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Item 3. Legal Proceedings

2023-02-28 compared with 2022-03-01 · 81 added, 33 removed, 11 unchanged (91% of the section changed)

LEGAL PROCEEDINGS

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, captioned Thomas Golubinski v.

Douglas, et al.

On November 12, 2021, Sothinathan Sinnathurai filed a purported securities class action in the U.S.

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

Novavax, Inc., et al.

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

On January 26, 2022, the Maryland Court entered an order designating David Truong, Nuggehalli Balmukund Nandkumar, and Jeffrey Gabbert as co-lead plaintiffs in the Sinnathurai Action.

The co-lead plaintiffs filed a consolidated amended complaint on March 11, 2022, alleging that the defendants made certain purportedly false and misleading statements concerning the Company’s ability to manufacture NVX-CoV2373 on a commercial scale and to secure the NVX-CoV2373’s regulatory approval.

The amended complaint defines the purported class as those stockholders who purchased the Company’s securities between February 24, 2021 and October 19, 2021.

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

On December 12, 2022, the Maryland Court issued a ruling granting in part and denying in part defendants’ motion to dismiss.

The Maryland Court dismissed all claims against two individual defendants and claims based on certain public statements challenged in the consolidated amended complaint.

The Maryland Court denied the motion to dismiss as to the remaining claims and defendants, and directed the Company and other remaining defendants to answer within fourteen days.

On December 27, 2022, the Company filed its answer and affirmative defenses.

After the Sinnathurai Action was filed, seven 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.

Erck , et al., No.

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

Blackburn, et al.

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

(the “Mesa Action”), and (vii) Sean Acosta v.

(the “Acosta Action”).

The Meyer, Yung, Snyder, and Blackburn Actions were filed in the Maryland Court.

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

The Mesa and Acosta Actions were filed in the Delaware Court of Chancery (the “Delaware Court”).

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

The Company is deemed a nominal defendant.

The plaintiffs assert derivative claims arising out of substantially the same alleged facts and circumstances as the Sinnathurai Action.

Collectively, the derivative complaints assert claims for breach of fiduciary duty, insider selling, unjust enrichment, violation of federal securities law, abuse of control, waste, and mismanagement.

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

On February 7, 2022, the Maryland 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 Maryland Court entered an order 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.

On October 5, 2022, the Maryland 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 filed a consolidated amended complaint on November 21, 2022.

On February 10, 2023, defendants filed a motion to dismiss the Second Consolidated Derivative Action.

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

On December 6, 2022, the parties to the Kirst Action filed a stipulated schedule pursuant to which the plaintiffs were expected to file an amended complaint on December 22, 2022, and either (i) the parties would file a stipulated stay of the Kirst Action or (ii) the defendants would file a motion to stay the case by January 23, 2023.

The plaintiffs filed an amended complaint on December 30, 2022.

On January 23, 2023, defendants filed a motion to stay the Kirst action.

On February 22, 2023, the parties in the Kirst Action filed for the Court’s approval of a stipulation staying the Kirst Action pending the resolution of defendants’ motion to dismiss in the Second Consolidated Derivative Action.

On February 24, 2023, the Court entered an order staying the Kirst Action until a final judgment in the Second Consolidated Derivative Action.

The Company takes no position on whether the broader stay entered by the Court in the Kirst Action is likely to be modified to align with the parties’ stipulation.

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

On October 3, 2022, the Delaware 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.

On January 9, 2023, the court entered an order granting the parties’ request to set a briefing schedule in connection with a motion to stay that defendants intended to file.

Pursuant to the order, defendants filed a motion to stay on January 18, 2023.

The plaintiff filed his opposition on February 8, 2023.

Defendants filed their reply on February 22, 2023.

On February 28, 2023, the court granted Defendants’ motion to stay.

On December 7, 2022, the Acosta Action was filed.

On February 6, 2023, defendants accepted service of the complaint and summons in the Acosta action.

The financial impact of this claim, as well as the claims discussed above, is not estimable.

On February 26, 2021, a Company stockholder named Thomas Golubinski filed a derivative complaint against members of the Company’s board of directors and members of senior management in the Delaware Court, captioned Thomas Golubinski v.

Douglas, et al., No.

2021-0172-JRS.

Novavax is deemed a nominal defendant.

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.

3 unchanged sentences

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.

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

The results of the vote were disclosed in the Company’s Current Report on Form 8-K filed 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 action is currently stayed, and upon final resolution of the plaintiff’s motion for an award of fees and expenses, the action will be automatically dismissed.

On November 12, 2021, Sothinathan Sinnathurai filed a purported class action in the U.S.

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

Novavax, Inc., et al.

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

The complaint in the Sinnathurai Action alleges that the defendants made certain purportedly false and misleading statements concerning NVX-CoV2373, including with respect to the Company’s manufacturing capabilities and NVX-CoV2373’s regulatory and commercial prospects.

The purported class is defined as those who purchased or otherwise acquired Novavax securities between March 2, 2021 and October 19, 2021.

The complaint demands an award of damages on behalf of the purported class and attorneys’ fees incurred in connection with the litigation.

On January 26, 2022, the court entered an order designating David Truong, Nuggehalli Balmukund Nandkumar, and Jeffrey Gabbert as co-lead plaintiffs in the Sinnathurai Action.

The court has ordered the co-lead plaintiffs to file an amended complaint by March 11, 2022.

The Company’s response to the amended complaint is due April 25, 2022.

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:

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

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

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

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

Novavax is deemed a nominal defendant.

The derivative plaintiffs assert derivative claims arising out of substantially the same alleged facts and circumstances as the Sinnathurai Action.

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

Novavax removed the Kirst Action from the Circuit Court for Montgomery County, Maryland.

On February 7, 2022, the plaintiffs in the Kirst Action filed a motion to remand the action to state court and, in response, the Company has filed an opposition.

The Court also entered an order tolling the defendants’ time to respond to the complaints in the Meyer and Yung Actions pending submission of a joint proposed briefing schedule on any

anticipated motion practice in those cases by March 25, 2022.

On February 4, 2022, the Court entered an order consolidating the Meyer and Yung Actions.

We are also involved in various other legal proceedings arising in the normal course of business.

Although the outcomes of these other legal proceedings are inherently difficult to predict, we do not expect the resolution of these other legal proceedings to have a material adverse effect on our financial position, results of operations, or cash flows.

On October 18, 2022, the Delaware Court denied the plaintiff’s fee application in its entirety.

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

On November 14, 2022, Golubinski filed a Notice of Appeal in the Supreme Court of the State of Delaware.

The plaintiff / appellant filed his opening appellate brief on December 30, 2022.

The Company filed its responsive brief on January 30, 2023 and the appellant filed his reply brief on February 14, 2023.

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 (the “Par 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 Par 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.

On November 18, 2022, the Company delivered written notice to Gavi to terminate the Gavi APA based on Gavi’s failure to procure the purchase of 350 million doses of NVX-CoV2373 from the Company as required by the Gavi APA.

As of November 18, 2022, the Company had only received orders under the Gavi APA for approximately 2 million doses.

On December 2, 2022, Gavi issued a written notice purporting to terminate the Gavi APA based on Gavi’s contention that the

Company repudiated the agreement and, therefore, materially breached the Gavi APA.

Gavi also contends that, based on its purported termination of the Gavi APA, it is entitled to a refund of the Advance Payment Amount less any amounts that have been credited against the purchase price for binding orders placed by a buyer participating in the COVAX Facility.

As of December 31, 2022, the remaining Gavi Advance Payment Amount of $697.4 million, pending resolution of the dispute with Gavi related to a return of the remaining Advance Payment Amount, was reclassified from Deferred revenue to Other current liabilities in the Company’s consolidated balance sheet.

On January 24, 2023, Gavi filed a demand for arbitration with the International Court of Arbitration based on the claims described above.

The Company’s response is currently due by March 2, 2023.

Arbitration is inherently uncertain, and while we believe that we are entitled to retain the remaining Advance Payment Amount received from Gavi, it is possible that we could be required to refund all or a portion of the remaining Advance Payment Amount from Gavi.

We are also involved in various legal proceedings arising in the normal course of business.

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 our financial position, results of operations, or cash flows.

MINE SAFETY DISCLOSURES

1 unchanged sentence

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

What changed 10-K

Item 3. Legal Proceedings