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Why NovoCure Stock Soared 29% in November

By Beth McKenna - Dec 4, 2019 at 8:02AM

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This medical device maker's stock has gained an electrifying 166% in 2019.

What happened

Shares of NovoCure ( NVCR 0.33% ), which makes devices for treating cancerous solid tumors with electric fields, rocketed 28.7% last month, according to data from S&P Global Market Intelligence. For context, the S&P 500 returned 3.6% in November.

The healthcare stock has gained 166% this year through Dec. 3, versus the broader market's 25.7% return. 

Man sitting at desk wearing NovoCure's Optune, which appears like netting on his head and includes an over-the-shoulder attachment to the head device.

Image source: NovoCure.

So what

We can probably attribute NovoCure stock's strong November performance to a couple main catalysts. First, most of its rise was probably a continuation of the upward momentum it's enjoyed for some time, driven by investor optimism over the Jersey (Channel Islands)-based company's prospects.

Notably, shares got a big lift following NovoCure's May announcement that it had received approval from the U.S. Food and Drug Administration (FDA) to use its tumor-treating fields (TTM) technology to treat malignant pleural mesothelioma, an aggressive and rare form of lung cancer. That added a second indication for Optune, which is approved in the United States and some international markets to treat glioblastoma (GBM). GBM is the most common primary brain cancer in adults and extremely difficult to treat. 

Second, the stock got a boost after the company reported its third-quarter results on Oct. 31. While shares fell 3.5% that day, they rose 10% in the following two-day period. In Q3, NovoCure's revenue surged 42% year over year to $92.1 million. Moreover, the company posted its first ever quarter of positive net income. Net income came in at $1.9 million, or $0.02 per share, compared with a net loss of $11.7 million, or $0.13 per share, in the year-ago period. That bottom-line result crushed the Wall Street consensus estimate, which was for a loss of $0.05 per share. 

Bill Doyle, NovoCure's Executive Chairman, had this to say in the earnings release about the company's total addressable market in the U.S.:

We are determined to unlock the value of Tumor Treating Fields therapy across a variety of solid tumor indications. 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 in our late-stage pipeline will create a more than 20-fold increase in our U.S. addressable market.

Now what

NovoCure stock is worth putting on your watch list. Things have been moving in the right direction on the late-stage trials, regulatory approval, financial, and insurance reimbursement fronts.

Moreover, there's a potentially big catalyst for growth on the near-term horizon: The company and its Chinese partner, Zai Lab, could launch Optune for GBM in Mainland China any time now.  

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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