NOVOCURE LIMITED
Management's Discussion and Analysis of Financial Condition and Results of
Operations ("MD&A") is intended to provide information to assist you in better
understanding and evaluating our financial condition and results of operations.
We encourage you to read this MD&A in conjunction with our unaudited
consolidated financial statements and the notes thereto for the period ended
June 30, 2022 included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
This discussion contains forward-looking statements that involve risks and
uncertainties. Please refer to the information under the heading "Cautionary
Note Regarding Forward-Looking Statements" elsewhere in this report. References
to the words "we," "our," "us," and the "Company" in this report refer to
NovoCure Limited , including its consolidated subsidiaries.
Critical Accounting Policies and Estimates
In accordance withU.S. generally accepted accounting principles ("GAAP"), in preparing our financial statements, we must make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of net revenues and expenses during the reporting period. We develop and periodically change these estimates and assumptions based on historical experience and on various other factors that we believe are reasonable under the circumstances. Actual results may differ from these estimates. The critical accounting policies requiring estimates, assumptions and judgments that we believe have the most significant impact on our consolidated financial statements can be found in our 2021 10-K. For additional information, see Note 1 to our unaudited consolidated financial statements in Part I, Item 1 of this Quarterly Report. There were no other material changes to our critical accounting policies and estimates as compared to the critical accounting policies and estimates described in our 2021 10-K.
Overview
We are a global oncology company with a proprietary platform technology called
Tumor Treating Fields ("TTFields"), which are electric fields tuned to specific
frequencies that disrupt cancer cell division. Our key priorities are to drive
commercial adoption of Optune and Optune Lua, our commercial TTFields devices,
and to advance clinical and product development programs intended to extend
overall survival in some of the most aggressive forms of cancer.
Optune is approved by the U.S. Food and Drug Administration ("FDA") under the
Premarket Approval ("PMA") pathway for the treatment of adult patients with
newly diagnosed glioblastoma ("GBM") together with temozolomide, a chemotherapy
drug, and for adult patients with GBM following confirmed recurrence after
chemotherapy as monotherapy treatment. We also have a CE certificate to market
Optune for the treatment of GBM in the European Union ("EU"), as well as
approval or local registration in the United Kingdom ("UK"), Japan and certain
other countries. Optune Lua is approved by the FDA under the Humanitarian Device
Exemption ("HDE") pathway for the treatment of adult patients with malignant
pleural mesothelioma ("MPM") together with standard chemotherapies. We have also
received CE certification in the EU and approval or local registration to market
Optune Lua in certain other countries. We market Optune and Optune Lua in
multiple countries around the globe with the majority of our revenues coming
from the use of Optune in the U.S. , Germany and Japan . We are actively
evaluating opportunities to expand our international footprint.
We believe the physical mechanism of action behind TTFields therapy may be
broadly applicable to solid tumor cancers. Currently, we are conducting phase 3
pivotal studies evaluating the use of TTFields in non-small cell lung cancer
("NSCLC"), ovarian cancer, brain metastases from NSCLC, and pancreatic cancer.
In 2021, we completed patient enrollment in our phase 3 pivotal NSCLC and
ovarian cancer studies. Additionally, we have multiple ongoing or recently
completed phase 2 pilot studies evaluating the use of TTFields. These studies
are in gastric cancer and stage 3 NSCLC, as well as testing the potential
incremental survival benefit of TTFields delivered using high-intensity arrays
versus standard arrays. We are also currently conducting a global phase 4
post-marketing study testing the potential survival benefit of initiating Optune
concurrent with radiation therapy versus following radiation therapy in patients
with newly diagnosed GBM. We anticipate expanding our clinical pipeline over
time to study the safety and efficacy of TTFields for additional solid tumor
indications and combinations with other cancer treatment modalities.
We completed enrollment of the phase 3 pivotal LUNAR trial in November 2021 ,
which began the final patient's 12-month follow-up period and our clinical
operations and data collection efforts remain on track. Given feedback we
received from all interested parties, we recognized a pivotal data release the
final week of the year is not ideal for
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investigators, clinicians, investors, or potential patients. For that reason, we are moving the top-line data announcement to early Q1 2023.
InMarch 2022 , we announced that an independent data monitoring committee ("DMC") conducted a pre-specified interim analysis for the phase 3 pivotal INNOVATE-3 study for the treatment of platinum-resistant ovarian cancer. As part of the interim analysis, the DMC reviewed the safety data for all enrolled patients and completed an analysis of overall survival on the first 540 patients randomized in the study. The interim analysis did not indicate a need to increase the patient sample size and the DMC recommended that the study should continue to final analysis as planned. The INNOVATE-3 study accrued 540 patients as ofOctober 2021 and data will be reviewed in 2023, following an 18 month follow-up period. InMay 2022 , we entered into a clinical trial collaboration agreement with MSD, a tradename of Merck & Co., Inc., ("MSD") to conduct a double-blind, placebo-controlled study of TTFields concomitant with pembrolizumab and maintenance temozolomide for the treatment of newly diagnosed GBM. We intend to engage the FDA in pre-submission discussions in the near-term regarding the parameters of the KEYNOTE D58 trial protocol design. InJune 2022 , we announced results of the phase 2 pilot EF-31 study evaluating the use of TTFields together with standard-of-care (chemotherapy alone or in combination with trastuzumab for HER2-positive patients) as first-line treatment for gastric cancer. Initial analysis was conducted with a median follow-up period of 8.6 months. The primary endpoint, confirmed objective response rate, was 50%. Median progression-free survival was 7.8 months. Duration of response was 10.3 months. Median overall survival had not yet been reached with a one-year survival rate of 72%. We look forward to further exploration of these potential benefits as we look ahead to a randomized phase 3 clinical study. InJune 2022 , we announced the first patient has been enrolled in the phase 2 pilot KEYNOTE B36 study, conducted in collaboration with MSD. KEYNOTE B36 is designed to evaluate the safety and effectiveness of TTFields together with pembrolizumab for the treatment of locally advanced or metastatic intrathoracic NSCLC that expresses PD-L1. InJune 2022 , by mutual agreement withGT Medical Technologies, Inc. , we suspended indefinitely our joint plans to conduct a phase 2 pilot study to test the safety and effectiveness of neo-adjuvant TTFields followed by resection, GammaTile Therapy, and adjuvant TTFields for recurrent GBM.
The table below presents the current status of the ongoing clinical studies in our oncology pipeline and anticipated timing of data readout.
[[Image Removed: nvcr-20220630_g1.jpg]]
Our therapy is delivered through a medical device and we continue to advance our
Products with the intention to extend survival and maintain quality of life for
patients. We have several product development programs underway that are
designed to optimize TTFields delivery to the target tumor and enhance patient
ease of use. Our intellectual
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property portfolio contains hundreds of issued patents and numerous patent
applications pending worldwide. We believe we possess global commercialization
rights to our Products in oncology and are well-positioned to extend those
rights into the future as we continue to find innovative ways to improve our
Products.
In 2018, we granted Zai Lab (Shanghai) Co., Ltd. ("Zai") a license to
commercialize Optune in China , Hong Kong , Macau and Taiwan ("Greater China")
under a License and Collaboration Agreement (the "Zai Agreement"). The Zai
Agreement also establishes a development partnership intended to accelerate the
development of TTFields in multiple solid tumor cancer indications. For
additional information, see Note 12 to the Consolidated Financial Statements in
the Company's Annual Report on Form 10-K for the fiscal year ended December 31,
2021 (the "2021 10-K").
We view our operations and manage our business in one operating segment. For the
three and six months ended June 30, 2022 , our net revenues were $140.9 million
and $278.4 million , respectively. Our net loss for the three and six months
ended June 30, 2022 were $24.0 million and $28.7 million , respectively. As of
June 30, 2022 , we had an accumulated deficit of $714.6 million . Our net loss
resulted primarily from net revenue growth which was more than offset by
increasing investments in research, development and clinical trial initiatives
and sales and marketing initiatives that support our ongoing exploration of the
benefits of TTFields across numerous cancer indications, as well as geographic
expansion and pre-commercial activities associated with potential future
indication launches.
Impact of COVID-19
InMarch 2020 , theWorld Health Organization ("WHO") declared COVID-19 a global pandemic. Since the pandemic began, we have been following the guidance of theWHO , theU.S. Centers for Disease Control and Prevention , and local health authorities in all of our active markets and we have adjusted the way we conduct business to adapt to the evolving situation. The COVID-19 pandemic did not have a material impact on our financial results through the second quarter of 2022. The pandemic has had and is having an impact on our day-to-day operations, which varies by region based on factors such as geographical spread, stage of containment and recurrence of the pandemic in each region. We believe the prolonged disruption caused by COVID-19 is resulting in increased volatility across global health care systems, such as fluctuations in patient volumes and changes in patterns of care in certain regions, which is currently impacting and might continue to impact our business and clinical studies in the future. For example, outside theU.S. , localized lockdowns are causing disruptions in the ability to monitor clinical studies. TTFields is an emerging modality in cancer care and requires significant educational effort to drive awareness and acceptance of our therapy. We have relied heavily on virtual engagement to manage these educational efforts since the onset of the pandemic, which poses challenges to our ability to effectively communicate and engage with our customers and partners around the world. Given the aggressive nature of the cancers that we treat, we believe that the fundamental value proposition of the TTFields platform remains unchanged. We continue to evaluate and plan for the potential effects of COVID-19 on our business moving forward. The extent to which the COVID-19 pandemic may impact our business and clinical studies in the future will depend on further developments, which are highly uncertain and cannot be predicted with confidence. The COVID-19 pandemic may also have the effect of heightening many of the other risks described in our risk factors disclosed in our 2021 10-K.
Commentary on Results of Operations
Net revenues. Our revenues are primarily derived from patients using our Products in our active markets. We charge for treatment with our Products on a monthly basis. Our potential net revenues per patient are determined by our ability to secure payment, the monthly fee we collect and the number of months that the patient remains on therapy.
We also receive revenues pursuant to the Zai Agreement. For additional information regarding the Zai Agreement, see Note 12 to the Consolidated Financial Statements in our 2021 10-K.
Cost of revenues. We contract with third parties to manufacture our Products. Our cost of revenues is primarily comprised of the following:
•disposable arrays;
•depreciation expense for the field equipment, including the electric field generator used by patients; and
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•personnel and overhead costs such as facilities, freight and depreciation of
property, plant and equipment associated with managing our inventory,
warehousing and order fulfillment functions.
Operating expenses. Our operating expenses consist of research, development and
clinical studies, sales and marketing and general and administrative expenses.
Personnel costs are a significant component for each category of operating
expenses and consist of wages, benefits and bonuses. Personnel costs also
include share-based compensation.
Financial expenses, net. Financial expenses, net primarily consists of debt
issuance costs, interest income from cash balances and short-term investments
and gains (losses) from foreign currency transactions. Our reporting currency is
the U.S. dollar. We have historically held substantially all of our cash
balances in U.S. dollar denominated accounts to minimize the risk of
translational currency exposure.
Results of Operations
The following discussion provides an analysis of our results of operations and reasons for material changes therein for the three and six months endedJune 30, 2022 as compared to the three and six months endedJune 30, 2021 . The tables contained in this section reportU.S. dollars in thousands (except share, patient, and prescription data). The following table sets forth our consolidated statements of operations data: Three months ended June 30, Six months ended June 30, 2022 2021 2022 2021 Unaudited Unaudited Net revenues$ 140,866 $ 133,517 $ 278,413 $ 268,212 Cost of revenues 28,503 28,599 56,230 54,984 Gross profit 112,363 104,918 222,183 213,228 Operating costs and expenses: Research, development and clinical studies 57,075 50,315 99,309 96,231 Sales and marketing 44,750 34,138 82,634 65,495 General and administrative 31,666 32,760 62,174 63,885 Total operating costs and expenses 133,491 117,213 244,117 225,611 Operating income (loss) (21,128) (12,295) (21,934) (12,383) Financial expenses (income), net 2,228 940 3,937 3,586 Income (loss) before income taxes (23,356) (13,235) (25,871) (15,969) Income taxes 652 1,406 2,784 2,800 Net income (loss)$ (24,008) $ (14,641) $ (28,655) $ (18,769)
Basic net income (loss) per ordinary share
(0.14) $ (0.27) $ (0.18)
Weighted average number of ordinary shares
used in computing basic net income (loss) per
share 104,627,789 103,484,866 104,408,164 103,061,557
Diluted net income (loss) per ordinary share
(0.14) $ (0.27) $ (0.18)
Weighted average number of ordinary shares
used in computing diluted net income (loss)
per share 104,627,789 103,484,866 104,408,164 103,061,557
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The following table details the share-based compensation expense included in costs and expenses:
Three months ended June 30, Six months ended June 30,
2022 2021 2022 2021
Unaudited Unaudited
Cost of revenues $ 1,029 $ 827 $ 1,981 $ 1,560
Research, development and clinical studies 7,624 8,505 14,425 13,629
Sales and marketing 6,802 6,429 13,457 10,900
General and administrative 10,368 12,120 21,005 20,655
Total share-based compensation expense
Key performance indicators
We believe certain commercial operating statistics are useful to investors in evaluating our commercial business as they help our management team and investors evaluate and compare the adoption of our Products from period to period. The number of active patients on therapy is our principal revenue driver. An "active patient" is a patientwho is receiving treatment under a commercial prescription order as of the measurement date, including patientswho may be on a temporary break from treatment andwho plan to resume treatment in less than 60 days. Prescriptions are a leading indicator of demand. A "prescription received" is a commercial order for Optune or Optune Lua that is received from a physician certified to treat patients with our Products for a patient not previously on Optune or Optune Lua. Orders to renew or extend treatment are not included in this total.
The following table includes certain commercial operating statistics for and as of the end of the periods presented.
June 30,
Operating statistics 2022 2021
Active patients at period end
North America (1) 2,229 2,206
EMEA:
Germany 458 571
Other EMEA 421 419
Japan 346 291
Total 3,454 3,487
Three months ended June 30, Six months ended June 30,
2022 2021 2022 2021
Prescriptions received in period
North America (1) 954 967 1,889 1,884
EMEA:
Germany 216 237 436 485
Other EMEA 118 138 245 272
Japan 95 108 197 211
Total 1,383 1,450 2,767 2,852
(1)
There were 8 active MPM patients on therapy as of
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Three and six months endedJune 30, 2022 compared to three and six months endedJune 30, 2021 Three months ended June 30, Six months ended June 30, 2022 2021 % Change 2022 2021 % Change Net revenues$ 140,866 $ 133,517 6 %$ 278,413 $ 268,212 4 % Net revenues. Net revenues increased 6% to$140.9 million for the three month period endingJune 30, 2022 from$133.5 million for the same period in 2021, and increased 4% to$278.4 million for the six month period endedJune 30, 2022 from$268.2 million for the same period in 2021. The increase resulted primarily from an increase in active patients in theU.S. andJapan and increased collections for previously denied and appealed claims in theU.S. The increase was partially offset by a reduction in German active patient numbers and approval rates as a result of updated coverage criteria, and the impact of foreign exchange rate fluctuations.
We continue to actively appeal and pursue previously denied claims, but the cadence and size of these collections are impossible to predict.
Three months ended June 30, Six months ended June 30,
2022 2021 % Change 2022 2021 % Change
Cost of revenues $ 28,503 $ 28,599 - % $ 56,230 $ 54,984 2 %
Cost of revenues. Our cost of revenues for the three month period ended June 30,
2022 was $28.5 million , virtually unchanged from $28.6 million for the same
period in 2021. Cost of revenues for the six months ended June 30, 2022
increased by 2% to $56.2 million from $55.0 million for the same period in 2021.
For the six month period ended June 30, 2022 , the increase in cost of revenues
was primarily driven by increased shipments to Zai and the cost of shipping
arrays to a higher average volume of commercial patients, offset by lower
manufacturing costs per array. We continue to focus on opportunities to increase
efficiencies and scale within our supply chain. This includes evaluating new
materials, manufacturers, and processes that could lead to lower costs.
Gross margin was 80% for the three months ended June 30, 2022 compared to 79%
for the three months ended June 30 , 2021.Gross margin was 80% for the six months
ended June 30, 2022 and 79% for the six months ended June 30, 2021 . Excluding
sales to Zai, cost of revenues per active patient per month was $2,391 for the
three months ended June 30, 2022 , a decrease of 5% from $2,520 for the same
period in 2021, with increasing supply chain optimization and cost reduction
initiatives more than offsetting the impact of broader economic challenges. Cost
of revenues per active patient is calculated by dividing the cost of revenues
for the quarter less equipment sales to Zai for the quarter by the average of
the active patients at the end of the prior quarter and the ending active
patients in the current quarter. This quarterly figure is then divided by three
to estimate the monthly cost of revenues per active patient. Sales to Zai are
deducted because they are sold at cost and in anticipation of future royalties
from Zai, and Zai patient counts are not included in our active patient
population. Product sales to Zai totaled $3.4 million and $5.3 million for the
three and six months ended June 30, 2022 compared to $2.4 million and $3.9
million for the three and six months ended June 30, 2021 .
Operating Expenses.
Three months ended June 30, Six months ended June 30,
2022 2021 % Change 2022 2021 % Change
Research, development and
clinical studies $ 57,075 $ 50,315 13 % $ 99,309 $ 96,231 3 %
Sales and marketing 44,750 34,138 31 % 82,634 65,495 26 %
General and administrative 31,666 32,760 (3) % 62,174 63,885 (3) %
Total operating expenses $ 133,491 $ 117,213 14 % $ 244,117 $ 225,611 8 %
Research, development and clinical study expenses. Research, development and clinical study expenses increased 13% to$57.1 million for the three month period endedJune 30, 2022 from$50.3 million for the same period in 2021, and increased 3% to$99.3 million for the six month period endedJune 30, 2022 from$96.2 million in the same period in 2021, primarily driven by an increase in direct clinical study costs for both the three and six month 22
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periods. Direct clinical study costs can fluctuate quarter-to-quarter, dependent on the amount of clinical research organization services delivered and clinical materials procured within a given quarter. Sales and marketing expenses. Sales and marketing expenses increased 31% to$44.7 million for the three months endedJune 30, 2022 from$34.1 million for the same period in 2021, and increased 26% to$82.6 million for the six month period endedJune 30, 2022 from$65.5 million for the same period in 2021. For the three and six month period endedJune 30, 2022 , the change was primarily due to an increase in market research and strategic planning activities intended to enhance our commercial capabilities in anticipation of potential future approvals in new indications, including NSCLC and ovarian cancer. Additionally, we are investing in market access capabilities in order to evaluate opportunities, identify optimal access pathways, and successfully gain reimbursement in new geographies. General and administrative expenses. General and administrative expenses decreased 3% to$31.7 million for the three months endedJune 30, 2022 from$32.8 million for the same period in 2021, and decreased 3% to$62.2 million for the six months endedJune 30, 2022 from$63.9 million for the same period in 2021. For the three and six month periods, the change was primarily due to a decrease in personnel costs. Three months ended June 30, Six months ended June 30, 2022 2021 % Change 2022 2021 % Change Financial expenses (income), net$ 2,228 $ 940 137 %$ 3,937 $ 3,586 10 % Financial expenses, net. Financial expenses increased 137% to$2.2 million for the three months endedJune 30, 2022 from$0.9 million for the same period in 2021, and increased 10% to$3.9 for the six months endedJune 30, 2022 from$3.6 for the same period in 2021. For the three and six month periods, the increase was primarily due to increased foreign exchange rate fluctuations offset by interest income. Foreign exchange rate expenses increased to$3.4 million for the three months endedJune 30, 2022 from income of$0.3 million for the same period in 2021, and increased 166% to$4.8 million for the six months endedJune 30, 2022 from$1.8 million for the same period in 2021. Three months ended June 30, Six months ended June 30, 2022 2021 % Change 2022 2021 % Change Income taxes$ 652 $ 1,406 (54) %$ 2,784 $ 2,800 (1) % Income taxes. Income taxes decreased 54% to$0.7 million for the three months endedJune 30, 2022 from$1.4 million for the same period in 2021, and was unchanged at$2.8 million for the six months endedJune 30, 2022 compared to the same period in 2021. For the three months endedJune 30, 2022 the increase reflects a change in the mix of applicable statutory tax rates in active jurisdictions.
Non-GAAP financial measures
We also measure our performance using a non-GAAP measurement of earnings before
interest, taxes, depreciation, amortization and shared-based compensation
("Adjusted EBITDA"). We believe Adjusted EBITDA is useful to investors in
evaluating our operating performance because it helps investors evaluate and
compare the results of our operations from period to period by removing the
impact of earnings attributable to our capital structure, tax rate and material
non-cash items, specifically share-based compensation.
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We calculate Adjusted EBITDA as operating income before financial expenses and
income taxes, net of depreciation, amortization and share-based compensation.
The following table reconciles net income (loss), which is the most directly
comparable GAAP operating performance measure, to Adjusted EBITDA.
Three months ended June 30, Six months ended June 30,
2022 2021 % Change 2022 2021 % Change
Net income (loss) $ (24,008) $ (14,641) 64 % $ (28,655) $ (18,769) 53 %
Add: Income tax 652 1,406 (54) % 2,784 2,800 (1) %
Add: Financial expenses
(income), net 2,228 940 137 % 3,937 3,586 10 %
Add: Depreciation and
amortization 2,654 2,480 7 % 5,264 4,850 9 %
EBITDA $ (18,474) $ (9,815) 88 % $ (16,670) $ (7,533) 121 %
Add: Share-based compensation 25,823 27,881 (7) % 50,868 46,744 9 %
Adjusted EBITDA $ 7,349 $ 18,066 (59) % $ 34,198 $ 39,211 (13) %
Adjusted EBITDA decreased by 59% to $7.3 million for the three months ended
June 30, 2022 from $18.1 million for the same period in 2021, and decreased by
13% to $34.2 million for the six months ended June 30, 2022 from $39.2 million
for the same period in 2021. The changes in both periods were primarily due to a
decrease in net income driven by increased investment in research, development
and clinical studies and sales and marketing intended to maximize future growth
opportunities.
Liquidity and Capital Resources
We have incurred significant losses and cumulative negative cash flows from
operations since our founding in 2000. As of
AtJune 30, 2022 , we had$948.5 million in cash, cash equivalents and short-term investments, an increase of$10.8 million compared to$937.7 million atDecember 31, 2021 . We believe our cash, cash equivalents and short-term investments as ofJune 30, 2022 are sufficient for our operations for at least the next 12 months based on our existing business plan and our ability to control the timing of significant expense commitments. We expect that our research, development and clinical study expenses, sales and marketing expenses and general and administrative expenses will continue to increase over the next several years and may outpace our gross profit. As a result, we may need to raise additional capital to fund our operations.
The following summary of our cash flows for the periods indicated has been derived from our unaudited consolidated financial statements, which are included elsewhere in this Quarterly Report:
Six months ended June 30,
2022 2021 Change % Change
Net cash provided by (used in) operating
activities $ 12,075 $ 43,952 $ (31,877) (73) %
Net cash provided by (used in) investing
activities 138,347 51,553 86,794 168 %
Net cash provided by financing activities 7,877 19,014 (11,137) (59) %
Effect of exchange rate changes on cash and
cash equivalents (145) (105) (40) 38 %
Net increase (decrease) in cash, cash
equivalents and restricted cash $ 158,154 $ 114,414 $ 43,740 38 %
Operating activities. Net cash used in or provided by operating activities represents our net income (loss) for the periods presented, share-based compensation and depreciation and amortization. Operating cash flows are also impacted by changes in working capital.
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Net cash provided by operating activities decreased by$31.9 million from$44.0 million net cash provided by operating activities for the six months endedJune 30, 2021 to$12.1 million net cash provided by operating activities for the six months endedJune 30, 2022 . This decrease was a result of net income decreasing by$9.9 million compared to the same period in 2021, with a$24.4 million increase in working capital, including a$9.7 million decrease in accounts payables and accrued expenses,$12.9 million increase in accounts receivables and$5.4 million increase in inventories, partially offset by a$2.4 million change in the mix from cash to non-cash based expenses.
Investing activities. Our investing activities consist primarily of investments in and redemptions of our short-term investments as well as investments in property and equipment.
Net cash provided by investing activities was$138.3 million for the six months endedJune 30, 2022 , compared to$51.6 million provided by investing activities for the six months endedJune 30, 2021 . The net cash provided by investing activities for the six months endedJune 30, 2022 was primarily attributable to$147.6 million of net proceeds from maturity of short-term investments, offset by the purchase of$9.2 million of property and equipment. The net cash provided by investing activities for the six months endedJune 30, 2021 was primarily attributable to$58.2 million of net proceeds from maturity of short-term investments, partially offset by the purchase of$6.6 million of property and equipment. Financing activities. To date, our primary financing activities have been the sale of equity and the proceeds from long-term loans. Net cash provided by financing activities was$7.9 million for the six months endedJune 30, 2022 , as compared to$19.0 million provided by financing activities for the six months endedJune 30, 2021 . The net cash provided by financing activities for the six months endedJune 30, 2022 andJune 30, 2021 included proceeds from the issuance of shares as well as proceeds from the exercise of options under the Company's employee stock purchase plan and stock option plan.
Convertible Notes
OnNovember 5, 2020 , we issued$575.0 million aggregate principal amount of 0% Convertible Senior Notes due 2025 (the "Notes"). The Notes are senior unsecured obligations. The Notes do not bear regular interest, and the principal amount of the Notes will not accrete. The Notes are convertible at an initial conversion rate of 5.9439 ordinary shares per$1,000 principal amount of the Notes, which is equivalent to an initial conversion price of approximately$168.24 per ordinary share. The Notes are convertible at the option of the holders upon the satisfaction of certain other conditions and during certain periods, and if the Company exercises its right to redeem the Notes as permitted or required by the indenture. On or afterAugust 1, 2025 until the close of the business on the business day immediately preceding the maturity date, holders may convert all or any portion of their Notes at the conversion rate at any time irrespective of the foregoing conditions. InJanuary 2021 , we irrevocably elected to settle all conversions of Notes by a combination of cash and our ordinary shares and that the cash portion per$1,000 principal amount of Notes for all conversion settlements shall be$1,000 . Accordingly, from and after the date of the election, upon conversion of any Notes, holders of Notes will receive, with respect to each$1,000 principal amount of Notes converted, cash in an amount up to$1,000 and the balance of the conversion value, if any, in our ordinary shares
For more information, see Note 10a. to the Consolidated Financial Statements in the 2021 10-K.
Term loan credit facility OnNovember 6, 2020 , we entered into a new three-year$150.0 million senior secured revolving credit facility with a syndicate of relationship banks (the "2020 Credit Facility"). We may, subject to certain conditions and limitations, increase the revolving credit commitments outstanding under the 2020 Credit Facility or incur new incremental term loans in an aggregate principal amount not to exceed an additional$100.0 million . The commitments under the 2020 Credit Facility are guaranteed by certain of our subsidiaries and secured by a first lien on our and certain of our subsidiaries' assets. Outstanding loans bear interest per annum at a sliding scale based on the our secured leverage ratio from 2.75% to 3.25% above the applicable interbank borrowing reference rate for the currency in which the loan is denominated. Additionally, the 2020 Credit Facility contains a fee for the unused revolving credit commitments at a sliding scale based on our secured leverage ratio from 0.35% to 0.45%. The 2020 Credit Facility contains financial covenants requiring maintenance of a minimum fixed charge coverage 25
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ratio and specifying a maximum senior secured net leverage ratio, as well as customary events of default which include a change of control. As ofJune 30, 2022 , we were in compliance with such covenants.
As of
Contractual Obligations and Commitments
There have been no material changes from the information disclosed in our 2021 10-K.
Off-Balance Sheet Arrangements
We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements as defined underU.S. Securities and Exchange Commission ("SEC") rules.
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