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 endedMarch 31, 2021 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 toNovoCure Limited , including its consolidated subsidiaries. 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 delivery systems, 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 theU.S. Food and Drug Administration ("FDA") under the Premarket Approval ("PMA") pathway for the treatment of adult patients with newly diagnosed GBM in combination with temozolomide, a chemotherapy drug, and for adult patients with GBM following confirmed recurrence after chemotherapy as monotherapy treatment. We also have approval or a CE certificate to market Optune for the treatment of GBM in theEuropean Union ("EU"),Japan and certain other countries. We market Optune in theU.S. ,Austria ,Germany ,Israel ,Japan ,Sweden andSwitzerland , which we refer to as our "active markets." With respect to GBM, our sales and marketing efforts are principally focused on driving adoption with both neuro-oncologists and radiation oncologists. We are expanding our commercial operations intoFrance with an initial focus on developing key opinion leader relationships in GBM and establishing a path to reimbursement for our Products. Optune Lua is approved by the FDA under the Humanitarian Device Exemption ("HDE") pathway to treat MPM in combination with standard chemotherapies. We have received CE certification to market Optune Lua (under the name "NovoTTF-100L") in the EU andSwitzerland . We currently market Optune Lua in theU.S. , and are evaluating plans to expand access to our therapy for MPM patients in other markets. With respect to MPM, our commercial efforts are principally focused on generating awareness and on establishing a dialogue with third-party payers around access to Optune Lua. We believe the mechanism of action behind TTFields therapy may be broadly applicable to solid tumor cancers. Currently, we are conducting phase 3 pivotal trials evaluating the use of TTFields in brain metastases from non-small-cell lung cancer ("brain metastases"), non-small-cell lung cancer ("NSCLC"), ovarian cancer and pancreatic cancer. In 2020, we enrolled our first patient in our global phase 4 TRIDENT trial to test the potential survival benefit of initiating Optune concurrent with radiation therapy versus following radiation therapy in patients with newly diagnosed GBM. We recently concluded a phase 2 pilot trial evaluating the use of TTFields in liver cancer and are conducting a phase 2 pilot trial in gastric cancer, as well as testing the potential incremental survival benefit of TTFields delivered using high-intensity arrays versus standard arrays. 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. OnApril 13, 2021 , we announced that an independent data monitoring committee ("DMC") informed Novocure that the pre-specified interim analysis for the phase 3 pivotal LUNAR trial for the treatment of NSCLC was accelerated given the length of accrual and the number of events observed, to date. The interim analysis included data from 210 patients accrued throughFebruary 2021 . After review of the interim analysis, the DMC concluded that the LUNAR trial should continue with no evidence of increased systemic toxicity. The DMC went on to comment that the continued accrual to 534 patients as proposed in the original protocol, given the current rate of accrual and the interim data presented, is likely unnecessary and possibly unethical for patients randomized to control. For this reason, the DMC recommended an adjustment of accrual to approximately 276 patients with a 12-month follow-up following the enrollment of the last patient. The DMC believes this amended protocol would provide adequate data regarding toxicity and efficacy, providing sufficient overall power, as well as potentially providing important information regarding efficacy within treatment subgroups. We have since filed an IDE supplement incorporating the recommended protocol adjustments for FDA approval. 16 -------------------------------------------------------------------------------- Table of Contents InApril 2021 , the FDA approved our investigational device exemption ("IDE") application to initiate the KEYNOTE B36 phase 2 pilot trial to study TTFields with pembrolizumab in first-line NSCLC through our clinical collaboration with MSD (a tradename of Merck & Co.). We are currently evaluating clinical trial sites for initiation. Also inApril 2021 , we concluded our phase 2 pilot HEPANOVA trial investigating Tumor Treating Fields together with sorafenib, a kinase inhibitor, in 25 patients with advanced liver cancer. We have submitted an abstract for presentation at an upcoming medical conference in late June and look forward to discussing the full data set with clinicians, investigators and investors in the future. The table below presents the current status of the ongoing clinical trials in our oncology pipeline and anticipated timing of final data. [[Image Removed: nvcr-20210331_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 prioritize impact on both TTFields' dose and patient ease of use. Our oncology intellectual property portfolio contains over 185 issued patents and numerous patent applications pending worldwide. We believe we own global commercialization rights to our Products in oncology and are well-positioned to extend those rights into the future as we continue to find innovative ways to improve our Products. In 2018, we granted Zai Lab (Shanghai) Co., Ltd. ("Zai") a license to commercialize Optune inChina ,Hong Kong ,Macau andTaiwan ("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 2020 10-K. We view our operations and manage our business in one operating segment. For the three months endedMarch 31, 2021 , our net revenues were$134.7 million . Our net loss for the three months endedMarch 31, 2021 , was$4.1 million . As ofMarch 31, 2021 , we had an accumulated deficit of$631.7 million . Our net loss resulted primarily from net revenue growth which was more than offset by increasing investments in research and development to advance our pipeline programs and increase acceptance of TTFields across the global oncology community. Impact of COVID-19 The COVID-19 pandemic did not have a material impact on our financial results through the first quarter of 2021. 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 the COVID-19 pandemic 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 trials in the future. For example, 17 -------------------------------------------------------------------------------- Table of Contents we continue to see fluctuations in the timing of surgeries and radiation therapy in certain regions, which has had some adverse influence on the eligible patient population for Optune. 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 for nearly a year, 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 the COVID-19 pandemic on our business moving forward. The extent to which the COVID-19 pandemic may impact our business and clinical trials 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 2020 10-K. 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 2020 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 2020 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 2020 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 •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 trials, 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 credit facility interest expense and related debt issuance costs, interest income from cash balances and short-term investments and gains (losses) from foreign currency transactions. Our reporting currency is theU.S. dollar. We have historically held substantially all of our cash balances inU.S. dollar denominated accounts to minimize the risk of translational currency exposure. 18
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Results of Operations The following discussion provides an analysis of our results of operations and reasons for material changes therein for the three months endedMarch 31, 2021 as compared to the three months endedMarch 31, 2020 . 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 March 31, 2021 2020 Unaudited Net revenues$ 134,695 $ 101,828 Cost of revenues 26,385 24,496 Gross profit 108,310 77,332 Operating costs and expenses: Research, development and clinical trials 45,916 25,271 Sales and marketing 31,357 28,834 General and administrative 31,125 26,608 Total operating costs and expenses 108,398 80,713 Operating income (loss) (88) (3,381) Financial expenses (income), net 2,646 2,432 Income (loss) before income taxes (2,734) (5,813) Income taxes 1,394 (9,765) Net income (loss)$ (4,128) $ 3,952 Basic net income (loss) per ordinary share
102,633,545 99,877,567 Diluted net income (loss) per ordinary share
102,633,545 108,100,623 19
-------------------------------------------------------------------------------- Table of Contents The following table details the share-based compensation expense included in costs and expenses: Three months ended March 31, 2021 2020 Unaudited Cost of revenues$ 733 $ 590 Research, development and clinical trials 5,124 3,394 Sales and marketing 4,471 3,616 General and administrative 8,535 8,957 Total share-based compensation expense$ 18,863 $ 16,557 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 patient who is receiving treatment under a commercial prescription order as of the measurement date, including patients who may be on a temporary break from treatment and who 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.
March 31, Operating statistics 2021 2020 Active patients at period end United States 2,183 2,023 EMEA: Germany 594 514 Other EMEA 406 336 Japan 271 222 Total 3,454 3,095 Three months ended March 31, 2021 2020 Prescriptions received in period United States 917 986 EMEA: Germany 248 207 Other EMEA 134 122 Japan 103 94 Total 1,402 1,409
In the
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Table of Contents Three months endedMarch 31, 2021 compared to three months endedMarch 31, 2020 Three months ended March 31, 2021 2020 % Change Net revenues$ 134,695 $ 101,828 32 % Net revenues. Net revenues increased 32% to$134.7 million for the three month period endingMarch 31, 2021 from$101.8 million for the same period in 2020. The increase resulted primarily from an increase of 359 active patients in our currently active markets, representing 12% growth, and a durable improvement in the net revenues booked per active patient. We recorded$9.4 million in revenues from Medicare fee-for-service beneficiaries billed under the coverage policy effective onSeptember 1, 2019 for the three month period endedMarch 31, 2021 , an increase of 32% from the$7.1 million recognized in the same period in 2020. We have gained a good understanding of how to ensure timely processing of Medicare claims and we believe that we have sufficient experience to recognize approximately two-thirds of the expected contribution from Medicare beneficiaries. In the first quarter of 2021, incremental net revenues resulting from the successful appeal of previously denied claims for Medicare fee-for-service beneficiaries billed prior to established coverage reverted to normalized levels from the first half of 2020. Three months ended March 31, 2021 2020 % Change Cost of revenues$ 26,385 $ 24,496 8 % Cost of revenues. Our cost of revenues increased by 8%, to$26.4 million for the three months endedMarch 31, 2021 from$24.5 million for the same period in 2020. For the three month period, the increase in cost of revenues was primarily due to the cost of shipping transducer arrays to a higher volume of commercial patients and increasing shipments of equipment to Zai Lab. Excluding sales to Zai, cost of revenues per active patient per month decreased 9% to$2,415 for the three months endedMarch 31, 2021 from$2,641 for the same period in 2020 due to on-going efficiency initiatives and scale. 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$1.5 million for the quarter endedMarch 31, 2021 compared to$0.7 million for the quarter endedMarch 31, 2020 . Gross margin was 80% for the three months endedMarch 31, 2021 compared to 76% for the three months endedMarch 31, 2020 . Operating Expenses. Three months ended March 31, 2021 2020 % Change Research, development and clinical trials$ 45,916 $ 25,271 82 % Sales and marketing 31,357 28,834 9 % General and administrative 31,125 26,608 17 % Total operating expenses$ 108,398 $ 80,714 34 % Research, development and clinical trials expenses. Research, development and clinical trials expenses increased 82% to$45.9 million for the three month period endedMarch 31, 2021 from$25.3 million for the same period in 2020. For the three month period, the change is primarily due to an increase in clinical trial and personnel expenses for our phase 3 pivotal and post-marketing trials, an increase in development and personnel expenses to support our product development programs, increased investments in preclinical research and the expansion of our medical affairs activities. 21 -------------------------------------------------------------------------------- Table of Contents Sales and marketing expenses. Sales and marketing expenses increased 9% to$31.4 million for the three months endedMarch 31, 2021 from$28.8 million for the same period in 2020. For the three month period, the change was primarily due to an increase in personnel and professional services costs to support our growing commercial business and reimbursement efforts. General and administrative expenses. General and administrative expenses increased 17% to$31.1 million for the three months endedMarch 31, 2021 from$26.6 million for the same period in 2020. For the three month period, the change was primarily due to an increase in personnel costs and professional services. Three months ended March 31, 2021 2020 % Change Financial expenses (income), net$ 2,646 $ 2,432 9 % Financial expenses, net. Financial expenses increased 9% to$2.6 million for the three months endedMarch 31, 2021 from$2.4 million for the same period in 2020. For the three month period, the increase was primarily due to foreign currency translation expenses, partially offset by the absence of interest payments as a result of the loan repayment inAugust 2020 . Three months ended March 31, 2021 2020 % Change Income taxes$ 1,394 $ (9,765) (114) % Income taxes. Income taxes increased$11.2 million or 114% to an expense of$1.4 million for the three months endedMarch 31, 2021 from a benefit of$9.8 million for the same period in 2020. In the first quarter of 2020, a net one-time tax benefit of$11.3 million was recorded in response to the changes in theU.S. tax code related to the economic impacts of the COVID-19 pandemic. The variance also reflects a change in the mix of applicable statutory tax rates in certain active jurisdictions. Non-GAAP financial measures We also measure our performance using a non-GAAP measurement of earnings before interest, taxes, depreciation, amortization and shared-based compensation ("Adjusted EBITDA"). We believe Adjusted EBITDA is useful to investors in evaluating our operating performance because it helps investors evaluate and compare the results of our operations from period to period by removing the impact of earnings attributable to our capital structure, tax rate and material non-cash items, specifically share-based compensation. We calculate Adjusted EBITDA as operating income before financial expenses and income taxes, net of depreciation, amortization and share-based compensation. The following table reconciles net income (loss), which is the most directly comparable GAAP operating performance measure, to Adjusted EBITDA. Three months ended March 31, 2021 2020 % Change Net income (loss)$ (4,128) $ 3,952 (204) % Add: Income tax 1,394 (9,765) (114) % Add: Financial income (expenses), net 2,646 2,432 9 % Add: Depreciation and amortization 2,370 1,888 26 % EBITDA$ 2,282 $ (1,493) (253) % Add: Share-based compensation 18,863 16,557 14 % Adjusted EBITDA$ 21,145 $ 15,064 40 % Adjusted EBITDA increased by 40% to$21.1 million for the three months endedMarch 31, 2021 from$15.1 million for the same period in 2020. This improvement in fundamental financial performance was driven by net revenue growth partially offset by research and development investments to advance our pipeline programs and increase acceptance of TTFields across the global oncology community. 22 -------------------------------------------------------------------------------- Table of Contents Liquidity and Capital Resources We have incurred significant losses and cumulative negative cash flows from operations since our founding in 2000. As ofMarch 31, 2021 , we had an accumulated deficit of$631.7 million . To date, we have primarily financed our operations through the issuance and sale of equity and the proceeds from long-term loans. AtMarch 31, 2021 , we had$864.4 million in cash, cash equivalents and short-term investments, an increase of$21.8 million compared to$842.6 million atDecember 31, 2020 . The increase in our cash, cash equivalents and short-term investments was primarily due to the cash flow from operations and the exercise of options. We believe our cash, cash equivalents and short-term investments as ofMarch 31, 2021 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 trials 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: Three months ended March 31, 2021 2020 Change % Change
Net cash provided by operating activities
$ 15,823 809 % Net cash provided by (used in) investing activities 54,171 (3,112) 57,283 (1841) % Net cash provided by (used in) financing activities 7,955 4,503 3,452 77 % Effect of exchange rate changes on cash and cash equivalents (102) (59) (43) 73 % Net increase (decrease) in cash, cash equivalents and restricted cash$ 79,804 $ 3,289 $ 76,515 2326 % Operating activities. Net cash provided by operating activities primarily represents our net income (loss) for the periods presented. Adjustments to net income (loss) for non-cash items include share-based compensation, depreciation and amortization, and asset write-downs. Operating cash flows are also impacted by changes in operating assets and liabilities, principally trade payables, deferred revenues, other payables, prepaid expenses, inventory and trade receivables. Net cash provided by operating activities was$17.8 million for the three months endedMarch 31, 2021 , as compared to$2.0 million provided by operating activities for the three months endedMarch 31, 2020 . Gross profit increased by$31.0 million for the three months endedMarch 31, 2021 versus the three months endedMarch 31, 2020 , fully funding incremental investments of$20.6 million in research and development and$7.0 million in sales, marketing, general and administrative expenses. The increase in positive cash flow from operations was primarily driven by higher cash earnings, lower interest payments, the receipt of income tax refunds, as well as the timing of receipts and payments in the ordinary course of business. Investing activities. Our investing activities consist primarily of capital expenditures to purchase property and equipment and field equipment, as well as investments in and redemptions of our short-term investments. Net cash provided by investing activities was$54.2 million for the three months endedMarch 31, 2021 , compared to$3.1 million used in investing activities for the three months endedMarch 31, 2020 . The net cash provided by investing activities for the three months endedMarch 31, 2021 was primarily attributable to$58.2 million of net proceeds from maturity of short-term investments, partially offset by the purchase of$4.0 million of property and equipment. The net cash used in investing activities for the three months endedMarch 31, 2020 was primarily attributable to the purchase of$3.1 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$8.0 million for the three months endedMarch 31, 2021 , as compared to$4.5 million provided by financing activities for the three months endedMarch 31, 2020 . The net cash provided by financing activities for the three months endedMarch 31, 2021 was due to$8.0 million of 23 -------------------------------------------------------------------------------- Table of Contents proceeds from the exercise of options. The net cash provided by financing activities for the three months endedMarch 31, 2020 was due to$4.5 million of proceeds from the exercise of options. 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. Prior to the close of business onJuly 31, 2025 , the Notes are convertible at the option of the holders only upon the satisfaction of certain 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 10(a) to the Consolidated Financial Statements in the 2020 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 will bear interest at a sliding scale based on our secured leverage ratio from LIBOR plus 2.75% to LIBOR plus 3.25% per annum. 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 ratio and specifying a maximum senior secured net leverage ratio, as well as customary events of default which include a change of control. As ofMarch 31, 2021 , we were in compliance with such covenants. As ofMarch 31, 2021 , we had no outstanding balance borrowed under the 2020 Credit Facility. Contractual Obligations and Commitments There have been no material changes from the information disclosed in our 2020 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. Item 3. Quantitative and Qualitative Disclosures About Market Risk There have been no material changes from the information disclosed in our 2020 10-K. Item 4. Controls and Procedures Evaluation of Disclosure Controls and Procedures As required by Rule 13a-15(b) under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), our management, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures as ofMarch 31, 2021 . The term "disclosure controls and procedures," as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means 24 -------------------------------------------------------------------------------- Table of Contents controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in theSEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company's management, including its principal executive and principal financial officers, as appropriate, to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as ofMarch 31, 2021 , our Chief Executive Officer and Chief Financial Officer have concluded that, as ofMarch 31, 2021 , our disclosure controls and procedures were effective at the reasonable assurance level. Changes in Internal Control over Financial Reporting There has been no change in our internal control over financial reporting during the quarter endedMarch 31, 2021 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. 25
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