What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-11-09 compared with 2022-08-09 · 198 added, 164 removed, 399 unchanged (48% of the section changed)

4 unchanged sentences

For the Three Months Ended

June 30, For the Six Months Ended

September 30, For the Nine Months Ended

September 30,

2022 2021 2022 2021

7 unchanged sentences

Total expenses 861,766 485,988 2,025,330 1,785,695

Income (loss) from operations ( 482,960 ) ( 345,829 ) ( 273,668 ) ( 554,461 )

Other income (expense):

Loss from operations ( 127,189 ) ( 307,144 ) ( 400,857 ) ( 861,605 )

Other expense:

Interest expense ( 4,169 ) ( 5,182 ) ( 15,279 ) ( 15,989 )

Other income (expense) ( 19,873 ) 3,028 ( 18,219 ) ( 3,203 )

Income (loss) before income tax expense ( 509,067 ) ( 348,769 ) ( 302,997 ) ( 568,471 )

Other expense ( 34,783 ) ( 4,064 ) ( 53,002 ) ( 7,267 )

Loss before income tax expense ( 166,141 ) ( 316,390 ) ( 469,138 ) ( 884,861 )

Income tax expense 2,472 6,041 6,552 12,606

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

Net income (loss) per share:

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

Net loss $ ( 168,613 ) $ ( 322,431 ) $ ( 475,690 ) $ ( 897,467 )

Net loss per share:

Basic and diluted $ ( 2.15 ) $ ( 4.31 ) $ ( 6.13 ) $ ( 12.13 )

Weighted average number of common shares outstanding

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

Basic and diluted 78,274 74,745 77,631 73,972

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

1 unchanged sentence

For the Three Months Ended

June 30, For the Six Months Ended

September 30, For the Nine Months Ended

September 30,

2022 2021 2022 2021

Net loss $ ( 168,613 ) $ ( 322,431 ) $ ( 475,690 ) $ ( 897,467 )

Other comprehensive income (loss):

Other comprehensive loss:

Net unrealized losses on marketable securities available-for-sale, net of reclassifications — — — ( 9 )

Foreign currency translation adjustment ( 12,924 ) ( 3,309 ) ( 22,441 ) ( 6,154 )

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

Other comprehensive loss ( 12,924 ) ( 3,309 ) ( 22,441 ) ( 6,163 )

Comprehensive loss $ ( 181,537 ) $ ( 325,740 ) $ ( 498,131 ) $ ( 903,630 )

3 unchanged sentences

(in thousands, except share and per share information)

September 30,

2022 December 31,

23 unchanged sentences

Convertible notes payable — 323,458

Non-current finance lease liabilities 31,474 —

Other non-current liabilities 98,569 42,121

2 unchanged sentences

Stockholders' equity (deficit):

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

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

and 79,204,509 shares issued and 78,476,814 shares outstanding at September 30, 2022 and 76,433,151 shares issued and 75,841,171 shares outstanding at December 31, 2021

Additional paid-in capital 3,640,597 3,351,967

Accumulated deficit ( 4,093,640 ) ( 3,617,950 )

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

Treasury stock, cost basis, 727,695 shares at September 30, 2022 and 591,980 shares at December 31, 2021

( 89,940 ) ( 85,101 )

5 unchanged sentences

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)

Three and Six Months Ended June 30, 2022 and 2021

Three and Nine Months Ended September 30, 2022 and 2021

(in thousands, except share information)

7 unchanged sentences

Shares Amount

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

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

Stock-based compensation — — 33,386 — — — 33,386

2 unchanged sentences

Net loss — — — ( 168,613 ) — — ( 168,613 )

Balance at September 30, 2022 79,204,509 $ 792 $ 3,640,597 $ ( 4,093,640 ) $ ( 89,940 ) $ ( 23,794 ) $ ( 565,985 )

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

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

Stock-based compensation — — 45,274 — — — 45,274

2 unchanged sentences

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

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

Common Stock Additional

7 unchanged sentences

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-based compensation — — 104,367 — — — 104,367

Stock issued under incentive programs 573,960 6 4,900 — ( 4,839 ) — 67

3 unchanged sentences

Net loss — — — ( 475,690 ) — — ( 475,690 )

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

Balance at September 30, 2022 79,204,509 $ 792 $ 3,640,597 $ ( 4,093,640 ) $ ( 89,940 ) $ ( 23,794 ) $ ( 565,985 )

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

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

Stock-based compensation — — 151,457 — — — 151,457

Stock issued under incentive programs 2,044,191 20 58,747 — ( 37,326 ) — 21,441

4 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

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:

13 unchanged sentences

Investing Activities:

Capital expenditures ( 41,402 ) ( 28,932 )

Purchases of property and equipment ( 66,033 ) ( 41,122 )

Internal-use software development costs ( 4,888 ) —

Purchases of marketable securities — ( 2,167 )

19 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022

September 30, 2022

Note 1 – Organization and Business

1 unchanged sentence

(“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.

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.

The Company’s COVID-19 vaccine (“NVX-CoV2373,” “Nuvaxovid™,” “Covovax™,” “Novavax COVID-19 Vaccine, Adjuvanted”);

influenza vaccine candidate;

COVID-19-Influenza Combination (“CIC”) vaccine candidate;

and additional vaccine candidates, including for Omicron subvariants and bivalent formulations with prototype vaccine (“NVX-CoV2373”), are genetically engineered nanostructures of conformationally correct recombinant proteins critical to disease pathogenesis and may elicit differentiated immune responses, which may be more efficacious than naturally occurring immunity or other vaccine approaches.

NVX-CoV2373 and the Company’s other vaccine candidates incorporate the Company's proprietary Matrix-M ™ adjuvant to enhance the immune response and stimulate higher levels of functional antibodies and induce a cellular immune response.

The Company has announced data from its ongoing PREVENT-19 study supporting the use of NVX-CoV2373 for homologous boosting in adults and adolescents aged 12 through 17.

Additional findings in Phase 3 COVID-19 Omicron (study 311) trial showed utility of the prototype vaccine as a heterologous booster, inducing broad immune responses against contemporary Omicron variants.

As of September 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 for both adult and adolescent populations as a primary series and for both homologous and heterologous booster indications.

The Company commenced commercial shipments of NVX-CoV2373 doses under the name “Novavax COVID-19 Vaccine, Adjuvanted” and the brand name “Nuvaxovid™” in 2022.

Note 2 – Summary of Significant Accounting Policies

2 unchanged sentences

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

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 U.S.

3 unchanged sentences

All intercompany accounts and transactions have been eliminated in consolidation.

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.

Accumulated other comprehensive loss included a foreign currency translation loss of $ 23.8 million and $ 1.4 million as of September 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.

17 unchanged sentences

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.

Cost of sales does not include certain expenses related to raw materials, production, and manufacturing overhead costs that 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 (see Note 7).

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.

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

Manufacturing overhead costs are applied to semi-finished and finished goods based on expected production levels.

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.

18 unchanged sentences

Note 3 – Revenue

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

The Company's accounts receivable included $ 43.6 million and $ 419.7 million related to amounts that were billed to customers and $ 68.0 million and $ 35.3 million related to amounts which had not yet been billed to customers as of September 30, 2022 and December 31, 2021, respectively.

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

December 31, 2021 Additions Deductions September 30, 2022

Contract receivables:

3 unchanged sentences

$ 1,595,472 96,298 ( 251,576 ) (2)

(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 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 $ 5 billion as of June 30, 2022.

(1) Amount is comprised of $ 404.8 million and $ 1.4 billion of current Deferred revenue and $ 1.0 billion and $ 172.5 million of non-current Deferred revenue as of September 30, 2022 and December 31, 2021, respectively.

(2) Deductions from Deferred revenue includes $ 202.5 million that was realized in Revenue and $ 49.1 million that was reclassified to Other liabilities.

Failure to meet regulatory milestones, timely obtain supportive recommendations from governmental advisory committees, or achieve 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 adversely impact the Company’s ability to realize revenue from its unsatisfied performance obligations.

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

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

2022 2021 2022 2021

4 unchanged sentences

Total grant revenue $ 106,273 $ 135,007 $ 313,348 $ 854,390

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).

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 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 and delivered 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.

The Company’s funding agreement with CEPI, under which CEPI has agreed to provide funding of up to $ 399.5 million to the Company to support the development of NVX-CoV2373, provides up to $ 257.0 million in grant funding and up to $ 142.5 million in forgivable no-interest term loans.

These loans are only repayable if NVX-CoV2373 manufactured by the CMO network funded by CEPI is sold under the Company’s APA with Gavi, the Vaccine Alliance (“Gavi”), and such sales cover the Company’s costs of manufacturing the vaccine, not including manufacturing costs funded by CEPI.

The timing of any loan repayments is currently uncertain given the timing and quantities of future orders under the Company’s APA with Gavi are unclear, as discussed below.

Royalties and Other

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.

During the three and nine months ended September 30, 2022, the Company recognized $ 1.3 million and $ 10.5 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 sale of NVX-CoV2373 in Japan.

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

During the three and nine months ended September 30, 2021, the Company did not recognize any revenue related to milestone payments.

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 the terms of the Company’s supply commitment with Gavi, which includes both Novavax’ APA with Gavi and 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 APA 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.

Although Novavax continues to be prepared to deliver the quantities of NVX-CoV2373 doses to Gavi under the terms of the APA, 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.

The Company’s position is that Gavi has no contractual right to recover prior nonrefundable payments if it fails to order the 350 million doses it committed to order.

To date, except for an initial order of approximately 2 million doses, 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).

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.

As of September 30, 2022, the Company will be required to repay a minimum of $ 40.0 million related to the upfront payment, which is reflected in Other current liabilities, with the remaining balance of $ 185.0 million reflected in Deferred revenue.

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.

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).

The Company is in the process of finalizing a revised delivery schedule for the remaining 23 million committed doses under the APA that were originally scheduled for delivery during the first and second quarters of 2022.

Note 4 – Collaboration, License, and Supply Agreements

1 unchanged sentence

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.

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 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.

In May and August 2022, the Company expanded its license and supply arrangements with SIIPL to include its proprietary COVID-19 variant antigen candidate(s), its quadrivalent influenza vaccine candidate, and its CIC vaccine candidate, so that SIIPL can manufacture and commercialize a vaccine targeting COVID-19 variants, including the Omicron subvariants, a quadrivalent influenza vaccine, and CIC vaccine, and supply such vaccines to the Company.

In March 2020, the Company granted SIIPL a non-exclusive license for the use of Matrix-M™ adjuvant supplied by the Company to develop, manufacture, and commercialize R21, a malaria candidate developed by the Jenner Institute, University of Oxford.

Takeda Pharmaceutical Company Limited

4 unchanged sentences

The Company has a collaboration and license agreement with SK bioscience Co., Ltd.

(“SK bioscience”) to manufacture and commercialize NVX-CoV2373 for sale to the governments of Korea, Thailand, and Vietnam.

(“SK bioscience”) to manufacture and commercialize NVX-CoV2373 for sale to the governments of South Korea, Thailand, and Vietnam.

SK bioscience pays a royalty in the low to middle double-digit range.

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.

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

On September 30, 2022, the Company, FUJIFILM Diosynth Biotechnologies UK Limited (“FDBK”), FUJIFILM Diosynth Biotechnologies Texas, LLC (“FDBT”), and FUJIFILM Diosynth Biotechnologies USA, Inc.

(“FDBU” and together with FDBK and FDBT, “Fujifilm”) entered into a Confidential Settlement Agreement and Release (the “Fujifilm Settlement Agreement”) regarding amounts due to Fujifilm in connection with the termination of manufacturing activity at FDBT under the Commercial Supply Agreement (the “CSA”) dated August 20, 2021 and Master Services Agreement dated June 30, 2020 and associated statements of work (the “MSA”) by and between the Company and Fujifilm.

The MSA and CSA established the general terms and conditions applicable to Fujifilm’s manufacturing and supply activities related to NVX-CoV2373 under the associated statements of work.

Pursuant to the Fujifilm Settlement Agreement, the Company is responsible for payment of up to $ 185.0 million (the “Settlement Payment”) to Fujifilm in connection with cancellation of manufacturing activity at FDBT under the CSA, of which (i) $ 47.8 million, constituting the initial reservation fee under the CSA, was credited against the Settlement Payment on September 30, 2022 and (ii) the remaining balance is to be paid in four equal quarterly installments of $ 34.3 million each beginning March 31, 2023.

As of September 30, 2022, $ 102.9 million of the remaining payment was reflected in Accrued expenses and $ 34.3 million was reflected in Other non-current liabilities.

Under the Fujifilm Settlement Agreement, Fujifilm is required to use commercially reasonable efforts to mitigate the losses associated with the vacant manufacturing capacity caused by the termination of manufacturing activities at FDBT under the CSA, and the final two quarterly installments will be mitigated by any replacement revenue achieved by Fujifilm between July 1, 2023 and December 31, 2023.

The Settlement Payment is less than amounts previously recognized as embedded lease expense and reflected in Research and development expense from FDBT manufacturing activity under the CSA prior to the Fujifilm Settlement Agreement and accordingly, during the three and nine months ended September 30, 2022, the Company recorded a benefit of $ 98.3 million as Research and development expense (see Note 9).

Except with respect to certain limited activities agreed upon by the parties, the MSA terminated with respect to all activities in FDBU and FDBT on October 21, 2022 and the impact of the termination was determined in accordance with the provisions of the MSA.

The terms and conditions of the MSA and CSA will remain in full force and effect with respect to the ongoing activities at FDBK.

In addition, the Company and Fujifilm mutually released all claims relating to (i) the cancellation of batches to be manufactured at FDBT under the MSA or CSA, (ii) FDBT facility idle time in 2022, (iii) failure to complete product performance qualification testing of batches manufactured by Fujifilm by December 2021, and (iv) any obligation by Fujifilm to reserve capacity or manufacture batches at FDBT for the benefit of the Company under the MSA or CSA.

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 statements of cash flows (in thousands):

June 30, 2022 December 31, 2021

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 such amounts shown in the statements of cash flows (in thousands):

September 30, 2022 December 31, 2021

Cash and cash equivalents $ 1,280,581 $ 1,515,116

2 unchanged sentences

Cash, cash equivalents, and restricted cash $ 1,293,022 $ 1,528,259

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

(1) Classified as Other non-current assets as of September 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 June 30, 2022 Fair Value at December 31, 2021

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

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

5 unchanged sentences

— 109,914 — — 790,672 —

Agency securities (1)

— 42,777 — — — —

Total cash equivalents $ 365,631 $ 413,691 $ — $ 361,822 $ 1,056,922 $ —

Convertible notes payable $ — $ 317,044 $ — $ — $ 447,509 $ —

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

(1) All investments are classified as Cash and cash equivalents as of September 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 six months ended June 30, 2022 and 2021, the Company did not have any transfers between levels .

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

Note 7 – Inventory

Inventory consisted of the following (in thousands):

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

Raw materials $ 17,557 $ 8,872

3 unchanged sentences

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.

For the three and nine months ended September 30, 2022, inventory write-downs were $ 202.4 million and $ 358.1 million, respectively.

For the three and nine months ended September 30, 2022, losses on firm purchase commitments were $ 46.6 million and $ 146.2 million, respectively.

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

2 unchanged sentences

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

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

Amount Accumulated

5 unchanged sentences

Proprietary adjuvant technology $ 6,911 $ ( 3,069 ) $ 3,842 $ 8,239 $ ( 3,469 ) $ 4,770

Collaboration agreements 3,286 ( 3,286 ) — 3,722 ( 3,722 ) —

Internal-use software (1)

4,888 ( 274 ) 4,614 — — —

Total identifiable intangible assets $ 11,799 $ ( 3,343 ) $ 8,456 $ 8,239 $ ( 3,469 ) $ 4,770

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):

(1) As of September 30, 2022, internal-use software included $ 3.6 million for assets under development.

Amortization expense for the nine months ended September 30, 2022 and 2021 was $ 0.6 million and $ 0.3 million, respectively.

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

2022 (remainder) $ 189

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

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

Balance at December 31, 2021 $ 131,479

Currency translation adjustments ( 13,944 )

Balance at June 30, 2022 $ 123,467

Balance at September 30, 2022 $ 117,535

Note 9 - Leases

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 %.

During the nine months ended September 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 nine months ended September 30, 2022, the Company recognized a Right-Of-Use (“ROU”) asset and a corresponding long-term operating lease liability of $ 44.0 million on the remeasurement of its long-term supply agreements using an average incremental borrowing rate of 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.

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 the three and nine months ended September 30, 2022, the Company recognized a short-term lease benefit of $ 46.6 million and expense of $ 37.3 million, respectively, related to its embedded leases, net of a benefit of $ 98.3 million related to the Fujifilm Settlement Agreement (see Note 4).

During the three and nine months ended September 30, 2022, the Company expensed $ 24.2 million and $ 44.0 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 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 or modification of the lease.

During the three and nine months ended September 30, 2022, the Company recognized $ 0.9 million and $ 4.3 million of interest expense, respectively, on its finance lease liabilities.

During the three and nine months ended September 30, 2021, the Company recognized $ 1.6 million and $ 5.6 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.

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

The term of the lease is 15 years with options to extend the lease.

The lease provides for an annual base rent of $ 5.8 million that is subject to future rent increases and obligates the Company to pay building operating costs.

During the three months ended March 31, 2022, the Company obtained the right to direct the use of, and obtain substantially all of the benefit from, the third floor of the premises and recognized a ROU asset of $ 47.8 million and related lease obligation for the combined third floor and land lease as the lease commencement date for accounting purposes had occurred.

During the nine months ended September 30, 2022, the Company obtained the right to direct the use of, and obtain substantially all of the benefit from, certain floors located at the premises and recognized an ROU asset and related lease obligation of $ 73.2 million as the lease commencement dates for accounting purposes had occurred .

Note 10 – Debt

2 unchanged sentences

The $ 10.0 million of debt issuance costs is being amortized and recognized as additional interest expense over the seven-year contractual term of the Notes on a straight-line basis, which approximates the effective interest rate method.

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

June 30, 2022 December 31, 2021

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

September 30, 2022 December 31, 2021

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

2 unchanged sentences

$ 324,525 $ 323,458

(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.

(1) Convertible notes are classified as current liabilities and as non-current liabilities in the consolidated balance sheets as of September 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

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

5 unchanged sentences

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 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.

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

During the nine months ended September 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

4 unchanged sentences

The 2015 Plan will expire on March 4, 2025.

As of September 30, 2022, there were 4.6 million shares available for issuance under the 2015 Plan.

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.

5 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

Cost of sales $ 51 $ — $ 51 $ —

Research and development 16,107 21,860 52,692 70,429

1 unchanged sentence

Total stock-based compensation expense $ 31,547 $ 45,274 $ 102,525 $ 151,457

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”).

Total stock-based compensation capitalized and included in inventory as of September 30, 2022 was $ 1.8 million.

There was no stock-based compensation capitalized and included in inventory as of December 31, 2021.

As of September 30, 2022, there was approximately $ 189 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 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 six months ended June 30, 2022 and 2021 was approximately $ 8 million and $ 115 million, respectively.

The aggregate intrinsic value of stock options and SARs exercises and vesting of RSUs for the nine months ended September 30, 2022 and 2021 was approximately $ 19 million and $ 381 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 six months ended June 30, 2022:

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, 2022:

2015 Plan 2005 Plan

5 unchanged sentences

Canceled ( 61,364 ) 88.58 ( 1,500 ) 121.00

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

Outstanding at September 30, 2022 4,000,234 $ 46.78 63,725 $ 112.94

Shares exercisable at September 30, 2022 2,739,565 $ 39.72 63,725 $ 112.94

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,

2022 2021 2022 2021

8 unchanged sentences

Expected term (in years) 4.0 - 5.3

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.

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, 2022 was approximately $ 9 million and 7.4 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, 2022 was approximately $ 5 million and 7.0 years, respectively.

Restricted Stock Units

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

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

Shares Per Share

3 unchanged sentences

Forfeited ( 114,976 ) 110.59

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

Outstanding and unvested at September 30, 2022 1,439,008 $ 90.03

Employee Stock Purchase Plan

2 unchanged sentences

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).

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.

As of September 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:

Six Months Ended

Three Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

Range of Black-Scholes fair values of ESPP shares granted $ 23.59 -$ 39.73

$ 83.47 -$ 152.11

$ 23.59 -$ 79.74

$ 83.47 -$ 238.85

Risk-free interest rate 3.2 %- 3.3 %

2 unchanged sentences

114.9 %- 150.6 %

103.0 %- 142.9 %

114.9 %- 159.4 %

Expected term (in years) 0.5 - 2.0

1 unchanged sentence

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 June 30, 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 September 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 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.

On the basis of this evaluation, as of September 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.

9 unchanged sentences

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.

The Company recognized federal and state income tax expense of $ 2.4 million and $ 4.3 million, in total, for the three and nine months ended September 30, 2022, respectively, and did no t recognize federal or state income tax expense for the three and nine months ended September 30, 2021.

The Company recognized income tax expense related to foreign withholding tax on royalties of $ 0.1 million and $ 2.3 million, respectively, for the three and nine months ended September 30, 2022 and $ 6.0 million and $ 12.6 million for the three and nine months ended September 30, 2021, respectively.

Note 14 – Commitments and Contingencies

2 unchanged sentences

District Court for the District of Maryland against the Company and certain members of senior management, captioned Sothinathan Sinnathurai v.

Novavax, Inc., et al., No.

Novavax, Inc.

, et al., No.

8:21-cv-02910-TDC (the “Sinnathurai Action”).

6 unchanged sentences

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.

8:21-cv-02996-TDC (the “Meyer Action”), Shui Shing Yung v.

Erck, et al., No.

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

Erck, et al., No.

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.

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

(i) Robert E.

8:21-cv-02996-TDC (the “Meyer Action”), (ii) Shui Shing Yung v.

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

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

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

Blackburn, et al.

Erck, et al., No.

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

1:22-cv-01417-TDC (the “Blackburn Action”), and (vi) Diego J.

Erck, et al .

(the “Mesa Action”).

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

2 unchanged sentences

District Court for the District of Maryland by the defendants.

The Mesa Action was filed in the Delaware Court of Chancery.

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

4 unchanged sentences

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.

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

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

On May 10, 2022, the Court entered an order in the First 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.

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 October 5, 2022, the court entered an order granting a request by the plaintiffs in the First Consolidated Derivative Action and the Snyder and Blackburn Actions to consolidate all three actions and appoint co-lead plaintiffs and co-lead and liaison counsel (the “Second Consolidated Derivative Action”).

The co-lead plaintiffs in the Second Consolidated Derivative Action will designate an operative complaint or file a consolidated amended complaint by November 21, 2022.

On August 30, 2022, the Mesa Action was filed.

On October 3, 2022, the court entered an order granting the parties’ request to stay all proceedings and deadlines in the Mesa Action pending the earlier of dismissal of the Sinnathurai Action or the filing of an answer to the operative complaint in the Sinnathurai Action.

The financial impact of the claims is not estimable.

On February 26, 2021, a Novavax stockholder named Thomas Golubinski filed a derivative complaint against members of the Novavax board of directors and members of senior management in the Delaware Court of Chancery (the “Court”), captioned Thomas Golubinski v.

Douglas, et al.

2021-0172-JRS.

The Company is deemed a nominal defendant.

Golubinski challenged 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 such board members or members of senior management allegedly possessed undisclosed positive material information concerning the Company.

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

The plaintiff sought an award of damages to the Company, an order rescinding both 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.

Thereafter, the plaintiff stipulated that, as a result of the outcome of the June 17, 2021 vote, the plaintiff no longer intends to pursue the lawsuit or any claim arising from the April 2020 and June 2020 awards.

On August 23, 2021, the plaintiff filed a motion seeking an award of attorneys’ fees and expenses, to which the defendants filed an opposition.

The motion was argued before the Court on October 18, 2022.

The same day, the Court issued a bench ruling denying the plaintiff’s fee application in its entirety and entered an order to that effect.

Under a prior Court order, the case was automatically dismissed with prejudice upon denial of the plaintiff’s fee application.

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.

The matter is at a preliminary stage and therefore the potential loss is not reasonably estimable.

The parties are engaged in discovery and arbitration is scheduled for July 2023.

While the Company maintains that no breach of the MSA has occurred and intends to vigorously defend the matter, if the final resolution of the matter is adverse to the Company, it could have a material impact on the Company’s financial position, results of operations, or cash flows.

1 unchanged sentence

Although the outcomes of these legal proceedings are inherently difficult to predict, management does not expect the resolution of these legal proceedings to have a material adverse effect on the Company’s financial position, results of operations, or cash flows.

Note 15 – Subsequent Events

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.

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