What changed in this filing

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Item 1. Financial Statements

2021-11-05 compared with 2021-08-05 · 150 added, 119 removed, 403 unchanged (40% of the section changed)

3 unchanged sentences

(in thousands, except share and per share information)

September 30,

2021 December 31,

4 unchanged sentences

Accounts receivable 75,283 262,012

Unbilled services 21,374 —

Unbilled receivable

Prepaid expenses and other current assets 119,047 181,264

19 unchanged sentences

Commitments and contingencies

Preferred stock, $ 0.01 par value, 2,000,000 shares authorized at June 30, 2021 and December 31, 2020;

no shares issued and outstanding at June 30, 2021 and December 31, 2020

Preferred stock, $ 0.01 par value, 2,000,000 shares authorized at September 30, 2021 and December 31, 2020;

no shares issued and outstanding at September 30, 2021 and December 31, 2020

Stockholders' equity:

Common stock, $ 0.01 par value, 600,000,000 shares authorized at June 30, 2021 and December 31, 2020;

and 74,672,351 shares issued and 74,248,279 shares outstanding at June 30, 2021 and 71,350,365 shares issued and 70,953,739 shares outstanding at December 31, 2020

Common stock, $ 0.01 par value, 600,000,000 shares authorized at September 30, 2021 and December 31, 2020;

and 75,973,523 shares issued and 75,415,774 shares outstanding at September 30, 2021 and 71,350,365 shares issued and 70,953,739 shares outstanding at December 31, 2020

Additional paid-in capital 3,310,513 2,535,476

Accumulated deficit ( 2,771,666 ) ( 1,874,199 )

Treasury stock, 424,072 shares, cost basis at June 30, 2021 and 396,626 shares, cost basis at December 31, 2020

Treasury stock, 557,749 shares, cost basis at September 30, 2021 and 396,626 shares, cost basis at December 31, 2020

( 79,132 ) ( 41,806 )

7 unchanged sentences

For the Three Months Ended

June 30, For the Six Months Ended

September 30, For the Nine Months Ended

September 30,

2021 2020 2021 2020

19 unchanged sentences

For the Three Months Ended

June 30, For the Six Months Ended

September 30, For the Nine Months Ended

September 30,

2021 2020 2021 2020

3 unchanged sentences

Foreign currency translation adjustment ( 3,309 ) 8,226 ( 6,154 ) 7,495

Other comprehensive loss 4,527 1,291 ( 2,854 ) ( 687 )

Other comprehensive income (loss) ( 3,309 ) 8,200 ( 6,163 ) 7,513

Comprehensive loss $ ( 325,740 ) $ ( 189,110 ) $ ( 903,630 ) $ ( 233,182 )

1 unchanged sentence

NOVAVAX, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)

Three Months Ended June 30, 2021 and 2020

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

Three Months Ended September 30, 2021 and 2020

(in thousands, except share information)

5 unchanged sentences

Shares Amount

Balance at March 31, 2021 74,470,583 $ 745 $ 3,180,114 $ ( 2,096,918 ) $ ( 44,457 ) $ ( 357 ) $ 1,039,127

Balance at June 30, 2021 74,672,351 $ 747 $ 3,237,085 $ ( 2,449,235 ) $ ( 47,205 ) $ 4,170 $ 745,562

Non-cash stock-based compensation — — 45,274 — — — 45,274

2 unchanged sentences

Net loss — — — ( 322,431 ) — — ( 322,431 )

Balance at September 30, 2021 75,973,523 $ 760 $ 3,310,513 $ ( 2,771,666 ) $ ( 79,132 ) $ 861 $ 461,336

Balance at June 30, 2020 61,262,632 $ 612 $ 1,699,072 $ ( 1,499,325 ) $ ( 2,638 ) $ ( 13,195 ) $ 184,526

Balance at March 31, 2020 53,906,322 $ 539 $ 1,450,279 $ ( 1,457,665 ) $ ( 2,638 ) $ ( 14,486 ) $ ( 23,971 )

Preferred stock beneficial conversion feature — — 24,139 ( 24,139 ) — — —

Non-cash stock-based compensation — — 65,705 — — — 65,705

5 unchanged sentences

Net loss — — — ( 197,310 ) — — ( 197,310 )

Balance at June 30, 2020 61,262,632 $ 612 $ 1,699,072 $ ( 1,499,325 ) $ ( 2,638 ) $ ( 13,195 ) $ 184,526

Balance at September 30, 2020 63,318,888 $ 633 $ 1,848,644 $ ( 1,696,635 ) $ ( 41,207 ) $ ( 4,995 ) $ 106,440

The accompanying notes are an integral part of these financial statements.

NOVAVAX, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)

Six Months Ended June 30, 2021 and 2020

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

Nine Months Ended September 30, 2021 and 2020

(in thousands, except share information)

13 unchanged sentences

Net loss — — — ( 897,467 ) — — ( 897,467 )

Balance at June 30, 2021 74,672,351 $ 747 $ 3,237,085 $ ( 2,449,235 ) $ ( 47,205 ) $ 4,170 $ 745,562

Balance at September 30, 2021 75,973,523 $ 760 $ 3,310,513 $ ( 2,771,666 ) $ ( 79,132 ) $ 861 $ 461,336

Balance at December 31, 2019 32,399,352 $ 324 $ 1,260,551 $ ( 1,431,801 ) $ ( 2,583 ) $ ( 12,508 ) $ ( 186,017 )

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Net loss — — — ( 240,695 ) — — ( 240,695 )

Balance at June 30, 2020 61,262,632 $ 612 $ 1,699,072 $ ( 1,499,325 ) $ ( 2,638 ) $ ( 13,195 ) $ 184,526

Balance at September 30, 2020 63,318,888 $ 633 $ 1,848,644 $ ( 1,696,635 ) $ ( 41,207 ) $ ( 4,995 ) $ 106,440

The accompanying notes are an integral part of these financial statements.

2 unchanged sentences

(in thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

Operating Activities:

4 unchanged sentences

Right-of-use assets written off 17,117 187,193

Other 3,855 ( 1,081 )

Other items, net 2,739 ( 3,051 )

Changes in operating assets and liabilities:

20 unchanged sentences

Supplemental disclosure of non-cash activities:

Sale of common stock under the Sales Agreement not settled at quarter-end $ — $ 3,883

Right-of-use assets from new lease agreements $ 34,914 $ 188,362

6 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2021

September 30, 2021

Note 1 – Organization

7 unchanged sentences

GAAP”) for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X.

The consolidated balance sheet as of June 30, 2021, the consolidated statements of operations and the consolidated statements of comprehensive loss for the three and six months ended June 30, 2021 and 2020, the consolidated statements of changes in stockholders’ equity (deficit) for the three and six months ended June 30, 2021 and 2020 and the consolidated statements of cash flows for the six months ended June 30, 2021 and 2020 are unaudited, but include all adjustments (consisting of normal recurring adjustments) that the Company considers necessary for a fair presentation of the financial position, operating results, comprehensive loss, changes in stockholders’ equity (deficit) and cash flows, respectively, for the periods presented.

The consolidated balance sheet as of September 30, 2021, the consolidated statements of operations and the consolidated statements of comprehensive loss for the three and nine months ended September 30, 2021 and 2020, the consolidated statements of changes in stockholders’ equity for the three and nine months ended September 30, 2021 and 2020 and the consolidated statements of cash flows for the nine months ended September 30, 2021 and 2020 are unaudited, but include all adjustments (consisting of normal recurring adjustments) that the Company considers necessary for a fair presentation of the financial position, operating results, comprehensive loss, changes in stockholders’ equity and cash flows, respectively, for the periods presented.

Although the Company believes that the disclosures in these unaudited consolidated financial statements are adequate to make the information presented not misleading, certain information and footnote information normally included in consolidated financial statements prepared in accordance with U.S.

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Translation gains and losses are recognized as a component of accumulated other comprehensive income in the accompanying unaudited consolidated balance sheets.

Accumulated other comprehensive income included a foreign currency translation balance of $ 4.2 million and $ 7.0 million as of June 30, 2021 and December 31, 2020, respectively.

Accumulated other comprehensive income included a foreign currency translation balance of $ 0.9 million and $ 7.0 million as of September 30, 2021 and December 31, 2020, respectively.

The accompanying unaudited consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2020.

8 unchanged sentences

Cash and cash equivalents consist of the following at (in thousands):

September 30,

2021 December 31,

4 unchanged sentences

Corporate debt securities 1,159,729 246,668

Agency securities 110,993 —

Cash and cash equivalents $ 1,936,998 $ 553,398

6 unchanged sentences

The specific identification method is used in computing realized gains and losses on the sale of the Company's securities.

The Company classifies its marketable securities with readily determinable fair values as “available-for-sale.” Investments in securities that are classified as available-for-sale are measured at fair market value in the consolidated balance sheets, and unrealized gains and losses on marketable securities are reported as a separate component of stockholders' equity (deficit) until realized.

Marketable securities are evaluated periodically to determine whether a decline in value is “other-than-temporary.” The term “other-than-temporary” is not intended to indicate a permanent decline in value.

5 unchanged sentences

The Company will utilize the CEPI and BMGF funds as it incurs expenses for services performed under these agreements.

As of June 30, 2021, the restricted cash balances (both current and non-current) consisted of $ 1.2 million for payments received from BMGF, $ 45.2 million of payments under the CEPI funding agreements and $ 1.5 million of security deposits.

As of September 30, 2021, the restricted cash balances (both current and non-current) consisted of $ 1.2 million for payments received from BMGF, $ 7.0 million of payments under the CEPI funding agreements and $ 1.5 million of security

As of December 31, 2020, the restricted cash balances (both current and non-current) consisted of $ 1.5 million for payments received from BMGF, $ 92.4 million of payments under the CEPI funding agreements and $ 1.5 million of security deposits.

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported in the consolidated balance sheets that sum to the total of the same such amounts shown in the statement of cash flows (in thousands):

September 30,

2021 December 31,

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Cash, cash equivalents and restricted cash $ 1,946,826 $ 648,738

Pre-Launch Inventory

Prior to an emergency use authorization ("EUA") or regulatory approval of NVX-CoV2373, the Company's policy is to recognize the cost associated with acquiring raw materials and production for preclinical studies, clinical trials and pre-launch inventory, including both internal manufacturing and third-party Contract Manufacturing Organizations ("CMO"), as research and development expense in its consolidated statements of operations, in the period in which the costs are incurred.

When the Company believes EUA or regulatory approval and subsequent commercialization of NVX-CoV2373 is probable, and expects future economic benefit from the sales of NVX-CoV2373 to be realized, the Company will then start capitalizing the costs of production as inventory.

Revenue Recognition

6 unchanged sentences

For arrangements that include sales-based royalties, including milestone payments based upon the achievement of a certain level of product sales, wherein the license is deemed to be the sole or predominant item to which the payments relate, the Company recognizes revenue on the satisfaction (or partial satisfaction) of its performance obligation to which some or all of the payment has been allocated, which is normally on the occurrence of the related sales.

As a practical expedient, the Company has elected not to disclose the aggregate amount of the transaction price for the variable consideration that represents a sales-based royalties under the licensing arrangements.

As a practical expedient, the Company has elected not to disclose the aggregate amount of the transaction price for the variable consideration that represents sales-based royalties under the licensing arrangements.

Consideration for optional goods and/or services is excluded from the transaction price at contract inception.

During the three and six months ended June 30, 2021, the Company recognized sales-based royalties of $ 23.5 million.

During the three and nine months ended September 30, 2021, the Company recognized sales-based royalties of $ 39.9 million and $ 63.4 million, respectively.

The Company accounts for income taxes in accordance with ASC Topic 740, Income Taxes .

3 unchanged sentences

The Company is currently subject to examination in all open tax years.

During the three and six months ended June 30, 2021, the Company recognized $ 3.5 million and $ 6.6 million, respectively, of income tax expense related to foreign withholding tax on royalties.

During the three and nine months ended September 30, 2021, the Company recognized $ 6.0 million and $ 12.6 million, respectively, of income tax expense related to foreign withholding tax on royalties.

Net Loss per Share

Net loss per share is computed using the weighted average number of shares of common stock outstanding.

As of June 30, 2021 and 2020, the Company had outstanding stock options, stock appreciation rights (“SARs”) and unvested restricted stock units (“RSUs”) totaling 6,092,983 and 7,797,651 , respectively.

As of June 30, 2021, the Company’s Notes (see Note 7) would have been convertible into approximately 2,385,800 shares of the Company’s common stock assuming a common stock price of $ 136.20 or higher.

As of September 30, 2021 and 2020, the Company had outstanding stock options, stock appreciation rights (“SARs”) and unvested restricted stock units (“RSUs”) totaling 4,911,656 and 6,623,466 , respectively.

As of September 30, 2021, the Company’s Notes (see Note 7) would have been convertible into approximately 2,385,800 shares of the Company’s common stock assuming a common stock price of $ 136.20 or higher.

These shares, after giving effect to the add back of interest expense and unamortized debt issuance costs on the Notes and any shares due to the Company upon settlement of its capped call transactions, are excluded from the computation, as their effect is antidilutive.

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Not Yet Adopted

In August 2020, the Financial Accounting Standards Board ("FASB") issued ASU No.

In August 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No.

2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40):

6 unchanged sentences

The following table represents the Company's fair value hierarchy for its financial assets and liabilities (in thousands):

Fair Value at June 30, 2021 Fair Value at December 31, 2020

Fair Value at September 30, 2021 Fair Value at December 31, 2020

Assets Level 1 Level 2 Level 3 Level 1 Level 2 Level 3

6 unchanged sentences

Convertible notes payable $ — $ 559,722 $ — $ — $ 407,238 $ —

(1) Classified as cash and cash equivalents as of June 30, 2021 and December 31, 2020, respectively, on the consolidated balance sheets.

(2) Includes $ 199,990 and $ 44,052 classified as cash and cash equivalents as of June 30, 2021 and December 31, 2020, respectively, on the consolidated balance sheets.

(3) Includes $ 1,386,056 and $ 246,668 classified as cash and cash equivalents as of June 30, 2021 and December 31, 2020, respectively, on the consolidated balance sheets.

(4) Includes $ 110,993 classified as cash and cash equivalents as of June 30, 2021 on the consolidated balance sheets.

(1) Classified as cash and cash equivalents as of September 30, 2021 and December 31, 2020, respectively, on the consolidated balance sheets.

(2) Includes $ 99,996 and $ 44,052 classified as cash and cash equivalents as of September 30, 2021 and December 31, 2020, respectively, on the consolidated balance sheets.

(3) Includes $ 1,159,729 and $ 246,668 classified as cash and cash equivalents as of September 30, 2021 and December 31, 2020, respectively, on the consolidated balance sheets.

Fixed-income investments categorized as Level 2 are valued at the custodian bank by a third-party pricing vendor's valuation models that use verifiable observable market data, e.g., interest rates and yield curves observable at commonly quoted intervals and credit spreads, bids provided by brokers or dealers or quoted prices of securities with similar characteristics.

Pricing of the Company's Notes (see Note 7) has been estimated using other observable inputs, including the price of the Company's common stock, implied volatility, interest rates and credit spreads among others.

During the six months ended June 30, 2021 and 2020, the Company did not have any transfers between levels .

During the nine months ended September 30, 2021 and 2020, the Company did not have any transfers between levels .

Note 4 – Marketable Securities

Marketable securities classified as available-for-sale as of June 30, 2021 and December 31, 2020 were comprised of (in thousands):

June 30, 2021 December 31, 2020

Losses Fair Value Amortized

The Company had no marketable securities classified as available-for-sale as of September 30, 2021 as all of the Company's investments were in securities classified as cash and cash equivalents.

Marketable securities were classified as available-for-sale as of December 31, 2020 were comprised of (in thousands):

December 31, 2020

Losses Fair Value

5 unchanged sentences

thus, the Company's investment policy limits investments to certain types of instruments with high-grade credit ratings, places restrictions on maturities and concentrations in certain industries and requires the Company to maintain a certain level of liquidity.

As of June 30, 2021, all of the Company's investments were in securities classified as cash and cash equivalents.

Note 5 – Goodwill and Other Intangible Assets

The change in the carrying amounts of goodwill for the six months ended June 30, 2021 was as follows (in thousands):

The change in the carrying amounts of goodwill for the nine months ended September 30, 2021 was as follows (in thousands):

Balance at December 31, 2020 $ 135,379

Currency translation adjustments ( 3,390 )

Balance at June 30, 2021 $ 134,294

Balance at September 30, 2021 $ 131,989

Identifiable Intangible Assets

Purchased intangible assets consisted of the following as of June 30, 2021 and December 31, 2020 (in thousands):

June 30, 2021 December 31, 2020

Purchased intangible assets consisted of the following as of September 30, 2021 and December 31, 2020 (in thousands):

September 30, 2021 December 31, 2020

Amount Accumulated

7 unchanged sentences

Total identifiable intangible assets $ 12,332 $ ( 7,305 ) $ 5,027 $ 13,208 $ ( 7,483 ) $ 5,725

Amortization expense for the six months ended June 30, 2021 and 2020 was $ 0.2 million and $ 0.3 million, respectively.

Amortization expense for the nine months ended September 30, 2021 and 2020 was $ 0.3 million and $ 0.5 million, respectively.

Estimated amortization expense for existing intangible assets for the remainder of 2021 and for each of the five succeeding years ending December 31 will be as follows (in thousands):

1 unchanged sentence

Note 6 - Leases

During the second quarter of 2021, the Company evaluated the impact of changes in facts and circumstances on its Contract Manufacturing Organizations and Contract Development and Manufacturing Organizations agreements that had previously been determined to represent embedded lease arrangements.

During the third quarter of 2021, the Company entered into a supply agreement with a CMO that modified existing short-term embedded leases under ASC Topic 842, Leases (“ASC 842”) as the Company continues to have the exclusive use of, and control over, a portion of manufacturing facilities and equipment of the supplier during the contractual term of the new arrangement.

The modifications did not result in a change in lease classification and, in accordance with the Company's election to apply the practical expedient in ASC 842, it did not recognize a Right-Of-Use ("ROU") asset or lease liability but instead, will recognize lease payments as an expense on a straight-line basis over the modified lease term and variable lease payments that do not depend on an index or rate, are recognized as an expense in the period in which the variable lease costs are incurred based on performance or usage in accordance with contractual agreements.

During the second quarter of 2021, the Company evaluated the impact of changes in facts and circumstances on its CMOs and contract development and manufacturing organizations agreements that had previously been determined to represent embedded lease arrangements.

The Company concluded that the impact resulted in the modification of existing leases and, in accordance with its policy, the Company remeasured and reallocated the remaining consideration in the contracts and reassessed the lease classification as of the effective date of the modification.

As a result, the Company recognized a Right-Of-Use ("ROU") asset and a corresponding long-term operating lease liability of $ 11.4 million on the remeasurement of one of its long-term supply agreements using an incremental borrowing rate of 6.5 %.

As a result, the Company recognized a ROU asset and a corresponding long-term operating lease liability of $ 11.4 million on the remeasurement of one of its long-term supply agreements using an incremental borrowing rate of 6.5 %.

The Company expensed the ROU asset since it relates to research and development activities for the development of NVX-CoV2373 for which the Company does not have an alternative future use.

Modifications to leases with a lease term of 12 months or less at the commencement date did not result in a change in lease classification and, in accordance with the Company's election to apply the practical expedient in ASC Topic 842, Leases (“ASC 842”), it did not recognize a ROU asset or lease liability but instead, lease payments are recognized as an expense on a straight-line basis over the modified lease term and variable lease payments that do not depend on an index or rate, are recognized as an expense in the period in which the variable lease costs are incurred based on performance or usage in accordance with contractual agreements.

During the three and six months ended June 30, 2021, the Company recognized a short-term lease expense of $ 86.6 million and $ 214.2 million, respectively, related to its embedded leases, including a new lease that commenced during the first quarter of 2021.

The Company did no t recognize a short-term lease expense related to embedded leases during the three and six months ended June 30, 2020.

During the three and six months ended June 30, 2021, the Company recognized $ 1.8 million and $ 4.0 of interest expenses, respectively, on its finance lease liabilities.

The Company did no t recognize any interest expense related to finance lease liabilities during the three and six months ended June 30, 2020.

During the second quarter of 2021, the Company extended the term of certain of its existing research and development facility and offices leases by two years to five years , giving rise to additional ROU assets and related long-term operating lease liabilities of approximately $ 7.2 million.

Modifications to leases with a lease term of 12 months or less at the commencement date did not result in a change in lease classification and in accordance with the Company's election, it applied the practical expedient in ASC 842, as described above.

During the three and nine months ended September 30, 2021, the Company recognized a short-term lease expense of $ 111.3 million and $ 325.5 million, respectively, related to its embedded leases and expensed $ 4.4 million and $ 17.1 million, respectively, of ROU assets that represented assets acquired for research and development activities that did not have an alternative future use at the commencement of lease.

The Company recognized a short-term lease expense of $ 19.4 million related to embedded leases and expensed $ 187.2 million of ROU assets that represented assets acquired for research and development activities that did not have an alternative future use at the commencement of lease during the three and nine months ended September 30, 2020.

During the three and nine months ended September 30, 2021, the Company recognized $ 1.6 million and $ 5.6 million of interest expenses, respectively, on its finance lease liabilities.

The Company recognized $ 1.0 million of interest expense related to finance lease liabilities during the three and nine months ended September 30, 2020.

During the nine months ended September 30, 2021, the Company entered into or extended the term of certain of its existing research and development facility and offices leases, giving rise to additional ROU assets and related operating lease liabilities of $ 17.8 million.

Note 7 – Long-Term Debt

3 unchanged sentences

Total convertible notes payable consisted of the following at (in thousands):

September 30,

2021 December 31,

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The interest expense incurred in connection with the Notes consisted of the following (in thousands):

Three Months Ended

June 30, Six Months Ended

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

4 unchanged sentences

Note 8 – Stockholders' Equity

During the six months ended June 30, 2021 and 2020, the Company sold 2.6 million and 28.5 million, respectively, of shares of its common stock resulting in net proceeds of approximately $ 565 million and $ 392 million, respectively, under its various At Market Issuance Sales agreements.

During the nine months ended September 30, 2021 and 2020, the Company sold 2.6 million and 29.1 million, respectively, of shares of its common stock resulting in net proceeds of approximately $ 565 million and $ 446 million, respectively, under its various At Market Issuance Sales agreements.

In June 2021, the Company entered into an At Market Issuance Sales Agreement (the "June 2021 Sales Agreement"), which allows it to issue and sell up to $ 500 million in gross proceeds of shares of its common stock, and terminated its existing At Market Issuance Sales agreement.

As of June 30, 2021, no shares had been sold under the June 2021 Sales Agreement .

As of September 30, 2021, no shares had been sold under the June 2021 Sales Agreement .

Note 9 – Stock-Based Compensation

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The Amended and Restated 2005 Stock Incentive Plan (“2005 Plan”) expired in February 2015 and no new awards may be made under such plan, although awards will continue to be outstanding in accordance with their terms.

The 2015 Plan permits and the 2005 Plan permitted the grant of stock options (including incentive stock options), restricted stock, stock appreciation rights and restricted stock units.

The 2015 Plan permits and the 2005 Plan permitted the grant of stock options (including incentive stock options), restricted stock, SARs and RSUs.

In addition, under the 2015 Plan, unrestricted stock, stock units and performance awards may be granted.

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Stock Options and Stock Appreciation Rights

The following is a summary of stock options and SARs activity under the 2015 Plan and 2005 Plan for the six months ended June 30, 2021:

The following is a summary of stock options and SARs activity under the 2015 Plan and 2005 Plan for the nine months ended September 30, 2021:

2015 Plan 2005 Plan

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Canceled ( 80,799 ) $ 119.36 — $ —

Outstanding at June 30, 2021 4,818,599 $ 37.50 178,785 $ 84.47

Shares exercisable at June 30, 2021 692,187 $ 70.17 178,785 $ 84.47

Shares available for grant at June 30, 2021 2,360,263

Outstanding at September 30, 2021 3,992,205 $ 40.92 73,606 $ 103.56

Shares exercisable at September 30, 2021 1,286,515 $ 48.62 73,606 $ 103.56

Shares available for grant at September 30, 2021 3,788,799

The fair value of stock options granted under the 2015 Plan was estimated at the date of grant using the Black-Scholes option-pricing model with the following assumptions:

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

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Expected term (in years) 4.1 - 6.1

The total aggregate intrinsic value and weighted-average remaining contractual term of stock options and SARs outstanding under the 2015 Plan and 2005 Plan as of June 30, 2021 was approximately $ 865 million and 8.1 years, respectively.

The total aggregate intrinsic value and weighted-average remaining contractual term of stock options and SARs exercisable under the 2015 Plan and 2005 Plan as of June 30, 2021 was approximately $ 121 million and 5.5 years, respectively.

The aggregate intrinsic value represents the total intrinsic value (the difference between the Company's closing stock price on the last trading day of the period and the exercise price, multiplied by the number of in-the-money stock options and SARs) that would have been received by the holders had all stock option and SAR holders exercised their stock options and stock appreciation rights on June 30, 2021.

The total aggregate intrinsic value and weighted-average remaining contractual term of stock options and SARs outstanding under the 2015 Plan and 2005 Plan as of September 30, 2021 was approximately $ 673 million and 7.9 years, respectively.

The total aggregate intrinsic value and weighted-average remaining contractual term of stock options and SARs exercisable under the 2015 Plan and 2005 Plan as of September 30, 2021 was approximately $ 212 million and 7.0 years, respectively.

This amount is subject to change based on changes to the closing price of the Company's common stock.

The aggregate intrinsic value of stock options and vesting of restricted stock awards for the six months ended June 30, 2021 and 2020 was approximately $ 115 million and $ 8 million, respectively.

The aggregate intrinsic value of stock options and SARs exercises and vesting of RSUs for the nine months ended September 30, 2021 and 2020 was approximately $ 381 million and $ 164 million, respectively.

Employee Stock Purchase Plan

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The ESPP allows employees to purchase shares of common stock of the Company at each purchase date through payroll deductions of up to a maximum of 15 % of their compensation, at 85 % of the lesser of the market price of the shares at the time of purchase or the market price on the beginning date of an option period (or, if later, the date during the option period when the employee was first eligible to participate).

As of June 30, 2021, there were 212,876 shares available for issuance under the ESPP.

As of September 30, 2021, there were 164,495 shares available for issuance under the ESPP.

The ESPP is considered compensatory for financial reporting purposes.

1 unchanged sentence

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

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Restricted Stock Units

The following is a summary of restricted stock units activity for the six months ended June 30, 2021:

The following is a summary of RSUs activity for the nine months ended September 30, 2021:

Shares Per Share

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Restricted stock units forfeited ( 32,599 ) $ 131.95

Outstanding and Unvested at June 30, 2021 1,095,599 $ 84.30

Outstanding and Unvested at September 30, 2021 845,845 $ 110.68

The Company recorded all stock-based compensation expense in the consolidated statements of operations as follows (in thousands):

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

2 unchanged sentences

Total stock-based compensation expense $ 45,274 $ 65,705 $ 151,457 $ 77,602

As of June 30, 2021, there was approximately $ 230 million of total unrecognized compensation expense related to unvested stock options, SARs, restricted stock units and the ESPP.

The increase in unrecognized compensation expense is primarily due to the significant increase in the Company's common stock price starting in 2020.

As of September 30, 2021, there was approximately $ 209 million of total unrecognized compensation expense related to unvested stock options, SARs, RSUs and the ESPP.

This unrecognized non-cash compensation expense is expected to be recognized over a weighted-average period of one year , and will be allocated between research and development and general and administrative expenses accordingly.

This estimate does not include the impact of other possible stock-based awards that may be made during future periods and awards that require approval by the stockholders.

Note 10 – Contingencies

In February 2021, a Novavax stockholder filed a derivative complaint against certain members of the Company's board of directors and certain members of senior management in the Delaware Court of Chancery with Novavax as a nominal defendant.

The plaintiff challenges two sets of equity awards made in April 2020 and in June 2020 on the ground that they were “spring-loaded,” that is, made at a time when certain board members or members of senior management allegedly possessed undisclosed positive material information concerning the Company.

The complaint asserts claims for breach of fiduciary duty, waste, and unjust enrichment.

The plaintiff seeks an award of damages to the Company, an order rescinding the April 2020 and June 2020 awards or requiring disgorgement, and an award of attorneys’ fees incurred in connection with the litigation.

On May 10, 2021, the defendants moved to dismiss the complaint in its entirety.

On June 17, 2021, the Company’s stockholders voted FOR ratification of the April 2020 awards and ratification of the June 2020 awards.

Details of the ratification proposals are set forth in the Company’s Definitive Proxy Statement filed with the SEC on May 3, 2021.

The results of the vote were disclosed in the Company’s Current Report on Form 8-K filed with the SEC on June 24, 2021.

Should the plaintiff elect to move forward with his claims, the defendants intend to move for summary judgment on ratification grounds while continuing to pursue dismissal.

As such, the Company is not expecting any material estimable financial impact of the plaintiff's claim.

This estimate does not include the impact of other possible stock-based awards that may be made during future periods.

Note 10 – Revenue

During the three and six months ended June 30, 2021 and 2020, the Company performed research and development under government contracts and grant, license and clinical development agreements.

The Company's revenue primarily

consisted of funding under U.S.

government contracts and the Company's funding arrangement with CEPI to advance the clinical development and manufacturing of NVX-CoV2373.

During the three and nine months ended September 30, 2021 and 2020, the Company performed research and development under government contracts and grant, license and clinical development agreements.

The Company's revenue

primarily consisted of funding under U.S.

government contracts and the Company's funding arrangement with CEPI to advance the clinical development and manufacturing of NVX-CoV2373, and royalties under its licensing arrangements.

The Company recorded revenue as follows (in thousands):

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

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Department of Defense (the “DoD”).

As of June 30, 2021, the Company's OWS agreement was fully funded up to $ 1.75 billion to support certain activities related to the development of NVX-CoV2373 and the manufacture and delivery of 100 million doses of the vaccine candidate to the U.S.

government has recently instructed the Company to prioritize alignment with the U.S.

As of September 30, 2021, the Company's OWS agreement was amended to increase the contract ceiling by $ 52.9 million for a revised total of $ 1.8 billion.

The agreement’s authorized funding and original scope of work remains unchanged at $ 1.75 billion for support of certain activities related to the development of NVX-CoV2373 and the manufacture and delivery of 100 million doses of the vaccine candidate to the U.S.

In July 2021, the U.S.

government instructed the Company to prioritize alignment with the U.S.

Food and Drug Administration on the Company's analytic methods before conducting additional U.S.

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manufacturing until such agreement has been made.

In the third quarter of 2021, the Company updated its estimate-at-completion to reflect the impact of the change to the recognition of the fixed-fee under the contract.

government also instructed the Company to proceed with work under the OWS Agreement related to all other activities, including ongoing clinical trials and nonclinical studies, regulatory interactions, analytics/assays and characterization of manufactured vaccine and project management.

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Collaboration and License Agreements

In February 2021, the Company finalized an expanded collaboration and license agreement with SK bioscience to manufacture and commercialize NVX-CoV2373 for sale to the government of Korea.

Concurrently, SK bioscience finalized an advance purchase agreement with the Korean government to supply 40 million doses of NVX-CoV2373 to the Republic of Korea beginning in 2021.

In February 2021, the Company finalized an expanded collaboration and license agreement with SK bioscience, Co., Ltd.

("SK bioscience") to manufacture and commercialize NVX-CoV2373 for sale to the government of Korea.

Concurrently, SK bioscience finalized an advance purchase agreement ("APA") with the Korean government to supply 40 million doses of NVX-CoV2373 to the Republic of Korea beginning in 2021.

The agreement is in addition to the Company's existing manufacturing arrangement with SK bioscience entered into in August 2020.

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SK bioscience will pay the Company a tiered royalty in the low to middle double-digit range on the sale of NVX-CoV2373.

The Company recognized royalties of $ 23.5 million during the three and six months ended June 30, 2021 related to SK bioscience's sale of the antigen component of NVX-CoV2373 to the Korean government.

The Company recognized royalties of $ 39.9 million and $ 63.4 million during the three and nine months ended September 30, 2021, respectively, related to SK bioscience's sale of the antigen component of NVX-CoV2373 to the Korean government.

In May 2021, the Company entered a non-binding Memorandum of Understanding ("MOU") with the Ministry of Health and Welfare of Korea and SK bioscience to explore further cooperation in the development and manufacturing of vaccines, including NVX-CoV2373.

Under the MOU, the Company agreed to potentially explore the development of new vaccine products with SK bioscience, including COVID-19 variant vaccines, and/or an influenza/COVID-19 combination vaccine.

In February 2021, the Company finalized a collaboration agreement previously announced in August 2020, with Takeda Pharmaceutical Company Limited (“Takeda”) for the exclusive development, manufacturing and commercialization of NVX-CoV2373 in Japan.

Under the agreement, the Company will transfer technology and supply the Matrix-M ™ adjuvant to Takeda, which will manufacture the antigen component of NVX-CoV2373.

Takeda will receive funding from the Government

of Japan’s Ministry of Health, Labour and Welfare to support the technology transfer, establishment of infrastructure and scale-up of manufacturing.

In February 2021, the Company finalized a collaboration and license agreement previously announced in August 2020, with Takeda Pharmaceutical Company Limited (“Takeda”), under which the Company granted Takeda an exclusive license to develop, manufacture and commercialize NVX-CoV2373 in Japan.

Under the agreement, Takeda purchases Matrix-M™ adjuvant from the Company to manufacture doses of finished NVX-CoV2373.

Takeda is receiving funding from the Government of Japan’s Ministry of Health, Labour and Welfare ("MHLW") to support the technology transfer, establishment of infrastructure and scale-up of manufacturing and, in September 2021, Takeda finalized an agreement with the MHLW for the purchase of 150 million doses of NVX-CoV2373.

The Company will be entitled to receive royalties based on the achievement of certain development and commercial milestones, as well as on a portion of net profits from the sale of the vaccine.

In July 2020, the Company entered into a supply and license agreement with Serum Institute of India Private Limited (“SIIPL”), which was amended and restated in July 2021, under which it granted exclusive (in India) and non-exclusive (in designated other countries) licenses to SIIPL for the development, co-formulation, filling and finishing, registration and commercialization of NVX-CoV2373.

SIIPL agreed to purchase Matrix-M™ adjuvant from the Company and the Company granted SIIPL a non-exclusive license to manufacture the antigen drug substance component of NVX-CoV2373 in SIIPL’s licensed territory solely for use in the manufacture of NVX-CoV2373 under the terms of the agreement.

The parties will equally split the revenue from SIIPL’s sale of NVX-CoV2373 in its licensed territory, net of agreed costs.

In partnership with SIIPL, in August 2021, for the Company's COVID-19 vaccine that will be manufactured and commercialized with SIIPL, the Company filed regulatory submissions for EUA with the Drugs Controller General of India, regulatory agencies in Indonesia, the Philippines and emergency use listing ("EUL") for the World Health Organization ("WHO").

The grant of EUL by the WHO is a prerequisite for exports to numerous countries participating in the COVAX Facility, which was established to allocate and distribute vaccines equitably to participating countries and economies.

EUA was granted by Indonesia on October 31, 2021.

Vaccine Supply Agreements

During the six months ended June 30, 2021, the Company entered into various Advanced Purchase Agreements ("APAs"), including an agreement with Her Majesty the Queen in Right of Canada as represented by the Minister of Public Works and Government Services to supply 52 million doses of NVX-CoV2373.

The Company will submit an application for regulatory approval in Canada following its first submission for regulatory approval in another priority market and the Canada authority will provide reasonable assistance to the Company with obtaining such regulatory approval.

During the nine months ended September 30, 2021, the Company entered into various APA, including an agreement with Her Majesty the Queen in Right of Canada as represented by the Minister of Public Works and Government Services to supply 52 million doses of NVX-CoV2373.

As part of the agreement, Canada will have the option to purchase up to an additional 24 million doses of NVX-CoV2373.

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The Company plans to produce NVX-CoV2373 at the National Research Council’s Biologics Manufacturing Centre in Montreal once both the vaccine candidate and the facility receive Health Canada approvals.

In May 2021, the Company finalized an APA with Gavi, the Vaccine Alliance ("Gavi") building upon its MOU previously announced in February 2021.

Under the terms of the agreement, 1.1 billion doses of NVX-CoV2373 are to be made available to countries participating in the COVAX Facility, which was established to allocate and distribute vaccines equitably to participating countries and economies.

On November 1, 2021, the Company submitted an application for regulatory approval in Canada.

In May 2021, the Company entered into an APA with Gavi, the Vaccine Alliance ("Gavi") building upon its MOU previously announced in February 2021.

Under the terms of the agreement, 1.1 billion doses of NVX-CoV2373 are to be made available to countries participating in the COVAX Facility.

The Company expects to manufacture and distribute 350 million doses of NVX-CoV2373 to countries participating under the COVAX Facility.

Under a separate purchase agreement with Gavi, Serum Institute of India Private Limited ("SIIPL") is expected to manufacture and deliver the balance of the 1.1 billion doses of NVX-CoV2373 for low- and middle-income countries participating in the COVAX Facility.

Under a separate purchase agreement with Gavi, SIIPL is expected to manufacture and deliver the balance of the 1.1 billion doses of NVX-CoV2373 for low- and middle-income countries participating in the COVAX Facility.

The Company expects to deliver doses with antigen and adjuvant manufactured at facilities directly funded under the Company's funding agreement with CEPI.

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Together with SIIPL, the Company expects to initiate delivery of doses following receipt of appropriate regulatory authorizations.

Under the agreement, the Company received an upfront payment from Gavi of $ 350 million during the second quarter of 2021 and expects to receive an additional payment of $ 350 million if the Company secures emergency use listing for NVX-CoV2373 by the World Health Organization ("WHO").

During the six months ended June 30, 2021, changes in the Company's accounts receivables, unbilled services and deferred revenue balances were as follows (in thousands):

December 31, 2020 Additions Deductions June 30, 2021

Under the agreement, the Company received an upfront payment from Gavi of $ 350 million during the second quarter of 2021 and expects

to receive an additional payment of $ 350 million if the Company secures emergency use listing for NVX-CoV2373 by the WHO.

In August 2021, the Company executed an APA with the European Commission acting on behalf of various European Union member states (the "Commission"), to supply a minimum of 20 million and up to 100 million initial doses of NVX-CoV2373, with the option for the Commission to purchase up to a maximum aggregate of 100 million additional doses in one or more tranches, through 2023.

Under the terms of the APA, the Company agreed to use reasonable best efforts to seek European marketing authorization for NVX-CoV2373, manufacture the vaccine in facilities located in the European Union and ensure continued efficacy of the vaccine against variants of the SARS-CoV-2 virus.

Furthermore, if European marketing authorization is obtained, the Company agreed to commence delivering shipments of the vaccine to participating European Union member states as soon as possible thereafter pursuant to order forms to be entered into with such European Union member states based on an allocation determined by the Commission.

Pursuant to the terms of the APA, the Company is prohibited from supplying NVX-CoV2373 to any third party if such delivery would impede or limit the fulfillment of the Company’s obligations to the Commission under the APA, except with respect to the Company’s obligations under its APA with Gavi.

During the nine months ended September 30, 2021, changes in the Company's accounts receivables, unbilled receivable and deferred revenue balances were as follows (in thousands):

December 31, 2020 Additions Deductions September 30, 2021

Accounts receivable $ 262,012 $ 1,601,385 $ ( 1,788,114 ) $ 75,283

Unbilled services — 499,239 ( 477,865 ) 21,374

Unbilled receivable

— 635,975 ( 601,297 ) 34,678

Deferred revenue 273,228 1,277,247 ( 288,115 ) 1,262,360

As of June 30, 2021, the deferred revenue of $ 1.2 billion primarily comprised of approximately $ 1.1 billion related to upfront payments under APAs.

The aggregate amount of the transaction price allocated to performance obligations that were unsatisfied (or partially unsatisfied) was $ 7.0 billion as at June 30, 2021.

The Company expects to fulfil its unsatisfied performance obligations within 12 months.

As of September 30, 2021, the deferred revenue of $ 1.3 billion primarily comprised of approximately $ 1.2 billion related to upfront payments under APAs.

The upfront payments are intended to assist the Company in funding investments related to building out and operating its manufacturing and distribution network, among other expenses, in support of its global supply commitment.

Such upfront payments generally become non-refundable upon our achievement of certain development and commercial milestones.

However, certain of the APAs may be terminated by the counterparty if the Company does not timely achieve requisite regulatory approval for NVX-CoV2373 in the relevant jurisdictions under such agreements.

If the APAs were terminated, the refundable portion of the upfront payments will be repaid.

The aggregate amount of the transaction price allocated to performance obligations that were unsatisfied (or partially unsatisfied) was $ 7.2 billion as on September 30, 2021.

The Company expects to fulfill its unsatisfied performance obligations within 12 months.

Note 11 – Subsequent Events

In August 2021, the Company announced that it finalized the terms of an APA with the European Commission, which the parties expect to execute during the third quarter of 2021, for the purchase of up to 100 million initial doses of NVX-CoV2373, with the option of the European Commission to purchase an additional 100 million doses through 2023.

In August 2021, the Company filed regulatory submissions in partnership with SIIPL for emergency use authorization in multiple markets.

Regulatory submissions were filed with the Drugs Controller General of India, as well as regulatory agencies in Indonesia and the Philippines.

In addition to these filings, the Company expects to file a submission to the WHO for emergency use listing in August of 2021.

In November 2021, in partnership with SIIPL, the Company received EUA from the National Agency of Drug and Food Control of the Republic of Indonesia, or Badan Pengawas Obat dan Makanan, following the August 2021 regulatory submission made by SIIPL with support from the Company.

EUA was granted for the Company's recombinant nanoparticle protein-based vaccine with its Matrix-M TM adjuvant, which will be manufactured and marketed in Indonesia by SIIPL under the brand name COVOVAX TM .

Indonesia contracted with SIIPL for the purchase of 50 million doses of COVOVAX TM .

In November 2021, the Company completed the rolling submission of all modules required by the European Medicines Agency ("EMA") to support final regulatory review.

The final step to complete the application in the European Union will be an invitation from EMA to file for conditional marketing authorization.

In October and November 2021, the Company completed rolling regulatory submissions in key markets for NVX-CoV2373.

The Company filed for conditional marketing authorization with the United Kingdom Medicines and Healthcare products Regulatory Agency, leveraging its manufacturing partnership with SIIPL.

Additionally, the Company filed for provisional approval with Australia’s Therapeutic Goods Administration, authorization with Health Canada, provisional approval with New Zealand Medicines and Medical Devices Authority and the WHO for EUL.

In October 2021, the Company entered into a supply agreement with SIIPL and Serum Life Sciences Limited.

("SLS"), an affiliate of SIIPL, for the manufacture of NVX-CoV2373.

In October 2021, the Company also entered into a contract development manufacture agreement with SLS, where SLS will manufacture and supply finished vaccine product to the Company using antigen drug substance and Matrix-M™ adjuvant supplied by the Company.

In October 2021, the Company entered into a CMO agreement with Mabion S.A.

(“Mabion”) for the large-scale manufacturing of NVX-CoV2373 through 2026 at the Mabion facility located near Warsaw, Poland.

In October 2021, the Company entered into a lease for approximately 63,000 square feet of space for premises located in Germantown, MD.

The Company intends to use the premises for manufacturing, research and development and offices.

The term of the lease is approximately eight years with options to extend the lease.

The lease provides for an annual base rent of $ 1.9 million that is subject to future rent increases, and obligates the Company to pay building operating costs.

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-Q

Item 1. Financial Statements