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NovoCure Limited (NASDAQ:NVCR)
Q4 2019 Earnings Call
Feb 27, 2020, 1:30 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

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

Good morning everyone and thank you for joining us to review Novocure's Fourth Quarter and Full Year 2019 Performance. I am joined today by our Executive Chairman, William Doyle; our CEO, Asaf Danziger; and our CFO, Wilco Groenhuysen. Pritesh Shah, our Chief Commercial Officer, and Ely Benaim, our Chief Medical Officer are also on the call.

The slides presented today can be viewed on our website www.novocure.com by clicking on the link for fourth quarter and full year 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 statement except as required by law.

Following our prepared remarks today we will open the line for questions. Financials for the three and 12 months ended December 31, 2019 are available in our press release and in our 10-K, both of which we released earlier this morning.

Where appropriate, we will refer to non-GAAP financial measures to evaluate our business. Reconciliations of non-GAAP financial measures to GAAP financial measures are also included in our press release and the appendix of the supplemental slides accompanying this presentation and in our Form 8-K filed with the SEC today.

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

William F. Doyle -- Executive Chairman

Thank you, Ashley and good morning everyone. We started Novocure with the fundamental insight that electric fields can be harnessed to disrupt cancer cell division and cause cancer cell death.

Over the last 20 years, we've built an organization of more than 750 colleagues dedicated to delivering Tumor Treating Fields, our life extending therapy to patients with glioblastoma or mesothelioma and dedicated to advancing clinical and product development programs intended to extend survival in some of the most difficult forms of cancer. We believe we are in a virtuous cycle of execution and innovation supporting the future growth of our Company.

In 2019, our global commercial oncology business generated $351 million in net revenue and provided $27 million in cash flow from operations. With this financial strength, we funded significant investments in preclinical and clinical development programs intended to expand the addressable market for Tumor Treating Fields therapy. Additionally, a growing body of evidence inform product development programs intended to improve efficacy and patient usability for current and future indications and ultimately to propel further growth.

We start 2020 with substantial momentum from an extraordinary 2019. In 2019, we initiated our INNOVATE-3 trial in recurrent ovarian cancer and are now enrolling patients in four Phase 3 pivotal trials. We received FDA approval via the HDE pathway for malignant pleural mesothelioma our first FDA-approved torso indication. Medicare established coverage of Optune for newly diagnosed GBM. We took initial steps into China through our partnership with Zai Lab. There were more than 250 presentations on Tumor Treating Fields at key medical congresses, the majority by independent researchers.

We made significant advancements into radiation oncology with a Red Journal publication detailing the dose efficacy dependence of Tumor Treating Fields and with ongoing investments to enhance our treatment planning software. Notably, we accomplished all of this while growing our net revenue by more than 40% and adding $80 million to our balance sheet.

I will expand on our clinical and product development programs later this morning, but first, I want to turn the call over to Asaf, who will speak about our commercial progress in the quarter.

Asaf Danziger -- Chief Executive Officer

Thank you, Bill. Novocure delivered another strong quarter of top line growth in the fourth quarter with a record $99 million in global net revenues up 42% versus Q4 2018. We ended the quarter with more than 2,900 patients on therapy, our 20th consecutive quarter of active patient growth, since the initial presentation of our EF-14 data. Leading indicators were also strong.

Total prescription in Q4 grew 5% versus Q3 and the mix of prescriptions received for newly diagnosed GBM remained near 80%. With more than 14,000 GBM patients treated to-date, Optune has established its central role in the treatment of GBM. As proud as we are of our progress to-date, we believe multiple levers remain to drive near-term growth in GBM.

We plan to penetrate further into our active markets and are laying the groundwork for access in new markets.

Also, we are working to extend treatment duration through patient and physician education and through product innovation. Optune has been proven to provide long-term quality survival to patients with newly diagnosed GBM, and I remain as confident as ever that we are making a difference in this disease.

Moving to MPM, our launch in the US continues to progress with three active MPM patients on therapy at quarter-end. We have fully on-boarded our sales team and they remain focused on certifying and training radiation oncologists supporting the required IRB approval processes and educating the multidisciplinary care teams that treat MPM patients. We are encouraged by the initial response from the MPM physician community.

In 2020, we will broaden our target treatment centers to include community centers that see a high volume of MPM cases. We will continue to support the required IRB approval processes and have developed tools we believe will help centers accelerate this process.

We are educating the physician community at key medical congresses and are building patient awareness in partnership with patient advocacy groups.

We continue to believe that there are many more patients who can benefit from Tumor Treating Fields, than are currently on therapy, and we will not be satisfied until all eligible patients are offered a great opportunity for long-term quality survival.

With that, I will turn the call back to Bill to discuss our clinical and product development programs.

William F. Doyle -- Executive Chairman

Thank you, Asaf. We believe the Tumor Treating Fields mechanism of action is broadly applicable to solid tumor cancers. Our fundamental scientific research spans two decades and in all of our preclinical research to date, Tumor Treating Fields has demonstrated a consistent anti-mitotic effect.

Our extensive preclinical evidence provides the foundation upon which we are executing a strategy to advance Tumor Treating Fields through Phase 2 pilot trials, Phase 3 pivotal trials and Phase 4 post-marketing studies across multiple solid tumor types. We are optimistic about where Tumor Treating Fields may go in oncology and our teams are working hard to enroll patients in six clinical programs, including four randomized Phase 3 pivotal trials. We are excited about the potential to significantly expand the addressable market for Tumor Treating Fields with readouts of key data sets anticipated over the next three years.

Our METIS trial is testing the effectiveness of stereotactic radiosurgery, plus Tumor Treating Fields in patients with brain metastases from non-small cell lung cancer. Today, there are limited treatment options available for patients with brain mets. While certain second-line systemic agents can be effective in treating metastatic disease outside of the brain, the blood-brain barrier limits the effectiveness of these agents within the brain.

Patients typically experience intracranial progression within about eight months. METIS is designed to extend this time to intracranial progression by approximately six months equating to a hazard ratio of 0.57. METIS is designed to recruit 270 patients with data analyzed 12 months after the last patient in. The majority of clinical trial sites were on-board leading into 2019. We are now focused on accelerating enrollment at each clinical site and are working closely with investigators to ensure, they have the tools and resources needed to effectively communicate the trial protocol to as many eligible patients as possible.

Moving to the torso. Our LUNAR trial is testing the effectiveness of Tumor Treating Fields with physician's choice of immune checkpoint inhibitor or docetaxel for the second-line treatment of patients with non-small cell lung cancer. LUNAR is designed to enroll 534 patients with data analyzed 18 months after the last patient in.

LUNAR aims to extend overall survival by approximately five months, equating to a hazard ratio of 0.75. We have more than 80 trial sites in North America and Europe and we intend to increase the footprint of this study by more than 50% to include additional clinical sites and additional countries across Eastern Europe and Asia to accelerate enrollment.

LUNAR allows physicians to choose between an immune checkpoint inhibitor or docetaxel in combination with Tumor Treating Fields. We expect this choice to vary based on geography, contraindications and first-line treatment. The data that will be generated from this trial contemplates multiple outcomes, all of which, we believe will be clinically meaningful for patients whose disease progresses, while on or after platinum-based therapy.

Moving to pancreatic cancer. Our PANOVA-3 trial is testing the effectiveness of Tumor Treating Fields, with gemcitabine and nab-paclitaxel, as a first-line treatment for patients with locally advanced pancreatic adenocarcinoma. Pancreatic cancer is one of the most lethal cancers and is the third most frequent cause of cancer-related death in the US, with a median overall survival of approximately 15 months and a five-year survival rate of only 9%.

PANOVA-3 is designed to extend overall survival by approximately five months, equating to a hazard ratio of 0.75. PANOVA-3 is designed to accrue 556 patients with data analyzed 18 months after the last patient in. At the end of 2019, we had 85 clinical trial sites onboard. We anticipate international expansion of study sites in 2020, bringing the total number of sites to approximately 135 by year-end. We are optimistic about the potential to significantly extend survivals of patients with this terrible disease for which there is still such a high unmet medical need.

Our INNOVATE-3 trial is testing the effectiveness of Tumor Treating Fields with weekly paclitaxel in patients with platinum-resistant ovarian cancer. Ovarian cancer ranks fifth in cancer deaths among women in the US. Nearly, all patients with recurrent ovarian cancer develop platinum resistance and the prognosis for this population remains poor.

INNOVATE-3 aims to detect an overall survival benefit of approximately four months, equating to a hazard ratio of 0.75. INNOVATE-3 is designed to accrue 540 patients with data analyzed 18 months after the last patient in. The European Network for Gynecological, Oncological Trial Group is collaborating with us on this trial to facilitate enrollment of INNOVATE-3 at leading cancer centers in Europe. We are encouraged by the initial speed of enrollment, which we view as a sign of enthusiasm from the investigator community.

Beyond our focus on clinical development, we believe we have a considerable opportunity to improve our Tumor Treating Fields delivery systems through product innovation. The dose response for Tumor Treating Fields is driven by total energy delivered, which is a function of time on therapy and electric field intensity. Supported by our financial strength, we are increasing investments in engineering programs intended both to improve time on therapy and to maximize the energy delivered to each patient's tumor bed. We believe these enhancements have the potential to significantly improve patient outcomes, as we work to extend survival in some of the most aggressive forms of cancer.

With more than 180 issued patents, we believe we own 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. Our commitment to innovation resulted in 33 new patent applications in 2019 alone.

With that development update, I'll turn the call over to Wilco to discuss our financial progress.

Wilco Groenhuysen -- Chief Financial Officer

Thank you, Bill. Novocure's continued commercial execution drove strengthening financial performance in 2019. Annual net revenues were $351 million, an increase of 42% versus the prior year. This is the sixth consecutive year that we have reported at least double-digit revenue growth.

We generated $27 million in cash flow from operations during the year compared to $2 million in cash flow used in operations in 2018. We added $80 million in cash to our balance sheet ending 2019 with $326 million cash on hand providing financial and strategic flexibility.

Specific to the fourth quarter, net revenues were $99 million growing 42% year-over-year and 8%, sequentially. Our year-over-year revenue growth was driven both by a 22% increase in active patients and by an increased average duration of therapy due to the patient mix shifts toward newly diagnosed GBM. We also drove a significant improvement in average revenue per patient from the initial impact of Medicare revenue in the US and increased reimbursement rates in Germany and Sweden.

For the three months ended December 31, 2019, we recognized $5 million in net revenues for Medicare beneficiaries built under the newly defined coverage policy, which became effective on September 1, 2019. We are working through the typical administrative ramp-up with Medicare and expect our net revenues for Medicare beneficiaries to further improve as we gain experience processing claims.

Our track record of execution continues into 2020 with another national coverage decision. Last month, the Ministry of Health in Israel established reimbursement for Optune for patients with newly diagnosed GBM. Access to our therapy continues to grow in our active markets, which we believe demonstrates an increasing recognition by health insurers of the value of Tumor Treating Fields. We believe that our global pricing is sustainable and a further expansion of reimbursement in our currently active markets is an important lever for continued revenue growth.

Moving down to P&L. Gross profit in the fourth quarter was $74 million, reflecting a 75% gross margin. Efficiency initiatives and scale drove a 12% decrease in the cost of revenues per active patients to approximately $2,900 for the fourth quarter of 2019. Innovation remains core to our long-term value creation strategy.

R&D expenses in the quarter totaled $24 million up 58% versus the fourth quarter of 2018 reflecting an ongoing commitment to investments in clinical and product development intended to extend survival in multiple solid tumor cancers. We anticipate R&D expenses will continue to increase in future quarters as we advance clinical programs and meaningful product innovations intended to propel further growth.

Our fourth quarter SG&A expenses were $51 million up 26% versus the fourth quarter of 2018, driven primarily by increased marketing expenses and personnel costs to support our growing commercial business. SG&A expenses as a percentage of net revenues were 51% in the fourth quarter of 2019 compared to 58% in the fourth quarter of 2018 reflecting an ongoing commitment to maintain a disciplined approach to spending as we support commercial growth in GBM and MPM.

Our net income was $4 million with $0.04 in earnings per share in the quarter, our second quarter of positive net income.

You will note that for the first time we are including an adjusted EBITDA calculation in our investor communications. Adjusted EBITDA is a non-GAAP measurement of earnings before interest, taxes, depreciation, amortization and share-based compensation. We believe adjusted EBITDA is useful in evaluating our operating performance as it removes the impact of earnings attributable to capital structure, tax rate and material non-cash items, specifically share-based compensation.

Adjusted EBITDA increased by $13 million or 314% to $17 million for the three months ended December 31, 2019 from $4 million for the three months ended December 31, 2018. This improvement in fundamental financial performance was driven by top line growth and disciplined execution.

We ended the quarter with $326 million in cash, cash equivalents and short-term investments, an increase of $13 million from the prior quarter. We remain committed to improving financial, operational and capital efficiency by maintaining a balanced focus across growth, profitability and liquidity.

Our core business is stronger than ever, and our 2019 performance reinforces our confidence in the long-term potential of the Tumor Treating Fields platform. With a compelling growth proposition, disciplined operational execution and financial strength, our focus is unwavering on strengthening our existing foundation and executing on our strategic objectives to deliver value to our patients, employees and our shareholders.

Thank you for your time this morning. With that, I will 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 with Evercore ISI. Your line is open.

John -- Evercore ISI -- Analyst

Hey, guys. It's John on for Vijay today. Just a couple of quick ones. So, for the last couple of years you guys had revenues around the 40% level, but the Street's modeling just a little bit sub-30% growth. And I know you guys don't give guidance, but how are you thinking about the trajectory? And are you comfortable with where the Street is?

William F. Doyle -- Executive Chairman

So, we'll ask Wilco to take the question, John. Good morning.

John -- Evercore ISI -- Analyst

Good morning.

Wilco Groenhuysen -- Chief Financial Officer

I think our growth rate, and when you look at it in active patients, that's what we've been talking about for quite a number of consecutive quarters remains uninterrupted. We've shown a number of quarters of consecutive growth. We expect it to continue. We show 5% year-over-year growth in prescriptions. We had our first quarter of above 1,000 scripts in the US, as I'm sure you've noticed. So, we think that with the data, the unprecedented data, I'd like to say in terms of long-term survival with NCCN Category 1 designation a number of things that basically attest, including the publications of independent IST studies etc., etc. We think there's a substantial growth opportunity in front of us. We think we have multiple levers remaining to drive top line growth, including realizing, and we talked a little bit about that in the previous quarter, the statements with national reimbursements Medicare, Israel, others that we're working on coming up, which we see substantial potential for improvement, continued improvement in our top line growth.

John -- Evercore ISI -- Analyst

Okay. That's helpful. Thank you. The other one that I had for you guys was about lung. Do you have any update on how you're feeling about the timelines there? And regarding kind of what we can expect for the interim readout, is there any information that you're willing to kind of bless for us, going forward, as to what we can really expect to see? Is it going to be a headline? Or will it be something a little bit more in-depth?

William F. Doyle -- Executive Chairman

Yeah, so just to remind everybody, LUNAR is our study investigating Tumor Treating Fields with PD-1 inhibitors or docetaxel for second-line treatment of non-small cell lung cancer. You all recall that Tumor Treating Fields, of course, is a therapy that we add to whatever the best standard of care pharmacology is, and we see in our preclinical work significant benefits to adding Tumor Treating Fields to both chemotherapy and immune checkpoint inhibitors. We are enrolling 534 patients with 18 months minimum follow-up.

With respect to the specific timelines, we have not updated those. They are mentioned in the press release. We continue to work very hard with our existing centers here to increase enrollment and we intend as we mentioned in the script to continue to expand the number of centers.

In terms of the interim, we do expect the interim to occur toward the end of this year. And just to be specific here, there's three outcomes in an interim trial. There's the possibility, theoretical possibility that you have to stop the study, due to futility or due to some safety -- negative safety signal. We don't expect that with this trial. Number one, we've never seen a safety issue, of course, in 20 years of work with this therapy, and this is supported by very strong preclinical and Phase 2 work. It's the same mechanism of action of course throughout all of our work, including our successful work in mesothelioma.

And the most likely outcome is sort of the green light continue the trial as is. And I think that's where we'd like to set expectations. There is a small probability that the study can be stopped for success. Of course, that is what happened with our GBM trial. That is an extremely high bar. And so, I think it's important not to anticipate necessarily an early stoppage on success.

John -- Evercore ISI -- Analyst

Got it. So in the event of a continuation, can we just expect a headline? Or will we get a deeper look under the hood?

William F. Doyle -- Executive Chairman

No, we don't get a look under the hood. So, you'll get a headline.

John -- Evercore ISI -- Analyst

Okay, thank you, helpful.

Operator

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

Larry Biegelsen -- Wells Fargo -- Analyst

Hey, guys. Thanks for taking the question. Hey Bill, on LUNAR have you guys disclosed at what point the interim analysis occurs? In other words, how many patients have kind of reached 18 months follow-up?

William F. Doyle -- Executive Chairman

Yeah, so we have, Larry. The protocol specifies an event-driven interim analysis at 432 patients. And again, we expect it toward the end of this year.

Larry Biegelsen -- Wells Fargo -- Analyst

Got it. And Wilco, at this point in the year, in the past, you've pointed out potential disconnects between your thinking and consensus. I know you were asked about it on top line earlier. Is there anything else you would highlight today? And any color on kind of the gross to net billing expectation for 2020? And then I had a follow-up.

Wilco Groenhuysen -- Chief Financial Officer

Yeah, good morning, Larry. Well, we -- our gross to net, as we said in the past, we expect it to continue to improve. We talked a little bit about that in the script. We're going through the administrative ramp up for Medicare, we -- as we've talked about that in the past, it's probably going to take a few quarters into 2020 to come to full fruition as well. So that will help in the gross to net as we have been treating the Medicare patients, while we were in ongoing dialogue with CMM -- CMS toward reimbursement. Same is actually applicable for Israel, where we now have national reimbursement and get reimbursed for patients that are already on therapy. So, that flows to gross margin, it flows to the bottom line.

What we've also seen is continued improvement in COGS development for instance. And we talked in the call a little bit about $2,900 per active patient in terms, per month for COGS which is from the top of my mind about $300 below where it was just a year ago. And with ongoing volume, ongoing capacity utilization, we would expect further improvement in COGS. That helps in gross margin improvement as well. So, to cut it a little bit shorter than I just -- and I have done so far, we are very committed to continued improvement of gross margin.

Larry Biegelsen -- Wells Fargo -- Analyst

Thanks, Wilco. And just lastly for me. What's the status of approval in China? Are you still optimistic, you won't need a clinical trial there, Bill? Thanks for taking the question.

William F. Doyle -- Executive Chairman

So, we are still optimistic that we will not require a clinical trial. We have seen a, I'll call it a slowdown, but not a stop in terms of our interaction due to the obvious situation there. So, we think that there'll be a minor delay, but we are still anticipating approval.

Larry Biegelsen -- Wells Fargo -- Analyst

Thanks for taking the question, guys.

Operator

Thank you. Our next question comes from Cory Kasimov with JP Morgan. Your line is open.

Gavin -- JP Morgan -- Analyst

Hi. This is Gavin on for Cory. Thanks for taking my questions. We just had one on LUNAR as well. Maybe can you discuss what's driving the increased recruitment in Asia and Eastern Europe? Is this more of a function of just a low accrual in North America and the EU? Or are you trying to get a broader geographic footprint? And then, I had one follow-up.

William F. Doyle -- Executive Chairman

Yeah. This is fairly simple. So this is really our focus this year is to add additional trial sites in those regions, and that will help us. Those are areas where there's less competition, and there are areas where we can drive the overall recruitment.

Gavin -- JP Morgan -- Analyst

Great, thank you. And then just on opex, it just seems like came in a little higher than we were expecting, but you benefited from a tax item this quarter. Can you just provide additional context around that?

Wilco Groenhuysen -- Chief Financial Officer

Yeah, this is Wilco. Good morning. I think you got two questions wrapped in sentence. So, when we look at opex, R&D expenses are increasing as we would like them to. I think that's the investment in the future. We've talked about that in the past quarters as well that we expect R&D expenses to grow and that's still our expectation.

When you look at SG&A expenses, this probably is the first quarter where we don't see a decrease in SG&A expense as a percentage of revenue. And I'd like to think that that's for a good reason as well. When you split SG&A up in its two main components, sales and marketing and G&A, then in G&A we see continued improvement in leverage, continued improvement in G&A expenses, growing at a substantially lower pace than revenue.

Sales and marketing was growing, especially a little bit in the fourth quarter and that's mostly related to also an investment in the future. It's related to the MPM launch, where we spent, of course, launch-related expenses and have an organization put in place without having revenue yet for MPM in the fourth quarter. So, I think overall we're making the investments where we need to make investments, where we expect substantial future return and are still very much focused on disciplined execution.

A little bit on tax, there were two questions. Sorry, I answered the one, and I should answer the second one as well. I think tax expenses, we benefited similar as to the third quarter, where we had some R&D credit benefits that helped us in reducing the tax expense line in the third quarter. We saw something similar in the fourth quarter. We also saw some amortization of intellectual property rights that we benefited from and there were some share exercises of share-based compensation that basically are deductible in the United States. There was a tax -- beneficial tax effect on those as well. So, that led to an overall, approximately $6 million tax benefit for this fourth quarter.

Gavin -- JP Morgan -- Analyst

Great. Thank you.

Operator

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

Gregg Gilbert -- SunTrust -- Analyst

Thank you. I have a few questions. My first one, Bill, is about your commentary around accelerating enrollment at sites. Is that to accelerate enrollment versus, -- or timelines versus previously communicated ones? Or do you need to do this to meet those objectives?

William F. Doyle -- Executive Chairman

Yes, so again, Gregg. This is the -- developing the clinical pipeline is one of the principal focus areas of the Company, and we haven't changed the timelines. But, what we wanted to communicate, since there's obviously tremendous interest in the pipeline is really the extent of the efforts and activities across our clinical trial program.

Gregg Gilbert -- SunTrust -- Analyst

Okay. And then Bill, I'm intrigued by the concept of enhancing the efficacy of the technology. It seems like it's an engineering and material science issue first, and then later needs to be proven out in some clinical setting. Can you walk us through over what sort of period of years and just paint a picture for us as to what the path forward would be there? That seems pretty exciting.

William F. Doyle -- Executive Chairman

Yeah. So, thanks, Gregg. So for everyone, we've seen consistently that the effect of Tumor Treating Fields, and by effect, I mean the efficacy, how long the patients live, is a function of the total energy that we deliver to the tumor. That total energy is equal to the time on therapy, the number of hours per day, times, the intensity of the fields at the tumor.

We showed some time ago in our EF-14 trial data that those patients, who use the therapy longer, had significantly longer survivals. What we showed last year, it means we're independent authors than what I think is really a seminal publication in the Red Journal, this is the journal for radiation oncologists, that there was also a strong correlation with the intensity of the electric fields.

I get asked, well, why don't you just turn it up then? The reason we can't just turn it up with the existing system is because as we increase the power to the tumor, we generate heat at the skin, which is the point of maximum resistance. And so, we limit the power based on the temperature of the skin. Gregg, you're 100% right, that that is an engineering problem, not a science problem. And now with the financial strength that's been built from our GBM business and I mentioned in the prepared remarks, what we really view now is this virtuous cycle that we grow the existing businesses as we provide significant cash and that enables us, one, to be profitable, but I think even more important for investors to make really significant engineering investments. The specific investments that you asked about relate to T arrays[Phonetic] and further investments actually in the TTFields' delivery system itself to deliver higher intensities. I envisioned not one big bang here, but a series of innovations that will unfold over the next number of years. We think some of which may require essentially lab development and submission, and others will require clinical submission. So, I really see this as something that we're fully engaged in today, and you'll see it rolled out over a period of years.

Gregg Gilbert -- SunTrust -- Analyst

Great. Thanks. And lastly, at the risk of going too early, Bill, are your scientists or others outside the company looking at TTF outside of oncology at this point?

William F. Doyle -- Executive Chairman

So, our focus, and I've said we have an extremely full play with oncology and all of the solid tumors. Again, we've shown efficacy in over 20 different tumor types. We've talked extensively about the four Phase 3 programs, we also have Phase 2 programs in liver cancer, we just started one in gastric cancer. And we've a list to go from there.

That said, we do have hints that, that electric fields, as we deliver them in these medium-frequency, alternating electric fields may, and I underline may, have efficacy in other areas. And we've begun early stage, thinking about those.

Gregg Gilbert -- SunTrust -- Analyst

Thanks a lot.

William F. Doyle -- Executive Chairman

Thanks, Greg.

Operator

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

Esther Rajavelu -- Oppenheimer -- Analyst

Hey, good morning. Just following up on Greg's question, would any of these tech enhancements require regulatory updates like a bridging study? Or do you just update the technology, and just switch patients?

William F. Doyle -- Executive Chairman

Hi. Esther, the answer is probably both. And what I mean by that, as I said, all of them will require regulatory submissions. We can't just cut in on new product. In fact, even when we change the color of our arrays, they require regulatory submissions.

The big differentiator is do --- the regulatory submissions, are they based on laboratory work? Or do they require clinical trials? Anytime we want to change our claims, so in other words, the claims of efficacy, those will require some sort of bridging work. But there may, and again, we're early days in terms of the regulatory investigations here, and it may vary by region. There may also be opportunities to bring improvements into the field, based on laboratory submissions. So, it's kind of the both.

Esther Rajavelu -- Oppenheimer -- Analyst

Thank you. And then, a couple of quick housekeeping questions, can you share with us the proportion of scripts written by rad oncs versus neuro oncs in this quarter versus prior quarter?

William F. Doyle -- Executive Chairman

Pritesh, can you comment on the...

Pritesh Shah -- Chief Commercial Officer

Sure. Thank you, Bill. Thank you for that question, Esther. So, we'd like to think about our business in multiple segments, of physicians. So, in the U.S., as you know, multiple physicians are able to prescribe, primarily the neuro oncologists in GBM and radiation oncologists being your second segment. In MPM, as you heard, our focus is primarily on radiation oncologists. So, we're building that book of business. We don't split out in percentages because they ebb and flow. And it really matters on when that patient is being seen, and in that life cycle of their treatment, who is going to prescribe. So, we don't break out the radiation oncology number in specific.

Esther Rajavelu -- Oppenheimer -- Analyst

Thank you. And then, lastly on China, you reported about $2 million in revenues. I assume most of that is from royalties. But can you talk a little bit about how your partner has priced the product in China?

William F. Doyle -- Executive Chairman

Sure. So, first of all, the product has been launched in Hong Kong. It has not been launched yet in Mainland China. And Zai Lab is our partner and they're principally responsible for pricing. So, they report pricing. The one thing, I will say, is it is initially a self-pay market in China. And as a philosophy, we have a global price throughout all the regions in the world.

Esther Rajavelu -- Oppenheimer -- Analyst

And your partner is sort of in line with your global pricing?

William F. Doyle -- Executive Chairman

Correct.

Esther Rajavelu -- Oppenheimer -- Analyst

Okay, thank you.

Operator

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

Dan Clark -- Mizuho Securities -- Analyst

Hi, this is Dan Clark on for Difei. Thanks for taking my questions. I guess, to start, is there any carryover for the legwork you're doing in terms of opening new centers in Eastern Europe, Asia, and just globally into recruitment for future trials?

William F. Doyle -- Executive Chairman

Yeah. Again, one of the things that we're investing in and this goes to some of Wilco's comments about investments in R&D, our significant investments in our clinical organization and footprint. And every time, we develop a relationship with a center, it becomes a Novocure center, if you will. It's -- we support our clinical trials with our DSS network. And so, yes, this creates and adds to our global footprint.

Dan Clark -- Mizuho Securities -- Analyst

Thanks. And then, just as a follow-up, is there any update on the second-gen torso device, are you still planning on launching that this year? And then, any color on how this might lead to patients maybe staying on therapy or adhere to, it would be helpful. Thanks.

William F. Doyle -- Executive Chairman

So, with respect to second-gen torso device, and I will say the Mylink[Phonetic] for most download capability. We are still expecting the commercial launch later this year.

Dan Clark -- Mizuho Securities -- Analyst

Thanks.

Operator

Thank you. And I'm showing no further questions at this time. I'd like to turn the call back to Mr. Bill Doyle for any closing remarks.

William F. Doyle -- Executive Chairman

Sure. And just brief remarks, first of all, I want to thank everyone for their continued interest in Novocure. This is an extremely exciting time for all of us at the company. We have grown from 20 years ago, a group of a handful of people, working with Professor Palti on his really groundbreaking ideas to treat cancer with electric fields, to an organization today of over 750 colleagues globally. We're now full[Phonetic] into 2020, but really with exceptional momentum from 2019, which was just a year to remember, in terms of the company like ours. So, we're going to end the call and get back to work. But thank you for your interest and attention.

Operator

[Operator Closing Remarks]

Duration: 90 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

John -- Evercore ISI -- Analyst

Larry Biegelsen -- Wells Fargo -- Analyst

Gavin -- JP Morgan -- Analyst

Gregg Gilbert -- SunTrust -- Analyst

Esther Rajavelu -- Oppenheimer -- Analyst

Dan Clark -- Mizuho Securities -- Analyst

More NVCR analysis

All earnings call transcripts

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