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NovoCure (NASDAQ:NVCR)
Q3 2020 Earnings Call
Oct 29, 2020, 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 earnings conference call. [Operator instructions] Please be advised that today's conference is being recorded. [Operator instructions] I would now like to hand the conference over to your speaker today, Gabrielle Fernandes, director of investor relations. Please go ahead, ma'am.

Gabrielle Fernandes -- Director of Investor Relations

Good morning, everyone, and thank you for joining us to review NovoCure's third-quarter 2020 performance. With the management team largely working remotely, we are again conducting today's call virtually. I am joined on the phone by our executive chairman, Bill Doyle; our CEO, Asaf Danziger; and our CFO, Ashley Cordova. Other members of our executive leadership team are also on the call and available for Q&A.

The slides presented today can be viewed on our website, www.novocure.com, by clicking on the link for third-quarter 2020 financial results located in the events section of 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 30, 2020, are available in our press release and in our 10-Q, 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, in the appendix of the supplemental slides accompanying this presentation and in our Form 8-K filed with the SEC today.

These materials can be accessed from our Investor Relations page of our website www.novocure.com. With that, I will now turn the call over to Bill Doyle.

Bill Doyle -- Executive Chairman

Thank you, Gabby, and good morning, everyone. We remain focused on three overarching priorities at NovoCure. First, to further strengthen our established commercial business treating patients diagnosed with glioblastoma or mesothelioma. Second, to advance our clinical pipeline across multiple solid tumor indications.

And third, to improve our Tumor Treating Fields delivery system, all with the goal to extend survival in some of the most aggressive forms of cancer. We made important progress across our organization in the third quarter despite the prolonged industrywide complexities and uncertainty posed by COVID-19. Driven by our team's solid execution, we delivered another record quarter of financial performance, with $133 million in net revenue and $0.09 in earnings per share. Our financial strength demonstrates the resilience of our business model and enables increasing investments to accomplish our priorities.

We believe our investments in our commercial, clinical and engineering capabilities are instrumental to unlocking the long-term value of the Tumor Treating Fields platform. With readouts from key clinical trials in multiple indications anticipated over the next few years, we are actively working to ensure organizational readiness for the company's next chapter. NovoCure's track record of innovation and financial performance is a testament to the strength of our organization. In August, we further solidified our executive leadership team with the appointment of Wilco Groenhuysen to an expanded chief operating officer role, the promotion of Ashley Cordova to chief financial officer, and the promotion of Frank Leonard to the newly created position of chief development officer.

Wilco, Ashley, and Frank's extensive experience and many contributions to NovoCure's successes to date instill confidence that our expanded leadership team is well-equipped to advance the company's priorities during the period of significant innovation and growth anticipated in the coming years. Our belief that the Tumor Treating Fields mechanism of action is broadly applicable to solid tumor cancers is supported by a scientific rationale grounded in 20 years of preclinical research. Building upon this compelling body of scientific evidence, we continue to invest in translational research to deepen our understanding of Tumor Treating Fields effects on cancer and to fuel development of new treatment strategies. Just this month, we entered into a strategic alliance with the NYU Grossman School of Medicine's Department of Radiation Oncology.

It provides a framework for preclinical and clinical development projects, studying Tumor Treating Fields. The research to be conducted is geared to further the understanding of the interaction between Tumor Treating Fields and radiation therapy, to study Tumor Treating Fields in combination with various pharmacological agents, and to identify new indications for use. We are excited to partner with a leading U.S. academic institution and look forward to working with NYU's top researchers.

We believe that collaborations with leading academic research centers signifies growing interest in Tumor Treating Fields across the scientific community and advances our mission to extend survival in the aggressive cancers we treat. Shifting to our clinical pipeline, we continue to progress trials to generate data on the safety and efficacy of Tumor Treating Fields therapy in new indications. Our teams are diligently enrolling randomized Phase III pivotal trials in brain metastases, lung cancer, pancreatic cancer, and ovarian cancer. We have ongoing Phase II pilot studies in gastric cancer and in recurring GBM, testing a new high-intensity array system, which we launched last quarter.

We made considerable progress toward opening our TRIDENT trial, a randomized post-marketing study in newly diagnosed GBM to study the potential survival benefit of initiating Tumor Treating Fields therapy concurrent with radiation therapy. We have secured all necessary regulatory approvals for TRIDENT and conducted our first site initiation visit in the United States. We anticipate first patient enrollment in TRIDENT prior to year-end. We are seeing early signs of stabilization in the clinical trial environment in certain geographies despite persisting pressure and uncertainty caused by COVID-19.

In our ongoing clinical trials, we remain focused on opening additional sites and increasing site engagement. Through our partnership with Zai Lab, we expect to begin opening new trial sites in China to drive enrollment in some of our Phase III trials beginning in 2021. In the third quarter, we added a total of 29 new clinical trial sites in the U.S. and Europe, across our Phase III programs.

Notwithstanding this progress, we continue to work closely with institutions, local authorities and contract research organizations to monitor the dynamic COVID-19 environment and to refine our processes as needed to advance our clinical research studies. In July, we completed enrollment of the HEPANOVA trial, a Phase II pilot trial in liver cancer. And we expect final data from this study in the first quarter of 2021. The HEPANOVA data will mark the first of multiple data readouts we anticipate during the next few years, creating the potential for significant market expansion into multiple solid tumor indications with high unmet need.

Beyond our clinical development programs, we continue to expand our programs to deliver technology innovation intended to improve our therapy's efficacy and our product's ease of use, guided by scientific evidence of Tumor Treating Fields optimal application. In his new role as chief development officer, Frank Leonard is charged with leading the overall strategic and operational development of NovoCure's innovation platform, including product development and business development. Under Frank, we have strengthened our innovation capabilities with teams dedicated to Tumor Treating Fields generators, transducer arrays, and software applications. As with radiation therapy, treatment planning is an essential process to optimize the Tumor Treating Fields' energy delivered to the region of a patient's tumor.

Guided by research that demonstrated improved survival in newly diagnosed GBM patients who received higher doses of Tumor Treating Fields therapy, last quarter, our software applications team completed initial development of a new treatment planning software package we call Maxpoint. We have commenced beta testing of Maxpoint with a select number of radiation oncology partners. Research and development are central priorities at NovoCure, and we are excited to highlight our programs as they progress. We believe we are in the early stages of our therapy's evolution, and our confidence in the potential of Tumor Treating Fields to make a difference in the lives of cancer patients continues to build.

We invite you to join us for a virtual R&D Day on November 12. During the session, we plan to highlight development pipeline progress and review areas of internal and external focus in our translational research. With that, I'll turn the call over to Asaf to share his perspective on the third quarter. Asaf?

Asaf Danziger -- Chief Executive Officer

Thank you, Bill. The NovoCure team delivered another strong performance in the third quarter. We reported a record $133 million in global net revenues, up 14% versus Q2 2020. Our net revenue growth was driven primarily by active patient growth and expanding reimbursement for Optune.

Active patient grew 3% quarter over quarter with 3,361 active patients on therapy at the end of Q3, adding to the more than 17,000 patients treated to date globally. This represents our 23rd quarter of consecutive active patient growth since the presentation of our EF-14 data in newly diagnosed GBM. Nine months into COVID-19, we continue to gain new insight into patterns of care in the treatment of GBM. As noted in the past, the aggressive cancers we treat do not slow with COVID 19.

We have seen fluctuations in the timing of surgeries and radiation therapy in certain regions which had some influence on Optune prescription flow. Despite these ebbs and flows, we sustained commercial momentum in the third quarter and remain confident in our ability to adapt to this dynamic situation with minimal disruption to our business. We believe our proven execution to date in 2020 highlights our team's focus and commitment to innovation that enables us to serve our patients and partners. Throughout the year, we have continued to adapt how we interact with patients and healthcare providers by adding virtual capabilities and programs.

For example, we rolled out remote download technology that allows us to download data from a patient's device without the need for an in-person visit. To maintain engagement with healthcare providers, we increased our peer-to-peer programming and created new engagement tools to highlight the unique benefits of Optune and Optune Lua. The multiple virtual engagement capabilities we have developed helped to minimize the impact of COVID-19 on our commercial business. We believe these innovations also provide a foundation for scaling our business to serve many more patients in the future.

As Bill mentioned, we are actively working on organizational readiness in anticipation of future growth. We are strengthening our commercial footprint by expanding access to our approved indications into additional markets. In EMEA, we currently market Optune for GBM in Austria, Germany, Israel, Sweden, and Switzerland. We have secured national reimbursement for Optune in GBM in nearly all of our active EMEA markets, with the exception of Switzerland, where we continue to have ongoing productive coverage discussions with the Federal Office of Public Health.

We believe we have identified a pathway to reimbursement in France and plan to submit a full reimbursement package to establish coverage for Optune in GBM to the French Ministry of Health in the upcoming quarters. We are evaluating market access pathways to enter additional major European markets for our currently marketed indications prior to the expected launch of future indications. Moving beyond GBM, we continue to gain valuable market insights about the treatment landscape in MPM. Based on our early experience with GBM, we know that acceptance of a new technology requires a significant amount of effort to educate patients and healthcare providers.

And we believe that the benefit of these efforts will extend beyond MPM to future torso indication currently in development. I want to reiterate how proud I am of our performance this quarter and this year, a testament to the commitment of all NovoCure colleagues. For those colleagues listening on the call today, thank you for all that you do in support of our patient-forward mission. With that, I will turn the call over to Ashley to discuss our financial results.

Ashley Cordova -- Chief Financial Officer

Thank you, Asaf. NovoCure further strengthened its financial position in the third quarter as we continue to see the disciplined execution of our team drive sustained revenue growth. We delivered 44% year-over-year revenue growth, reported $0.09 in earnings per share, and generated a record $31 million in cash flow from operations. In addition to our efforts to solidify our foundation for long-term sustainable growth, our financial strength enabled the repayment of a $150 million long-term debt, which we are in the process of replacing with a new three-year secured revolving credit facility at a significantly lower carrying cost.

We ended the quarter with $235 million in cash and cash equivalents. The capital structure we are implementing, along with our improved profitability profile, positions us well for a period of significant innovation and growth anticipated over the next few years. Turning to our quarterly performance. Our GBM business delivered third quarter revenues of $133 million, representing 44% growth versus Q3 2019.

Our year-over-year revenue growth was driven by active patient growth and a durable improvement in the net revenues booked per active patient as well as an increase in collaboration revenues from our partnership with Zai Lab. We recorded $10 million in third-quarter net revenues from Medicare fee-for-service beneficiaries billed under the positive coverage policy for newly diagnosed GBM. Over the last year, we have gained a good understanding of how to ensure timely processing of Medicare claims and have sufficient experience to recognize approximately two-thirds of the expected contribution for Medicare beneficiaries. In Q3, we also recognized approximately $8 million in incremental net revenues compared to the first two quarters of 2020, resulting from the successful appeal of previously denied claims for Medicare fee-for-service beneficiaries built prior to established coverage.

Moving down the P&L. Gross profit in the third quarter was $104 million, reflecting a 79% gross margin. Gross margin continues to benefit from ongoing efficiency initiatives and increasing scale. Our capital allocation priorities are unchanged, and we continue to invest in innovation as a part of our long-term value-creation strategy.

We invested $33 million in R&D to support the continued advancement of Tumor Treating Fields science and technology in the third quarter, up 75% versus the third quarter of 2019. This was primarily due to an increase in clinical trial and personnel expenses for our Phase III pivotal and post-marketing trials, an increase in development and personnel expenses to support our product development program, increased investments in preclinical research and the expansion of our medical affairs activities. We expect R&D expenses will continue to increase in future quarters as we advance our preclinical, clinical, and product development programs and our efforts to increase acceptance of Tumor Treating Fields across the global scientific community. Our third-quarter SG&A expenses were $56 million, up 21% versus the third quarter of 2019.

In parallel, we achieved 44% year-over-year revenue growth, reflecting an ongoing commitment to maintain a disciplined approach to spending as we support commercial growth in GBM and MPM and organizational readiness efforts in anticipation of future growth. Our net income was $9 million with $0.09 in earnings per share, representing our fifth consecutive quarter of profitability. We also evaluate our operating performance based on adjusted EBITDA, a non-GAAP measure of earnings before interest, taxes, depreciation, amortization, and share-based compensation. We believe this is an important metric as it removes the impact of earnings attributable to our capital structure, tax rate, and material noncash items, specifically share-based compensation, and it best reflects the financial value generated by our business.

In the third quarter, adjusted EBITDA increased by 85% to $37 million from $20 million for the same period in 2019. This improvement in fundamental financial performance was driven by top line growth and by the disciplined management of expenses. Before I hand the call over to the operator for Q&A, I would like to thank everyone on the phone for their continued interest in NovoCure. Our team's track record of execution delivered another strong quarter of financial performance, positioning us well to invest in the advancement of our clinical and product development programs and in organizational readiness efforts designed to sustain long-term growth and maximize shareholder value.

We believe that the fundamental prospects of our business are strong, and we remain confident in our team, our strategy, and the long-term potential of the Tumor Treating Fields platform to extend survival in some of the most aggressive forms of cancer.

Questions & Answers:


Operator

Thank you. [Operator instructions] Our first question comes from Jason Bednar with Piper Sandler. You may proceed with your question.

Bill Doyle -- Executive Chairman

Jason, we don't hear you.

Jason Bednar -- Piper Sandler -- Analyst

I'm sorry, really sorry. I was on mute there. Congrats on the nice quarter there, Bill. I just wanted to start maybe with your trial progress.

I think we all appreciate, nobody has a crystal ball here with respect to COVID. But just curious if you could speak to what you're seeing and hearing from your research center partners as we're seeing outbreaks grow across the globe. And really, it'd be great if you're able to contrast that with what you're seeing maybe real-time today with, you know, the trial site onboarding and enrollment we saw earlier this year when countries are going into lockdown?

Bill Doyle -- Executive Chairman

Sure. So, I'll just remind everybody -- and first of all, hello, good morning, afternoon, evening, depending on where you are. I'm joined today by Asaf, Ashley, and the management team, but we're all in different parts of the world. So, I'm going to act a little bit as MC this morning on the question.

Let me -- I'm going to turn this over to Ely to comment specifically on the question, but I do want to just congratulate, if that's the right word, the NovoCure team because you -- it's clear that this is an unprecedented time. There's different difficulties that ebb and flow in the different regions, and our teams have been able to maintain the patient care of our commercial patients and our clinical trial patients in spite of the challenges in all the different regions that we serve. But with that, Ely, maybe you can comment specifically on the question.

Ely Benaim -- Chief Medical Officer

Hi. Hello, everybody. Thank you, Jason for your call and your question. Just to supplement what Bill has done, we -- one of the things I first want to say is that we have anticipated that the timing of our data for our ongoing clinical trials is unchanged from what we updated in Q1.

We continue to treat current trial patients. So, we haven't stopped that. And we have enrolled new patients in the clinical trials. On COVID-19, we started to see some early stabilization -- early signs of stabilizations in the clinical trial environment in certain geographies.

But as you said -- as you know, this is volatile. So once one opens in one area, closes in the others. And -- but I can assure you that we are being -- we are prepared in each one of these geographies to keep pushing the clinical trials. So, I would say that advancing the clinical pipeline is among our highest priorities in the company.

And we are continuing monitoring the COVID-19 situation.

Jason Bednar -- Piper Sandler -- Analyst

All right. Great. That's helpful. And then, maybe specifically, I focus on, you know, INNOVATE for a second, the trial in recurrent ovarian cancer.

I mean site onboarding, there has been real impressive. I mean, to the point where this is now the trial with the most patient recruitment sites of any of your Phase III studies. I mean, I know, Bill, you've talked to in the past, this is in part kind of the partnership that you've got there on kind of the trial site onboarding and recruitment, the efforts that are going on. But what you've done there and it seems like it's helped accelerate the timeline on that study in the past.

And does that influence how you think about similar trial development partnerships in the future? Thanks so much.

Bill Doyle -- Executive Chairman

Yeah. So absolutely. As Ely said, progressing our clinical trials is among the highest priorities in the company. And while Ely has the principal responsibility, Asaf and I and the entire management team is engaged in ensuring the successful completion of these trials.

And you're absolutely right. You know, we learned something in one trial, and we apply it to another. And the various successes that we've seen in the ovarian cancer trial were absolutely looking to see how those may be applicable in the other trials.

Jason Bednar -- Piper Sandler -- Analyst

All right. Thanks so much. Congrats on the nice quarter, guys.

Bill Doyle -- Executive Chairman

Thank you.

Operator

Our next question comes from Larry Biegelsen with Wells Fargo. You may proceed with your question.

Larry Biegelsen -- Wells Fargo Securities -- Analyst

Good morning, guys. Thank you for taking the questions. Can you hear me, guys?

Bill Doyle -- Executive Chairman

Yeah, Larry. Good morning. How are you?

Larry Biegelsen -- Wells Fargo Securities -- Analyst

Great, great, great. One on China, one on the NYU collaboration. So, in China, you know, you've seen very good uptake there. Could you talk about, you know, patients treated in Hong Kong versus mainland China, the Zai Lab's commercial rollout and pricing? And how do we think about, you know, reimbursement in China going forward? And I'll just ask the second question upfront.

Bill, on the NYU collaboration, can you provide any additional color, when might you start, you know, doing some studies? Any additional color on what the focus will be there? Thanks for taking the questions, guys.

Bill Doyle -- Executive Chairman

Yeah. Sure. So, first of all, with respect to China, of course, we have this wonderful partnership with Zai Lab. And I think for any company that's first entering the Chinese market, there's a lot of uncertainty, a lot of unknowns.

But we couldn't be more pleased with the way that our teams have been able to collaborate with the teams at Zai Lab. It's been sort of a textbook example of a great partnership to enter the China market. Now, with that, Zai, of course, has the principal reporting responsibility for the progress in China. So, I'm not going to comment on the numbers.

But we have been very pleased with the launch. They have adopted our patient support model and were great students of what we had learned in the rest of the world. So, they also have device support specialists that bring the therapy to the patients and train them in appropriate use. That model has worked extremely effectively in Hong Kong and is now, as you can see in our numbers, beginning to work extremely effectively in China.

When we launched, we anticipated that the early growth would be largely self-pay. And again, I'll remind you, we do have a global pricing strategy. So, you know, the pricing strategy is not special in China. I will say Zai is also on the forefront of the new emerging insurance models that are coming in China.

This was one of the reasons why we were so determined to enter the China market because we saw that, in the long term, the payment models would clearly evolve and then insurance would become part of the mix in China. We're seeing that, which is good for patients there. So, I'd say all in all, we're extremely pleased. And the final thing I'll note, and we mentioned this in the opening remarks, we chose Zai as our partner because we thought they would be a great partner to commercialize our GBM and, hopefully soon, our MPM therapies in China, but we also wanted to work with them to bring leading Chinese centers into our global clinical trials.

And we made, with Ely's organization, great progress on that front. And we anticipate that leading Chinese sites will join our global trial footprint in the early part of next year. And, of course, this provides access to a large pool of patients for our clinical trials. So great progress.

Now with respect to NYU, we are joined by Uri Weinberg, Dr. Weinberg, our chief science officer. And Uri, maybe you can give a couple of comments on the NYU partnership.

Uri Weinberg -- Chief Science Officer

Absolutely. Hello, everybody, and good morning. So, I'm very happy to shed more light on our strategic alliance with NYU. This is going to provide a framework for preclinical as well as clinical development projects studying Tumor Treating Fields.

The research that is going to be designed as part of this alliance is going to encompass -- sorry, topics such as the combination of TTFields with radiation therapy, studying TTFields in new combinations, identifying new indications for use for TTFields. We're very excited about this, partnering with a leading U.S. academic institute and look forward to sharing results of research conducted through this partnership also in the future. And we believe that collaborations like these signify growing interest in TTFields across the scientific community, and we look forward to expand the research projects to additional academic centers.

Bill Doyle -- Executive Chairman

Thanks, Uri.

Larry Biegelsen -- Wells Fargo Securities -- Analyst

Thanks so much, Bill.

Operator

Thank you. Our next question comes from Vijay Kumar with Evercore. You may proceed with your question.

Vijay Kumar -- Evercore ISI -- Analyst

Hey, guys. Congrats on a solid frontier. I guess, you know, Bill, my question is, you look at year-to-date trends on revenues, close to 40% growth in a pandemic environment, really impressive. But you look at Street numbers for next year, Street's modeling sub-20% revenue growth.

And part of, I guess, when we look at the revenue dynamics, the active patients, it's been growing at a pretty healthy clip. So, can you maybe just comment on these active patients sustaining to grow plus 20%? Is that something that we could expect for the medium term? And is that a key driver of revenue growth when we look at 2021?

Bill Doyle -- Executive Chairman

Sure. So – good morning, Vijay. I'm going to turn this question over to Pritesh to comment a little bit about what he's seeing in the field in active patients, and then I'll follow up.

Pritesh Shah -- Chief Commercial Officer

Great. Thank you, Bill. Good morning, everyone. And thank you for the question, Vijay.

What I would start with is our patient support model. What we are -- what we have built with regards to our patient support model is to ensure that good education and good follow-through leads to patients benefiting in time on treatment. We know that Optune has a dose-response relationship. And our goal is to make sure that we can optimize that dose-response relationship because of the outcome.

So, what we have been doing to date is making sure that our patient support system, so this is primarily our DSSs, as they initiate patients on treatment, we look to understand how can we ensure best support for those patients, learn from our early experience with them. For the first month that they're on treatment, we provide enhanced support, and this is touching base with them more frequently. Just recently, we launched a tool called MyLink. You heard about that in the opening remarks, we talked about this on the last earnings call.

This is an important innovation because now we're able to track this, the time on treatment and anything that may be happening with the usage real time. So, our efforts now that are live patient education, we can now use tools that are newly available to make sure that we continue to optimize this dose-response relationship that we see with our therapy. And this, again, if we couple this with the continued strength in the newly diagnosed prescription mix, we saw 81% of our total prescriptions in Quarter 3 that were newly diagnosed. All these parameters lead to greater number of active patients in any given horizon.

Bill Doyle -- Executive Chairman

Thank you, Pritesh.

Vijay Kumar -- Evercore ISI -- Analyst

I guess, maybe one for Ashley. To follow up on that, Ashley. If you look at that '21 number Street modeling a deceleration here in revenues from, you know, 40% to sub-20%. One, are you comfortable with where Street numbers are? Does it make sense for revenues to decelerate to this extent? And when you think about CMS, the onetime catch up payments.

Is that -- was that for, like, claims filed in first half? Or was this perhaps for prior years? I guess where I'm trying to go with this is, should we be expecting future, you know, catch-up payments perhaps because of successful -- bits of your success against that prior denials?

Ashley Cordova -- Chief Financial Officer

Yeah, Vijay...

Bill Doyle -- Executive Chairman

So, Ashley -- I just want for everyone. You all know Ashley Cordova, but I want to welcome her to her first earnings call in her new role as CFO of NovoCure. We couldn't be more pleased to place the financial operations of the company in her hands. So, you know, with that, Ashley, please.

Ashley Cordova -- Chief Financial Officer

Well, thanks, Bill. And Vijay, thanks for the question. To answer directly, we do think there's still an opportunity to increase the net revenues book for activation over time. So clearly, beyond the active patient growth that Pritesh alluded to earlier, there is still an opportunity, both with Medicare, but just with ongoing improvements in our revenue operations globally to drive that net revenue growth through increasing reimbursement.

As you know, we don't guide, so I can't speak specifically to next year. But we have alluded to the fact that we're currently booking approximately two-thirds of the benefit from our Medicare coverage established September 1, 2019, and we still have ways to go there. That will continue to drive incremental reimbursement. We're still working to receive the full benefit of the reimbursement we received in Israel earlier this year as well as ongoing discussions with the authorities in Switzerland to hopefully establish reimbursement in the future for that important patient population.

With regards to the $8 million incremental payment that we received in the third quarter, that was from the result of the successful appeal of denied claim billed prior to September 1, 2019. We've always talked about there being a backlog of claims out here. We are not walking away from them. We're taking them through a very long-dated appeal process.

There is no ability to predict this. This does not have a rhyme or a reason. But we have treated these patients. We are not walking away from these claims, and we will continue to book revenue as we receive cash on the back of those appeals.

Again, it's simply too soon to comment as to what the pace and cadence of that looks like in the future, but I can tell you we're doing everything we can to make sure that we realize that revenue.

Vijay Kumar -- Evercore ISI -- Analyst

That's extremely helpful, Ashley, I would be remiss if I didn't add my congratulations as well. I guess is there any way to size what the backlog opportunity is for prior claims for...

Ashley Cordova -- Chief Financial Officer

Unfortunately, not. I mean, again, from the beginning, what we have said that Medicare beneficiaries have been 20% to 25% of our active patient time -- active patient population in the U.S. since launch, and we are fighting every one of those claims that we can.

Gotcha. Thanks, guys. Thanks, Ashley.

Operator

Our next question comes from Greg Gilbert with Trust. You may proceed with your question.

Greg Gilbert -- Truist Securities -- Analyst

A couple of pipeline ones. First on HEPANOVA, looks like you've been more granular on it being a Q1 event versus just next year in terms of that data. What can you do to frame that for us and let us know with what speed you could move to the next phase, if warranted?

Bill Doyle -- Executive Chairman

So, hi, Greg. This is Bill. I think we've always said, as we get closer to readouts and we know and can predict better when the data will be available, we pass that on, and we now feel that we can update the timing of the HEPANOVA readout. I think that we've always been very – you know, our overall goal is to get our therapy to patients who can benefit.

And so, we will move as quickly and deliberately as possible to get to the next stage, which would clearly be a Phase III trial. So, it takes a while to get a protocol written. Of course, we're already thinking about that and to get centers lined up, but we would move immediately into the process of the next steps.

Greg Gilbert -- Truist Securities -- Analyst

Great. And then moving on to the Merck collaboration. I was very intrigued and encouraged by that last summer that you signed that. But it looks like in the 10-Q, that the start of the pilot study has been delayed due to a "modification in regulatory strategy." Can you flesh that out a little bit? Was it your change, their change? Maybe any other background on the Merck collaboration you can share?

Bill Doyle -- Executive Chairman

Yeah. So, I'm going to pass this over to Ely to maybe comment on the specifics of the regulatory work that we did during the quarter. This is clearly a very important collaboration. And I think it's a first of the types of collaborations that we are interested in conducting with pharmaceutical company partners.

You saw the collaboration with NYU, which is a great prototype for collaboration with academic institutions. The Merck partnership is a prototype of collaboration with Big Pharma. Ely, any comments on the work during the quarter?

Ely Benaim -- Chief Medical Officer

Hi, Greg. Thank you for your call. You know, we're really excited about this collaboration. But we need to make sure that we have all our things lined up.

And I want to make sure that -- you know, we haven't delayed really anything. We just want to make sure that we align with the FDA. So, we're having conversations with the FDA before the end of the year to confirm our regulatory strategy and design. So that's why we expect them to begin in the first half of next year.

Greg Gilbert -- Truist Securities -- Analyst

I just want to confirm that that has nothing to do with you or Merck or the agency wanting to see more data in the lung setting from other trials?

Ely Benaim -- Chief Medical Officer

No, we haven't. So that has nothing to do with it. It's all about having basically talk to the FDA and then from there, we'll move on. So, there's nothing stopping or delaying this development of the program.

Bill Doyle -- Executive Chairman

Yes. Just to underline...

Asaf Danziger -- Chief Executive Officer

Yes. I do want to add, it's Asaf. I think it's -- the collaboration with Merck is extremely important for us. And nothing changed in our timeline, and this is part of the regulatory process that Merck and us are working together on it.

And we are very happy with the collaboration and the response from all the agencies so far.

Bill Doyle -- Executive Chairman

Yeah. So, Larry, just to underline. These are the discussions in the normal course with the FDA upon serving a trial. You know, the interactions with the FDA are affected a little bit by COVID, but this is all normal course stuff.

Greg Gilbert -- Truist Securities -- Analyst

OK. Sorry, I was thrown off by the language in the queue about a modification and regulatory strategy wording. But I'll move on. Last question, Bill, about the R&D Day.

I'll allow you to set expectations, if you want to. But I'm curious if the goal here is more to provide sort of a backgrounder one-on-one session on the technology for those that may have not had it or understand it? Or is it more of a forum to provide new information? Or is it a mix of those things? Thank you.

Bill Doyle -- Executive Chairman

Yeah. So, the primary focus is not a one-o'-one. We are performing, and our collaborators and independent scientists are performing a tremendous amount of research and development on Tumor Treating Fields. It's one of the things that's been very gratifying to those of us who have been involved with this project now for 20 years to see the expansion of development activities in the community and our ability to expand our research and development as a result of our financial strength.

We don't think that a lot of this work is -- has been very visible to the financial community, notwithstanding the fact that, you know, literally hundreds of papers and projects have been published that are quite important to our internal development efforts as well as the understanding in the clinical community. So, it's not really meant to be a one-o'-one. It's meant to be a distillation of some of the important work in the field that we use to, you know, build our confidence and I think will be very useful for the financial community.

Greg Gilbert -- Truist Securities -- Analyst

And I have to sneak one in. Is it all about oncology?

Bill Doyle -- Executive Chairman

You'll have to come and see.

Greg Gilbert -- Truist Securities -- Analyst

All right. See you there. Thanks.

Operator

Thank you. Our next question comes from Jason Wittes with Northland. You may proceed with your question.

Jason Wittes -- Northland Securities -- Analyst

Great. Thanks for taking the questions. Some follow-ups here. First off, the $8 million catch up.

I assume there's more in the queue that may come at some other quarter that -- could you just provide some color on terms of -- is that it? Or is there more petition to be had? And I don't know if you have any indication on timing on when they might be petitioned?

Bill Doyle -- Executive Chairman

Yeah. Ashley mentioned this before, but Ashley, maybe you can underline your comments.

Ashley Cordova -- Chief Financial Officer

Yeah. So, I'll just remind everybody again that Medicare has been 20% to 25% of our patient population in the U.S. since we launched. And we've received coverage for which we began to recognize revenue in the normal course of business, September 2019.

So, there is certainly a backlog prior to that time. This $8 million correlates to that backlog, but we have no ability to predict the pace of receipt of those claims. As I mentioned before, we are not walking away from any of them. So, we are actively doing everything we can to take these claims through detailed process and ensure that we do receive revenue for them, but it is an extremely backlog, long-dated and unpredictable appeals process.

We'll share more as we can in the future.

Jason Wittes -- Northland Securities -- Analyst

OK. That's helpful. And then on the NYU announcement, it appears to be focused on radiation oncologists. How do we think about that? I mean, is it in terms of they may become one of the main prescribers of TTF? Or are you looking at how it might work in conjunction with radiation dosing?

Bill Doyle -- Executive Chairman

Yeah. So, I think this is a great question for both Pritesh and Uri. Pritesh, maybe you can start with our working relationship with the radiation oncology community. And then, Uri, maybe you can talk specifically about the -- some of the early goals of the partnership.

Pritesh Shah -- Chief Commercial Officer

Sure. Thank you for the question. What I would comment on is how we built our business in GBM and mesothelioma. What we realize is that both of those diseases and some of the other diseases that we are investigating in our multidisciplinary diseases, where many specialties play a key role, our experience specifically with the radiation oncologists and the radiation oncology community is that based on how the mechanism of action of Tumor Treating Fields, the delivery aspect of it, the dosing aspect of it that Bill referred to in his remarks, all those things lend themselves very well to how radiation oncologists think about delivering treatment.

So many aspects are akin to radiation planning, radiation delivery, the regional aspect of how our therapy is delivered. So, because of that, we see a great deal of interest with the radiation oncology community. We see that in the glioblastoma space. We see that in the mesothelioma space, and particularly with our study TRIDENT in glioblastoma, which is combining with radiation.

So, this particular group will continue to be an important partner to us as we think about our treatment today and also the future of that. And this particular relationship, which I'll ask Uri to comment on the specifics of it, is evidence to our commitment to ensuring that we continue to build evidence, both in the lab space as well as what might then lead to clinical decision-making on this front. Uri, I'm going to turn it over to you for specific comments on the NYU collaboration.

Uri Weinberg -- Chief Science Officer

Thank you, Pritesh. So, I would say that the collaboration has been primarily led by the radiation oncologists at NYU from their side. Nevertheless, other departments have already been involved in discussing the different aspects of this research collaboration and the intent to be involved in the preclinical as well as in the clinical studies that are going to be conducted as part of this new alliance. When it comes to radiation, there is a very strong rationale for combining TTFields with this modality since, from a scientific perspective, we have definitely seen preclinical evidence of the synergy between the two treatments, TTFields and radiation.

And then there's a population of physicians who become more and more significant in prescribing TTFields and working with the modality. This naturally happened this way. Nevertheless, we anticipate the oncologists and other departments to be involved in the research as part of this overall agreement.

Jason Wittes -- Northland Securities -- Analyst

OK. Thank you. That's helpful. One last question.

Just on -- it's a little bit ahead. It's not until 2022, but you are studying high-intensity arrays in glioblastoma. Assuming that ends up to be a positive trial, what would be the regulatory pathway for glioblastoma? But also, I think the assumption would be that if it works for GBM, it probably also is going to work for other indications. So, I'm curious if you guys have thought about whether you have to rerun Phase IIIs or if there's a shorter pathway to getting high-intensity on the market?

Bill Doyle -- Executive Chairman

Sure. So, as Pritesh mentioned earlier, and as we've discussed in prior calls, we see an absolute dose response with Tumor Treating Fields, which is encouraging, of course, for all sorts of reasons. Pritesh talked about things that we're actively involved in doing to ensure that patients have the maximum time on therapy. But the other big driver of dose is the intensity of the fields that we can deliver.

And today, our intensity is determined principally by the array design. And as we mentioned in our previous remarks, with our new financial strength, we're able to increase our investments in improving the technology. We think we're in the very early stages of what we can deliver to patients with our technology, both in terms of dose and in terms of patient comfort and ease of use, and we're really focused on this as one of our core priorities. With respect to the specific regulatory strategy, it's a little early to talk about that.

We're obviously engaged in it. There may be multiple approaches to the regulatory strategy. It will also depend a little bit on the region. Our goal would be to clearly bring these innovations to patients as early as possible.

They may need to be followed by longer trials in order to make specific claims about life extension. But I wouldn't expect in -- that we would have to wait for those trials in order to get these improvements to patients.

Jason Wittes -- Northland Securities -- Analyst

Got it. Thanks a lot.

Operator

Thank you. [Operator instructions] Our next question comes from Difei Yang with Mizuho Securities. You may proceed with your question.

Difei Yang -- Mizuho Securities -- Analyst

Hi. Good morning, and thanks for taking my questions. So, I have two questions. One on mesothelioma and one is finance-related.

So for -- on mesothelioma, would you share your thoughts on how Optune Lua will fit into the evolving treatment paradigm now that we see Opdivo plus Yervoy getting approved as a first-line therapy? And because of the precedent that was set by GBM, do you think for the mesothelioma indication, there may be a shorter pathway for reimburse -- CMS reimbursement.

Bill Doyle -- Executive Chairman

So, let me ask Pritesh to start to comment on MPM. And then, Ashley, you may want to follow-up with a comment on reimbursement.

Pritesh Shah -- Chief Commercial Officer

Great. Thank you for this question. Given the significant unmet need for patients with mesothelioma, we view the introduction of the dual IO combination as a treatment win for all patients that are suffering from this disease. Having said that, we believe that our therapy is still relevant for MPM patients across all histologies.

The efficacy profile of Optune Lua and the safety profile of Optune Lua, there are many patients who can benefit from that. And our efforts right now are focused on making sure that our educational and our -- for both patient populations as well as physician populations remain, and we are moving forward on making that possible. I think with this introduction now, it opens up doors for further studies. So, studying TTFields in combinations with IOs, this has been our strategy in non-small cell lung cancer with our LUNAR study.

And also, we will be evaluating potential investigator-sponsored studies and other bridging studies of many types that allow us to then continue on exploring the benefit of Optune Lua in this setting with different combinations.

Ashley Cordova -- Chief Financial Officer

Perfect. And just we hit a follow-up on your reimbursement question. Similar to GBM, we'll go through a process with private payers first to gain access and then upon conclusion of that, begin to work with Medicare. I certainly would anticipate it would be quicker.

Everything is a little easier, the second or third time around, but it's simply too soon at this point to point toward timing of material revenue for next year.

Difei Yang -- Mizuho Securities -- Analyst

Thank you, Ashley. So, I'll just ask you my second question related to finance. Of those backlogs previously denied Medicare claims, and so you were able to book $8 million. Are you able to tell us whether these reimbursements are at the same rate as your current CMS reimbursement? Or is it at reduced rate?

Ashley Cordova -- Chief Financial Officer

Yeah. Again, I'm not going to be able to provide that level of detail because it is somewhat case dependent as it goes through. But I will tell you that the LCD coverage effective September 1, and the e-schedule put in place is the relevant benchmark for claims post September 1. And then we are still – you know, we billed at list price for our prior invoices, and there is an ongoing negotiation as we go through appeals.

But we're not going to be able to provide any additional information other than to say that we continue to work those claims as we bill them, and we're working to get as much as we can out of that patient population.

Difei Yang -- Mizuho Securities -- Analyst

Thank you. Very helpful.

Operator

And I'm not showing any further questions at this time. I would now like to turn the call back over to Bill Doyle for any further remarks.

Bill Doyle -- Executive Chairman

So, first of all, I'd like to thank you all again for participating on our earnings call. NovoCure has three overarching priorities. Our strategy is quite simple. We're working to extend our therapies that are approved to all the patients globally who can benefit from them.

Secondly, we're working to expand the cancers that we can treat with our -- what we believe to be broadly applicable mechanism of action. And third, we're working to improve our Tumor Treating Fields delivery platform, which we think is in the very early stages of our ability to deliver efficacy and patient comfort. These are clearly difficult times. We see in the news that they're difficult, they're complex, and they're volatile, but I want to thank the NovoCure team for continuing to deliver therapy to all of our patients, notwithstanding these difficulties to continuing to recruit our clinical trials, notwithstanding all these difficulties and to open new trials, both to expand our ability to treat patients and to demonstrate the improved benefits of our R&D efforts.

So, I really have to thank the team for their dedication and their hard work during these times. And with that, we'll see you again next quarter. Thank you.

Operator

[Operator signoff]

Duration: 59 minutes

Call participants:

Gabrielle Fernandes -- Director of Investor Relations

Bill Doyle -- Executive Chairman

Asaf Danziger -- Chief Executive Officer

Ashley Cordova -- Chief Financial Officer

Jason Bednar -- Piper Sandler -- Analyst

Ely Benaim -- Chief Medical Officer

Larry Biegelsen -- Wells Fargo Securities -- Analyst

Uri Weinberg -- Chief Science Officer

Vijay Kumar -- Evercore ISI -- Analyst

Pritesh Shah -- Chief Commercial Officer

Greg Gilbert -- Truist Securities -- Analyst

Jason Wittes -- Northland Securities -- Analyst

Difei Yang -- Mizuho Securities -- Analyst

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