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Item 1. Financial Statements

2022-08-09 compared with 2022-05-10 · 238 added, 147 removed, 325 unchanged (54% of the section changed)

4 unchanged sentences

For the Three Months Ended

June 30, For the Six Months Ended

2022 2021 2022 2021

Product sales $ 55,455 $ — $ 641,083 $ —

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Basic $ ( 6.53 ) $ ( 4.75 ) $ ( 3.97 ) $ ( 7.82 )

Diluted $ 2.56 $ ( 3.05 )

Weighted average number of common shares outstanding

Basic 78,143 74,118 77,305 73,580

Diluted 80,711 73,035

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(in thousands)

For the Three Months Ended

Net income (loss) $ 203,408 $ ( 222,719 )

June 30, For the Six Months Ended

2022 2021 2022 2021

Net loss $ ( 510,485 ) $ ( 352,317 ) $ ( 307,077 ) $ ( 575,036 )

Other comprehensive income (loss):

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Other comprehensive income (loss) ( 9,558 ) 4,527 ( 9,517 ) ( 2,854 )

Comprehensive income (loss) $ 203,449 $ ( 230,100 )

Comprehensive loss $ ( 520,043 ) $ ( 347,790 ) $ ( 316,594 ) $ ( 577,890 )

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

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Total assets $ 2,622,993 $ 2,576,753

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

LIABILITIES AND STOCKHOLDERS’ DEFICIT

Current liabilities:

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Stockholders' equity (deficit):

Common stock, $ 0.01 par value, 600,000,000 shares authorized at March 31, 2022 and December 31, 2021;

and 78,722,337 shares issued and 78,122,978 shares outstanding at March 31, 2022 and 76,433,151 shares issued and 75,841,171 shares outstanding at December 31, 2021

Common stock, $ 0.01 par value, 600,000,000 shares authorized at June 30, 2022 and December 31, 2021;

and 78,776,234 shares issued and 78,166,935 shares outstanding at June 30, 2022 and 76,433,151 shares issued and 75,841,171 shares outstanding at December 31, 2021

Additional paid-in capital 3,604,614 3,351,967

Accumulated deficit ( 3,925,027 ) ( 3,617,950 )

Treasury stock, cost basis, 599,359 shares at March 31, 2022 and 591,980 shares at December 31, 2021

Treasury stock, cost basis, 609,299 shares at June 30, 2022 and 591,980 shares at December 31, 2021

( 86,455 ) ( 85,101 )

Accumulated other comprehensive loss ( 10,870 ) ( 1,353 )

Total stockholders’ equity (deficit) 65,324 ( 351,673 )

Total liabilities and stockholders’ equity (deficit) $ 2,834,875 $ 2,576,753

Total stockholders’ deficit ( 416,950 ) ( 351,673 )

Total liabilities and stockholders’ deficit $ 2,622,993 $ 2,576,753

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

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CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)

Three Months Ended March 31, 2022 and 2021

Three and Six Months Ended June 30, 2022 and 2021

(in thousands, except share information)

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Shares Amount

Balance at December 31, 2021 76,433,151 $ 764 $ 3,351,967 $ ( 3,617,950 ) $ ( 85,101 ) $ ( 1,353 ) $ ( 351,673 )

Balance at March 31, 2022 78,722,337 $ 787 $ 3,566,292 $ ( 3,414,542 ) $ ( 85,901 ) $ ( 1,312 ) $ 65,324

Stock-based compensation — — 38,048 — — — 38,048

Stock issued under incentive programs 53,897 1 274 — ( 554 ) — ( 279 )

Foreign currency translation adjustment — — — — — ( 9,558 ) ( 9,558 )

Net loss — — — ( 510,485 ) — — ( 510,485 )

Balance at June 30, 2022 78,776,234 $ 788 $ 3,604,614 $ ( 3,925,027 ) $ ( 86,455 ) $ ( 10,870 ) $ ( 416,950 )

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

Stock-based compensation — — 53,123 — — — 53,123

Stock issued under incentive programs 201,768 2 3,848 — ( 2,748 ) — 1,102

Foreign currency translation adjustment — — — — — 4,527 4,527

Net loss — — — ( 352,317 ) — — ( 352,317 )

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

Common Stock Additional

Capital Accumulated

Deficit Treasury

Stock Accumulated Other

Comprehensive

Income (Loss) Total Stockholders'

Equity (Deficit)

Shares Amount

Balance at December 31, 2021 76,433,151 $ 764 $ 3,351,967 $ ( 3,617,950 ) $ ( 85,101 ) $ ( 1,353 ) $ ( 351,673 )

Non-cash stock-based compensation — — 70,981 — — — 70,981

Stock issued under incentive programs 145,685 2 2,303 — ( 1,354 ) — 951

Issuance of common stock, net of issuance costs of $ 2,311

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Foreign currency translation adjustment — — — — — ( 9,517 ) ( 9,517 )

Net income — — — 203,408 — 203,408

Balance at March 31, 2022 78,722,337 $ 787 $ 3,566,292 $ ( 3,414,542 ) $ ( 85,901 ) $ ( 1,312 ) $ 65,324

Net loss — — — ( 307,077 ) — — ( 307,077 )

Balance at June 30, 2022 78,776,234 $ 788 $ 3,604,614 $ ( 3,925,027 ) $ ( 86,455 ) $ ( 10,870 ) $ ( 416,950 )

Balance at December 31, 2020 71,350,365 $ 714 $ 2,535,476 $ ( 1,874,199 ) $ ( 41,806 ) $ 7,024 $ 627,209

Stock-based compensation — — 53,060 — — — 53,060

Non-cash stock-based compensation — — 106,183 — — — 106,183

Stock issued under incentive programs 743,019 7 30,593 — ( 5,399 ) — 25,201

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Net loss — — — ( 575,036 ) — — ( 575,036 )

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

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

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(in thousands)

Three Months Ended March 31,

Six Months Ended June 30,

Operating Activities:

Net income (loss) $ 203,408 $ ( 222,719 )

Reconciliation of net income (loss) to net cash provided by (used in) operating activities:

Net loss $ ( 307,077 ) $ ( 575,036 )

Reconciliation of net loss to net cash provided by (used in) operating activities:

Depreciation and amortization 13,485 4,727

Non-cash stock-based compensation 70,981 106,183

Right-of-use assets expensed 214 951

Provision for excess and obsolete inventory 155,662 —

Right-of-use assets expensed, net of credits received ( 3,291 ) 12,707

Other items, net ( 642 ) 3,855

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Inventory ( 403,725 ) —

Receivables, prepaid expenses, and other assets ( 56,016 ) 220,205

Accounts payable and accrued expenses ( 115,500 ) 53,325

Accounts receivable, prepaid expenses, and other assets 112,845 193,004

Accounts payable, accrued expenses, and other liabilities 179,158 115,212

Deferred revenue ( 76,809 ) 946,845

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Effect of exchange rate on cash, cash equivalents, and restricted cash ( 4,453 ) ( 348 )

Net increase in cash, cash equivalents, and restricted cash 55,841 1,380,332

Net increase (decrease) in cash, cash equivalents, and restricted cash ( 140,744 ) 1,474,001

Cash, cash equivalents, and restricted cash at beginning of period 1,528,259 648,738

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022

June 30, 2022

Note 1 – Organization and Business

Novavax, Inc.

(“Novavax,” and together with its wholly owned subsidiaries, the “Company”) is a biotechnology company that promotes improved global health through the discovery, development, and commercialization of innovative vaccines to prevent serious infectious diseases.

(“Novavax,” and together with its wholly owned subsidiaries, the “Company”) is a biotechnology company that promotes improved health globally through the discovery, development, and commercialization of innovative vaccines to prevent serious infectious diseases.

The Company’s coronavirus vaccine, NVX-CoV2373, and its lead influenza vaccine candidate, a quadrivalent influenza vaccine, previously known as NanoFlu, 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.

NVX-CoV2373 and the Company’s influenza vaccine include the use of the Company's proprietary Matrix-M ™ adjuvant.

As of March 31, 2022, the Company had received approval, interim authorization, provisional approval, conditional marketing authorization, and emergency use authorization (“EUA”) from multiple regulatory authorities globally for NVX-CoV2373, including by the World Health Organization (“WHO”), as well as the European Medicines Agency's (“EMA”) and the United Kingdom's Medicines and Healthcare products Regulatory Agency (“MHRA”), both of which are considered regulatory authorities that apply stringent standards and meet the WHO standards for quality, safety, and efficacy in their regulatory review process.

During the three months ended March 31, 2022, the Company commenced commercial shipments of NVX-CoV2373 doses, under the brand name, Nuvaxovid™.

The Company is developing various variant vaccines, including for Omicron subvariants, and bivalent formulations with prototype vaccine (NVX-CoV2373).

The Company has announced preclinical boosting data for NVX-CoV2373, NVX-CoV2515, and bivalent formulations which demonstrated strong antibody levels.

The Company is also participating in an ongoing Phase 3 strain change trial to assess safety and antibody responses following primary vaccination with mRNA vaccines.

As of June 30, 2022, the Company had received approval, interim authorization, provisional approval, conditional marketing authorization, and emergency use authorization (“EUA”) from multiple regulatory authorities globally for NVX-CoV2373, including by the World Health Organization (“WHO”), as well as the European Medicines Agency's (“EMA”) and the United Kingdom's Medicines and Healthcare products Regulatory Agency (“MHRA”), both of which are considered regulatory authorities that apply stringent standards and meet the WHO standards for quality, safety, and efficacy in their regulatory review process.

In July 2022, the Company received emergency use authorization for NVX-CoV2373 from the U.S.

Food and Drug Administration (“FDA”).

The Company commenced commercial shipments of NVX-CoV2373 doses under the brand name Nuvaxovid™ in 2022.

Note 2 – Summary of Significant Accounting Policies

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The consolidated financial statements 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.

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 GAAP have been condensed or omitted as permitted under the rules and regulations of the United States Securities and Exchange Commission (“SEC”).

GAAP have been condensed or omitted as permitted under the rules and regulations of the United States Securities and Exchange Commission (“SEC”).

The unaudited consolidated financial statements include the accounts of Novavax, Inc.

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All intercompany accounts and transactions have been eliminated in consolidation.

Accumulated other comprehensive income included a foreign currency translation loss of $ 1.3 million and $ 1.4 million as of March 31, 2022 and December 31, 2021, respectively.

Accumulated other comprehensive income included a foreign currency translation loss of $ 10.9 million and $ 1.4 million as of June 30, 2022 and December 31, 2021, 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, 2021.

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Use of Estimates

The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period.

The preparation of the consolidated financial statements in conformity with U.S.

GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period.

Actual results could differ materially from those estimates.

Revenue Recognition - Product Sales

Product sales are associated with our NVX-CoV2373 supply agreements, sometimes referred to as advance purchase agreements (“APAs”), with various international governments.

Product sales are associated with the Company’s NVX-CoV2373 supply agreements, sometimes referred to as advance purchase agreements (“APAs”), with various international governments.

The Company recognizes revenue from product sales based on the transaction price per dose calculated in accordance with Accounting Standards Codification Topic 606, Revenue from Contracts with Customers (Topic 606) when control of the product transfers to the customer and customer acceptance has occurred, unless such acceptance provisions are deemed perfunctory.

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Cost of sales includes cost of raw materials, production, and manufacturing overhead costs associated with the Company’s product sales during the period.

Cost of sales also includes adjustments for excess, obsolete, or expired inventory to the extent management determines that the cost cannot be recovered based on estimates about future demand.

Cost of sales does not include certain expenses related to raw materials, production, and manufacturing overhead costs which were expensed as described under the caption “Inventory” below.

Inventory is recorded at the lower of lease-adjusted standard cost or net realizable value under the First In, First Out (“FIFO”) methodology, taking into consideration the expiration of the inventory item.

The Company determines cost using a standard cost method, which approximates average cost.

Average cost consists primarily of costs associated with the purchase of raw materials, the cost of manufacturing goods, including the services and products of third-party suppliers, and the application of manufacturing overhead.

Cost of sales also includes adjustments for excess, obsolete, or expired inventory;

idle capacity;

and losses on firm purchase commitments to the extent the cost cannot be recovered based on estimates about future demand.

Cost of sales does not include certain expenses related to raw materials, production, and manufacturing overhead costs which were expensed prior to regulatory authorization as described under the caption “Inventory” below.

Inventory is recorded at the lower of cost or net realizable value under the First In, First Out (“FIFO”) methodology, taking into consideration the expiration of the inventory item.

The Company determines the cost of raw materials using moving average costs and the cost of semi-finished and finished goods using a standard cost method adjusted on a periodic basis to reflect the deviation in the actual cost from the standard cost estimate.

Standard costs consist primarily of the cost of manufacturing goods, including direct materials, direct labor, the services and products of third-party suppliers, and the application of manufacturing overhead.

The Company utilizes third-party contract manufacturing organizations (“CMOs”), contract development and manufacturing organizations (“CDMOs”), and other suppliers and service organizations to support the procurement and processing of raw materials, management of inventory, packaging, and the delivery process.

Adjustments to reduce the cost of inventory to its net realizable value, if required, are made for estimated excess, obsolete, or expired inventory through cost of goods sold.

Adjustments to reduce the cost of inventory to its net realizable value, if required, are made for estimated excess, obsolete, or expired inventory through cost of sales.

Prior to initial regulatory authorization for its product candidates, the Company expenses costs relating to raw materials, production, and manufacturing overhead costs as research and development expenses in the consolidated statements of operations, in the period incurred.

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The ASU is effective for the Company beginning on January 1, 2023.

Management is currently evaluating the effect of the guidance and does expect it to have a material impact on the Company’s consolidated financial statements.

Management is currently evaluating the effect of the guidance and does not expect it to have a material impact on the Company’s consolidated financial statements.

In August 2020, the FASB issued ASU No.

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Note 3 – Revenue

The Company's accounts receivable included $ 425.9 million and $ 419.7 million related to amounts that were billed to customers and $ 52.3 million and $ 35.3 million related to amounts which had not yet been billed to customers as of March 31, 2022 and December 31, 2021, respectively.

During the three months ended March 31, 2022, changes in the Company's accounts receivables and deferred revenue balances were as follows (in thousands):

December 31, 2021 Additions Deductions March 31, 2022

The Company's accounts receivable included $ 165.6 million and $ 419.7 million related to amounts that were billed to customers and $ 29.0 million and $ 35.3 million related to amounts which had not yet been billed to customers as of June 30, 2022 and December 31, 2021, respectively.

During the six months ended June 30, 2022, changes in the Company's accounts receivables and deferred revenue balances were as follows (in thousands):

December 31, 2021 Additions Deductions June 30, 2022

Contract receivables:

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$ 1,595,472 49,107 ( 128,432 ) $ 1,516,147

(1) Amount is comprised of $ 1.1 billion and $ 1.4 billion of current Deferred revenue and $ 441.7 million and $ 172.5 million of non-current Deferred revenue as of March 31, 2022 and December 31, 2021, respectively.

The aggregate amount of the transaction price allocated to performance obligations that were unsatisfied (or partially unsatisfied), excluding amounts related to sales-based royalties, was approximately $ 7 billion as of March 31, 2022.

The timing to fulfill performance obligations related to grant agreements will depend on the results of the Company's research and development activities, including clinical trials.

The timing to fulfill performance obligations related to APAs will depend on timing of product manufacturing, delivery, and receipt of marketing authorizations.

The remaining unfilled performance obligations are expected to be fulfilled in less than 12 months.

(1) Amount is comprised of $ 701.5 million and $ 1.4 billion of current Deferred revenue and $ 814.6 million and $ 172.5 million of non-current Deferred revenue as of June 30, 2022 and December 31, 2021, respectively.

The timing to fulfill performance obligations related to grant agreements will depend on the results of the Company's research and development activities, including clinical trials, and delivery of doses.

The timing to fulfill performance obligations related to APAs will depend on timing of product manufacturing, receipt of marketing authorizations for additional indications, delivery of doses based on customer demand, and the ability of the customer to request variant vaccine in place of the prototype NVX-CoV2373 under certain of our APAs.

Failure to meet regulatory milestones, product volume, or delivery timing obligations under the Company’s APA agreements may require the Company to refund portions of upfront payments or result in reduced future payments, which could result in a material and adverse effect on our unsatisfied performance obligations.

The remaining unfilled performance obligations not related to grant agreements or APAs are expected to be fulfilled in less than 12 months.

The Company recognized grant revenue as follows (in thousands):

Three Months Ended

June 30, Six Months Ended

2022 2021 2022 2021

government partnership (“OWS”) $ 107,774 $ 239,493 $ 207,075 $ 603,053

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Bill & Melinda Gates Foundation (“BMGF”)

Total $ 99,301 $ 446,893

Total grant revenue $ 107,774 $ 272,489 $ 207,075 $ 719,382

Government Partnership

The Company’s U.S.

government partnership consists of an agreement (“the “OWS Agreement”) with Advanced Technology International, the Consortium Management Firm acting on behalf of the Medical CBRN Defense Consortium in connection with the partnership formerly known as Operation Warp Speed (“OWS”).

In July 2021, the U.S.

government instructed the Company to prioritize alignment with the FDA on the Company's analytic methods before conducting additional U.S.

manufacturing and further indicated that the U.S.

government would not fund additional U.S.

manufacturing until such alignment was made.

In June 2022, the U.S.

government agreed to the manufacture and delivery of approximately 3 million doses of NVX-CoV2373 under the OWS Agreement as the Company had completed alignment with the FDA’s analytic methods.

The Company updated its estimate-at-completion to reflect the impact of this authorization to the recognition of the fixed fee under the contract.

In July 2022, the Company formally modified the OWS Agreement to provide for an initial delivery to the U.S.

government of approximately 3 million doses of NVX-CoV2373, and the Company modified its existing agreement with the U.S.

Department of Defense (“DoD”) to provide for an initial delivery of approximately 0.2 million doses of NVX-CoV2373 (see Note 15).

Royalties and Other

For the three months ended March 31, 2022, the Company recognized $ 7.4 million in revenue related to sales-based royalties.

For the three months ended March 31, 2021, the Company did no t recognize any revenue related to sales-based royalties.

Note 4 – Collaboration and License Agreements

During the three and six months ended June 30, 2022, the Company recognized $ 1.7 million and $ 9.2 million, respectively, in revenue related to sales-based royalties.

During the three months ended June 30, 2022, the Company recognized a $ 20.0 million milestone payment upon the first sale of NVX-CoV2373 in Japan.

During the three months ended June 30, 2021, the Company recognized $ 23.5 million in revenue related to sales-based royalties.

During the three months ended March 31, 2021, the Company did not recognize any revenue related to sales-based royalties.

Advance Purchase Agreements (APAs)

Under the terms of the Company’s contracted supply commitment with Gavi, which includes the supply obligation of its licensed partner, Serum Institute of India Private Limited (“SIIPL”), 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.

The Novavax portion is a supply agreement that contemplates that the Company will manufacture and distribute 350 million doses.

Under that agreement with Gavi, the Company received an upfront payment of $ 350 million from Gavi in 2021 and an additional payment of $ 350 million in the first quarter of 2022 related to the Company’s achieving WHO Emergency Use Listing.

Although Novavax is prepared to deliver the quantities of NVX-CoV2373 doses to Gavi under the terms of the supply agreement, the Company was notified by Gavi of its intent to seek to revise the number and timing of doses of NVX-CoV2373 supplied by Novavax under such agreement.

Furthermore, Gavi may seek partial or full recovery of the prior nonrefundable payments it has made to Novavax.

The Company’s position is that Gavi has no contractual right to recover prior nonrefundable payments.

To date, Novavax has not received an order from Gavi and the timing and quantities of future orders to deliver NVX-CoV2373 to the COVAX facility are unclear.

Under the terms of the Company’s SARS-CoV-2 Vaccine Supply Agreement, originally entered into in October 2020 (the “Original UK Supply Agreement”) with The Secretary of State for Business, Energy and Industrial Strategy, acting on behalf of the government of the United Kingdom of Great Britain and Northern Ireland (the “Authority”), the Authority agreed to purchase 60 million doses of NVX-CoV2373.

In July 2022, the Company entered into an Amended and Restated SARS-CoV-2 Vaccine Supply Agreement (the “Amended and Restated UK Supply Agreement”) with the Authority, under which the Authority agreed to purchase a minimum of 1 million doses and up to an additional 15 million doses of NVX-CoV2373, with the number of additional doses contingent on the Company’s timely achievement of supportive recommendations from the Joint Committee on Vaccination and Immunisation (the “JCVI”) (see Note 15).

The Company has an APA with the European Commission (“EC”) acting on behalf of various European Union member states to supply a minimum of 20 million and up to 100 million initial doses of NVX-CoV2373, with the option for the EC to purchase an additional 100 million doses up to a maximum aggregate of 200 million doses in one or more tranches, through 2023.

The Company is in the process of finalizing a revised delivery schedule for the remaining 42 million doses of the 70 million previously committed doses under the APA that were originally scheduled for delivery during the first and second quarters of 2022.

In July and August 2022, the Company was notified by the EC that it was cancelling 5 million doses of its prior commitment originally scheduled for delivery in the first and second quarters of 2022, in accordance with the APA, and reducing the order to 65 million doses (see Note 15).

Note 4 – Collaboration, License, and Supply Agreements

Serum Institute

The Company previously granted Serum Institute of India Private Limited (“SIIPL”) exclusive and non-exclusive licenses for the development, co-formulation, filling and finishing, registration, and commercialization of NVX-CoV2373.

SIIPL agreed to purchase the Company's Matrix-M TM adjuvant 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.

The Company previously granted SIIPL exclusive and non-exclusive licenses for the development, co-formulation, filling and finishing, registration, and commercialization of NVX-CoV2373.

SIIPL agreed to purchase the Company’s Matrix-MTM adjuvant 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.

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

The Company also has a supply agreement with SIIPL and Serum Life Sciences Limited (“SLS”) under which SIIPL and SLS supply the Company with NVX-CoV2373 for commercialization and sale in certain territories, as well as a contract development manufacture agreement with SLS, under which SLS manufactures and supplies finished vaccine product to the Company using antigen drug substance and Matrix-M™ adjuvant supplied by the Company.

The Company has expanded its license and supply arrangements with SIIPL to include its proprietary COVID-19 variant antigen candidate(s) so that SIIPL can manufacture and commercialize a vaccine targeting COVID-19 variants, including the Omicron subvariants, and supply such variant vaccine to the Company.

Takeda Pharmaceutical Company Limited

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Under the agreement, Takeda purchases the Company’s Matrix-M™ adjuvant to manufacture NVX-CoV2373 and the Company is entitled to receive payments from Takeda based on the achievement of certain development and commercial milestones, as well as a portion of net profits from the sale of NVX-CoV2373 in the low to middle double-digit range.

The Company is eligible for a future milestone payment of $ 20.0 million upon the first sale in Japan.

Regulatory approval in Japan was received in April 2022 (see Note 16).

During the three months ended June 30, 2022, the Company recognized a milestone payment of $ 20.0 million upon the first sale in Japan.

SK bioscience, Co., Ltd.

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Additionally, the Company has a manufacturing supply arrangement with SK bioscience under which SK bioscience supplies the Company with the antigen component of NVX-CoV2373 for use in the final drug product globally, including product to be distributed by the COVAX Facility, which was established to allocate and distribute vaccines equitably to participating countries and economies.

Note 5 – Earnings (Loss) per Share

Basic and diluted net income (loss) per share were calculated as follows (in thousands, except per share data):

Three Months Ended

Net income (loss), basic $ 203,408 $ ( 222,719 )

Interest on convertible notes, net 3,403 —

Net income (loss), dilutive 206,811 ( 222,719 )

Weighted average number of common shares outstanding, basic 76,457 73,035

Effect of dilutive securities 4,254 —

Weighted average number of common shares outstanding, dilutive 80,711 73,035

Net income (loss) per share:

Basic $ 2.66 $ ( 3.05 )

Diluted $ 2.56 $ ( 3.05 )

Anti-dilutive securities excluded from calculations of diluted net income (loss) per share 1,474 8,659

In July 2022, the Company signed an additional agreement with SK bioscience for the technology transfer of the Company’s proprietary COVID-19 variant antigen materials so that SK bioscience can manufacture the drug substance targeting COVID-19 variants, including the Omicron subvariants (see Note 15).

The companies also signed an agreement to manufacture and supply the Novavax COVID-19 vaccine in a prefilled syringe.

Other Supply Agreements

The Company continues to assess its manufacturing needs and intends to modify its global manufacturing footprint consistent with its contractual obligations to supply, and anticipated demand for, NVX-CoV2373, and in doing so, recognizes that significant costs may be incurred.

Note 5 – Cash, Cash Equivalents, and Restricted Cash

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

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

Cash and cash equivalents $ 1,375,587 $ 1,515,116

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Cash, cash equivalents, and restricted cash $ 1,387,515 $ 1,528,259

(1) Classified as Other non-current assets as of March 31, 2022 and December 31, 2021, on the consolidated balance sheets.

(1) Classified as Other non-current assets as of June 30, 2022 and December 31, 2021, on the consolidated balance sheets.

Note 6 – Fair Value Measurements

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

Fair Value at March 31, 2022 Fair Value at December 31, 2021

Fair Value at June 30, 2022 Fair Value at December 31, 2021

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

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— 179,500 — — 266,250 —

Treasury securities (1)

— 54,009 — — — —

Corporate debt securities (1)

— 594,750 — — 790,672 —

Agency securities (1)

— 62,739 — — — —

Total cash equivalents $ 500,885 $ 774,250 $ — $ 361,822 $ 1,056,922 $ —

Convertible notes payable $ — $ 323,112 $ — $ — $ 447,509 $ —

(1) All investments are classified as cash and cash equivalents as of March 31, 2022 and December 31, 2021, on the consolidated balance sheets.

(1) All investments are classified as cash and cash equivalents as of June 30, 2022 and December 31, 2021, on the consolidated balance sheets.

Cash equivalents are recorded at cost, which approximate fair value due to their short-term nature.

Pricing of the Company's Notes (see Note 10) 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 three months ended March 31, 2022 and 2021, the Company did not have any transfers between levels .

During the six months ended June 30, 2022 and 2021, the Company did not have any transfers between levels .

Note 7 – Inventory

Inventory consisted of the following (in thousands):

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

Raw materials $ 55,154 $ 8,872

2 unchanged sentences

Total inventory $ 256,301 $ 8,872

Note 9 – Goodwill and Other Intangible Assets

The change in the carrying amounts of goodwill for the three months ended March 31, 2022 was as follows (in thousands):

Balance at December 31, 2021 $ 131,479

Currency translation adjustments ( 723 )

Balance at March 31, 2022 $ 130,756

Inventory write-downs as a result of excess, obsolescence, expiry, or other reasons, and losses on firm purchase commitments are recorded as a component of cost of sales in our consolidated statements of operations.

For the three months ended June 30, 2022, inventory write-downs were $ 155.7 million.

There were no inventory write-downs for the three months ended March 31, 2022.

For the three months ended June 30, 2022, losses on firm purchase commitments were $ 99.6 million.

There were no losses on firm purchase commitments during the three months ended March 31, 2022.

There were no inventory write-downs or losses on firm purchase commitments during 2021.

Note 8 – Intangible Assets and Goodwill

Identifiable Intangible Assets

Purchased intangible assets consisted of the following (in thousands):

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

Amount Accumulated

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Total identifiable intangible assets $ 10,564 $ ( 6,531 ) $ 4,033 $ 11,961 $ ( 7,191 ) $ 4,770

Amortization expense was $ 0.1 million for each of the three months ended March 31, 2022 and 2021.

Amortization expense for the six months ended June 30, 2022 and 2021 was $ 0.2 million.

Estimated amortization expense for existing intangible assets for the remainder of 2022 and for each of the five succeeding years ending December 31 will be as follows (in thousands):

2022 (remainder) $ 182

The change in the carrying amounts of goodwill for the six months ended June 30, 2022 was as follows (in thousands):

Balance at December 31, 2021 $ 131,479

Currency translation adjustments ( 8,012 )

Balance at June 30, 2022 $ 123,467

Note 9 - Leases

During the first quarter of 2022, the Company evaluated the impact of changes in facts and circumstances on its CMOs and CDMOs 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 $ 10.4 million on the remeasurement of one of its long-term supply agreements using an incremental borrowing rate of 2.4 %.

During the six months ended June 30, 2022, the Company concluded that changes in facts and circumstances on its CMO and CDMO agreements that had previously been determined to represent embedded lease arrangements 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, during the six months ended June 30, 2022, the Company recognized a Right-Of-Use (“ROU”) asset and a corresponding long-term operating lease liability of $ 19.8 million on the remeasurement of one of its long-term supply agreements using an average incremental borrowing rate of 3.0 %.

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, it applied the practical expedient in ASC 842 to recognize lease payments as an expense on a straight-line basis over the modified lease term.

During the three months ended March 31, 2022 and 2021, the Company recognized a short-term lease expense of $ 78.1 million and $ 127.6 million, respectively, related to its embedded leases and expensed $ 10.4 million and $ 1.0 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 or modification of the lease.

During the three months ended March 31, 2022 and 2021, the Company recognized $ 1.1 million and $ 2.1 million of interest expense, respectively, on its finance lease liabilities.

During 2020, the Company entered into a lease agreement for the premises located at 700 Quince Orchard Road, Gaithersburg, Maryland (“700QO”).

During the three and six months ended June 30, 2022, the Company recognized a short-term lease expense of $ 5.8 million and $ 83.9 million, respectively, related to its embedded leases and expensed $ 9.4 million and $ 19.8 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 or modification of the lease.

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 and expensed $ 11.4 million and $ 12.4 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 or modification of the lease.

During the three and six months ended June 30, 2022, the Company recognized $ 2.3 million and $ 3.4 million of interest expense, respectively, on its finance lease liabilities.

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

During 2020, the Company entered into a lease agreement for the premises located at 700 Quince Orchard Road, Gaithersburg, Maryland.

The lease is for approximately 170,000 square feet of space that the Company intends to use for manufacturing, research and development, and offices.

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

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

Principal amount of Notes $ 325,000 $ 325,000

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$ 324,169 $ 323,458

(1) Convertible notes are classified as current liabilities and as non-current liabilities in the Consolidated Balance Sheet as of March 31, 2022 and December 31, 2021, respectively.

(1) Convertible notes are classified as current liabilities and as non-current liabilities in the consolidated balance sheets as of June 30, 2022 and December 31, 2021, respectively.

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

Three Months Ended March 31,

Three Months Ended

June 30, Six Months Ended

2022 2021 2022 2021

Coupon interest at 3.75 %

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During the three months ended March 31, 2022, the Company sold 2.2 million of shares of its common stock resulting in net proceeds of approximately $ 179 million, under its most recent At Market Issuance Sales agreement entered in June 2021 (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.

As of March 31, 2022, the remaining balance under the June 2021 Sales Agreement was approximately $ 318 million.

During the three months ended March 31, 2021, the Company sold 2.6 million shares of its common stock resulting in net proceeds of approximately $ 565 million, under its various At Market Issuance Sales agreements.

As of June 30, 2022, the remaining balance under the June 2021 Sales Agreement was approximately $ 318 million.

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

Note 12 – Stock-Based Compensation

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Under the 2015 Plan, equity awards may be granted to officers, directors, employees, and consultants of and advisors to the Company and any present or future subsidiary.

The 2015 Plan authorizes the issuance of up to 12.4 million shares of common stock under equity awards granted under the 2015 Plan.

The 2015 Plan authorizes the issuance of up to 14.8 million shares of common stock under equity awards granted under the 2015 Plan, which includes an increase of 2.4 million shares approved for issuance under the 2015 Plan at the Company's 2022 annual meeting of stockholders.

All such shares authorized for issuance under the 2015 Plan have been reserved.

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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, stock appreciation rights (“SARs”), and restricted stock units (“RSUs”).

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

Stock options and stock appreciation rights generally have a maximum term of ten years and may be or were granted with an exercise price that is no less than 100 % of the fair market value of the Company's common stock at the time of grant.

Stock options and SARs generally have a maximum term of ten years and may be or were granted with an exercise price that is no less than 100 % of the fair market value of the Company's common stock at the time of grant.

Grants of stock options are generally subject to vesting over periods ranging from one to four years .

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Three Months Ended

June 30, Six Months Ended

2022 2021 2022 2021

Research and development $ 19,695 $ 24,779 $ 36,582 $ 48,569

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Total stock-based compensation expense $ 38,048 $ 53,123 $ 70,981 $ 106,183

As of March 31, 2022, there was approximately $ 239 million of total unrecognized compensation expense related to unvested stock options, SARs, RSUs, and the ESPP.

As of June 30, 2022, there was approximately $ 212 million of total unrecognized compensation expense related to unvested stock options, SARs, RSUs, and the Company’s Employee Stock Purchase Plan, as amended (“ESPP”).

This unrecognized non-cash compensation expense is expected to be recognized over a weighted-average period of approximately one year .

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

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 SARs on March 31, 2022.

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 SARs on June 30, 2022.

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 SARs exercises and vesting of RSUs for the three months ended March 31, 2022 and 2021 was approximately $ 5.6 million and $ 81.5 million, respectively.

The aggregate intrinsic value of stock options and SARs exercises and vesting of RSUs for the six months ended June 30, 2022 and 2021 was approximately $ 8 million and $ 115 million, respectively.

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 three months ended March 31, 2022:

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, 2022:

2015 Plan 2005 Plan

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Canceled ( 35,195 ) 78.51 ( 1,500 ) 121.00

Outstanding at March 31, 2022 4,017,374 $ 46.62 63,725 $ 112.94

Shares exercisable at March 31, 2022 1,296,368 $ 55.96 63,725 $ 112.94

Shares available for grant at March 31, 2022 2,666,535

Outstanding at June 30, 2022 4,047,736 $ 46.61 63,725 $ 112.94

Shares exercisable at June 30, 2022 1,463,037 $ 55.28 63,725 $ 112.94

Shares available for grant at June 30, 2022 4,834,171

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

2022 2021 2022 2021

Weighted average Black-Scholes fair value of stock options granted $ 43.21

$ 166.66 $ 62.52

Risk-free interest rate 2.7 %- 3.2 %

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126.2 %- 142.0 %

120.5 %- 136.7 %

124.7 %- 142.0 %

Expected term (in years) 4.0 - 6.2

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 March 31, 2022 was approximately $ 154 million and 7.7 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 March 31, 2022 was approximately $ 47 million and 6.6 years, respectively.

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, 2022 was approximately $ 91 million and 7.5 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, 2022 was approximately $ 30 million and 6.5 years, respectively.

Restricted Stock Units

The following is a summary of RSU activity for the three months ended March 31, 2022:

The following is a summary of RSU activity for the six months ended June 30, 2022:

Shares Per Share

Outstanding and unvested at December 31, 2021 819,828 $ 116.70

Restricted stock units granted 659,189 79.97

Restricted stock units vested ( 20,386 ) 174.64

Restricted stock units forfeited ( 31,444 ) 97.85

Outstanding and unvested at March 31, 2022 1,427,187 $ 99.32

Granted 882,828 74.34

Vested ( 55,425 ) 157.97

Forfeited ( 71,989 ) 110.57

Outstanding and unvested at June 30, 2022 1,575,242 $ 91.79

Employee Stock Purchase Plan

The Employee Stock Purchase Plan, as amended (the “ESPP”), was approved at the Company's annual meeting of stockholders in June 2013.

The ESPP currently authorizes an aggregate of 600,000 shares of common stock to be purchased.

The ESPP was approved at the Company's annual meeting of stockholders in June 2013.

The ESPP currently authorizes an aggregate of 1.1 million shares of common stock to be purchased, and the aggregate amount of shares will continue to increase 5 % on each anniversary of its adoption up to a maximum of 1.65 million shares.

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 March 31, 2022, there were 137,139 shares available for issuance under the ESPP.

No ESPP option periods commenced during the three months ended June 30, 2022 and 2021.

As of June 30, 2022, there were 0.7 million shares available for issuance under the ESPP.

The ESPP is considered compensatory for financial reporting purposes.

As such, the fair value of ESPP shares was estimated at the date of grant using the Black-Scholes option-pricing model with the following assumptions:

Three Months Ended

Six Months Ended

Range of Black-Scholes fair values of ESPP shares granted $ 44.67 -$ 79.74

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The Company evaluates the available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit use of the existing deferred tax assets.

A significant piece of objective evidence evaluated was the cumulative loss incurred over the three-year period ended March 31, 2022 and that the Company has historically generated pretax losses.

A significant piece of objective evidence evaluated was the cumulative loss incurred over the three-year period ended June 30, 2022 and that the Company has historically generated pretax losses.

Such objective evidence limits the ability to consider other subjective evidence, such as projections for future growth.

On the basis of this evaluation, as of March 31, 2022, the Company continued to maintain a full valuation allowance against its deferred tax assets, except to the extent Net Operating Losses (“NOLs”) were used to reduce taxable income during the quarter.

On the basis of this evaluation, as of June 30, 2022, the Company continued to maintain a full valuation allowance against its deferred tax assets, except to the extent Net Operating Losses (“NOLs”) have been used to reduce taxable income.

The Company’s remaining U.S.

Federal NOLs are subject to limitation in accordance with the 2017 Tax Cuts and Jobs Act, which limits allowable NOL deductions to 80% of federal taxable income.

The Company recognized federal and state income tax expense of $ 0.6 million, in total, for the three months ended March 31, 2022 and did no t recognize federal or state income tax expense for the three months ended March 31, 2021.

During the three months ended March 31, 2022 and 2021, the Company recognized $ 2.1 million and $ 3.0 million, respectively, of income tax expense related to foreign withholding tax on royalties.

Federal NOLs are subject to limitation in accordance with the 2017 Tax Cuts and Jobs Act (“TCJA”), which limits allowable NOL deductions to 80% of federal taxable income.

Effective January 1, 2022, a provision of the TCJA has taken effect creating a significant change to the treatment of research and experimental expenditures under Section 174 of the IRC (“Sec.

174 expenses”).

Historically, businesses have had the option of deducting Sec.

174 expenses in the year incurred or capitalizing and amortizing the costs over five years.

The new TCJA provision, however, eliminates this option and will require Sec.

174 expenses associated with research conducted in the U.S.

to be capitalized and amortized over a five-year period.

For expenses associated with research outside of the U.S., Sec.

174 expenses will be capitalized and amortized over a 15-year period.

The Company recognized federal and state income tax expense of $ 1.4 million and $ 1.9 million, in total, for the three and six months ended June 30, 2022, respectively, and did no t recognize federal or state income tax expense for the three and six months ended June 30, 2021.

The Company recognized income tax expense related to foreign withholding tax on royalties of $ 2.2 million for the six months ended June 30, 2022 and $ 3.5 million and $ 6.6 million for the three and six months ended June 30, 2021, respectively.

The Company did not recognize income tax expense related to foreign withholding tax on royalties for the three months ended June 30, 2022.

Note 14 – Commitments and Contingencies

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On April 25, 2022, defendants filed a motion to dismiss the consolidated amended complaint.

After the Sinnathurai Action was filed, three derivative lawsuits were filed and are currently pending in the U.S.

District Court for the District of Maryland:

On June 9, 2022, the co-lead plaintiffs filed an opposition to the motion to dismiss and on July 11, 2022, the Company filed a reply brief.

The matter is now fully briefed.

The Court has not indicated whether it intends to schedule any hearing on the motion before issuing a ruling.

After the Sinnathurai Action was filed, five derivative lawsuits were filed:

Erck, et al., No.

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Erck, et al., No.

8:21-cv-03248-TDC (the “Yung Action”), and William Kirst, et al.

8:21-cv-03248-TDC (the “Yung Action”), William Kirst, et al.

Erck, et al., No.

8:22-cv-00024-TDC (the “Kirst Action”).

8:22-cv-00024-TDC (the “Kirst Action”), Amy Snyder v.

Erck, et al., No.

8:22-cv-01415-TDC (the “Snyder Action”), and Charles R.

Blackburn, et al.

Erck, et al., No.

1:22-cv-01417-TDC (the “Blackburn Action”).

The Meyer, Yung, Snyder, and Blackburn Actions were filed in the U.S.

District Court for the District of Maryland.

The Kirst Action was filed in the Circuit Court for Montgomery County, Maryland, and shortly thereafter removed to the U.S.

District Court for the District of Maryland by the defendants.

The derivative lawsuits name members of the board of directors and certain members of senior management as defendants.

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Plaintiffs seek declaratory and injunctive relief, as well as an award of monetary damages and attorneys’ fees.

The Company removed the Kirst Action from the Circuit Court for Montgomery County, Maryland, shortly after the case was filed.

On February 7, 2022, the plaintiffs in the Kirst Action filed a motion to remand the case to state court.

The Company has opposed the remand motion.

The parties finished briefing the remand motion on March 8, 2022, and await the Court’s decision.

On July 21, 2022, the Court issued a memorandum opinion and order remanding the Kirst Action to state court.

On February 4, 2022, the Court entered an order consolidating the Meyer and Yung Actions (the “Consolidated Derivative Action”).

The plaintiffs in the Consolidated Derivative Action filed their consolidated derivative complaint on April 25, 2022.

The parties to the Consolidated Derivative Action intend to file a stipulation and proposed order to temporarily stay all proceedings and deadlines in the Consolidated Derivative Action.

On May 10, 2022, the Court entered an order in the Consolidated Derivative Action granting the parties’ request to stay all proceedings and deadlines pending the earlier of dismissal or the filing of an answer in the Sinnathurai Action.

If a related derivative action is filed and is not stayed, the Meyer and Yung plaintiffs may seek to terminate the stay.

On June 10, 2022, the Snyder and Blackburn Actions were filed.

The Snyder and Blackburn plaintiffs have expressed their intent to move the court to consolidate all of the derivative actions pending in Maryland federal court and to appoint lead counsel.

On July 21, 2022, the Court ordered the parties in the Consolidated Derivative Action, the Snyder Action, and the Blackburn Action to meet and confer concerning consolidation, the appointment of lead counsel, and the ongoing stay of proceedings in the Consolidated Derivative Action.

Should the parties fail to reach agreement on those issues, the Snyder and Blackburn plaintiffs were granted leave to file a motion for consolidation and appointment of lead counsel by August 18, 2022.

On March 29, 2022, Par Sterile Products, LLC (“Par”) submitted a demand for arbitration against the Company with the American Arbitration Association, alleging that the Company breached certain provisions of the Manufacturing and Services Agreement (“MSA”) that the Company entered into with Par in September 2020 to provide fill-finish manufacturing services for NVX-CoV2373.

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Note 15 – Subsequent Events

In April 2022, the Company was granted conditional marketing authorization for NVX-CoV2373 by Swissmedic, the regulatory authority in Switzerland.

In April 2022, Takeda received marketing and manufacturing approval for NVX-CoV2373 from the Japan Ministry of Health, Labour and Welfare.

In April 2022, SIIPL was granted EUA by the Thailand Food and Drug Administration for NVX-CoV2373, to be manufactured and marketed by SIIPL under the brand name Covovax™, and EUA by the Drugs Controller General of India for the use of NVX-CoV2373 in adolescents aged 12 to 17 years, to be manufactured and marketed in India as Covovax™.

In April 2022, the U.S.

government extended the prescribed time to meet its July 2021 instructions related to the Company’s agreement under the U.S.

government partnership formerly known as Operation Warp Speed (“OWS”) requiring that the Company align with the U.S.

Food and Drug Administration (“FDA”) on analytic methods before conducting additional U.S.

manufacturing, to July 2022.

In April 2022, the Company announced initial results from the Phase 1/2 clinical trial of its COVID-Influenza Combination Vaccine (“CIC”).

The CIC combines NVX-CoV2373 and its quadrivalent influenza vaccine candidate.

The CIC trial demonstrated that formulating the combination vaccine is feasible, well-tolerated, and immunogenic.

In April 2022, the Company announced that the FDA’s Vaccines and Related Biological Products Advisory Committee (“VRBPAC”) will review NVX-CoV2373 at a meeting scheduled for June 7, 2022.

VRBPAC reviews and evaluates data regarding the safety and efficacy of vaccines and related biological products that are intended for use in the prevention, treatment, or diagnosis of human diseases.

In July 2022, the Company received emergency use authorization for NVX-CoV2373 from the FDA to provide a two-dose primary series in individuals 18 years of age and over.

In July 2022, the Company entered into a modification to the OWS Agreement that amended the terms of such agreement to provide for (i) an initial delivery to the U.S.

government of approximately 3 million doses of NVX-CoV2373, contingent on the timing of EUA approval by the FDA, as well as the timing of label language and artwork approvals by the FDA and the recommendation of the Advisory Committee on Immunization Practices within the United States Centers for Disease Control and Prevention, and (ii) any additional manufacture and delivery to the U.S.

government up to an aggregate of 100 million doses of NVX-CoV2373 contemplated by the original OWS Agreement (inclusive of the initial batch of approximately 3 million doses) dependent on U.S.

government demand, FDA guidance on strain selection, agreement between the parties on the price of such doses, and available funding.

The 3 million initial doses were delivered in July 2022.

Additionally, in July 2022, the Company modified its existing agreement with the DoD to provide for the initial delivery of 0.2 million doses of NVX-CoV2373 after receipt of EUA approval from the FDA, with delivery of the remaining 9.8 million doses of NVX-CoV2373 contemplated by the original agreement subject to DoD demand and available funding.

In July 2022, the Company entered into the Amended and Restated UK Supply Agreement with the Authority, which amended and restated in its entirety the Original UK Supply Agreement.

Under the Amended and Restated UK Supply Agreement, the Authority agreed to purchase a minimum of 1 million doses and up to an additional 15 million doses of NVX-CoV2373, with the number of additional doses contingent on the Company’s timely achievement of supportive recommendations from the JCVI.

In the event that the Company is unable to achieve the JCVI supportive recommendations, it may have to repay up to $ 225.0 million related to the upfront payment previously received from the Authority under the Original UK Supply Agreement.

Under the Amended and Restated UK Supply Agreement, the Authority also has the option to purchase up to an additional 44 million doses, in one or more tranches, through 2024.

In July 2022 and August 2022, the Company was notified by the EC that it was cancelling its prior commitment for 5 million doses originally scheduled for delivery in the first and second quarters of 2022, in accordance with the APA.

In July 2022, the Company signed an agreement with SK bioscience for the technology transfer of the Company’s proprietary COVID-19 variant antigen materials so that SK bioscience can manufacture the drug substance targeting COVID-19 variants, including the Omicron subvariants.

In addition, the companies signed an agreement to manufacture and supply the Novavax COVID-19 vaccine in a prefilled syringe.

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