What changed in this filing

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Item 1. Financial Statements

2023-05-09 compared with 2022-11-09 · 317 added, 324 removed, 273 unchanged (70% of the section changed)

4 unchanged sentences

For the Three Months Ended

September 30, For the Nine Months Ended

September 30,

2022 2021 2022 2021

Product sales $ ( 7,457 ) $ 585,628

6 unchanged sentences

Total expenses 393,719 494,679

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

Other expense:

Income (Loss) from operations ( 312,768 ) 209,292

Other income (expense):

Interest expense ( 4,316 ) ( 4,876 )

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

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

Other income 24,362 1,654

Income (Loss) before income tax expense ( 292,722 ) 206,070

Income tax expense 1,183 2,662

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 )

Net income (loss) $ ( 293,905 ) $ 203,408

Net income (loss) per share:

Basic $ ( 3.41 ) $ 2.66

Diluted $ ( 3.41 ) $ 2.56

Weighted average number of common shares outstanding

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

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

Basic 86,158 76,457

Diluted 86,158 80,711

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in thousands)

For the Three 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 loss:

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

Net income (loss) $ ( 293,905 ) $ 203,408

Other comprehensive income:

Foreign currency translation adjustment 3,211 41

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

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

Other comprehensive income 3,211 41

Comprehensive income (loss) $ ( 290,694 ) $ 203,449

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

2 unchanged sentences

(in thousands, except share and per share information)

September 30,

2023 December 31,

8 unchanged sentences

Right of use asset, net 103,923 106,241

Intangible assets, net 8,456 4,770

Goodwill 129,827 126,331

16 unchanged sentences

Commitments and contingencies (Note 15)

Stockholders' equity (deficit):

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

Preferred stock, $ 0.01 par value, 2,000,000 shares authorized at March 31, 2023 and December 31, 2022;

no shares issued and outstanding at March 31, 2023 and December 31, 2022.

Stockholders' deficit:

Common stock, $ 0.01 par value, 600,000,000 shares authorized at March 31, 2023 and December 31, 2022;

87,139,831 shares issued and 86,291,473 shares outstanding at March 31, 2023 and 86,806,554 shares issued and 86,039,923 shares outstanding at December 31, 2022

Additional paid-in capital 3,767,733 3,737,979

Accumulated deficit ( 4,569,794 ) ( 4,275,889 )

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

Treasury stock, cost basis, 848,358 shares at March 31, 2023 and 766,631 shares at December 31, 2022

( 91,226 ) ( 90,659 )

5 unchanged sentences

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)

Three and Nine Months Ended September 30, 2022 and 2021

Three Months Ended March 31, 2023 and 2022

(in thousands, except share information)

4 unchanged sentences

Comprehensive

Income (Loss) Total Stockholders'

Equity (Deficit)

Shares Amount

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

Stock issued under incentive programs 428,275 4 2,597 — ( 3,485 ) — ( 884 )

Foreign currency translation adjustment — — — — — ( 12,924 ) ( 12,924 )

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

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

Stock issued under incentive programs 1,301,172 13 28,154 — ( 31,927 ) — ( 3,760 )

Foreign currency translation adjustment — — — — — ( 3,309 ) ( 3,309 )

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

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

Common Stock Additional

Capital Accumulated

Deficit Treasury

Stock Accumulated Other

Comprehensive

Income (Loss) Total Stockholders'

Loss Total Stockholders'

Equity (Deficit)

3 unchanged sentences

Stock issued under incentive programs 333,277 3 1,107 — ( 567 ) — 543

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

2,197,398 22 179,363 — — — 179,385

Foreign currency translation adjustment — — — — — 3,211 3,211

Net loss — — — ( 293,905 ) — — ( 293,905 )

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

Balance at March 31, 2023 87,139,831 $ 871 $ 3,767,733 $ ( 4,569,794 ) $ ( 91,226 ) $ ( 3,166 ) $ ( 895,582 )

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

3 unchanged sentences

2,197,398 22 179,363 — — — 179,385

Unrealized loss on marketable securities — — — — — ( 9 ) ( 9 )

Foreign currency translation adjustment — — — — — 41 41

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

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

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

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

2 unchanged sentences

(in thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

Operating Activities:

Net loss $ ( 475,690 ) $ ( 897,467 )

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

Net income (loss) $ ( 293,905 ) $ 203,408

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

Depreciation and amortization 9,043 6,765

8 unchanged sentences

Deferred revenue 140,275 ( 61,391 )

Net cash provided by (used in) operating activities ( 298,121 ) 665,354

Net cash used in operating activities ( 325,593 ) ( 88,510 )

Investing Activities:

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

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

Purchases of marketable securities — ( 2,167 )

Proceeds from maturities and sale of marketable securities — 159,807

Net cash provided by (used in) investing activities ( 70,921 ) 116,518

Capital expenditures ( 19,801 ) ( 16,826 )

Internal-use software ( 3,757 ) —

Net cash used in investing activities ( 23,558 ) ( 16,826 )

Financing Activities:

2 unchanged sentences

Finance lease payments ( 26,331 ) ( 20,838 )

Net cash provided by financing activities 133,548 522,424

Repayment of 2023 Convertible notes ( 325,000 ) —

Payments of costs related to issuance of 2027 Convertible notes ( 3,591 ) —

Net cash provided by (used in) financing activities ( 354,379 ) 159,865

Effect of exchange rate on cash, cash equivalents, and restricted cash ( 8,372 ) 1,312

6 unchanged sentences

Supplemental disclosure of cash flow information:

Cash interest payments $ 17,260 $ 17,768

Cash interest payments, net of amounts capitalized $ 6,566 $ 6,654

Cash paid for income taxes $ — $ 15,451

1 unchanged sentence

NOVAVAX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023

Note 1 – Organization and Business

8 unchanged sentences

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.

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

Note 2 – Summary of Significant Accounting Policies

8 unchanged sentences

All intercompany accounts and transactions have been eliminated in consolidation.

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.

Accumulated other comprehensive loss included a foreign currency translation loss of $ 3.2 million and $ 6.4 million at March 31, 2023 and December 31, 2022, respectively.

The aggregate foreign currency transaction gains resulting from the conversion of the transaction currency to functional currency were $ 16.3 million and $ 2.2 million for the three months ended March 31, 2023 and 2022, respectively, which are reflected in Other income.

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, 2022.

1 unchanged sentence

The Company operates in one business segment.

Reclassifications

Certain amounts reported in prior periods have been reclassified to conform to current period financial statement presentation.

These reclassifications have no material effect on previously reported financial position, cash flows, or results of operations.

Liquidity and Going Concern

The accompanying unaudited consolidated financial statements have been prepared assuming that the Company will continue as a going concern within one year after the date that the financial statements are issued.

At March 31, 2023, the Company had $ 636.9 million in cash and cash equivalents and restricted cash.

In April 2023, the Company repaid $ 112.5 million related to the refund due under the Amended and Restated SARS-CoV-2 Vaccine Supply Agreement, dated July 1, 2022, as further amended on September 26, 2022, (the “Amended and Restated UK Supply Agreement”) with The Secretary of

State for Business, Energy and Industrial Strategy (as assigned to the UK Health Security Agency), acting on behalf of the government of the United Kingdom of Great Britain and Northern Ireland, which amended and restated in its entirety the SARS-CoV-2 Vaccine Supply Agreement, dated October 22, 2020, between the parties, and $ 27.0 million related to a Settlement Agreement and Release of Claims between the Company and Par Sterile Products, LLC (“Par”), as described in Note 15 below, which was fully accrued as of March 31, 2023.

During the three months ended March 31, 2023, the Company incurred a net loss of $ 293.9 million and had net cash flows used in operating activities of $ 325.6 million.

In accordance with Accounting Standards Codification 205-40, Going Concern , the Company evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about its ability to continue as a going concern within one year after the date that these unaudited consolidated financial statements are issued.

While the Company’s current cash flow forecast for the one-year going concern look forward period estimates that there will be sufficient capital available to fund operations, this forecast is subject to significant uncertainty, including as it relates to revenue for the next 12 months, funding from the U.S.

government, and a pending matter subject to arbitration proceedings.

The Company’s revenue projections depend on its ability to successfully develop, manufacture, distribute, and market an updated monovalent or bivalent formulation of a vaccine candidate for COVID-19 for the Fall 2023 COVID vaccine season, which is inherently uncertain and subject to a number of risks, including regulatory approval and commercial adoption.

In February 2023, in connection with the execution of Modification 17 to the USG Agreement (as defined in Note 3), the U.S.

government indicated to the Company that the award may not be extended past its current period of performance.

If the USG Agreement is not amended, as the Company’s management had previously expected, then the Company may not receive all of the remaining $ 336.4 million in funding that was previously anticipated pursuant to the USG Agreement.

On January 24, 2023, Gavi, the Vaccine Alliance (“Gavi”) filed a demand for arbitration with the International Court of Arbitration regarding an alleged material breach by the Company of the Company’s advance purchase agreement with Gavi (the “Gavi APA”).

The outcome of that arbitration is inherently uncertain, and it is possible the Company could be required to refund all or a portion of the remaining advance payments of $ 697.4 million (see Note 3 and Note 15).

Management believes that, given the significance of these uncertainties, substantial doubt exists regarding the Company’s ability to continue as a going concern through one year from the date that these financial statements are issued.

In May 2023, the Company announced a global restructuring and cost reduction plan.

This plan includes a more focused investment in its NVX-CoV2373 program, reduction to its pipeline spending, the continued rationalization of its manufacturing network, a reduction to the Company’s global workforce, as well as the consolidation of facilities and infrastructure.

The planned workforce reduction includes an approximately 25 % reduction in the Company’s global workforce, comprised of an approximately 20 % reduction in full-time Novavax employees and the remainder comprised of contractors and consultants.

The Company expects the full annual impact of the cost savings to be realized in 2024 and approximately half of the annual impact to be realized in 2023 due to timing of implementing the measures, and the applicable laws, regulations, and other factors in the jurisdictions in which the Company operates.

The Company expects to record a charge of approximately $ 10 million to $ 15 million related to one-time employee severance and benefit costs, the majority of which are expected to be incurred in the second quarter of 2023 and is evaluating the anticipated costs related to the consolidation of facilities and infrastructure.

The Company’s ability to fund Company operations is dependent upon revenue related to vaccine sales for its products and product candidates, if such product candidates receive marketing approval and are successfully commercialized;

the resolution of certain matters, including whether, when, and how the dispute with Gavi is resolved;

and management’s plans, which include resolving the dispute with Gavi and cost reductions associated with the Company’s global restructuring and cost reduction plan.

Management’s plans may also include raising additional capital through a combination of equity and debt financing, collaborations, strategic alliances, and marketing, distribution, or licensing arrangements.

New financings may not be available to the Company on commercially acceptable terms, or at all.

Also, any collaborations, strategic alliances, and marketing, distribution, or licensing arrangements may require the Company to give up some or all of its rights to a product or technology, which in some cases may be at less than the full potential value of such rights.

In addition, the regulatory and commercial success of NVX-CoV2373 and the Company’s other vaccine candidates, including an influenza vaccine candidate, a CIC vaccine candidate, and a COVID-19 variant strain-containing monovalent or bivalent formulation, remains uncertain.

If the Company is unable to obtain additional capital, the Company will assess its capital resources and may be required to delay, reduce the scope of, or eliminate some or all of its operations, or further downsize its organization, any of which may have a material adverse effect on its business, financial condition, results of operations, and ability to operate as a going concern.

Use of Estimates

2 unchanged sentences

Actual results could differ materially from those estimates.

Revenue Recognition - Product Sales

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.

If an APA includes a term that may have the effect of decreasing the price per dose of previously delivered shipments, the Company constrains the price until it is probable that a significant reversal in revenue recognized will not occur.

Cost of Sales

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;

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 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, 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.

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.

Subsequent to initial regulatory authorization for a product candidate, the Company capitalizes the costs of production for a particular supply chain as inventory when the Company determines that it has a present right to the economic benefit associated with the product.

Revenue Recognition Constraints

The Company constrains the transaction price for customer arrangements until it is probable that a significant reversal in cumulative revenue recognized will not occur.

Specifically, if a customer arrangement includes a provision whereby the customer may request a discount, return or refund for a previously satisfied performance obligation or otherwise could have the effect of decreasing the transaction price, revenue is constrained based on an estimate of the impact to the transaction price recognized until it is probable that a significant reversal in cumulative revenue recognized will not occur.

Recent Accounting Pronouncements

Not Yet Adopted

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.

In June 2016, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) No.

2016-13, Financial Instruments - Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), with amendments in 2018, 2019, 2020, and 2022.

The ASU sets forth a “current expected credit loss” (“CECL”) model that requires companies to measure all expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions, and reasonable supportable forecasts.

The ASU sets forth a “current expected credit loss” model that requires companies to measure all expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions, and reasonable supportable forecasts.

ASU 2016-13 applies to financial instruments that are not measured at fair value, including receivables that result from revenue transactions.

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

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.

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

Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”), which simplified the accounting for certain financial instruments with characteristics of liabilities and equity, including certain convertible instruments and contracts in an entity’s own equity.

Specifically, the new standard removed the separation models required for convertible debt with cash conversion features and convertible instruments with beneficial conversion features.

It also removed certain settlement conditions that are currently required for equity contracts to qualify for the derivative scope exception and simplified the diluted earnings per share calculation for convertible instruments.

The Company adopted ASU 2020-06 on January 1, 2022 using a modified retrospective approach, which did not have a material impact on the Company’s consolidated financial statements.

The Company adopted ASU 2020-06 on January 1, 2023, using a modified retrospective approach, and it did not have a material impact on the Company’s consolidated financial statements.

Note 3 – Revenue

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:

The Company's accounts receivable included $ 70.2 million, $ 53.8 million, $ 425.9 million, and $ 419.7 million related to amounts that were billed to customers and $ 42.7 million, $ 28.6 million, $ 52.3 million, and $ 35.3 million related to amounts which had not yet been billed to customers as of March 31, 2023, December 31, 2022, March 31, 2022, and December 31, 2021, respectively.

During the three months ended March 31, 2023 and 2022, changes in the Company's accounts receivables, allowance for doubtful accounts, and deferred revenue balances were as follows (in thousands):

Balance, Beginning of Period Additions Deductions Balance, End of Period

Accounts receivable:

Contract liabilities:

Three months ended March 31, 2023 $ 96,210 $ 146,424 $ ( 115,950 ) $ 126,684

Three months ended March 31, 2022 454,993 625,124 ( 601,961 ) 478,156

Allowance for doubtful accounts (1) :

Three months ended March 31, 2023 $ ( 13,835 ) $ — $ — $ ( 13,835 )

Three months ended March 31, 2022 — — — —

Deferred revenue:

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

(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.

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 $ 4 billion as of September 30, 2022.

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.

Three months ended March 31, 2023 $ 549,551 $ 140,324 $ ( 49 ) $ 689,826

Three months ended March 31, 2022 1,595,472 49,094 ( 108,586 ) 1,535,980

(1) There was no bad debt expense recorded during the three months ended March 31, 2023 or 2022.

To estimate the allowance for doubtful accounts, the Company evaluates the credit risk related to its customers based on historical loss experience, economic conditions, the aging of receivables, and customer-specific risks.

As of March 31, 2023, the aggregate amount of the transaction price allocated to performance obligations that were unsatisfied (or partially unsatisfied), excluding amounts related to sales-based royalties, the Gavi APA, and the reduction in doses related to the Amended and Restated UK Supply Agreement, was approximately $ 3 billion of which $ 689.8 million was included in Deferred revenue.

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 advance purchase agreements (“APAs”) 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 vaccine under certain of our APAs.

NVX-CoV2373 vaccine under certain of our APAs.

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 September 30, Nine Months Ended September 30,

Under the terms of the Gavi APA and a separate purchase agreement between Gavi and Serum Institute of India Pvt.

(“SIIPL”), 1.1 billion doses of NVX-CoV2373 were to be made available to countries participating in the COVAX Facility.

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

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

The Company expected to deliver doses with antigen and adjuvant manufactured at facilities directly funded under the Company's funding agreement with Coalition for Epidemic Preparedness Innovations (“CEPI”), with initial doses supplied by SIIPL and Serum Life Sciences Limited (“SLS”) under a supply agreement.

The Company expected to supply significant doses that Gavi would allocate to low-, middle- and high-income countries, subject to certain limitations, utilizing a tiered pricing schedule and Gavi could prioritize such doses to low- and middle- income countries, at lower prices.

Additionally, the Company could provide additional doses of NVX-CoV2373, to the extent available from CEPI-funded manufacturing facilities, in the event that SIIPL could not materially deliver expected vaccine doses to the COVAX Facility.

Under the agreement, the Company received an upfront payment of $ 350.0 million from Gavi in 2021 and an additional payment of $ 350 million in 2022 related to the Company’s achieving an emergency use license for NVX-CoV2373 by the WHO (the “Advance Payment Amount”).

On November 18, 2022, the Company delivered written notice to Gavi to terminate the Gavi APA on the basis of 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 March 31, 2023, 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 sheets.

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

The Company filed its Answer and Counterclaims on March 2, 2023.

On April 5, 2023, Gavi filed its Reply to the Company’s Counterclaims.

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

Product Sales

Product sales by the Company’s customer’s geographic location was as follows (in thousands):

Three Months Ended

North America

Europe 57,267 413,745

Rest of the world

( 64,724 ) 107,121

government partnership (“OWS”) $ 104,348 $ 96,215 $ 311,423 $ 699,268

Department of Defense (“DoD”) 1,925 1,287 1,925 21,472

Coalition for Epidemic Preparedness Innovations (“CEPI”) — 37,505 — 131,022

Bill & Melinda Gates Foundation (“BMGF”)

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

Total product revenue $ ( 7,457 ) $ 585,628

In May 2023, the Company extended a credit for certain doses delivered in 2022 that qualified for replacement under the contract with the customer.

This credit is the result of a single lot sold to the Australian government that upon pre-planned 6-month stability testing was found to have fallen below the defined specifications and the lot was therefore removed from the market.

The credit will be applied against the future sale of doses to the customer and, during the three months ended March 31, 2023, the Company recorded a reduction of $ 64.7 million in product sales, with a corresponding increase to Deferred revenue, non-current.

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 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.

government agreement consists of a Project Agreement (the “Project Agreement”) and a Base 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 (the Base Agreement

together with the Project Agreement are referred to as the “USG Agreement”).

In February 2023, in connection with the execution of Modification 17 to the Project Agreement, the U.S.

government indicated to the Company that the award may not be extended past its current period of performance, December 31, 2023.

Also, Modification 17 included provisions requiring that the payment of $ 60.0 million of consideration associated with manufacturing work now be contingent upon meeting certain milestones, including the delivery of up to 1.5 million doses of NVX-CoV2373 and development and regulatory milestones related to commercial readiness, expansion of the EUA and development of multiple vial presentations.

As of March 31, 2023, the Company constrained the total transaction price by $ 48.0 million for consideration associated with milestones that are not fully within the Company’s control.

This constraint, in addition to other contract changes included within Modification 17, resulted in an approximately $ 29 million cumulative reduction to revenue previously recognized under the contract for the three months ended March 31, 2023.

Royalties and Other

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 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 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 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”).

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.

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.

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.

During the three months ended March 31, 2023, the Company did no t recognize revenue related to sales-based royalties.

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

Note 4 – Collaboration, License, and Supply Agreements

Serum Institute

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-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, its proprietary COVID-19 variant antigen candidate(s), its quadrivalent influenza vaccine candidate, and its CIC vaccine candidate.

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

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.

The Company also has a supply agreement with SIIPL and SLS under which SIIPL and SLS supply the Company with NVX-CoV2373, its proprietary COVID-19 variant antigen candidate(s), its quadrivalent influenza vaccine candidate, and its CIC vaccine candidate 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.

Under the agreement, SIIPL purchases the Company's Matrix-M™ adjuvant to manufacture R21/Malaria and SIIPL pays a royalty in the single to low double-digit range for a period of 15 years after the first commercial sale of product in each country.

Takeda Pharmaceutical Company Limited

The Company has a collaboration and license agreement with Takeda Pharmaceutical Company Limited (“Takeda”) under which the Company granted Takeda an exclusive license to develop, manufacture, and commercialize NVX-CoV2373 in Japan.

Under the agreement, Takeda purchases 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.

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.

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 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.

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

Under the agreement, Takeda purchases Matrix-M™ adjuvant from the Company to manufacture doses of 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 September 2021, Takeda finalized an agreement with the Government of Japan’s Ministry of Health, Labour and Welfare ("MHLW") for the purchase of 150 million doses of NVX-CoV2373.

In February 2023, MHLW cancelled the remainder of doses under its agreement with Takeda.

As a result, it is uncertain whether the Company will receive future payments from Takeda under the terms and conditions of their current collaboration and licensing agreement.

Other Supply Agreements

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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.

As of March 31, 2023, the remaining payment of $ 102.9 million was reflected in Accrued expenses.

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 Fujifilm 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 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 – 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 $ ( 293,905 ) $ 203,408

Interest on convertible notes, net — 3,403

Net income (loss), dilutive ( 293,905 ) 206,811

Weighted average number of common shares outstanding, basic 86,158 76,457

Effect of dilutive securities — 4,254

Weighted average number of common shares outstanding, dilutive 86,158 80,711

Net income (loss) per share:

Basic $ ( 3.41 ) $ 2.66

Diluted $ ( 3.41 ) $ 2.56

Anti-dilutive securities excluded from calculations of diluted net income (loss) per share 23,971 1,474

Note 6 – 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 such amounts shown in the statements of cash flows (in thousands):

September 30, 2022 December 31, 2021

March 31, 2023 December 31, 2022

Cash and cash equivalents $ 624,950 $ 1,336,883

2 unchanged sentences

Cash, cash equivalents, and restricted cash $ 636,943 $ 1,348,845

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

(1) Classified as Other non-current assets as of March 31, 2023 and December 31, 2022, on the consolidated balance sheets.

Note 7 – Fair Value Measurements

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

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

Fair Value at March 31, 2023 Fair Value at December 31, 2022

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

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Total cash equivalents $ 152,786 $ 300,991 $ — $ 398,834 $ 400,536 $ —

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

(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.

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

5.00 % Convertible notes due 2027

$ — $ 103,811 $ — $ — $ 172,789 $ —

3.75 % Convertible notes due 2023

— — — — 322,111 —

Total convertible notes payable $ — $ 103,811 $ — $ — $ 494,900 $ —

(1) All investments are classified as Cash and cash equivalents as of March 31, 2023 and December 31, 2022, on the consolidated balance sheets.

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

Pricing of the Company’s convertible notes has been estimated using observable inputs, including the price of the Company’s common stock, implied volatility, interest rates, and credit spreads.

During the three months ended March 31, 2023 and 2022, the Company did not have any transfers between levels .

The amount in the Company’s consolidated balance sheets for accounts payable and accrued expenses approximates its fair value due to its short-term nature.

Note 8 – Inventory

Inventory consisted of the following (in thousands):

September 30, 2022 December 31, 2021

March 31, 2023 December 31, 2022

Raw materials $ 12,320 $ 13,912

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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 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.

Note 8 – Intangible Assets and Goodwill

Identifiable Intangible Assets

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

September 30, 2022 December 31, 2021

Amount Accumulated

Amortization Intangible

Assets, Net Gross

Amount Accumulated

Amortization Intangible

Finite-lived intangible assets:

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

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

(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 nine months ended September 30, 2022 was as follows (in thousands):

For the three months ended March 31, 2023, inventory write-downs were $ 12.5 million.

For the three months ended March 31, 2023, losses on firm purchase commitments were $ 7.7 million.

There were no inventory write-downs or losses on firm purchase commitments during the three months ended March 31, 2022 .

Note 9 – Goodwill

The Company has one reporting unit, which has a negative equity value as of ended March 31, 2023 and December 31, 2022.

The change in the carrying amounts of goodwill for the three months ended March 31, 2023 was as follows (in thousands):

Balance at December 31, 2022 $ 126,331

Currency translation adjustments 3,496

Balance at September 30, 2022 $ 117,535

Balance at March 31, 2023 $ 129,827

Note 10 – Leases

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 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 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 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

Convertible Notes

The Company incurred approximately $ 10.0 million of debt issuance costs during the first quarter of 2016 relating to the issuance of $ 325 million aggregate principal amount of convertible senior unsecured notes that will mature on February 1, 2023 (the “Notes”), which were recorded as a reduction to the Notes on the consolidated balance sheet.

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.

The Company has embedded leases related to supply agreements with contract manufacturing organizations (“CMOs”) and contract manufacturing and development organizations to manufacture NVX-CoV2373, as well as operating leases for its research and development and manufacturing facilities, corporate headquarters and offices, and certain equipment.

During the three months ended March 31, 2023, the Company continued to align its global manufacturing footprint as a result of its ongoing assessment of manufacturing needs consistent with its contractual obligations related to the supply, and anticipated demand for, NVX-CoV2373.

During the three months ended March 31, 2023, the Company recognized a short-term lease expense of $ 0.7 million, related to its embedded leases and no expense was recognized for the write off of right of use (“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, the Company recognized a short-term lease expense of $ 78.1 million, related to its embedded leases and expensed $ 10.4 million of ROU write off.

During the three months ended March 31, 2023 and 2022, the Company recognized $ 0.5 million and $ 1.1 million, respectively, of interest expense on its finance lease liabilities.

Note 11 – Long-Term Debt

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

September 30, 2022 December 31, 2021

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

March 31, 2023 December 31, 2022

Current portion:

3.75 % Convertible notes due 2023

$ — $ 325,000

Unamortized debt issuance costs — ( 119 )

Total convertible notes payable (1)

Total current convertible notes payable $ — $ 324,881

Non-current portion:

5.00 % Convertible notes due 2027

$ 175,250 $ 175,250

(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.

Unamortized debt issuance costs and discount ( 8,393 ) ( 8,784 )

Total non-current convertible notes payable $ 166,857 $ 166,466

During the three months ended March 31, 2023, the Company repaid the outstanding principal amount of $ 325.0 million on its 3.75 % Convertible notes due in 2023, together with accrued but unpaid interest on the maturity date.

The repayment was funded by the issuance of the 5.00 % Convertible notes due 2027 and the concurrent common stock offering in December 2022, as well as cash on hand.

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

Three Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

Coupon interest at 3.75 %

$ 3,047 $ 3,047 $ 9,141 $ 9,141

Coupon interest $ 3,206 $ 3,047

Amortization of debt issuance costs 510 356

Total interest expense on Notes $ 3,403 $ 3,403 $ 10,209 $ 10,209

Total interest expense on convertible notes payable $ 3,716 $ 3,403

Note 12 – Stockholders' Equity (Deficit)

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 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.

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

As of March 31, 2023, the remaining balance available under the June 2021 Sales Agreement was approximately $ 318 million.

There were no sales recorded under the June 2021 Sales Agreement during the three months ended March 31, 2023.

During the three months ended March 31, 2022, the Company sold 2.2 million shares of its common stock resulting in net proceeds of approximately $ 179 million, under its June 2021 Sales Agreement.

Note 13 – Stock-Based Compensation

In January 2023, the Company established the 2023 Inducement Plan (the “2023 Inducement Plan”), which provides for the granting of share-based awards to individuals who were not previously employees, or following a bona fide period of non-employment, as an inducement material to such individuals entering into employment with the Company.

The Company reserved 1.0 million shares of common stock for grant under the 2023 Inducement Plan.

As of March 31, 2023, there were 0.3 million shares available for issuance under the 2023 Inducement Plan.

The 2015 Stock Incentive Plan, as amended (“2015 Plan”), was approved at the Company's annual meeting of stockholders in June 2015.

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 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.

The 2015 Plan authorizes the issuance of up to 14.8 million shares of common stock under equity awards granted under the 2015 Plan.

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

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.

As of March 31, 2023, there were 0.5 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.

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.

The 2023 Inducement Plan and the 2015 Plan permit 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 2023 Inducement Plan and the 2015 Plan, unrestricted stock, stock units, and performance awards may be granted.

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 .

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

Grants of share-based awards are generally subject to vesting over periods ranging from one to four years .

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

Three Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

Cost of sales $ 519 $ —

Research and development 13,858 16,887

General and administrative 15,389 23,414 49,782 81,028

Selling, general, and administrative 14,270 16,046

Total stock-based compensation expense $ 28,647 $ 32,933

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”).

Total stock-based compensation capitalized and included in inventory as of March 31, 2023 and December 31, 2022 was $ 1.7 million.

As of March 31, 2023, there was approximately $ 174 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 September 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 nine months ended September 30, 2022 and 2021 was approximately $ 19 million and $ 381 million, respectively.

The aggregate intrinsic value of stock options and SARs exercises and vesting of RSUs for the three months ended March 31, 2023 and 2022 was approximately $ 1.5 million and $ 5.6 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 nine months ended September 30, 2022:

2015 Plan 2005 Plan

The following is a summary of stock options and SARs activity under the 2023 Inducement Plan, 2015 Plan, and 2005 Plan for the three months ended March 31, 2023:

2023 Inducement Plan 2015 Plan 2005 Plan

Options Weighted-Average

Outstanding at December 31, 2022 — $ — 4,053,290 $ 46.07 63,725 $ 112.94

2 unchanged sentences

Canceled — — ( 15,835 ) 81.44 ( 5,250 ) 36.60

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:

Outstanding at March 31, 2023 358,600 $ 10.96 4,960,166 $ 38.73 58,475 $ 119.80

Shares exercisable at March 31, 2023 — $ — 311,560 $ 40.60 58,475 $ 119.80

The fair value of stock options granted under the 2023 Inducement Plan and the 2015 Plan was estimated at the date of grant using the Black-Scholes option-pricing model with the following assumptions:

Three Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

Weighted average Black-Scholes fair value of stock options granted $ 7.19

$ 203.51 $ 60.24

Risk-free interest rate 3.6 %- 4.0 %

2 unchanged sentences

120.5 %- 130.6 %

120.5 %- 136.7 %

124.7 %- 142.0 %

Expected term (in years) 3.9 - 5.1

The total aggregate intrinsic value and weighted-average remaining contractual term of stock options and SARs outstanding under the 2015 Plan and 2005 Plan as of 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.

The total aggregate intrinsic value and weighted-average remaining contractual term of stock options and SARs outstanding under the 2023 Inducement Plan, 2015 Plan and 2005 Plan as of March 31, 2023 was approximately $ 0.9 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 2023 Inducement Plan, 2015 Plan and 2005 Plan as of March 31, 2023 was approximately $ 0.7 million and 6.5 years, respectively.

Restricted Stock Units

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

The following is a summary of RSU activity for the three months ended March 31, 2023:

2023 Inducement Plan 2015 Plan

Shares Per Share

Fair Value Number of

Shares Per Share

Outstanding and unvested at December 31, 2022 — $ — 2,034,574 $ 61.67

2 unchanged sentences

Forfeited — $ — ( 88,570 ) 52.68

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

Outstanding and unvested at March 31, 2023 308,390 $ 10.96 4,265,761 $ 28.26

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).

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:

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 %

Dividend yield — % — % — % — %

Volatility 103.0 %- 114.8 %

114.9 %- 150.6 %

103.0 %- 142.9 %

114.9 %- 159.4 %

Expected term (in years) 0.5 - 2.0

As of March 31, 2023, there were 0.5 million shares available for issuance under the ESPP.

Note 14 – Income Taxes

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 September 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 March 31, 2023 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 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.

On the basis of this evaluation, as of March 31, 2023, 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 $ 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.

The Company recognized federal, state, and foreign income tax expense of $ 1.2 million and $ 0.6 million, in total, for the three months ended March 31, 2023 and 2022, respectively.

The Company recognized foreign withholding tax expense on royalties of $ 2.1 million for the three months ended March 31, 2022.

The Company did no t recognize any foreign withholding tax expense on royalties for the three months ended March 31, 2023.

Note 15 – Commitments and Contingencies

1 unchanged sentence

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

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.

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., No.

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

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 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 vaccine’s regulatory approval.

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 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, six derivative lawsuits were filed:

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.

Erck, et al., No.

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

Erck, et al., No.

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

Erck, et al., No.

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”), and (vi) Diego J.

Erck, et al .

(the “Mesa 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 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.

Erck, et al., No.

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.

2 unchanged sentences

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

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 “First Consolidated Derivative Action”).

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 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 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 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 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.

Plaintiffs’ filed their opposition to the motion to dismiss on April 11, 2023.

Defendant’s reply brief in further support of their motion to dismiss is due by May 11, 2023.

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 March 22, 2023, the Court entered an order staying the Kirst Action pending resolution of the Motion to Dismiss in the Second Consolidated Derivative Action.

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.

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 and stayed the Mesa Action pending the entry of a final, non-appealable judgment in the Second Consolidated Derivative Action.

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.

On March 9, 2023, the court entered an order granting the parties’ request to stay the Acosta Action pending the entry of a final, non-appealable judgment in the Second Consolidated Derivative 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.

5 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 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.

The Company is 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 the Company’s 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.

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

On March 29, 2022, 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.

On April 4, 2023, the parties entered into a Settlement Agreement and Release of Claims pursuant to which Novavax agreed to pay $ 27.0 million to Par, which was fully accrued for as of March 31, 2023.

Novavax characterized the payment as a $ 15.0 million termination fee due under the Par MSA and a $ 12.0 million settlement payment.

Because Par and its parent company, Endo International plc, are parties to Chapter 11 bankruptcy proceedings, the Settlement Agreement and Release of Claims and the payment due thereunder required, and subsequently received, approval from the bankruptcy court.

The Company has made the payment required by the Settlement Agreement and Release of Claims, and, subject to the non-occurrence of certain contingencies, the arbitration will be dismissed on or about July 13, 2023.

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.

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 filed its Answer and Counterclaims on March 2, 2023.

On April 5, 2023, Gavi filed its Reply to the Company’s Counterclaims.

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

The Company is 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, the Company do not expect the resolution of these other legal proceedings to have a material adverse effect on its financial position, results of operations, or cash flows.

Note 16 – Subsequent Events

In December 2020, the Company entered into an APA with the Commonwealth of Australia for the purchase of doses of NVX-CoV2373 (the “Australia APA”).

In April 2023, the Company entered into an amendment to the Australia APA that reduced the number of doses to be delivered under the Australia APA with a commensurate increase in the per-dose price, such that the total contract value of the Australia APA was maintained, with doses to be delivered through 2024.

In January 2021, the Company entered into an APA with Her Majesty the Queen in Right of Canada as represented by the Minister of Public Works and Government Services for the purchase of doses of NVX-CoV2373 (the “Canada APA”).

In April 2023, the Company entered into an amendment to the Canada APA under which it will receive a payment of $ 100.4 million for the forfeiture of doses originally scheduled for delivery in 2022.

In May 2023, the Company announced a global restructuring and cost reduction plan.

In May 2023, the Company announced that its CIC, stand-alone influenza and high-dose COVID vaccine candidates all showed a reassuring preliminary safety profile as well as comparable reactogenicity to individual Novavax influenza and COVID vaccine candidates or authorized influenza vaccine comparators.

Additionally, all three vaccines demonstrated preliminary robust immune responses.

The primary endpoint evaluated the safety of different formulations of the CIC vaccine candidate and the quadrivalent influenza vaccine candidate compared to Fluad® and Fluzone High-Dose Quadrivalent® (Fluzone HD), as well as a high-dose COVID vaccine candidate in adults aged 50 through 80.

All three vaccine candidates contained Novavax’s patented Matrix-M adjuvant and showed reassuring preliminary safety profiles and reactogenicity that was comparable to Fluad and Fluzone HD.

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