NOVOCURE 2016 ANNUAL REP ORT who we are 450+ EMPLOYEES 2 4 FDA-APPROVED INDICATIONS CURRENTLY ACTIVE MARKETS I N N OVAT I V E B R E A K T H RO U G H S Novocure is developing a profoundly different cancer treatment centered on a proprietary therapy called TTFields, the use of alternating electric fields tuned to specific frequencies to disrupt solid tumor cancer cell division. The basic mechanism behind TTFields may be broadly applicable and is not limited to a specific solid tumor type or genetic marker. Importantly, we believe TTFields has the potential to increase survival when used in combination with other cancer therapies without significantly increasing side effects. 2 NOVOCURE 2016 ANNUAL REPORT NOVOCURE 2016 ANNUAL REPORT For over 15 years, Novocure’s researchers have explored a different approach to cancer treatment that puts the patient first. Medical advancements have led to dramatic improvements in cancer survival in the last 50 years. In the United States, five-year survival for all In the United States, five-year survival for all cancers cancers rose from 49 percent in the 1970s to 69 rose from 49 percent in the 1970s to 69 percent percent in this decade. in this decade. Despite meaningful advancements in cancer treatment, Despite meaningful advancements in cancer a significant unmet need to improve survival and treatment, we believe a significant unmet need to quality of life remains. Of the 22,280 women diagnosed improve survival and quality of life remains. Of with ovarian cancer in the U.S. each year, only 46.2 the 22,280 women diagnosed with ovarian cancer in percent live past five years. Of the 224,390 Americans the U.S. each year, only 46.2 percent live past five years. diagnosed with lung cancer annually, only 17.7 are alive Of the 224,390 Americans diagnosed with lung cancer five years later. Of the 12,500 Americans diagnosed annually, only 17.7 percent are alive five years later. with glioblastoma (GBM) each year, only 9.8 percent Of the 53,070 people diagnosed with pancreatic cancer survive five years. Of the 53,070 people diagnosed with in the U.S. each year, only 7.7 percent survive past pancreatic cancer in the U.S. each year, only 7.7 percent the five-year mark. survive past the five-year mark. For patients facing some of the most aggressive For patients facing some of the most aggressive forms forms of cancer, these grim statistics are their reality. of cancer, these grim statistics are their reality. For The five-year survival rates are simply unacceptable. many patients, the five-year survival rates are simply We believe a profoundly different approach to cancer unacceptable. For these patients, a profoundly different treatment is needed. approach to cancer treatment is needed. 3 3 3 Cover: Moshe Giladi, PhD Head of Preclinical Research Novocure’s Director of Preclinical Research, Moshe Giladi, joined the company in August 2005. Dr. Giladi’s team in Israel researches the mechanism of action and the biological application of alternating electric fields. T H E B U S I N E S S O F N OVO CU R E to our fellow shareholders, Asaf Danziger, CEO (left) William Doyle, Executive Chairman During our first full year as a public company, we achieved many important milestones that we believe leave us well positioned for our future success. We had nearly 1,100 active Optune patients on treatment at the end of 2016 and have made great strides in our GBM business. During 2016, we added more than 400 certified treatment centers globally and expanded our sales force in the United States and Germany. We completed the rollout of our second generation Optune System, which weighs less than 2.7 pounds. We took steps forward in market access and in contracting with major payers, entering 2017 with more than 180 million U.S. covered lives. We also made strides in advancing our clinical pipeline. In October 2016, we enrolled the first patient in our phase 3 pivotal METIS trial studying TTFields in patients with brain metastases from non-small cell lung cancer. In February 2017, we enrolled the first patient in our phase 3 pivotal LUNAR trial studying TTFields in patients with advanced non-small cell lung cancer. We completed phase 2 pilot trials in pancreatic cancer and ovarian cancer, and shared the topline results at our research and development day in December 2016. We also presented what we believe are promising interim results from our phase 2 pilot trial in mesothelioma at the International Association for the Study of Lung Cancer World Conference. In our preclinical and clinical experience to date, TTFields have consistently shown anti-mitotic activity with no known systemic toxicity, and we are encouraged by the preliminary evidence from these pilot studies. 4 A H I S TO RY O F S T RO N G L E A D E R S H I P Asaf Danziger, Novocure’s Chief Executive Officer, and Bill Doyle, Novocure’s Executive Chairman, have been working together since 2002, bringing low-intensity, alternating electric fields from preclinical concept to a clinically-validated and FDA-approved commercial product for the treatment of glioblastoma. NOVOCURE 2016 ANNUAL REPORT NOVOCURE 2016 ANNUAL REPORT NEARLY 1,100 ACTIVE PATIENTS AT 2016 YEAR END 5 INDICATIONS IN OUR CLINICAL PIPELINE $220 MILLION IN CASH, CASH EQUIVALENTS, AND SHORT TERM INVESTMENTS AT 2016 YEAR END Financially, we ended the year in a position of strength to support our commercial business and our clinical pipeline. We recorded revenues of $82.9 million for the full year 2016, representing more than 150 percent of year-over- year revenue growth. On December 31, 2016, we had almost $220 million in cash, cash equivalents and short term investments on our balance sheet. Looking forward to 2017, we are acutely focused on our simple, two-pronged strategy that we believe will enable us to responsibly sustain the growth of our business while bringing our therapy to patients. First, we are committed to driving commercial adoption of Optune within our GBM business. Second, we are dedicated to advancing our clinical pipeline to indications beyond GBM. We strive to achieve both of these strategies while improving operating leverage. With discipline and focus, we are committed to bringing our profoundly different approach to cancer treatment to as many patients as possible who may benefit from it. Thank you for your continued support of Novocure. Asaf Danziger, CEO William Doyle, Executive Chairman 5 ”Even after 15+ years of research, there is still more being learned about treatment with alternating electric fields. We are excited about the promising application of this profoundly different approach to solid tumor cancer treatment, for glioblastoma and beyond.” — Eilon Kirson MD, PhD Chief Science Officer and Head of Research and Development low-intensity alternating electric fields USED ALONE OR IN COMBINATION TO TREAT SOLID TUMORS surgery radiation pharmacological treatments tumor treating fields (TTFields) • Most frequently employed therapy • Reduces size of a tumor prior to initiation of additional therapies • Kills cells when delivered at high doses • Injures healthy tissues with numerous potential toxic side effects • Includes chemotherapy, • Low-intensity, alternating targeted therapies and immuno-oncology • Limited by potential side effects • Resistance can develop over time electric fields • Mild side effect profile • No known resistance or cumulative toxicity • Can be used in combination with other treatment modalities 6 6 NOVOCURE 2016 ANNUAL REPORT T H E S C I E N CE O F N OVO CU R E a message from our chief science officer, Eilon Kirson MD, PhD For more than a century, advances in cancer treatment have depended upon innovative researchers and clinicians and hard-fought breakthroughs. Each step forward was sparked by an idea or a hypothesis. Today’s traditional treatments–surgery, radiation and chemotherapy—were once thought of as radical, and each therapy evolved over time. Throughout medical history, advancements small and large led to improved survival rates and quality of care over prior treatments. Every several decades, a major breakthrough made a significant enough impact to change the course of cancer treatment for countless patients. Yet for many people diagnosed with some of the most aggressive forms of cancer, traditional treatments aren’t enough, as is evident from low and stagnant survival rates in certain forms of cancer. In order to make a meaningful impact in the lives of these patients, we believe that we need a different approach to solid tumor cancer treatment. In 2000, Yoram Palti, Novocure’s founder and professor emeritus of physiology and biophysics at the Technion - Israel Institute of Technology, hypothesized and began testing such an approach. Instead of searching for ways to improve upon existing cancer therapies, he employed his knowledge of physics to influence biological processes in cancer cells, particularly mitosis. Professor Palti proposed that alternating electric fields tuned to specific frequencies could disrupt cancer cell division without causing many of the life-altering side effects associated with other traditional treatments. Over a decade of preclinical and clinical research in more than 15 cancer cell lines has proven he was right. Professor Palti viewed the problems with traditional cancer treatments through an innovative lens. He assessed the need for improved outcomes and his own knowledge in physics and biology, and questioned what people think about existing treatments and where they might be stuck in their thought patterns. By thinking of killing cancer from a new perspective, he discovered another way. A DVA N C I N G A LT E R N AT I N G E L EC T R I C FI E L D T H E R A P Y Novocure’s Chief Science Officer and Head of Research and Development Eilon Kirson was one of the first employees to join the company in 2002. Dr. Kirson has global responsibility for Novocure’s preclinical and clinical and product development programs, as well as the company’s regulatory strategy. The spirit of Professor Palti’s original hypothesis remains a core pillar of Novocure today. As innovators ourselves, we carried Professor Palti’s original idea forward. Like the many innovators in cancer research who’ve come before, we see the limitations of current treatments not as a challenge, but as an opportunity to approach the problem—and find a solution—in a profoundly different way. Eilon Kirson MD, PhD Chief Science Officer and Head of Research and Development 7 mechanism of action an effective anti-mitotic treatment In order to understand treatment with TTFields, one must first be familiar with electric fields and how they can be utilized for medical applications. All fields exert forces on specific objects that are spatially located inside the field. For example, gravitational fields exert forces on masses, and magnetic fields exert forces on iron. Similarly, electric fields exert forces on polarized molecules and can be used across multiple medical applications at specific frequencies. Low frequency or pulsed electric fields can depolarize cell membranes, as seen in artificial pacemakers, while high frequency electric fields can generate heat, as seen in radiofrequency ablation. Intermediate frequency electric fields, long thought to have no significant biological effect, have now been shown to inhibit the growth rate of a variety of cancer cell lines and cause cancer cell death. TTFields use low-intensity, alternating electric fields tuned to specific frequencies to disrupt the highly choreographed mitotic process essential to tumor growth. While many intracellular molecules are slightly polarized or neutral, some are highly polarized and strongly affected by intermediate-frequency, alternating electric fields. For example, tubulin is a highly polarized molecule that must orient spatially to form the mitotic spindle, which segregates chromosomes into two daughter cells during mitosis. In the presence of electric fields, tubulin aligns with the direction of the electric field, causing disruption of mitotic spindle formation and eventual cell death. Septin is another highly polarized molecule that must orient spatially to form the contractile ring needed to split daughter cells during mitosis. In the presence of electric fields, septin aligns with the direction of the electric field, leading to improper localization of the contractile ring. This process causes membrane blebbing and eventual cell death. 8 Einav Zeevi, Preclinical Researcher A B C +2h +3h +30m +50m +30m +60m LOW I N T E N S I T Y A LT E R N AT I N G E L EC T R I C FI E L D S A N D T H E I R E FFEC T O N M I TO S I S Alternating electric fields affect tumor cells by arresting mitosis, slowing TTFields-treated cell division time from less than one hour to more than three hours (a). Some cells in the field may also disintegrate in the later stages of cell division (b,c). Credit: Physics Today, adapted from Kirson et al. Cancer Res. 64, 3288, 2004 application of therapy Novocure’s profoundly different approach to cancer treatment utilizes low-intensity, alternating electric fields tuned to a specific frequency with the goal of disrupting cancer cell division and tumor growth. To apply these electric fields to the body, two sets of transducer arrays are placed front to back and side to side to surround the region of treatment. The arrays are connected to an electric field generator, and the direction of the electric field oscillates rapidly between each set of arrays. The electric field penetrates the entire volume of tissue between the arrays and, at the right frequency, into the cells inside the field. The cell membrane serves as an effective filter for electric fields unless tuned to a specific frequency, with the frequency required to penetrate the membrane principally linked to cell size. Cancer cells tend to be smaller than normal healthy cells and, as a result, the frequency of the electric field can be tuned to the specific size of the targeted tumor cell. TTFields impact metaphase normal metaphase tubulin subunits align properly, forming a normal mitotic spindle NOVOCURE 2016 ANNUAL REPORT E L EC T RO D E P L ACE M E N T I S O P T I M IZ E D FO R E ACH PAT I E N T The distribution of the field depends on the exact layout of the transducer arrays and the passive electrical properties, mainly resistance, of the different tissues between them. Array placement is optimized for each patient using proprietary software called NovoTAL™, based on morphometric measurements of the patient’s anatomy according to a recent MRI scan and the location of the tumor. effect of TTFields on metaphase tubulin subunits align with TTFields mitotic spindle mitotic spindle mitotic spindle tubulin subunits tubulin subunits align properly, forming a normal align properly, mitotic spindle forming a normal mitotic spindle mitotic spindle + misaligned tubulin disrupts mitotic spindle tubulin subunits align with TTFields tubulin subunits align properly, forming a normal mitotic spindle misaligned tubulin disrupts mitotic spindle + – tubulin tubulin subunits align with TTFields subunits align misaligned tubulin with TTFields disrupts mitotic spindle misaligned tubulin disrupts uniform mitotic spindle electric field – + – tubulin subunits have tubulin subunits a high dipole moment have a high uniform electric field dipole moment tubulin subunits have a high dipole moment tubulin subunits have a high dipole moment uniform uniform electric field electric field TTFields impact telophase normal telophase – + + – – + + – + – + – + – – + cleavage furrow effect of TTFields on telophase + – + – + – + + – – – + – + – + dielectrophoresis dielectrophoresis non-uniform electric field movement of polar cellular components due to electric field 9 Q &A Z E ’ E V B O M ZO N D I R EC TO R O F S C I E N CE Physicist Ze’ev Bomzon and his team of researchers aim to optimize the delivery of alternating electric fields to solid tumor cancers and further the understanding of the mechanism of action. E FFEC T I V E LY CO M M U N I C AT I N G N OVO CU R E ’ S S C I E N CE Director of Science Ze’ev Bomzon recognizes the necessity of effectively explaining Novocure’s technology—which bridges physics and biology—to researchers of various scientific backgrounds. “We’re always developing new tools to educate people.” Ze’ev Bomzon, Director of Science 10 NOVOCURE 2016 ANNUAL REPORT D E E P E N I N G O U R U N D E R S TA N D I N G O F T H E M ECH A N I S M Novocure’s Director of Science Ze’ev Bomzon joined the company in April 2014. He uses his background in physics and cell mechanics to lead a team of researchers at Novocure’s facility in Israel. What type of research do you conduct? We do a lot of physics research. Our main focus has been on optimizing the delivery of TTFields. We do a lot of simulation, numerical work and experimental work as well, such as measuring TTFields in various situations. We also continue our research into the mechanism of action of TTFields. That includes a lot of work with our preclinical teams and looking at things such as electric properties of cells, which are relevant to enhancing our understanding of how TTFields penetrate into the cells. What are some of the challenges of working with a profoundly different technology? Although Novocure has been researching TTFields for more than 15 years, that’s not a long time in the grand scheme of things. We continue to deepen our understanding of the mechanism of action of TTFields. Because our therapy is so different, it has taken time for the broader scientific community to begin researching TTFields. However, a number of institutions have started to study TTFields in the last several years. Additional research, whether done internally or externally, will help inform our therapy and could result in better outcomes for patients. Our technology bridges physics with biology, and we have to communicate information to people with various scientific backgrounds. The way physicists describe the world is very different from the way biologists describe the world. For many people, the concept of an electric field is abstract. You can’t see it. It’s not intuitive to people what the electric field is and what it does, so you have to explain that and you can’t do it with equations. It’s not easy for everyone to comprehend the physics and theory behind it. What do you like about science? I like the sense of discovery. I like that science involves exploring new territory and doing new things. Within the scientific community, you’re always working with this huge global community of scientists. That’s an aspect I love. 11 Dean Calcagno, HCP Coordinator O P T U N E S YS T E M TTFields therapy is delivered using non invasive, insulated transducer arrays that are placed directly on the skin in the region surrounding the tumor. The complete delivery system includes a portable electric field generator, transducer arrays, rechargeable batteries and accessories. It is designed to allow patients to go about their daily activities while receiving continuous cancer treatment. commercial execution our commercial business The first indication we pursued for TTFields was GBM, the most common form of primary brain cancer. We initially received FDA approval for Optune, our first TTFields delivery system, in 2011 for use as a monotherapy treatment for adult patients with GBM, following confirmed recurrence after chemotherapy. In October 2015, we received FDA approval of Optune for the treatment of adult patients with newly diagnosed GBM in combination with temozolomide, the standard of care chemotherapy. Since these approvals, we have built a commercial organization to support the launch of Optune for the treatment of GBM in the United States, Germany, Switzerland and Japan. As of December 31, 2016, we had nearly 1,100 patients on treatment with Optune. We provide technical training for patients and caregivers, 24/7 technical support, compliance monitoring and assistance with all aspects of billing and reimbursement. 12 active patient growth global active patients at period end 1200 1000 800 600 400 200 0 425 469 372 225 NOVOCURE 2016 ANNUAL REPORT 1,091 985 891 797 605 8 CONSECUTIVE QUARTERS OF ACTIVE PATIEN T GROWTH SINCE PRESENTATION OF EF-14 DATA Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 U.S. active patients EMEA and Japan active patients commercial footprint as of December 31, 2016 UNITED STATES 490 certified centers EMEA 10 sales force colleagues EMEA 155 certified centers UNITED STATES 49 sales force colleagues JAPAN 131 certified centers JAPAN 2 sales force colleagues certified centers sales force colleagues ”This career takes patience and compassion. We are doing more than just telling a patient and their family what to expect or how to stop alarms on the device. We are giving them our full attention to ensure that they know that we are here for them, 100%, 24/7, to support their treatment with Optune.” — Kate Beddie, Patient Care Coordinator 13 Q &A TO B I A S W E IZ E L G E N E R A L M A N AG E R G E R M A N Y Tobias Weizel, Novocure’s General Manager Germany, leads the company’s commercial business in Germany and said he feels lucky to be a part of Novocure’s mission of bringing a profoundly different cancer treatment to patients worldwide. Tobias Weizel, General Manager Germany 14 What are some of the challenges you face in leading Novocure’s commercial team in Germany? It’s getting physicians to buy into a different technology in order for it to hopefully become standard of care. We’ve made a great deal of advancement here, and we continue to increase education and exposure for key physicians. How do you go about introducing Optune to patients and physicians? The most important key player here is the physician. If physicians don’t believe in the therapy, German patients are still largely listening to what a doctor says, especially when you have such a devastating diagnosis of GBM. We have a lot of physicians who are excited by the opportunity of Optune and the EF-14 phase 3 pivotal trial data in newly diagnosed GBM. These are the ones who tell their patients about Optune. We continue to educate physicians on the survival benefits of the therapy and believe they will increasingly share this treatment option with their patients. How is Novocure different from other companies where you’ve worked? I believe that to be successful at Novocure, you have to have a passion for helping patients along with flexibility. Being a part of a growing organization, employees have a chance to help define the best processes to move the company forward. It’s more than thinking outside of the box. There is no other company that does what we do–there’s no box we fit in, so we often have to create new ways of doing things. What do you enjoy about working for Novocure? If you have a chance to introduce a different therapy, to change mindsets and to change the way cancer is treated, then I believe I’m really lucky. The possibility to see what we can do with this therapy gives me a lot of energy. Many companies in this industry say they put their patients first. For me, this is the first time that I actually feel it’s true. NOVOCURE 2016 ANNUAL REPORT O U R M I S S I O N -D R I V E N CU LT U R E Tobias Weizel, Novocure’s General Manager Germany, joined the company in July 2016 and said he thrives off of the entrepreneurial, startup spirit inherent in Novocure. “The company has grown substantially in the last several years, but we’ve managed to preserve this.” A G ROW I N G G LO B A L P R E S E N CE Tobias Weizel, Novocure’s General Manager Germany who has a background of working in sales and marketing for biotech and pharmaceutical companies, leads Novocure’s commercial activities in Germany. 15 pipeline development advancing our clinical pipeline in indications with significant unmet need For more than 15 years, Novocure has performed research and published multiple peer-reviewed articles with preclinical data in more than 15 different solid tumor types in culture and eight different tumor models in vivo. Preclinical and clinical data continue to suggest broad applicability of the mechanism of action behind TTFields, and we have developed a pipeline strategy to advance TTFields through phase 2 pilot and phase 3 pivotal trials across a variety of solid tumor cancers. We currently have two ongoing phase 3 pivotal trials, in brain metastases and non-small cell lung cancer (NSCLC), as well as three ongoing or completed phase 2 pilot trials investigating TTFields in pancreatic cancer, ovarian cancer and mesothelioma. 16 Yaara Porat, Preclinical Researcher Novocure trials PA N CR E AT I C C A N CE R : Pancreatic cancer is one of the most lethal forms of cancer globally, killing more than 330,000 individuals worldwide each year. At the end of 2016, we concluded our first phase 2 pilot trial in advanced pancreatic cancer— our PANOVA trial—and data will be presented at the AACR Annual Meeting 2017. In January 2016, we presented data from an initial 20 patient cohort treated with TTFields plus gemcitabine. These data demonstrated progression free survival and overall survival of patients treated with TTFields combined with gemcitabine were more than double those of gemcitabine-alone historical controls. In December 2016, we announced topline results from a second 20 patient cohort treated with TTFields plus nab-paclitaxel and gemcitabine. In this second cohort, median progression free survival and one-year survival rate of advanced pancreatic cancer patients treated with TTFields plus nab-paclitaxel and gemcitabine were more than double those of nab-paclitaxel and gemcitabine-treated historical controls. Based on these results, we plan to open a phase 3 pivotal trial in advanced pancreatic cancer in 2017. NOVOCURE 2016 ANNUAL REPORT abdominal array placement torso array placement pelvic array placement LU N G C A N CE R : Lung cancer is the most common cause of cancer-related death worldwide, and NSCLC accounts for approximately 85 percent of all lung cancers. We published data for our first completed phase 2 pilot trial in advanced NSCLC in July 2013. These results suggested more than doubling of median progression free survival and a 66% improvement in median overall survival in non-small cell lung cancer patients treated with TTFields plus pemetrexed compared to pemetrexed-alone historical controls. Based on these results, we opened a phase 3 pivotal trial for the second-line treatment of NSCLC—our LUNAR trial–that incorporates the latest standard of care treatment. We enrolled our first patient in February 2017 and anticipate data will be available for presentation approximately 18 months following last patient enrollment. M E S OT H E L I O M A : Mesothelioma is a rare, solid tumor cancer affecting the lining of the lungs that is strongly linked to asbestos exposure. We currently have an ongoing phase 2 pilot trial in mesothelioma—our STELLAR trial—in which we expect to complete enrollment in 2017. We presented interim data of the first 42 patients in December 2016. These data suggested that one-year survival rates of patients treated with TTFields combined with pemetrexed and cisplatin or carboplatin were more than 58 percent greater than historical control data of patients treated with pemetrexed and cisplatin alone. With a minimum of 12 month follow-up after all 80 patients are enrolled, we expect data in 2018. OVA R I A N C A N CE R : In the United States, ovarian cancer accounts for approximately 3 percent of cancers among women, but causes more deaths than any other cancer of the female reproductive system. At the end of 2016, we concluded our first phase 2 pilot trial in recurrent ovarian cancer—our INNOVATE trial—and data will be presented at the AACR Annual Meeting 2017. We announced topline results from this 30 patient trial at our R&D Day in December 2016. These data suggested a more than doubling of the median progression free survival versus historical controls when treatment with TTFields is added to weekly paclitaxel. Based on these results, we are developing the trial design for a phase 3 pivotal trial in recurrent ovarian cancer. 17 clinical milestones and next steps FI R S T PAT I E N T I N L A S T PAT I E N T I N DATA N E X T S T E P S brain metastases • Enrolled in October 2016 • Expected in 2019 • Expected 12 months following last patient enrollment non-small cell lung cancer • Enrolled in February 2017 • Expected in 2019 • Expected 18 months following last patient enrollment • Continued expansion of investigator and investigating site footprint • Continued expansion of investigator and investigating site footprint pancreatic cancer • Expected 2H 2017 • Expected 2 years following first patient enrolled ovarian cancer • Expected 18 months • Phase 3 pivotal trial following last patient enrollment first patient in • Presentation of phase 2 pilot second cohort data at AACR in April 2017 • Publication of PANOVA data targeted for 2017 • Finalization of phase 3 pivotal trial design • Presentation of INNOVATE data at AACR in April 2017 • Publication of INNOVATE data targeted for 2017 mesothelioma • Enrolled in February 2015 • Expected in 2017 • Expected 12 months • Last patient enrollment following last patient enrollment anticipated in 2017 Novocure engineering We plan to use the same field generator technology across all indications for which TTFields are approved, but we can specifically target individual solid tumor types by tuning the field generator to the appropriate frequency based upon tumor cell size and adjusting the output power to treat the required tumor tissue volume. As technology for components of our device improves, we have the flexibility to incorporate these advances into our product, subject to applicable regulatory approvals. Within our GBM indication, our engineering research and development team looks for ways to improve our Optune System by directly incorporating feedback from the patients who receive our treatment. After introducing our lighter, smaller second generation Optune System in mid-2016, we plan to reduce the footprint of our device’s transducer arrays and wires. We hope to launch a less conspicuous, tan colored transducer array in 2017 and we then plan to develop a next-generation transducer array that minimizes the impact of wires to improve overall aesthetics. 18 incidence metrics NOVOCURE 2016 ANNUAL REPORT UNITED STATES EUROPE JAPAN glioblastoma brain metastases non-small cell lung cancer pancreatic cancer ovarian cancer mesothelioma United States 12,500 new cases annually Europe 3,600 new cases annually in Germany alone 98,000– 170,000 new cases annually 75,000 new cases annually 214,000 new cases annually 53,000 new cases annually 22,000 new cases annually 3,000 new cases annually 350,000 new cases annually 110,000 new cases annually 65,000 new cases annually Japan 1,500 new cases annually 13,000 new cases annually 95,000 new cases annually 33,000 new cases annually 9,000 new cases annually western europe predicted peak of 9,000 male deaths around the year 2018 estimated 1,000 new cases annually D E D I C AT I O N TO CO N T I N UA L I M P ROV E M E N T B ROA D A P P L I C A B I L I T Y O F T H E M ECH A N I S M O F AC T I O N Victor Kaikov, Electronics Engineer, has been with the company since April 2003. He and the engineering team develop improvements in our treatment systems (subject to applicable regulatory approval), incorporating feedback from our global patient base and advancements in electronics. Roza Shnayderman, Head of Novocure’s Israel Biology Lab, joined Novocure in March 2000. During her seventeen years with Novocure, she and the preclinical team have researched the effects of TTFields on a variety of solid tumor cancer cell lines and laid the foundation for Novocure’s expansion into additional clinical trials. 19 Q &A S H A RY N RU P E R T I A S S I S TA N T CL I N I C A L T R I A L M A N AG E R Sharyn Ruperti, Assistant Clinical Trial Manager Sharyn first started working with Novocure about 10 years ago as a Device Support Specialist supporting patients on the company’s EF-11 trial in recurrent GBM. She joined the Clinical Operations Team after receiving her Masters in Clinical Research Administration in 2012. What does your job entail? I am responsible for the day to day management of the company’s METIS trial in brain metastases from non-small cell lung cancer. I provide oversight of our clinical research organization and work to ensure study metrics are met. I also visit doctors at participating trial sites and train them on the science of alternating electric field therapy and how to explain the therapy to potential study participants. How has Novocure changed since your early days with the company? Novocure has grown significantly in the past several years. When I first started, I was one of six Device Support Specialists hired in the U.S. to support clinical patients in the company’s first phase 3 pivotal study. We are now a global company with more than 450 employees, two FDA approvals and a robust clinical pipeline. As we continue to develop our clinical pipeline, we are also making connections with and educating doctors interested in our clinical trials from areas of oncology outside of GBM. Today, along with our FDA approvals, we have data published in peer-reviewed medical journals to present to physicians when we introduce our therapy. There is more excitement today about alternating electric field therapy. There are many doctors who have been waiting to clinically study our therapy for other indications that are difficult to treat. We also have observed an increased interest from investigators who want to be a part of our studies. In what ways is Novocure’s approach to cancer treatment different? I’ll tell you what many doctors tell us. We care. We go out of our way to help patients, and we are closely connected with our doctors. They know that if they have a question, we will respond quickly. I know that every patient matters. Patients on our therapy are not viewed only as a “subject” or study ID number— they are people with loved ones and the company works hard to help each individual patient. NOVOCURE 2016 ANNUAL REPORT D E V E LO P I N G O U R CL I N I C A L P I P E L I N E With two FDA-approved indications, three ongoing or completed phase 2 pilot trials and two phase 3 pivotal trial under way, Sharyn Ruperti, Assistant Clinical Trial Manager, said it’s an exciting time to be a part of Novocure. A PAT I E N T-FO RWA R D M I S S I O N Assistant Clinical Trial Manager Sharyn Ruperti said she enjoys making a difference. “I feel like I am truly making a difference for patients and their families by providing physicians an additional possible tool to use in their battle against cancer.” 21 ”With a growing commercial business in two FDA-approved indications and an advancing clinical pipeline in additional solid tumor cancers, we believe we are establishing Novocure as a global oncology business.” — Wilco Groenhuysen, Chief Financial Officer 22 selected financials Schemel Wiley, Associate Tax Manager, and Rob Havens, Financial Planning and Analysis Manager CO N T I N U E D FO CU S O N R E V E N U E G E N E R AT I O N A N D O P E R AT I N G L E V E R AG E Entering 2017, we believe we have established a strong foundation upon which we are building a global oncology business. We realized 2016 net revenues of $82.9 million, an increase of more than 150% versus the prior year. We improved our ability to collect payment by improving coverage and contracting in the U.S., and we saw significant active patient and revenue growth in EMEA. Regardless of the trajectory of the adoption curve in GBM, our management team strives to improve operating leverage. We believe that our SG&A organization is substantially built and able to support the commercialization of Optune in our currently active markets. Ending the year with $220 million cash on hand and with our infrastructure substantially built, we believe that we have the resources to reach profitability in our GBM business alone and to fund our clinical pipeline to build our business for the future. 80% ACTIVE PATIENT GROWTH SINCE 2015 151% REVENUE GROWTH 2016 VERSUS 2015 revenue growth global net revenue by quarter $35,000 $30,000 $25,000 $20,000 $15,000 $10,000 $5,000 $0 $30,242 $21,674 $17,919 $12,383 $13,053 $8,953 $6,543 $3,801 $5,208 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 U.S. active patients EMEA and Japan active patients 8 151% R EV EN UE G ROW TH 20 1 6 V ER SUS 201 5 CONSECUTIVE QUARTERS OF ACTIVE PATIENT GROWTH SINCE PRESENTATION OF EF-14 DATA 23 consolidated statement of operations USD Thousands Net revenues Cost of revenues Impairment of field equipment Gross profit Operating costs and expenses: Research, development and clinical trials Sales and marketing General and administrative Total operating costs and expenses Operating loss Financial expenses, net Loss before income taxes Income taxes Net loss leadership corporate officers and executive leadership William F. Doyle Executive Chairman Asaf Danziger Chief Executive Officer Mike Ambrogi Chief Operating Officer Wilco Groenhuysen Chief Financial Officer Eilon Kirson, M.D., Ph.D. Chief Science Officer and Head of Research and Development Todd Longsworth General Counsel Yoram Palti, M.D., Ph.D. Founder 24 Year ended December 31, 2016 2015 2014 $ 82,888 $ 33,087 $ 15,490 39,870 6,412 36,606 41,467 59,449 51,007 151,923 (115,317) (6,147) (121,464) 10,381 20,610 – 12,477 43,748 38,861 33,864 116,473 (103,996) (3,151) (107,147) 4,434 10,036 – 5,454 40,381 21,177 24,052 85,610 (80,156) (144) (80,300) 382 $ (131,845) $ (111,581) $ (80,682) board of directors William F. Doyle Executive Chairman William Burkoth Asaf Danziger Louis Lavigne, Jr. Kinyip Gabriel Leung Robert J. Mylod, Jr. Yoram Palti, M.D., Ph.D. Gert Lennart Perlhagen Charles G. Phillips III William A. Vernon NOVOCURE 2016 ANNUAL REPORT market price of and dividends on the registrants’ common equity and related stockholder matters The following graph shows the total shareholder return of an investment of $100 in cash at market close on October 2, 2015 (the first day of trading of our ordinary shares) through December 31, 2016 for (1) our ordinary shares, (2) the Russell 2000 Index, and (3) the Nasdaq Biotechnology Index. Pursuant to applicable SEC rules, all values assume reinvestment of the full amount of all dividends; however, no dividends have been declared on our ordinary shares to date. The shareholder return shown on the graph below is not necessarily indicative of future performance, and we do not make or endorse any predictions as to future stockholder returns. comparison of cumulative total return COMPARISON OF CUMULATIVE TOTAL RETURN COMPARISON OF CUMULATIVE TOTAL RETURN Among NovoCure Limited, the Russell 2000 Index, and the NASDAQ Biotechnology Index Among NovoCure Limited, the Russell 2000 Index, and the NASDAQ Biotechnology Index $ 140 $ 120 $ 100 $ 80 $ 60 $ 40 $ 20 $ 0 10/2/2015 $ 140 $ 120 $ 100 $ 80 $ 60 $ 40 $ 20 $ 0 10/2/2015 12/31/2015 12/31/2015 03/31/2016 03/31/2016 06/30/2016 06/30/2016 09/30/2016 09/30/2016 12/31/2016 12/31/2016 NovoCure Limited NovoCure Limited NASDAQ Biotechnology Index NASDAQ Biotechnology Index Russell 2000 Index Russell 2000 Index Assumes $100 invested on October 2, 2015 Assumes $100 invested on October 2, 2015 Assumes dividend reinvested Assumes dividend reinvested Fiscal year ending December 31, 2015 Fiscal year ending December 31, 2015 total return annual comparison cumulative total return summary COMPARISON OF CUMULATIVE TOTAL RETURN COMPARISON OF CUMULATIVE TOTAL RETURN 03/31/2016 Among Novocure Limited, the Russell 2000 Index, and the Nasdaq Biotechnology Index Among Novocure Limited, the Russell 2000 Index, and the Nasdaq Biotechnology Index 12/31/2015 10/2/2015 06/30/2016 09/30/2016 12/31/2016 NovoCure Limited $ 140 $ 140 $ 120 $ 120 $ 100 $ 100 $ 80 $ 80 NASDAQ Biotechnology Index $ 60 $ 60 $ 40 $ 40 $ 20 $ 20 Russell 2000 Index $ 0 $ 0 10/2/2015 10/2/2015 Return% Cum $ Return% Cum $ 100.00 22.32 122.32 -35.24 79.21 7.29 -22.88 100.00 107.29 82.74 -19.41 63.84 -1.12 81.81 -26.82 46.72 12.50 92.03 -8.08 42.94 -8.31 84.38 8.83 Novocure Limited Novocure Limited NASDAQ Biotechnology Index NASDAQ Biotechnology Index 10/31/2015 Return% 10/31/2015 Cum $ 100.00 2.33 -1.52 3.79 11/30/2015 102.33 11/30/2015 100.78 Russell 2000 Index Russell 2000 Index 104.60 9.05 12/31/2015 114.06 12/31/2015 124.14 Indications For Use Optune is intended as a treatment for adult patients (22 years of age or older) with histologically-confirmed glioblastoma multiforme (GBM). Assumes $100 invested on October 2, 2015 Assumes $100 invested on October 2, 2015 Assumes dividend reinvested Assumes dividend reinvested Fiscal year ending December 31, 2015 Fiscal year ending December 31, 2015 Optune with temozolomide is indicated for the treatment of adult patients with newly diagnosed, supratentorial glioblastoma following maximal debulking surgery and completion of radiation therapy together with concomitant standard of care chemotherapy. For the treatment of recurrent GBM, Optune is indicated following histologically-or radiologically-confirmed recurrence in the supratentorial region of the brain after receiving chemotherapy. The device is intended to be used as a monotherapy, and is intended as an alternative to standard medical therapy for GBM after surgical and radiation options have been exhausted. Summary of Important Safety Information Contraindications Do not use Optune if you have an active implanted medical device, a skull defect (such as, missing bone with no replacement), or bullet fragments. Use of Optune together with implanted electronic devices has not been tested and may theoretically lead to malfunctioning of the implanted device. Use of Optune together with skull defects or bullet fragments has not been tested and may possibly lead to tissue damage or render Optune ineffective. Do not use Optune if you are known to be sensitive to conductive hydrogels. In this case, skin contact with the gel used with Optune may commonly cause increased redness and itching, and rarely may even lead to severe allergic reactions such as shock and respiratory failure. Warnings and Precautions Use Optune only after receiving training from qualified personnel, such as your doctor, a nurse, or other medical personnel who have completed a training course given by Novocure (the device manufacturer). Do not use Optune if you are pregnant, you think you might be pregnant or are trying to get pregnant. It is not known if Optune is safe or effective in these populations. The most common (≥10%) adverse events involving Optune in combination with temozolomide were low blood platelet count, nausea, constipation, vomiting, fatigue, scalp irritation from device use, headache, convulsions, and depression. All servicing procedures must be performed by qualified and trained personnel. Do not use any parts that do not come with the Optune Treatment Kit, or that were not sent to you by the device manufacturer or given to you by your doctor. Do not wet the device or transducer arrays. If you have an underlying serious skin condition on the scalp, discuss with your doctor whether this may prevent or temporarily interfere with Optune treatment. Please visit www.optune.com/safety for Optune Instructions for Use (IFU) for complete information regarding the device’s indications, contraindications, warnings, and precautions. 25 looking ahead As far as we’ve come in the last 16 years, we are intensely focused on the future. Treatment with TTFields offers a profoundly different approach to cancer treatment. We believe that the basic mechanism behind treatment of solid tumor cancers with TTFields may be broadly applicable and is not limited to a specific tumor type or genetic marker. Importantly, we believe TTFields has the potential to increase survival when used in combination with other cancer therapies without significantly increasing side effects. Treatment with TTFields is FDA approved for the treatment of GBM, and we are committed to developing our promising therapy for a broad range of solid tumor types. 26 26 NOVOCURE 2016 ANNUAL REPORT 27 Le Masurier House La Rue Le Masurier St Helier, Jersey JE2 4YE www.novocure.com