What changed in this filing

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Item 5. Market for Registrant’s Common Equity

2021-03-01 compared with 2020-03-11 · 34 added, 680 removed, 18 unchanged (98% of the section changed)

FOR REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Our common stock trades

on the Nasdaq Global Select Market under the symbol “NVAX.”

Our common stock was held by approximately 133 stockholders

of record as of March 6, 2020, one of which is Cede & Co., a nominee for Depository Trust Company (“DTC”).

of the shares of common stock held by brokerage firms, banks and other financial institutions as nominees for beneficial owners

are deposited into participant accounts at DTC, and are therefore considered to be held of record by Cede & Co.

MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Our common stock trades on the Nasdaq Global Select Market under the symbol “NVAX.” Our common stock was held by approximately 129 stockholders of record as of February 24, 2021, one of which is Cede & Co., a nominee for Depository Trust Company (“DTC”).

All of the shares of common stock held by brokerage firms, banks and other financial institutions as nominees for beneficial owners are deposited into participant accounts at DTC, and are therefore considered to be held of record by Cede & Co.

as one stockholder.

We do not anticipate declaring or paying any cash dividends in the foreseeable future.

Securities Authorized for Issuance under

our Equity Compensation Plans

Information regarding

our equity compensation plans, including both stockholder approved plans and non-stockholder approved plans, is included in Item

12 of this Annual Report on Form 10-K.

Securities Authorized for Issuance under our Equity Compensation Plans

Information regarding our equity compensation plans, including both stockholder approved plans and non-stockholder approved plans, is included in Item 12 of this Annual Report on Form 10-K.

Performance Graph

The graph below compares

the cumulative total stockholders return on our common stock for the last five fiscal years with the cumulative total return on

the Nasdaq Composite Index and the Russell 2000 Growth Biotechnology Index (which includes Novavax) over the same period, assuming

the investment of $100 in our common stock, the Nasdaq Composite Index and the Russell 2000 Growth Biotechnology Index on December

31, 2014, and reinvestments of all dividends.

Value of $100 invested on December 31,

2014 in stock or index, including reinvestment of dividends, for fiscal years ended December 31:

The graph below compares the cumulative total stockholders return on our common stock for the last five fiscal years with the cumulative total return on the Nasdaq Composite Index and the Russell 2000 Growth Biotechnology Index (which includes Novavax) over the same period, assuming the investment of $100 in our common stock, the Nasdaq Composite Index and the Russell 2000 Growth Biotechnology Index on December 31, 2015, and reinvestments of all dividends.

COMPARISON OF 5 YEAR CUMULATIVE RETURN*

Among Novavax Inc., the NASDAQ Composite index

and the Russell2000 Growth Biotechnology Index

*$100 invested on 12/21/15 in stock or index, including reinvestment of dividends.

Fiscal year ending December 31.

Table of C onten ts

Value of $100 invested on December 31, 2015 in stock or index, including reinvestment of dividends, for fiscal years ended December 31:

12/31/15 12/30/16 12/29/17 12/31/18 12/31/19 12/31/20

Novavax, Inc.

Nasdaq Composite Index

RUSSELL 2000 Growth Biotechnology Index

This graph is not “soliciting

material,”

is not deemed “filed”

with the SEC and is not to be incorporated by reference in any filing of the

Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or

after the date hereof and irrespective of any general incorporation language in any such filing.

$ 100 $ 15.02 $ 14.78 $ 21.93 $ 2.37 $ 66.45

NASDAQ Composite $ 100 $ 108.87 $ 141.13 $ 137.12 $ 187.44 $ 271.64

Russell 2000 Growth Biotechnology $ 100 $ 79.71 $ 127.4 $ 105.07 $ 153.35 $ 238.36

This graph is not “soliciting material,” is not deemed “filed” with the SEC and is not to be incorporated by reference in any filing of the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing.

SELECTED FINANCIAL DATA

The following table

sets forth selected financial data for each of the years in the five-year period ended December 31, 2019, which have been

derived from our audited consolidated financial statements.

The information below should be read in conjunction with our consolidated

financial statements and notes thereto and “Management’s Discussion and Analysis of Financial Condition and Results

of Operations”

included elsewhere in this Annual Report.

These historical results are not necessarily indicative of results

for future periods.

The following table sets forth selected financial data for each of the years in the five-year period ended December 31, 2020, which have been derived from our audited consolidated financial statements.

The information below should be read in conjunction with our consolidated financial statements and notes thereto and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this Annual Report.

These historical results are not necessarily indicative of results for future periods.

Year Ended December 31,

1 unchanged sentence

Statements of Operations Data (5) :

Revenue $ 475,598 $ 18,662 $ 34,288 $ 31,176 $ 15,353

Net loss (418,259) (132,694) (184,748) (183,769) (279,966)

Basic and diluted net loss per share (7.27) (5.51) (9.99) (12.56) (20.68)

7 unchanged sentences

Total assets(7) 1,582,479 172,957 207,978 302,493 394,301

Long-term debt, less current portion(9)

Long-term debt 322,035 320,611 319,187 317,763 316,339

Accumulated deficit (1,874,199) (1,431,801) (1,299,107) (1,114,359) (929,996)

Total stockholders’

(deficit) equity

(1) In 2019, we had sales of 13.0 million shares of common

stock resulting in net proceeds of approximately $98 million.

(2) In 2018, we had sales of 2.9 million shares of common

stock resulting in net proceeds of approximately $100 million.

(3) In 2017, we had sales of 2.5 million shares of common

stock resulting in net proceeds of approximately $63 million.

(4) In 2016, we issued $325 million aggregate principal amount

of convertible senior unsecured notes resulting in net proceeds of approximately $315 million.

(5) In 2015, we had sales of 1.5 million shares of common

stock resulting in net proceeds of approximately $204 million.

(6) All share and per share amounts have been retroactively

restated for all periods presented to reflect the Reverse Stock Split (see Note 12 to the accompanying consolidated financial

(7) Working capital is computed as the excess of current

assets over current liabilities.

(8) In 2019, the Company adopted ASU 20160-02, Leases

(Topic 842), in which the Company recorded right-of-use assets associated with its leases on the consolidated balance sheet

(see Note 7 to the accompanying consolidated financial statements).

(9) Includes non-current portion of capital leases in 2015.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Any statements in the

discussion below and elsewhere in this Annual Report about expectations, beliefs, plans, objectives, assumptions or future events

or performance of Novavax, Inc.

(“Novavax,”

and together with its wholly owned subsidiary Novavax AB, the “Company,”

“we”

or “us”) are not historical facts and are forward-looking statements.

Such forward-looking statements

include, without limitation, statements with respect to our capabilities, goals, expectations regarding future revenue and expense

levels and capital raising activities, including possible proceeds from our March 2020 Sales Agreement (defined below);

under our Services Agreement (defined below) with Catalent Maryland, Inc.

(formerly Paragon Bioservices, Inc.), a unit

of Catalent Biologics (“Catalent”);

potential market sizes and demand for our product candidates;

the efficacy, safety

and intended utilization of our product candidates;

the development of our clinical-stage product candidates and our recombinant

vaccine and adjuvant technologies;

the development of our preclinical product candidates;

the conduct, timing and potential results

from clinical trials and other preclinical studies;

plans for and potential timing of regulatory filings;

our expectations with

respect to the anticipated ongoing development and potential commercialization or licensure of ResVax;

the expected timing and

content of regulatory actions;

payments by the Bill & Melinda Gates Foundation (“BMGF”);

our available cash

resources and usage and the availability of financing generally;

expected future cash savings and expense reductions associated

with the Catalent transaction;

plans regarding partnering activities, business development initiatives;

the adoption of stock incentive

plans and amendments thereto;

and other matters referenced herein.

You generally can identify these forward-looking statements

by the use of words or phrases such as “believe,”

“may,”

“could,”

“will,”

“would,”

“possible,”

“can,”

“estimate,”

“continue,”

“ongoing,”

“consider,”

“anticipate,”

“intend,”

“seek,”

“plan,”

“project,”

“expect,”

“should,”

“would,”

or “assume”

or the negative of these terms, or other comparable terminology,

although not all forward-looking statements contain these words.

Forward-looking statements

involve estimates, assumptions and uncertainties that could cause actual results to differ materially from those expressed or implied

in the statements.

Any or all of our forward-looking statements in this Annual Report may turn out to be inaccurate or materially

different from actual results.

Because the risk factors

discussed in this Annual Report and other risk factors of which we are not aware could cause actual results or outcomes to differ

materially from those expressed or implied in any forward-looking statements made by or on behalf of us, you should not place undue

reliance on any such forward-looking statements.

These statements are subject to risks and uncertainties, known and unknown, which

could cause actual results and developments to differ materially from those expressed or implied in such statements.

We have included

important factors that could cause results to differ in the cautionary statements included in this Annual Report, particularly

those identified in Part I, Item 1A “Risk Factors”

of this Annual Report.

These and other risks may also

be detailed and modified or updated in our reports and other documents filed with the Securities and Exchange Commission (“SEC”)

from time to time.

You are encouraged to read these filings as they are made.

We cannot guarantee

future results, events, level of activity, performance or achievement.

Further, any forward-looking statement speaks only as of

the date on which it is made, and we undertake no obligation to update or revise any forward-looking statements, whether as a result

of new information, future events or otherwise, unless required by law.

New factors emerge from time to time, and it is not possible

for us to predict which factors will arise.

In addition, we cannot assess the impact of each factor on our business or the extent

to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking

We are a late-stage

biotechnology company that promotes improved global health through the discovery, development and commercialization of innovative

vaccines to prevent serious infectious diseases.

Our vaccine candidates, including our lead candidates, NanoFlu™

and ResVax™,

are genetically engineered, three-dimensional nanostructures of recombinant proteins critical to disease pathogenesis and may elicit

differentiated immune responses, which may be more efficacious than naturally occurring immunity or traditional vaccines.

Our technology

targets a variety of infectious diseases.

We are also developing proprietary immune stimulating saponin-based adjuvants at Novavax

AB, our wholly owned Swedish subsidiary.

Our lead adjuvant, Matrix-M™, has been shown to enhance immune responses and has

been well-tolerated in multiple clinical trials.

Product Pipeline

Development Stage

(Older Adults) (1)

Syncytial Virus (“RSV”)

ResVax (2) (Infants

via Maternal Immunization)

Seasonal Influenza/RSV (1)

Virus (“EBOV”) (1)

(“COVID-19”) (1)

Matrix-M adjuvant

(2) Supported

by a grant of up to $89.1 million from BMGF

A summary and status

of these vaccine programs follows:

Seasonal Influenza

NanoFlu Program (Older Adults)

Influenza is a world-wide

infectious disease with serious illness generally occurring in more susceptible populations such as children under 18 years old

and older adults, but also occurring in the general population.

According to influenza vaccines forecasts by Datamonitor in 2013,

the market for seasonal influenza vaccines is expected to grow from approximately $3.2 billion in the 2015-16 flu season to approximately

$5.3 billion in the 2021-22 flu season (in the countries comprising the top seven markets).

Recent flu seasons have shown an increase

in the influenza disease burden.

For the 2017-18 flu season, the Centers for Disease Control and Prevention estimates that influenza

resulted in 48.8 million illnesses, 959,000 hospitalizations and 79,400 deaths, a dramatic increase across all categories

compared to previous years.

In October 2019,

we initiated a pivotal Phase 3 clinical trial of NanoFlu in older adults (65 years and older).

This randomized, observer-blinded,

active-controlled trial will evaluate the immunogenicity and safety of NanoFlu with its proprietary Matrix-M adjuvant, compared

to a U.S.-licensed quadrivalent vaccine, Fluzone ®

Quadrivalent.

The trial’s primary objective is to demonstrate

non-inferior immunogenicity as measured by hemagglutination inhibition (“HAI”) titers of vaccine homologous influenza

strains compared to a licensed seasonal vaccine, and to describe its safety profile.

In October 2019, we completed enrollment

of 2,652 healthy older adults across 19 clinical sites in the U.S.

and we expect to report top-line clinical data by the end of

the first quarter of 2020.

Positive data will support a subsequent U.S.

biologics license application (“BLA”) and licensure

of NanoFlu using the U.S.

Food and Drug Administration’s (“FDA”) accelerated approval pathway.

January 2020, we announced that the FDA granted NanoFlu Fast Track designation, which is intended for products that treat

serious or life-threatening diseases or conditions and that demonstrate the potential to address unmet medical needs for such diseases

or conditions.

The program is designed to facilitate development and expedite review of drugs to treat serious and life-threatening

conditions so that approved products can reach the market expeditiously.

Specifically, Fast Track designation facilitates meetings

to discuss all aspects of development to support licensure and provides the opportunity to submit sections of a BLA on a rolling

basis as data become available.

This permits the FDA to review modules of the BLA as they are received instead of waiting for the

entire BLA submission.

In addition, priority review (six-month review versus standard 10-month review) is an additional benefit

that may potentially be available for NanoFlu in the future.

In June 2019,

we announced that the FDA acknowledged that the accelerated approval pathway is available for NanoFlu.

An accelerated approval

may be granted for certain biological products that have been studied for their safety and effectiveness in treating serious or

life-threatening illnesses and that provide meaningful therapeutic benefit over existing treatments.

Such an approval will be based

on adequate and well-controlled clinical trials establishing that the biological product has an effect on a surrogate endpoint

that is reasonably likely to predict clinical benefit.

For seasonal influenza vaccines, the HAI antibody response is considered

an acceptable surrogate marker of activity that is reasonably likely to predict clinical benefit.

To be considered for accelerated

approval, a BLA for a new seasonal influenza vaccine should include results from one or more well-controlled studies designed to

meet immunogenicity endpoints along with a commitment to conduct confirmatory post-marketing studies of clinical effectiveness

in preventing influenza.

Respiratory Syncytial Virus (RSV)

Currently, there is

no approved RSV vaccine available to combat the estimated 64 million RSV infections that occur globally each year.

We have identified

three susceptible target populations that we believe could benefit from the development of our respiratory syncytial virus fusion

(F) protein nanoparticle vaccine candidate (“RSV F Vaccine”) in different formulations:

(1) infants via maternal

immunization, (2) older adults (60 years and older) and (3) children six months to five years old (“pediatrics”).

With our current estimates of the annual global cost burden of RSV in excess of $88 billion, we believe our RSV F Vaccine represents

a multi-billion dollar worldwide opportunity.

ResVax Program (Infants

via Maternal Immunization)

ResVax is our adjuvanted

RSV F Vaccine for infants via maternal immunization.

RSV is the most common cause of lower respiratory tract infections (“LRTI”)

and the leading viral cause of severe lower respiratory tract disease in infants and young children worldwide.

In the U.S., RSV

is the leading cause of hospitalization of infants and, globally, is second only to malaria as a cause of death in children under

one year of age.

Data from our Prepare

trial, which was initiated in December 2015, was announced in February 2019.

The Prepare trial was conducted to determine

whether ResVax reduced incidence of medically significant RSV-positive LRTI in infants through a minimum of the first 90 days of

life and up through the first six months of life.

While these data did not meet the trial’s primary efficacy endpoint, it

did demonstrate efficacy against a secondary objective by reducing RSV LRTI hospitalizations in treated infants.

ResVax is thus

the first RSV vaccine to show efficacy in a Phase 3 clinical trial, and in addition, showed important effects against a variety

of pre-specified exploratory endpoints and post-hoc analyses.

This included a ~60% reduction in RSV-related severe hypoxemia and

a ~74% reduction in RSV-related, radiographically-confirmed pneumonia through day 90.

As in previous clinical trials, ResVax also

showed favorable safety and tolerability results.

In light of the fact that the trial failed to meet the primary endpoints, the

FDA and European Medicines Agency (“EMA”) recommended that we conduct an additional Phase 3 clinical trial to confirm

BMGF has supported the Prepare trial for ResVax through a grant of up to $89.1 million;

BMGF continues to financially

support our efforts to conduct certain follow-on analyses of the Phase 3 data.

We are currently in discussions with multiple potential

commercial partners about the opportunity to bring ResVax to market globally, including assisting us with the regulatory licensure

pathways in the U.S., the European Union and other geographies.

RSV Older Adults

Older adults (60 years

and older) are at increased risk for RSV disease due in part to immunosenescence, the age-related decline in the human immune system.

RSV infection can also lead to exacerbation of underlying co-morbidities such as chronic obstructive pulmonary disease, asthma

and congestive heart failure.

alone, a reported RSV incidence rate of 5.5% in older adults would account for approximately

2.5 million infections per year.

We estimate that approximately 900,000 medical interventions are caused by RSV disease in this

population each year.

We followed up the 2016 Phase 3 clinical trial of our RSV F Vaccine, which failed to meet its pre-specified

primary or secondary efficacy objectives, with a 2017 Phase 2 clinical trial in older adults, to assess safety and immunogenicity

of one and two dose regimens of our RSV F Vaccine, with and without aluminum phosphate or our proprietary Matrix-M adjuvant.

Immunogenicity

results from the 2017 trial indicate that both adjuvants increase the magnitude, duration and quality of the immune response versus

the non-adjuvanted RSV F Vaccine.

We continue to assess the development opportunities for our RSV F Vaccine in older adults.

RSV Pediatrics

By the age of five,

essentially all children will have been exposed to RSV and will likely develop natural immunity against the virus;

however, children

under five remain vulnerable to RSV disease, offering a strong rationale for a pediatric vaccine that could offer enhanced protection.

In 2015, we announced positive results in our Phase 1 clinical trial evaluating the safety and immunogenicity of our RSV F Vaccine

in healthy children between two and six years of age.

We continue to assess the development opportunities for our RSV F Vaccine

for pediatrics.

Combination Seasonal Influenza/RSV F

With the ongoing development

of our NanoFlu and RSV F Vaccine, a strong rationale exists for developing a combination respiratory vaccine that is designed to

protect susceptible populations against both diseases.

Although testing is at an early stage, we believe that a combination vaccine

against both influenza and RSV may be achievable.

Ebola virus (“EBOV”)

is a filovirus that produces severe, often fatal illness in humans.

Within the last decade, it has produced two large outbreaks

in Sub-Saharan Africa with high mortality.

There are currently no licensed treatments proven to prevent EBOV, although a range

of blood, immunological and drug therapies are under development.

We have developed an

EBOV glycoprotein vaccine candidate (“Ebola GP Vaccine”) expressed in insect cells, using our core recombinant baculovirus

In five separate studies, carried out in collaboration with the National Institute of Allergy and Infectious Disease,

active immunization with Ebola GP Vaccine was shown to be highly immunogenic and efficacious in preventing lethal disease in non-human

primates challenged with EBOV.

Our 2015 Phase 1 clinical trial demonstrated that our Ebola GP Vaccine is highly immunogenic in

humans, well-tolerated and, in conjunction with our proprietary Matrix-M adjuvant, demonstrated marked antigen dose-sparing and

induced significant increases in neutralizing antibody titers.

While we intend to advance our Ebola GP Vaccine, doing so will be

dependent upon funding or a partner.

Coronaviruses (“CoV”),

so named for their “crown-like”

appearance, are a large family of viruses that spread from animals to humans and include

diseases such as Middle East Respiratory Syndrome (“MERS”) and Severe Acute Respiratory Syndrome (“SARS”).

Historically, we developed a vaccine candidate against MERS, a novel coronavirus first identified in 2012, as well as a vaccine

candidate against SARS in 2005.

In 2012, within weeks of obtaining the sequence of the circulating MERS strain, we successfully

produced a vaccine candidate designed to provide protection.

Our MERS candidate was based on the major surface spike protein, which

we had previously identified as the antigen of choice in our work with our SARS vaccine candidate.

In 2014, in collaboration with

the University of Maryland, School of Medicine, we published results that showed our MERS and SARS vaccine candidates both blocked

infection in laboratory studies.

Recently, a new strain

of coronavirus (“COVID-19”) causing pneumonia-like symptoms has emerged in China, marking the beginning of a spread

of the virus across the globe.

Researchers have now confirmed that the virus can spread via human-to-human transmission.

are currently no licensed treatments proven to prevent COVID-19, although a range of vaccine candidates are under development.

We have successfully produced a vaccine candidate designed to provide protection against COVID-19.

Using our recombinant nanoparticle

technology, we have generated antigen for our initial vaccine candidate derived from the coronavirus spike (S) protein.

vaccine candidate has been engineered from the genetic sequence of COVID-19 virus and binds efficiently with the same human receptors

targeted by the virus, a critical aspect for effective vaccine protection.

We intend to combine our proprietary Matrix-M adjuvant

into our experimental vaccine candidate to potentially provide an additional immune response.

We were recently awarded initial

funding from the Coalition for Epidemic Preparedness Innovations (“CEPI”) to facilitate our development of a COVID-19

vaccine in preparation for potential future clinical trials.

A subsequent CEPI award may be available to cover our program expenditures

through Phase 1 clinical trial results.

CPLB Joint Venture

CPL Biologicals Private

Limited (“CPLB”), our joint venture between Novavax and Cadila Pharmaceuticals Limited (“Cadila”), is actively

developing a number of vaccine candidates in India.

CPLB is owned 20% by Novavax and 80% by Cadila.

Reverse Stock Split

On May 8, 2019,

following stockholders approval at a Special Meeting earlier that day, we filed a Certificate of Amendment to our Second Amended

and Restated Certificate of Incorporation with the Delaware Secretary of State to effect a reverse stock split of our issued and

outstanding common stock, par value $0.01, at a ratio of 1-for-20 (the “Reverse Stock Split”), effective as of May 10,

We have retroactively restated all per share and share amounts, including stock options and restricted stock awards, in this

Annual Report for all periods presented to reflect the Reverse Stock Split.

Catalent Transaction

In July 2019,

we closed a transaction under an asset purchase agreement (the “Purchase Agreement”) with Catalent, pursuant to which

we sold to Catalent certain assets related to our biomanufacturing and development activities located at the facilities situated

at each of 20 Firstfield Road in Gaithersburg, MD 20878 and 9920 Belward Campus Drive in Rockville, MD 20850, for a purchase price

of (i) $18.0 million, including $1.5 million to be held in escrow for one year following the closing of the transaction, plus

(ii) an additional fee to purchase laboratory supplies of approximately $0.3 million, subject to certain adjustments.

to the transactions contemplated by the Purchase Agreement, approximately 100 Novavax manufacturing and quality employees transferred

to Catalent, and we assigned two facility leases to Catalent.

We also entered into other ancillary agreements upon the closing

of the transaction, including a Non-Commercial GMP Manufacturing Services Agreement pursuant to which we are required to purchase

$6.0 million in certain services from Catalent set forth therein, through July 31, 2020.

The transaction was treated as an

asset disposition for accounting purposes.

As a result of the transactions contemplated by the Purchase Agreement and related attrition

since March 1, 2019, we have reduced our headcount by more than 200 employees.

In 2019, we recorded a gain on the disposition

of such assets of $9.0 million.

HHS BARDA Contract Close Out

In December 2019,

we amended our contract with the Department of Health and Human Services, Biomedical Advanced Research and Development Authority

(“HHS BARDA”) to close out the contract we were awarded by HHS BARDA in 2011.

Pursuant to the amendment, HHS BARDA

agreed to pay us $7.5 million for the recovery of additional costs under the contract relating to the close out of indirect rates

for the remaining fiscal years 2013 through 2016.

As a result of the amendment, we recorded revenue of $7.5 million in the fourth

quarter of 2019.

Payment was received in the first quarter of 2020.

Sales of Common Stock

In March 2020,

we entered into an At Market Issuance Sales Agreement (“March 2020 Sales Agreement”), which allows us to issue

and sell up to $150 million in gross proceeds of our common stock.

From March 2 through March 6, 2020, we sold 1.5 million

shares of common stock under the March 2020 Sales Agreement resulting in $18.6 million in net proceeds, leaving $131.1 million

In January 2020,

we entered into an At Market Issuance Sales Agreement (“January 2020 Sales Agreement”), which allowed us to issue

and sell up to $100 million in gross proceeds of our common stock.

During the first quarter of 2020, we sold 10.5 million shares

of common stock under the January 2020 Sales Agreement resulting in $98.7 million in net proceeds.

The January 2020 Sales

Agreement was fully utilized at that time.

In December 2018,

we entered into an At Market Issuance Sales Agreement (“December 2018 Sales Agreement”), which allowed us to issue

and sell up to $100 million in gross proceeds of our common stock.

During 2019, we sold 10.5 million shares of common stock under

the December 2018 Sales Agreement resulting in $59.5 million in net proceeds (this amount excludes $0.5 million received in

the first quarter of 2020 for shares traded in late December 2019).

In January 2020, we sold 7.2 million shares of common

stock under the December 2018 Sales Agreement resulting in $38.5 million in net proceeds.

The December 2018 Sales Agreement

was fully utilized at that time.

Critical Accounting Policies and

Use of Estimates

The discussion and

analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have

been prepared in accordance with generally accepted accounting principles in the United States.

The preparation of

our consolidated financial statements requires us to make estimates, assumptions and judgments that affect the reported amounts

of assets, liabilities and equity and disclosure of contingent assets and liabilities at the date of the financial statements and

the reported amounts of revenue and expenses during the reporting period.

These estimates, particularly estimates relating to accounting

for revenue and long-lived assets have a material impact on our consolidated financial statements and are discussed in detail throughout

our analysis of the results of operations discussed below.

We base our estimates

on historical experience and various other assumptions that we believe are reasonable under the circumstances, the results of which

form the basis for making judgments about the carrying value of assets, liabilities and equity that are not readily apparent from

other sources.

Actual results and outcomes could differ from these estimates and assumptions.

Our current revenue

primarily consists of revenue under our Grant Agreement with BMGF.

We are reimbursed for certain costs that support development

activities, including our global Phase 3 clinical trial in pregnant women in their third trimester, product licensing efforts and

efforts to obtain WHO prequalification of ResVax.

The Grant Agreement does not provide a direct economic benefit to BMGF.

we entered into an agreement with BMGF to make a certain amount of ResVax available and accessible at affordable pricing to people

in certain low- and middle-income countries.

Based on these circumstances, we do not consider BMGF to be a customer and concluded

the Grant Agreement is outside the scope of Accounting Standards Update 2014-09, Revenue from Contracts with Customers (Topic

606) (“Topic”

Payments received under the Grant Agreement are considered conditional contributions

under the scope of ASC 958-605, Not-for-Profit Entities –

Revenue Recognition , and are recorded as deferred revenue

until the period in which such research and development activities are performed and revenue can be recognized.

We analyzed the Grant

Agreement with BMGF to determine whether the payments received should be recorded as revenue or as a reduction to research and

development expenses.

In reaching the determination that such payments should be recorded as revenue, we considered a number of

factors, including whether we are the principal under the arrangement, and whether the arrangement is significant to, and part

of, our core operations.

Further, we have consistently applied our policy of presenting such amounts as revenue.

For arrangements that

are determined within the scope of Topic 606, we recognize revenue following the five-step model:

(i) identify the contract(s) with

(ii) identify the performance obligation(s) in the contract;

(iii) determine the transaction price;

(iv) allocate the transaction price to the performance obligations in the contract;

and (v) recognize revenue when (or

as) we satisfy a performance obligation.

We only apply the five-step model to contracts when it is probable that we will collect

the consideration we are entitled to in exchange for the goods or services we transfer to our customer.

At contract inception,

once the contract is determined to be within the scope of Topic 606, we assess the goods or services promised within each contract

and determine the performance obligations, and assesses whether each promised good or service is distinct.

We then recognize

as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance

obligation is satisfied.

We perform research

and development under grant, license and clinical development agreements.

Payments received in advance of work performed are recorded

as deferred revenue.

Impairments of Long-Lived

We account for the

impairment of long-lived assets (including property and equipment and finite-lived intangible and right-of-use assets) by performing

an evaluation of the recoverability of the carrying value of long-lived asset (group) whenever events or changes in circumstances

indicate that the carrying value of the asset (group) may not be recoverable.

Examples of events or changes in circumstances that

indicate that the recoverability of the carrying value of an asset (group) should be assessed include, but are not limited to,

the following:

a significant decrease in the market value of an asset, a significant change in the extent or manner in which an

asset is used, a significant physical change in an asset, a significant adverse change in legal factors or in the business climate

that could affect the value of an asset, an adverse action or assessment by a regulator, an accumulation of costs significantly

in excess of the amount originally expected to acquire or construct an asset, a current period operating or cash flow loss combined

with a history of operating or cash flow losses and/or a projection or forecast that demonstrates continuing losses associated

with an asset used for the purpose of producing revenue.

We consider historical performance and anticipated future results in our

evaluation of potential impairment.

Accordingly, when indicators of impairment are present, we evaluate the carrying value of these

assets (group) in relation to the operating performance of the business and future undiscounted cash flows expected to result from

the use of these asset (groups).

Impairment losses are recognized when the sum of expected future cash flows is less than the assets’

(group’s) carrying value.

Recent Accounting Pronouncements

See “Note 3―Summary

of Significant Accounting Policies”

included in our Notes to Consolidated Financial Statements (under the caption “

Accounting Pronouncements ”).

Results of Operations for Fiscal Years

2019 and 2018

The following is a

discussion of the historical financial condition and results of operations of Novavax, including Novavax AB’s operations,

and should be read in conjunction with the consolidated financial statements and notes thereto set forth in this Annual Report.

Additional information concerning factors that could cause actual results to differ materially from those in our forward-looking

statements is described under Part I, Item 1A, “Risk Factors”

of this Annual Report.

For our discussion

of the year ended December 31, 2018, compared to the year ended December 31, 2017, please read Item 7.

Discussion and Analysis of Financial Condition and Results of Operations located in our 2018 Form 10-K.

Revenue (in thousands):

Total revenue

Revenue for 2019 was

$18.7 million as compared to $34.3 million for 2018, a decrease of $15.6 million, or 46%.

Revenue for 2019 and 2018 was primarily

comprised of services performed under the Grant Agreement, the closeout of our HHS BARDA contract and, to a much lesser extent,

revenue from Novavax AB.

Revenue decreased under the Grant Agreement by $22.3 million as a result of completing enrollment of the

Prepare trial in the second quarter of 2018, partially offset by $7.5 million in revenue for the recovery of additional costs under

the HHS BARDA contract relating to the close out of indirect rates for the remaining fiscal years 2013 through 2016.

We expect revenue in

2020 to be significantly lower than in 2019 as the Prepare trial and our HHS BARDA contract have both concluded.

Expenses (in thousands):

Research and development

Gain on Catalent transaction

General and administrative

Total expenses

Development Expenses

development expenses include salaries, stock-based compensation, laboratory supplies, consultants and subcontractors,

including external contract research organizations, and other expenses associated with our process development,

manufacturing, clinical, regulatory and quality assurance activities for our programs.

In addition, indirect costs such as

fringe benefits and overhead expenses related to research and development activities, are also included in research and

development expenses.

Research and development expenses decreased to $113.8 million for 2019 from $173.8 million for 2018, a

decrease of $60.0 million, or 34%.

This decrease was primarily due to decreased development activities, including lower

clinical trial costs, of ResVax, and lower employee-related costs and other cost savings due to the Catalent transaction,

partially offset by our Phase 3 clinical trial of NanoFlu.

At December 31, 2019, we had 127 employees dedicated to our research

and development programs versus 324 employees as of December 31, 2018.

For 2020, we expect research and development

expenses overall to decrease primarily due to the completion of activities related to the conclusion of the Prepare trial and

lower employee-related and other costs resulting from the Catalent transaction, partially offset by our Phase 3 clinical

trial and development activities of NanoFlu.

Expenses by Functional

We track our research

and development expenses by the type of costs incurred in identifying, developing, manufacturing and testing vaccine candidates.

We evaluate and prioritize our activities according to functional area and therefore believe that project-by-project information

would not form a reasonable basis for disclosure to our investors.

Historically, we did not account for internal research and development

expenses by project, since our employees’

work time was spread across multiple programs and our internal manufacturing clean-room

facility produced multiple vaccine candidates.

The following summarizes

our research and development expenses by functional area for the years ended December 31, 2019 and 2018 (in millions).

Manufacturing

Vaccine Discovery

Clinical and Regulatory

Total research and development expenses

We do not provide forward-looking

estimates of costs and time to complete our research programs due to the many uncertainties associated with vaccine development.

As we obtain data from preclinical studies and clinical trials, we may elect to discontinue or delay clinical trials in order to

focus our resources on more promising vaccine candidates.

Completion of clinical trials may take several years or more, but the

length of time can vary substantially depending upon the phase, size of clinical trial, primary and secondary endpoints and the

intended use of the vaccine candidate.

The cost of clinical trials may vary significantly over the life of a project as a result

of a variety of factors, including:

the number of participants who participate in the clinical trials;

the number of sites included in the clinical trials;

if clinical trial locations are domestic, international or both;

the time to enroll participants;

the duration of treatment and follow-up;

the safety and efficacy profile of the vaccine candidate;

the cost and timing of, and the ability to secure, regulatory approvals.

As a result of these

uncertainties, we are unable to determine with any significant degree of certainty the duration and completion costs of our research

and development projects or when, and to what extent, we will generate future cash flows from our research projects.

Gain on Catalent

As a result of the

Catalent transaction (see discussion above), we recorded a gain of $9.0 million in 2019.

General and Administrative

General and administrative

expenses were flat at $34.4 million.

At December 31, 2019, we had 41 employees dedicated to general and administrative

functions versus 50 employees as of December 31, 2018.

For 2020, we expect general and administrative expenses to continue

to be flat year-over-year.

Other Income (Expense):

Other Income (Expense) (in thousands):

Investment income

Interest expense

Other income (expense)

Total other income (expense), net

We had total other

expense, net of $12.1 million for 2019 compared to total other expense, net of $10.8 million for 2018, an increase of $1.3 million.

Our investment income decreased in 2019 as compared to 2018 due to lower marketable securities balances.

Net Loss (in thousands, except per share information):

Net loss per share

Weighted average shares outstanding

Net loss for 2019 was

$132.7 million, or $5.51 per share, as compared to $184.7 million, or $9.99 per share, for 2018, a decrease of $52.1 million.

decrease in net loss was primarily due to decreased development activities, including lower clinical trial costs of ResVax, and

the $9.0 million gain recorded on the Catalent transaction, partially offset by decreased revenue under the Grant Agreement.

The increase in weighted

average shares outstanding for 2019 and 2018 is primarily a result of sales of our common stock in 2019 and 2018.

Liquidity Matters and Capital Resources

Our future capital

requirements depend on numerous factors including, but not limited to, the commitments and progress of our research and development

programs, the progress of preclinical and clinical testing, the time and costs involved in obtaining regulatory approvals, the

costs of filing, prosecuting, defending and enforcing patent claims and other intellectual property rights and manufacturing costs.

We plan to continue to have multiple vaccines and product candidates in various stages of development, and we believe our operating

expenses and capital requirements will fluctuate depending upon the timing of events, such as the scope, initiation, rate and progress

of our preclinical studies and clinical trials and other research and development activities.

We have primarily funded our operations

with proceeds from the sale of common stock in equity offerings, the issuance of convertible debt and revenue under our Grant Agreement

As of December 31,

2018, we had $82.2 million in cash and cash equivalents, marketable securities and restricted cash as compared to $103.9 million

as of December 31, 2018.

These amounts consisted of $78.8 million in cash and cash equivalents and $3.4 million in restricted

cash as of December 31, 2019 as compared to $70.2 million in cash and cash equivalents, $22.0 million in marketable securities

and $11.8 million in restricted cash as of December 31, 2018.

The following table

summarizes cash flows for 2019 and 2018:

Summary of Cash Flows (in thousands):

Net cash (used in) provided by:

Operating activities

Investing activities

Financing activities

Effect on exchange rate on cash, cash equivalents and restricted cash..

Net increase (decrease) in cash, cash equivalents and restricted cash

Cash, cash equivalents and restricted cash at beginning of year

Cash, cash equivalents and restricted cash at end of year

Net cash used in operating

activities decreased to $136.6 million for 2019, as compared to $184.8 million for 2018.

The decrease in cash usage is primarily

due to decreased development activities, including lower clinical trial costs, of ResVax in 2019 as compared to 2018, $9.3 million

of one-time payments made in 2018 that included our lease termination fee and a milestone payment to Wyeth Holdings LLC and reduced

bonus payouts in the first quarter of 2019 as compared to the same period in 2018, partially offset by receipt of a $15 million

payment under the Grant Agreement with BMGF in 2018.

During 2019 and 2018,

our investing activities consisted primarily of purchases and maturities of marketable securities, $18.3 million in proceeds from

the Catalent transaction in 2019.

In 2020, we expect our capital expenditures to slightly increase due to development activities

related to NanoFlu.

Our financing activities

consisted primarily of sales of our common stock under our At Market Issuance Sales Agreements and, to a much lesser extent, stock

option exercises and purchases under our employee stock purchase plan.

In 2019, we received net proceeds of $97.4 million (this

amount excludes $0.5 million received in the first quarter of 2020 for shares traded in late December 2019) from selling shares

of common stock through our At Market Issuance Sales Agreements.

During the first quarter of 2020, we received approximately $156

million in net proceeds from selling shares of common stock under our At Market Issuance Sales Agreements.

In 2018, we completed

a public offering of our common stock resulting in net proceeds of approximately $54 million and received net proceeds of $46.2

million from selling shares of common stock through our At Market Issuance Sales Agreements.

Based on our most recent

cash flow forecast, we believe our current capital is sufficient to fund our operating plans for a minimum of twelve months from

the date that this Annual Report was filed.

Additional capital may be required in the future to develop our vaccine candidates

through clinical development, manufacturing and commercialization.

Our ability to fund

the Company’s operations is dependent upon management’s plans, which include raising additional capital in the near

term primarily through a combination of equity and debt financings, collaborations, strategic alliances and marketing, distribution

or licensing arrangements and in the longer term, from revenue related to product sales, to the extent our product candidates receive

marketing approval and can be commercialized.

New financings may not be available to the Company on commercially acceptable terms,

Also, any collaborations, strategic alliances and marketing, distribution or licensing arrangements may require us to

give up some or all of our rights to a product or technology, which in some cases may be at less than the full potential value

of such rights.

If we are unable to obtain additional capital, we will assess the Company’s capital resources and may be

required to delay, reduce the scope of or eliminate one or more of our research and development programs, and/or downsize our organization.

Contractual Obligations

The following table

summarizes our contractual obligations as of December 31, 2019 (in thousands):

Contractual Obligations:

notes payable

contractual obligations

See Note 11 to the

consolidated financial statements included in the Annual Report regarding our convertible notes payable, which will mature on February 1,

2023, and bear cash interest of 3.75%, payable February 1 and August 1 of each year.

Off-Balance Sheet Arrangements

We are not involved

in any off-balance sheet agreements that have or are reasonably likely to have a material future effect on our financial condition,

changes in financial condition, revenue or expenses, results of operations, liquidity, capital expenditures or capital resources.

Total stockholders’ (deficit) equity 627,209 (186,017) (167,935) (101,732) (5,546)

______________________________

(1) In 2020, we had sales of 32.4 million shares of common stock and we sold 0.4 million shares of preferred stock, which were converted to 4.4 million shares of common stock in the fourth quarter 2020, resulting in total net proceeds of approximately $1.1 billion.

(2) In 2019, we had sales of 13.0 million shares of common stock resulting in net proceeds of approximately $98 million.

(3) In 2018, we had sales of 2.9 million shares of common stock resulting in net proceeds of approximately $100 million.

(4) In 2017, we had sales of 2.5 million shares of common stock resulting in net proceeds of approximately $63 million.

Table of C onten ts

(5) All share and per share amounts have been retroactively restated for all periods presented to reflect the Reverse Stock Split (see Note 12 to the accompanying consolidated financial statements).

(6) Working capital is computed as the excess of current assets over current liabilities.

(7) In 2019, the Company adopted ASU 20160-02, Leases (Topic 842), under which the Company recorded right-of-use assets associated with its leases on the consolidated balance sheet (see Note 7 to the accompanying consolidated financial statements).

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 5. Market for Registrant’s Common Equity