremely well. We mentioned that the Chinese NMPA designated Optune as an innovative medical device in August. That was a key step and of course, they also accepted the marketing application, which is also a key step. And Zai is preparing for a potential commercial launch as early as the end of Q4.

With that said, we estimate that there are 45,000 people in China that are diagnosed with GBM each year. This is the largest market for GBM. But I think it's too early for us to predict exactly what the uptake would be post approval there.

Vijay Kumar -- Evercore ISI -- Analyst

Thanks guys.

Operator

Thank you. Our next question comes from Larry Biegelsen from Wells Fargo. Your line is open.

Leah Rozzi -- Wells Fargo -- Analyst

Hi, good morning. It's Leah calling in for Larry. And thanks for taking my question. And I want to ask one on -- just on mesothelioma. You mentioned the first patient is on therapy and training -- that you've trained ten centers so far. Can you talk about the ramp to training the 40 centers that you're targeting, kind of what time period you're referring to?

William F. Doyle -- Executive Chairman

Sure. So thank you for the question. I want to introduce Pritesh Shah to this audience this morning. Pritesh is our Chief Commercial Officer and is the person who is leading the Zai Lab launch, as well as the rest of our commercial business and I'm going to turn it over to Pritesh to make comments.

Pritesh Shah -- Chief Commercial Officer

Great, thank you, Bill, and thank you, Leah for the question. So, we are very pleased with the MPM launch. It's where -- the launch is on track, we're in the first stages of the launch, which if you recall from our GBM days, the first step is to certify the centers.

I'll focus on the audience that we're certifying, because it's really important for mesothelioma as well as our future pipeline that you heard about. We are focusing on the radiation oncologists at these 40 centers where mesothelioma is primarily treated and our goal here is to ensure that the radiation oncologists becomes the key prescriber for tumor treating fields, NovoTTF-100L and mesothelioma and also moving forward in our other indications.

The second step of the launch is the IRB process. So, as you know, the HDE requires an IRB approval. That step also takes a bit of time and the onus here is on the center. So we were very pleased to see the first two centers get IRB approval in quarter three. The second step now or the rest of the centers are now in the IRB process.

So our goal is to continue certifying centers as the first step in making sure that we are able to get access to mesothelioma patients with our NovoTTF-100L and we will continue to work on that through the end of this year going into next year, so we can ensure those 40 centers are certified and ready to go.

Leah Rozzi -- Wells Fargo -- Analyst

Great, thanks for that. And then if I can ask a question, just on the pipeline front. You -- I think it was on the last call you talked about a couple of new GBM studies that you're looking at, one Optune plus radiation and another one Optune plus TMZ plus other agents. Is there a status update on that?

William F. Doyle -- Executive Chairman

So I'm going to turn the Q&A over to Ely Benaim. Ely joined us on the last call for the first time, but is joining us again today to handle the questions on the pipeline. So I'll turn it over to Ely.

Ely Benaim -- Chief Medical Officer

Thank you, Bill. There is really no material updates. We are still planning these two studies. We -- as you know, we intended to advance the scientific evidence supporting the use of Optune in GBM and really gather additional information about the Optune optimal use.

Leah Rozzi -- Wells Fargo -- Analyst

Okay, thanks. And if I can squeeze in one last one, any update on the national reimbursement in Germany? Thank you.

Asaf Danziger -- Chief Executive Officer

Hi, it's Asaf. So, you know, I just would like to remind everyone that we -- our reimbursement right now in Germany is in a very good shape. So we are -- but we are still working on national reimbursement in Germany. We have really a -- doing discussion with the regulatory and just [Phonetic] -- with the regulatory authorities in Germany about reimbursement and we believe that these discussions will bring some fruit over the next year.

Operator

Thank you. And our next question comes from Cory Kasimov from JPMorgan. Your line is open.

Cory Kasimov -- JPMorgan -- Analyst

Hey, good morning guys. Thanks for taking my questions. Wanted to go back to the sequential prescriptions and obviously the active patients continues to climb quarter-over-quarter, but you had the slight drop in Rx [Phonetic]. So I'm curious, is there a seasonality component to this or some type of other -- some other type of like one-off impact or another dynamic in the marketplace that we should be thinking about when we look at sequential script trends?

William F. Doyle -- Executive Chairman

We are very focused, of course, Cory on script trends. We don't believe that we have reached any sort of peak or plateau. There are more, many more patients with GBM in the US and our active markets who can benefit from the therapy. It is a brand new therapy of course. It's a completely new concept and so we expect it to grow more slowly over time to peak, than for instance, a new drug or pharmaceutical.

Cory Kasimov -- JPMorgan -- Analyst

Okay. And then a follow-up question on your non-small cell lung cancer study. Couple of things here. I'm curious, can you talk about the accrual rates across geographies and then I just want to make sure I understand the design or the statistical analysis here.

So the primary analysis, if I'm right is pooled across all patients regardless of background PD-1 use, and then the secondary endpoints will look at subgroups with or without checkpoint inhibitors. Is that right? And if so, are you comfortable that you have enough powering on those secondary endpoints?

Ely Benaim -- Chief Medical Officer

Hi, this is Ely again. So thank you for your call and for your second call, the answer is, yes. I think we will have power for both the primary, secondary endpoints and we think that this study is getting even more interesting in the sense that we now have -- the two arms are quite current in combination with PD-1 inhibitors. But we don't require PD-1 diagnosis or pathology to be in this study.

On the recruitment side, we -- as we have mentioned before, we have ongoing 68 sites across North America and Europe, but we don't provide really patient enrollment figures. So, we're -- but we'll press release our last patient enrollment.

Cory Kasimov -- JPMorgan -- Analyst

Okay, I understand that you don't require PD-1, but do you expect that this study will be relatively balanced between -- between groups in terms of background PD-1 use?

Ely Benaim -- Chief Medical Officer

That's the expectation. Yes.

Cory Kasimov -- JPMorgan -- Analyst

Okay, thanks guys. I appreciate it.

Operator

Thank you. Our next question from Gregg Gilbert from SunTrust. Your line is open.

Gregg Gilbert -- SunTrust Robinson Humphrey -- Analyst

Thank you. I just want to quickly start with a commercial question. You talked about the expansion in the France. Can you share some thoughts on where else you plan to expand commercially in the next couple of years before I shift to a couple of R&D questions?

William F. Doyle -- Executive Chairman

Yeah, I think. Hi, Gregg. This is Bill. We will announce new markets as we enter. I think the obvious markets are the rest of the big five countries in Europe. And our plan is to take them one at a time and the next one will be France.

Gregg Gilbert -- SunTrust Robinson Humphrey -- Analyst

Okay, great. On the research side, can you talk about how the mesothelioma approval has affected the momentum of research interest in torso applications? I imagine there's a logistical sort of hurdle there of having an official approval on the torso, but can you talk about any quantification or at least some anecdotal color around additional research interests you're seeing outside of U.S. [Phonetic] on the torso?

William F. Doyle -- Executive Chairman

So I'll start and maybe if Ely or Pritesh have some comments and anecdotes, they can jump in. But I think clearly the approval in mesothelioma has been very important to Novocure. It's the first indication outside of the brain which was substantial evidence that this can -- this therapy can be used for other tumors. It opens a whole new audience of oncologists who are now interested in learning about the therapy, who are interested in doing research about the therapy.

So I think above and beyond the relatively small indication which will still be good business in time for Novocure, it was a real milestone in terms of validating the potential torso applications.

Gregg Gilbert -- SunTrust Robinson Humphrey -- Analyst

Okay. And then I think Pritesh touched on this a little bit already, but can you speak a little bit about how the preparations for mesothelioma will specifically relate to say, lung? Should you be in a position to launch in a couple of years in the lung setting? How much overlap and sort of centers and other logistical issues are there? Thanks.

William F. Doyle -- Executive Chairman

Sure. Thank you for that question. So it's too early to talk about non-small cell lung cancer. But we're very excited to prepare the market with mesothelioma. I think one of the key elements of our preparation is to focus on one audience, the radiation oncologists. Being successful on this front will allow us to really just have a -- more of a turnkey launch, when we get to non-small cell lung cancer.

So, what the mesothelioma launch allows us is, building experience with the radiation oncologists with the torso application and then, over time as we get to non-small cell lung cancer market preparation allow for more seamless launch and the execution on that front.

Gregg Gilbert -- SunTrust Robinson Humphrey -- Analyst

Okay, thanks.

Operator

Thank you. Our next question comes from Esther Rajavelu from Oppenheimer. Your line is open.

Esther Rajavelu -- Oppenheimer -- Analyst

Hi, good morning. Thank you for taking my questions. Following up on Gregg's question on mesothelioma, can you maybe share some updated thoughts on how you view the OUS opportunity here and whether you're likely to pursue something outside the US?

William F. Doyle -- Executive Chairman

Sure. Thank you for that question. So, right now our focus is on ensuring a successful launch in the US. We're still learning as we are bringing the treatment to the 40 centers that we talked about, and we are in the process of CE mark in Europe, which would then allow us the opportunity to gain regulatory access in Europe.

Esther Rajavelu -- Oppenheimer -- Analyst

But you'll need to run a trial in Europe, I assume separate from the US trend [Phonetic].

William F. Doyle -- Executive Chairman

That is not our expectation or understanding at this time.

Esther Rajavelu -- Oppenheimer -- Analyst

Got you. And then -- and then in China, you are booking incremental revenues. Can you help us understand in Hong Kong, how the product is being priced and any read-throughs from Hong Kong to the broader Chinese market?

Wilco Groenhuysen -- Chief Financial Officer

Yeah. Good morning, Esther. This is Wilco. We do disclose revenue coming from China associated with the Zai partnership. It effectively consists of two or three components as you know, one is, at this point in time a relatively modest royalty revenue.

The second one is, as you will recall, part of the agreement with Zai is that we would supply them with equipment both arrays and boxes. So that supply is also in our revenue line and third component that consists of the amortization of the initial sign on fee. So those are the key components upon approval of Zai. And let's assume the successful commercial launch we would expect that royalty stream to pick up.

It's really difficult to predict at this point in time to what extent and I'll refer back to the comments that Bill made earlier on in the call that there is a significant opportunity there, but it's still early to call how much of the 45,000 patient base can be captured by Zai.

But we do think pricing overall, most likely will be more -- will be more or less in line with immunotherapies in China.

Esther Rajavelu -- Oppenheimer -- Analyst

Okay. And then my last question, you had talked about potentially using Optune in earlier lines of therapy concurrent with radiation. When do you anticipate initiating that trial and what are the implications if that use becomes a reality?

William F. Doyle -- Executive Chairman

So maybe I'll take the last question first and then turn it over to Ely. So there, we talked about a little bit today about the preclinical evidence, both in-vitro and in-vivo. We don't always talk about this on the calls, but we have a significant internal R&D engine and now there is significant external academic R&D being done in tumor treating fields.

One aspect of that R&D is the combination of tumor treating fields with radiation. So our approval today is for use in GBM after radiotherapy. The preclinical evidence supports use with radiation. We see that it enhances the efficacy of the radiation.

So this is something that we intend to study in a Phase 3 trial. The implications for the business are that one, the patients would start earlier, that's approximately two additional months of therapy and again our -- what -- the reason we're conducting the trial would be to prove that it would give them extended survival benefit, which could potentially extend the benefit in the long term.

So, those are some of the potential benefits should this prove out in human population.

Esther Rajavelu -- Oppenheimer -- Analyst

Thank you. Appreciate it.

Operator

Thank you. Our next question comes from Difei Yang from Mizuho. Your line is open.

Difei Yang -- Mizuho Securities -- Analyst

Hi, good morning and thanks for taking my questions. So just a couple of quick ones. With regards to, could you talk about the CMS reimbursement pathway and potential timelines on mesothelioma and then maybe perhaps help us to understand the business opportunity outside of the United States let's say in Europe, primarily for mesothelioma?

William F. Doyle -- Executive Chairman

Just one question, [Indecipherable] you're very right. This is Will. Let's start with the first part of your question and that's the Medicare revenue recognition. We're actually very pleased that we're able to recognize revenue in the third quarter for patient treatment as of -- as of September 1st, the achievement of the Medicare reimbursements and establishing that was a great accomplishment in the second quarter. It takes a lot of work to be able to figure out and design and implement a process that will allow us to recognize fully the benefit of the Medicare billings. And we recognized $0.5 million in September. We're making significant improvements in those processes and expect in the next few quarters to come to full realization of Medicare revenues.

The second part of your question related to Europe? [Speech Overlap]

Difei Yang -- Mizuho Securities -- Analyst

Maybe [Speech Overlap]

William F. Doyle -- Executive Chairman

Yeah, I think we continue to -- and I think we touched upon a few of those topic earlier on, and I think Asaf mentioned it as well. So we are making significant progress again in securing national reimbursement in Germany. Asaf alluded to that, we still think that in 2020 either in March or in October, most -- more likely than that in the second part of the year, we would expect to have national reimbursement in Germany.

We don't think it's material and we talked about it in the past as well to overall revenue, as we are very successful in filing claims on a case-by-case basis and realizing substantial revenue from that.

So it will help us in efficiency and processing of claims. It will probably have a very modest if any impact on our net revenue. We're working on the secured reimbursement in Switzerland and Israel. It's too early to give any indication on when that might become a reality.

But I think the quality of the data, the support that we have in the physician and patient community give us hope that also those discussions will be concluded positively.

Difei Yang -- Mizuho Securities -- Analyst

Yeah, then turning the subject to mesothelioma, the -- is ex-US -- does ex-US have a bigger opportunity than the opportunity in the US?

Pritesh Shah -- Chief Commercial Officer

Yes, I'll answer that question. This is Pritesh again. So thank you for your question. As we mentioned, related to the opportunity in outside of the United States. Our focus is to ensure that we are successful in bringing the treatment of patients in the US and we're in the process of the CE mark. And, in terms of the opportunity, it will depend on which country we go in and we have not made that determination just yet.

Difei Yang -- Mizuho Securities -- Analyst

Okay. So that leads to my final question on the gastric cancer that Zai Lab is running or planning to run trials on. And, do you see a significant opportunity assuming that trial is positive. Do you see significant opportunity in the US or rest of the world outside of China?

William F. Doyle -- Executive Chairman

Yeah. So the trial that's being, that is designed and were in the stages of implementation is a Phase 2 trial. So it's a consistent with our other Phase 2 trials will focus on safety of course, where we don't expect to see an issue and then on hints of efficacy. From there we would expect to perform a Phase 3 trial. The largest opportunity in gastric cancer is Asia. It's why we're doing the trial in Asia. There are opportunities that are smaller in the US and of course we would exploit those as well.

Difei Yang -- Mizuho Securities -- Analyst

Thank you.

Operator

Thank you. And we do have a follow-up from Vijay Kumar from Evercore ISI. Your line is open.

Vijay Kumar -- Evercore ISI -- Analyst

Hey, thanks guys. Just a couple of housekeeping or follow-up questions if you will, on the new GBM. Can you clarify that new GBM scripts are growing, because I think they have been growing double-digits in the teens range. Did those trends change at all in the Q?

Wilco Groenhuysen -- Chief Financial Officer

No. We saw a 2% increase, sorry, Vijay, this is Wilco, we saw a 2% increase Q3 over Q2. We had 1,076 newly diagnosed scripts, which is, as we said earlier on about 82% of total scripts.

Vijay Kumar -- Evercore ISI -- Analyst

That's helpful. On the non-small cell lung cancer, I know the trial, it's got four arms in combination with chemo, combination with KEYTRUDA and now that these IO drugs, they have been -- they have the first line status, but the trial itself is, you're looking at second line patients.

I'm just curious whether, because the combination is in [Phonetic] the IOs, they've been given the first line status. Would that change the opportunity for you guys or could you get a first-line indication based on this trial or would there have to be a separate trial?

Ely Benaim -- Chief Medical Officer

Yes. And so, this is Ely. The -- yes, we don't think that with this trial we'll get our first line indication. But certainly, all right, as we have mentioned before, we know that the combination of Tumor Treating Fields with any cancer but that -- will be potential beneficial. So we think that this, there is still a space in the non-small cell lung cancer area for a second-line treatment with combination with immuno check point inhibitors or also with -- in combination with docetaxel.

So, there's always going to be -- unfortunately, checkpoint inhibitors does not cure non-small cell lung cancer. So, all of these [Indecipherable] eventually [Phonetic] would receive potentially docetaxel, and so we also will have that covered in the combination.

Vijay Kumar -- Evercore ISI -- Analyst

That's helpful. And maybe one last one, free cash flow positive cash is building up on the balance sheet. I'm just curious on our thoughts on capital deployment, because that really is ballooning every quarter, right. And it looks like for your trial needs expenses, your ongoing operations is enough to sustain. Any thoughts on capital deployment?

Ely Benaim -- Chief Medical Officer

Yes. So I think first and foremost, we would like to emphasize that the revenue and profits now from the GBM business provide us great flexibility to do everything that we need to do to build long-term value with our Tumor Treating Fields platform.

And that includes the full -- paying for the full clinical program and it also includes paying for technology development, because we see a significant opportunity as a device to continue to develop the technology, both to improve efficacy further, and to improve patient comfort. So that's our focus right now. But it's clear that we do have this cushion and flexibility to undertake everything that we need to undertake to build long-term value.

Vijay Kumar -- Evercore ISI -- Analyst

Thanks guys.

Operator

Thank you. And I am showing no further questions from our phone lines and I'd like to turn the conference back over to Bill Doyle for any closing remarks.

William F. Doyle -- Executive Chairman

Yes. So I just like to once again thank you all for your interest in NovoCure. This was another milestone quarter for us, our first quarter of profitability. For those of us who have been involved in this project now for 18-plus years, in fact, Asaf has just crossed his 18 year milestone with the Company. This is really a tremendous affirmation of years and years of hard work. So thank you.

Operator

[Operator Closing Remarks]

Duration: 41 minutes

Call participants:

Ashley Cordova -- Senior Vice President of Finance and Investor Relations

William F. Doyle -- Executive Chairman

Asaf Danziger -- Chief Executive Officer

Wilco Groenhuysen -- Chief Financial Officer

Pritesh Shah -- Chief Commercial Officer

Ely Benaim -- Chief Medical Officer

Vijay Kumar -- Evercore ISI -- Analyst

Leah Rozzi -- Wells Fargo -- Analyst

Cory Kasimov -- JPMorgan -- Analyst

Gregg Gilbert -- SunTrust Robinson Humphrey -- Analyst

Esther Rajavelu -- Oppenheimer -- Analyst

Difei Yang -- Mizuho Securities -- Analyst

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