What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-05-09 compared with 2022-11-09 · 240 added, 268 removed, 111 unchanged (82% of the section changed)

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Any statements in the discussion below and elsewhere in this Quarterly Report on Form 10-Q (this “Quarterly Report”) about expectations, beliefs, plans, objectives, assumptions, or future events or performance of Novavax, Inc.

(“Novavax,” and together with its wholly owned subsidiaries, the “Company,” “we,” or “us”) are not historical facts and are forward-looking statements.

Any statements in the discussion below and elsewhere in this Quarterly Report on Form 10-Q (“Quarterly Report”) about expectations, beliefs, plans, objectives, assumptions, or future events or performance of Novavax, Inc.

(“Novavax,” together with its wholly owned subsidiaries, the “Company,” “we,” or “us”) are not historical facts and are forward-looking statements.

Such forward-looking statements include, without limitation, statements about our capabilities, goals, expectations regarding future revenue and expense levels, and capital raising activities;

our operating plans and prospects;

our operating plans and prospects, including our ability to continue as a going concern through one year from the date of Novavax’ unaudited financial statements for the period ended March 31, 2023;

global restructuring and cost reduction plan, which includes a more focused investment in our NVX-CoV2373 program, reduction to our pipeline spending, the continued rationalization of our manufacturing network, a reduction to our global workforce, as well as the consolidation of facilities and infrastructure, the size and timing of the Company’s workforce reduction, the amount and timing of the charges and cash expenditures resulting from the workforce reduction, and the expected timing and impact of cost savings from our global restructuring and cost reduction plan;

potential market sizes and demand for our product candidates;

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plans for and potential timing of regulatory filings;

our expectation of manufacturing capacity, timing, production, distribution, and delivery for our coronavirus vaccine candidate (“NVX-CoV2373”) by us and our partners;

our expectation of manufacturing capacity, timing, production, distribution, and delivery for NVX-CoV2373 (as defined below) by us and our partners;

our estimate of the number of individuals who may potentially be reached by NVX-CoV2373;

our expectations with respect to the anticipated ongoing development and commercialization or licensure of NVX-CoV2373, including efforts to expand the NVX-CoV2373 label worldwide as a booster, and to various age groups and geographic locations, and our seasonal quadrivalent influenza vaccine, previously known as NanoFlu;

our expectations with respect to the anticipated ongoing development and commercialization or licensure of NVX-CoV2373, ongoing development of COVID-19 variant strain including the Phase 2b/3 Hummingbird™ trial, the timing of anticipated results and our efforts for the Fall 2023 vaccination season, efforts to expand the NVX-CoV2373 label worldwide as a booster, and to various age groups and geographic locations, and our seasonal quadrivalent influenza vaccine, previously known as NanoFlu;

the expected timing, content, and outcomes of regulatory actions;

funding from the U.S.

government partnership formerly known as Operation Warp Speed (“OWS”), the U.S.

Department of Defense (“DoD”), and the Coalition for Epidemic Preparedness Innovations (“CEPI”), and payments from the Bill & Melinda Gates Foundation (“BMGF”);

funding under our advance purchase agreements and supply agreements and amendments to, or termination of, any such agreement;

government partnership formerly known as Operation Warp Speed under the USG Agreement (as defined below);

funding under our advance purchase agreements (“APAs”) and supply agreements and amendments to, termination of, or legal disputes relating to any such agreement;

our available cash resources and usage and the availability of financing generally;

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Such risks and uncertainties include, without limitation, challenges satisfying, alone or together with partners, various safety, efficacy, and product characterization requirements, including those related to process qualification and assay validation, necessary to satisfy applicable regulatory authorities, such as the U.S.

Food and Drug Administration (“FDA”), World Health Organization (“WHO”), United Kingdom (“UK”) Medicines and Healthcare Products Regulatory Agency, the European Medicines Agency, the Republic of Korea’s Ministry of Food and Drug Safety, or Japan’s Ministry of Health, Labour and Welfare;

Food and Drug Administration (“FDA”), the World Health Organization (“WHO”), United Kingdom (“UK”) Medicines and Healthcare Products Regulatory Agency (“MHRA”), the European Medicines Agency (“EMA”), the Republic of Korea’s Ministry of Food and Drug Safety, or Japan’s Ministry of Health, Labour and Welfare;

unanticipated challenges or delays in conducting clinical trials;

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challenges meeting contractual requirements under agreements with multiple commercial, governmental, and other entities;

and other risks and uncertainties identified in Part I, Item 1A “Risk Factors” of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2021, which may be detailed and modified or updated in other documents filed with the United States Securities and Exchange Commission (“SEC”) from time to time, and are available at www.sec.gov and at www.novavax.com.

challenges in implementing our global restructuring and cost reduction plan;

challenges in obtaining commercial adoption of NVX-CoV2373 or a COVID-19 variant strain-containing formulation;

and other risks and uncertainties identified in Part II, Item 1A “Risk Factors” of this Quarterly Report and in Part I, Item 1A “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2022, which may be detailed and modified or updated in other documents filed with the SEC from time to time, and are available at www.sec.gov and at www.novavax.com.

You are encouraged to read these filings as they are made.

Information in this Quarterly Report includes a financial measure that was not prepared in accordance with U.S.

generally accepted accounting principles (“GAAP”), which we refer to as adjusted cost of sales.

We are presenting this non-GAAP financial measure to assist an understanding of our business and its performance.

Adjusted cost of sales includes an estimate of standard manufacturing costs that were previously expensed to research and development prior to regulatory approvals for NVX-CoV2373 that would otherwise have been capitalized to inventory.

Any non-GAAP financial measures presented are not, and should not be viewed as, substitutes for financial measures required by GAAP, have no standardized meaning prescribed by GAAP, and may not be comparable to the calculation of similar measures of other companies.

We cannot guarantee future results, events, level of activity, performance, or achievement.

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In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

Novavax, Inc., together with our wholly-owned subsidiaries, is a biotechnology company that promotes improved health globally through the discovery, development, and commercialization of innovative vaccines to prevent serious infectious diseases.

Information in this Quarterly Report, includes a financial measure that was not prepared in accordance with U.S.

generally accepted accounting principles (“GAAP”), which we refer to as adjusted cost of sales.

We are presenting this non-GAAP financial measure to assist an understanding of our business and its performance.

We are a biotechnology company that promotes improved health globally through the discovery, development, and commercialization of innovative vaccines to prevent serious infectious diseases.

Our proprietary recombinant technology platform harnesses the power and speed of genetic engineering to efficiently produce highly immunogenic nanoparticle vaccines designed to address urgent global health needs.

Our vaccine candidates are genetically engineered nanostructures of conformationally correct recombinant proteins that mimic those found on natural pathogens.

This technology enables the immune system to recognize the right target proteins from different angles and develop protective antibodies.

We believe that our vaccine technology may lead to the induction of a differentiated immune response that may be more efficacious than naturally occurring immunity or other vaccine approaches.

Our vaccine candidates also incorporate our proprietary saponin-based Matrix-M™ adjuvant to enhance the immune response and stimulate higher levels of functional antibodies and induce a cellular immune response.

We have developed a COVID-19 vaccine (“NVX-CoV2373,” “Nuvaxovid™,” “Covovax™,” “Novavax COVID-19 Vaccine, Adjuvanted”), and are developing an influenza vaccine candidate, a COVID-19-Influenza Combination (“CIC”) vaccine candidate, and additional vaccine candidates, including for Omicron subvariants (NVX-CoV2515 for Omicron BA.1 specific vaccine), and bivalent formulations with prototype vaccine (“NVX-CoV2373”).

NVX-CoV2373 has received approval, interim authorization, provisional approval, conditional marketing authorization (“CMA”), and emergency use authorization (“EUA”) from multiple regulatory authorities globally for both adult and adolescent populations as a primary series and for both homologous and heterologous booster indications.

In addition to COVID-19 and seasonal influenza, our other areas of focus include respiratory syncytial virus (“RSV”) and malaria.

Our vaccine candidates are nanostructures of conformationally correct recombinant proteins that mimic those found on natural pathogens.

This technology enables the immune system to recognize target proteins and develop protective antibodies.

We believe that our vaccine technology may lead to the induction of a differentiated immune response that may be more efficacious than naturally occurring immunity or some other vaccine approaches.

Our vaccine candidates also incorporate our proprietary saponin-based Matrix-M™ adjuvant to enhance the immune response, stimulate higher levels of functional antibodies, and induce a cellular immune response.

We have developed a COVID-19 vaccine (“NVX-CoV2373, “Nuvaxovid™,” “Covovax™,” “Novavax COVID-19 Vaccine, Adjuvanted”), that has received approval, interim authorization, provisional approval, conditional marketing authorization (“CMA”), and emergency use authorization (“EUA”) from multiple regulatory authorities globally for both adult and adolescent populations as a primary series and for both homologous and heterologous booster indications.

We are also developing an influenza vaccine candidate, a COVID-19-Influenza Combination (“CIC”) vaccine candidate, as well as COVID-19 variant strain-containing formulation that we intend to provide in a monovalent or bivalent presentation in alignment with public health recommendations.

In addition to COVID-19 and seasonal influenza, our other areas of focus include providing Matrix-M™ adjuvant for collaborations investigating the prevention of malaria, including R21/Matrix-M™ adjuvant malaria vaccine, which recently received authorization in several countries.

We intend to focus the organization to align our investments and activities with our top priority of delivering an updated COVID-19 vaccine consistent with public health recommendations for strain composition for the 2023 Fall vaccination season.

To maximize our opportunities and mitigate the significant risks and uncertainties of the COVID-19 market, we have taken several cost restructuring measures to reduce spend, extend our cash runway, and operate efficiently to best position the company to deliver longer-term growth.

We discuss these cost restructuring strategies in greater detail in Note 2 to our consolidated financial statements in this Quarterly Report.

Technology Overview

We believe our recombinant nanoparticle vaccine technology together with our proprietary Matrix-M™ adjuvant is well-suited for the development and commercialization of vaccine candidates targeting a broad scope of respiratory and other emerging infectious diseases at scale.

We believe our recombinant nanoparticle vaccine technology, together with our proprietary Matrix-M™ adjuvant, is well suited for the development and commercialization of vaccine candidates targeting a broad scope of respiratory and other endemic and emerging infectious diseases at scale.

Recombinant Nanoparticle Vaccine Technology

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Matrix-M™ Adjuvant

Our proprietary Matrix-M™ adjuvant has been a key differentiator within our platform.

This adjuvant has demonstrated potent, well-tolerated, and durable efficacy by stimulating the entry of antigen presenting cells (“APCs”) into the injection site and enhancing antigen presentation in local lymph nodes.

This in turn activates APCs, T-cell and B-cell populations, plasma cells, and high affinity antibodies, thereby boosting immune response.

This potent mechanism of action enables a lower dose of antigen required to achieve the desired immune response and we believe thereby contributes to increased vaccine supply and manufacturing capacity.

Our proprietary Matrix-M™ adjuvant is a key differentiator within our platform.

This adjuvant has enabled potent, well tolerated, and durable efficacy by stimulating the entry of antigen presenting cells (“APCs”) into the injection site and

enhancing antigen presentation in local lymph nodes.

This in turn activates APCs, T-cell and B-cell populations, and plasma cells, which promotes the production of high affinity antibodies, an immune boosting response.

This potent mechanism of action enables a lower dose of antigen required to achieve the desired immune response, thereby contributing to increased vaccine supply and manufacturing capacity.

These immune-boosting and dose-sparing capabilities contribute to the adjuvant’s highly unique profile.

We continue to evaluate commercial opportunities for the use of our Matrix-M™ adjuvant alongside vaccine antigens produced by other manufacturers.

Matrix-M™ adjuvant is being evaluated in combination with several partner-led malaria vaccine candidates, including for R21/Matrix-M™ adjuvant, a malaria vaccine candidate created by the Jenner Institute, University of Oxford.

The R21/Matrix-M™ adjuvant vaccine has been licensed to Serum Institute of India Pvt.

(“SIIPL”) for commercialization.

Our adjuvant technology is also being investigated in veterinary applications and is a key component in equine vaccine to prevent Strangles.

NVX-CoV2373 Regulatory and Licensure

We continue to make progress in advancing NVX-CoV2373 toward regulatory approvals.

We have received numerous authorizations globally within the adult population, aged 18 and older, and the adolescent population, aged 12 through 17, for primary series and both homologous and heterologous booster indications.

Collectively, these indications have the potential to reach over six billion individuals.

To date, we have received approval, interim authorization, provisional approval, CMA, and EUA for both adult and adolescent populations, and we are working to expand our label worldwide.

We continue to work closely with governments, regulatory authorities, and non-governmental organizations in our commitment to facilitate equitable global access to our COVID-19 vaccine.

For the territories in which our vaccine has gained authorization, NVX-CoV2373 is marketed under the brand names (i) Nuvaxovid™ COVID-19 Vaccine (SARS-CoV-2 rS Recombinant, adjuvanted), (ii) Covovax™ (manufacturing and commercialization by the Serum Institute of India Pvt.

(“SIIPL”)), or (iii) Novavax COVID-19 Vaccine, Adjuvanted.

Through the date of filing this Quarterly Report, the below is a summary of regulatory authorizations for NVX-CoV2373:

(1) Regulatory approval received in partnership with SIIPL.

(2) Regulatory manufacturing and marketing approval received by partner Takeda Pharmaceutical Company Limited (“Takeda”).

During the third quarter of 2022, we completed additional regulatory submissions in major markets for both adult and adolescent populations for primary and booster indications.

We are in active discussions with regulatory authorities and remain focused on expanding our label in multiple countries for NVX-CoV2373.

Below is a summary and status of our regulatory submissions completed and awaiting authorization decisions, through the date of filing this Quarterly Report.

(1) Regulatory filing submitted by our partner, SK bioscience, Co., Ltd.

(“SK bioscience”).

We are advancing NVX-CoV2373 through multiple regulatory approvals.

We have received authorizations in over 40 countries globally from major regulatory agencies including the FDA, the WHO, the EMA, and the MHRA.

To date, we have received approval, interim authorization, provisional approval, CMA, and EUA for the adult population, aged 18 and older, the adolescent population, aged 12 to 17 years, and the pediatric population, aged 7 to 11 years in select territories.

The regulatory authorizations for NVX-CoV2373 include primary series and both homologous and heterologous booster indications within specific countries.

For the territories in which our vaccine has gained authorization, NVX-CoV2373 is marketed under the brand names (i) Nuvaxovid™ (SARS-CoV-2 rS Recombinant, adjuvanted), (ii) Covovax™ (manufacturing and commercialization by SIIPL), or (iii) Novavax COVID-19 Vaccine, Adjuvanted.

Below we highlight the first quarter 2023 and subsequent regulatory authorizations received through the date of this filing on Form 10-Q.

In January 2023, our partner SK bioscience received expanded manufacturing and marketing approval from Korean Ministry of Food and Drug Safety for Nuvaxovid™ for use as a booster in adults aged 18 and older.

We are working to continue to expand our label for heterologous boosting in adults, adolescents, and younger children, and to achieve supportive policy recommendations enabling broad market access.

We continue to work closely with governments, regulatory authorities, and non-governmental organizations in our commitment to facilitate global access to our COVID-19 vaccine.

Clinical Pipeline

Our clinical pipeline encompasses vaccine candidates spanning multiple therapeutic areas including coronavirus, seasonal influenza, and RSV, in addition to providing Matrix-M TM adjuvant for collaborations investigating the prevention of malaria.

Our COVID-19 vaccine candidate, NVX-CoV2373, is our leading product, having received approval, interim authorization, provisional approval, CMA, and EUA from multiple regulatory authorities globally.

We advanced NVX-CoV2373 through two pivotal Phase 3 clinical trials that demonstrated high efficacy against both the original COVID-19 strain and commonly circulating COVID-19 variants of concern, while displaying a favorable safety profile.

In October 2022, we announced additional data from the Phase 3 PREVENT-19 trial and new results from a Lot Consistency Study (Study 307).

New PREVENT-19 data added support for the use of prototype Novavax vaccine for homologous boosting in adults and adolescents aged 12 through 17.

In all adults, boosted responses were long-lived and were demonstrated to be relevant against currently circulating variants such as Omicron.

The Lot Consistency trial met its primary endpoint, showing that three lots of COVID-19 vaccine induced comparable immune responses in adults aged 18 through 49, thereby demonstrating the consistency of the commercial manufacturing process.

Additional findings showed utility of the prototype vaccine as a heterologous booster, inducing broad immune responses against contemporary Omicron variants.

Our clinical pipeline is comprised of vaccine candidates for infectious diseases.

Our lead product is our COVID-19 vaccine, NVX-CoV2373, which has received approval, interim authorization, provisional approval, CMA, or EUA for both adult and adolescent populations in over 40 countries.

Beyond COVID-19, our clinical pipeline includes seasonal influenza and CIC vaccines, in addition to our Matrix-M™ adjuvant being used for collaborations investigating the prevention of malaria.

We remain focused on expanding our NVX-CoV2373 vaccine label within the booster and adolescent market following global regulatory authorizations.

In August 2022, we initiated the Phase 2b/3 Hummingbird global clinical trial.

The trial will evaluate the safety, effectiveness (immunogenicity), and efficacy of two primary doses of NVX-CoV2373 given 21 days apart in younger children (aged six to 11 years), followed by a booster dose at six months after the primary vaccination series.

We enrolled the sentinel cohort in the first age group (aged six to 11 years) in the United States.

Based on initial supportive safety and tolerability data analyzed by an independent Safety Monitoring Committee, we have progressed to recruiting the full age cohort.

Furthermore, through ongoing booster studies in our clinical trials and continued development of our COVID-19 variant strain vaccine candidates, we continue to evaluate vaccine performance.

We remain confident in the utility of our prototype vaccine against emerging variants, as we continue to respond to the evolving COVID landscape.

We are currently analyzing preliminary clinical data from our ongoing Omicron BA.1 monovalent and bivalent strain change trial (study 311).

Study 311 achieved its strain-change endpoint using BA.1 as the model omicron subvariant vaccine.

However, the magnitude and breadth of the immune responses following boosting with the prototype vaccine reinforces our belief that a strain change may not be required for our technology.

No significant benefit was observed for the bivalent formatted vaccine.

When evaluating the response to the forward drifted BA.5 omicron subvariant, neither the BA.1 vaccine nor the prototype/BA.1 bivalent vaccine offered any advantage.

We expect to leverage these clinical insights to advance additional regulatory approvals of our COVID-19 vaccine for primary, booster, and pediatric indications globally, amidst the ongoing and evolving COVID-19 pandemic.

Additionally, we are developing our quadrivalent nanoparticle influenza vaccine (qNIV) candidate, previously known as NanoFlu, which we previously advanced through a successful Phase 3 study announced in September 2021, demonstrating the utility for a stand-alone influenza vaccine or used in a combination vaccine.

We continue to progress our CIC vaccine candidate, which combines NVX-CoV2373 and our qNIV approach.

In October 2022, we announced positive results from the Phase 1/2 CIC clinical trial demonstrating the CIC vaccine’s ability to generate both antibody and polyfunctional CD4+ T-cell (lymphocytes that help coordinate the immune response) responses against severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2) and homologous and heterologous influenza strains.

We intend to continue the clinical development of CIC with a follow-up trial to begin in late 2022.

Furthermore, we remain interested in continuing the development of both our RSV Program for respiratory syncytial virus fusion (F) protein nanoparticle vaccine candidate (“RSV F Vaccine”) and Matrix-M TM adjuvant collaborations for malaria.

There is an ongoing Phase 3 trial being conducted by our partner, Jenner Institute, University of Oxford, for R21, a malaria candidate which is formulated using our Matrix-M ™ adjuvant.

In September 2022, positive results from an ongoing Phase 1/2b study were published in The Lancet Infectious Diseases reporting safety, immunogenicity, and efficacy results at 12 months following administration of a booster vaccination.

A booster dose of R21 formulated with our Matrix-M ™ adjuvant at one year following the primary three-dose regimen maintained high efficacy against first and multiple episodes of clinical malaria.

The booster vaccine induced antibody concentrations that is related to vaccine efficacy.

The trial is ongoing to assess long-term follow-up of the participants and the value of further booster vaccinations.

The pipeline chart below summarizes the core clinical and preclinical development programs that we are focusing on in the near-term.

(1) Supported by OWS, DoD, CEPI, and BMGF.

(2) Authorized for provisional approval, CMA, or EUA in select geographies under trade names Nuvaxovid TM and Covovax TM .

Received EUA from the U.S.

PREVENT-19, a Phase 3 clinical trial in the U.S.

Ongoing PREVENT-19 pediatric expansion in the U.S.;

Phase 3 clinical trial in the UK;

Ongoing Phase 2b clinical trial in South Africa.

We, along with our partners, will have commercial rights in authorized geographies to sell and distribute NVX-CoV2373.

We continue to evaluate vaccine effectiveness through ongoing booster studies in our clinical trials, and we continue to advance development of our COVID-19 variant strain containing monovalent or bivalent formulation.

In March 2023, we initiated the Phase 3 COVID-19 Omicron BA.5 clinical trial evaluating our prototype vaccine compared to an Omicron BA.5 vaccine, as well as a bivalent containing vaccine.

Topline results are expected mid-year 2023, which we expect will confirm the strain-change approach we anticipate using for future variant vaccine candidate approvals.

Further pediatric development is ongoing in the Phase 2b/3 Hummingbird™ Global Clinical Trial, which is evaluating the safety, immunogenicity, and effectiveness of NVX-CoV2373 in children.

The trial includes three age de-escalation cohorts of 1,200 children each.

The cohort aged six to 11 years has completed enrollment, and enrollment is ongoing in the cohort aged two to five years.

Topline results in the cohort aged six to 11 years are expected mid-year 2023.

We expect to leverage these clinical insights to pursue additional regulatory approvals of our COVID-19 vaccine for primary, booster, and pediatric indications globally, amidst the ongoing COVID-19 landscape.

Additionally, we are developing our quadrivalent nanoparticle influenza vaccine (“qNIV”) candidate, which we advanced through a successful Phase 3 study published in September 2021, demonstrating the utility of a stand-alone influenza vaccine or for use in a combination vaccine.

We have subsequently updated our qNIV candidate for further development.

We continue to progress a Phase 2 dose-confirming trial evaluating our stand-alone influenza vaccine candidate, qNIV and our CIC vaccine candidate, which combines NVX-CoV2373 and our updated qNIV approach in a single formulation.

In January 2023, we completed enrollment of 1,575 participants in the Phase 2 CIC clinical trial.

The clinical trial will evaluate safety and immunogenicity of different formulations of CIC and influenza stand-alone vaccine candidates in adults aged 50 to 80 years, with topline results expected by mid-year 2023.

Although our COVID-19, CIC, and influenza stand-alone vaccine candidates are our near-term priorities, our partner-led malaria candidates present strong opportunities for future development.

An ongoing Phase 3 clinical trial is being conducted for R21/Matrix-M™ adjuvant malaria vaccine, developed by our partner, the Jenner Institute, University of Oxford, manufactured by SIIPL, and is formulated with our Matrix-M™ adjuvant.

As of the filing of this Quarterly Report, the R21/Matrix-M™ adjuvant malaria vaccine received authorizations in Ghana and Nigeria.

We have an agreement with SIIPL related to its manufacture of R21/Matrix-M™ adjuvant malaria vaccine under which SIIPL purchases Matrix-M™ adjuvant, as well as pays royalties based on its vaccine sales.

The pipeline chart below summarizes the core clinical development programs that we are focusing on in the near-term.

(1) Authorized in select geographies under trade names Novavax COVID-19 Vaccine, Adjuvanted;

and Nuvaxovid™.

(2) Ongoing Phase 3 strain change trial.

(3) R21/Matrix-M™ adjuvant malaria vaccine being commercialized by SIIPL.

Business Highlights

Third Quarter 2022 and Recent Highlights

Expanded COVID-19 Vaccine in Adult Population Aged 18 and Older

• Nuvaxovid™ booster authorized for emergency use in the U.S., European Union (“EU”), Switzerland, United Arab Emirates (UAE) and New Zealand, with submissions completed to WHO, as well as in Great Britain and South Korea

◦ Recommendations provided by U.S.

Centers for Disease Control and Prevention (“CDC”), E.U.’s Committee for Medicinal Products for Human Use and Switzerland’s Federal Office of Public Health

• Nuvaxovid™ granted import and use permit in Israel for primary series and as a booster

• Covovax™ granted full product registration in South Africa for primary series

Expanded COVID-19 Vaccine in Adolescent Population Aged 12 Through 17

• Nuvaxovid™ primary series authorized for emergency use in the U.S., EU, Japan, Great Britain, Australia, South Korea, Taiwan, Switzerland, Thailand, UAE and New Zealand, with submissions completed to WHO and in Singapore

◦ Recommendation provided by U.S.

• Nuvaxovid™ granted import and use permit in Israel for primary series and as a booster

COVID-19 Vaccine Manufacturing and Supply

• Delivered over 94 million doses of NVX-CoV2373 globally to date

• Completed submission to add Novavax CZ as an EU manufacturing site

• Solidified manufacturing and supply network ensuring capacity to support ongoing global demand

COVID-19 Clinical Development Program

• Announced topline results from Phase 3 Boosting Trial for NVX-CoV2515, meeting the primary strain-change endpoint and reaffirming that prototype vaccine induces broadly cross-reactive responses, suggesting utility against current and future variants

• PREVENT-19 Phase 3 NVX-CoV2373 homologous booster data support benefits against variants

◦ Following a single homologous booster dose, adult participants demonstrated increased anti-spike IgG levels and increased functional antibody levels measured by hACE2 receptor inhibition against Omicron BA.1, BA.2 and BA.5 variants, approximating levels observed in our Phase 3 efficacy studies

◦ Robust booster responses were consistent between younger (less than 65 years of age) and older (greater than 65 years of age) adults, and independent of whether the booster dose was administered eight or 11 months after the primary series, offering further evidence of broad utility and duration of response with NVX-CoV2373

◦ Adolescent participants following a single booster dose demonstrated neutralizing titers were 2.7-fold higher than those seen with primary vaccination and a broad antibody response against Omicron BA.1, BA.2 and BA.5 variants

• Demonstrated NVX-CoV2373 induced consistent immune responses when boosted on top of mRNA or AD26 vaccines, and achieved primary endpoint of Lot Consistency study for adults aged 18 through 49, demonstrating a consistent manufacturing process

◦ When used as a heterologous boost (after either 2 or 3 doses of mRNA OR 1 or 2 doses of AD26) NVX-CoV2373 generated antibody levels previously found to be related to efficacy in the PREVENT-19 Phase 3 trial

• Initiated Phase 2b/3 Hummingbird global clinical trial for NVX-CoV2373 in younger children aged six months through 11 years, enrolling the sentinel cohort in the first group aged six through 11 years in the U.S.

◦ Based on initial supportive safety and tolerability data analyzed by an independent Safety and Monitoring Committee, progressed to recruiting the full age cohort

COVID-19-Influenza Combination (CIC) Vaccine Candidate Clinical Development

• Announced positive cellular immunity results of CIC Phase 1/2 trial following initial results announced in April, demonstrating ability to generate immune responses, including both antibody and polyfunctional CD4+ T-cell responses, against SARS-CoV-2 and homologous and heterologous influenza strains

◦ Generated robust antibody responses against both prototype and Omicron BA.1 strains of SARS-CoV-2 and influenza antigens

◦ Safety and tolerability profile was consistent with standalone NVX-CoV2373 prototype vaccine and quadrivalent influenza vaccine candidate

◦ Phase 2 trial expected to begin by the end of 2022

First Quarter 2023 and Recent Highlights

During the quarter, we made progress delivering on the three near-term priorities laid out during our fourth quarter 2022 earnings call.

Deliver an Updated, Competitive COVID Vaccine for the Upcoming 2023 Fall Vaccination Season

We remain focused on our top priority of delivering an updated, competitive COVID vaccine consistent with public health recommendations for the 2023 Fall vaccination season.

• Ongoing discussions with global regulators on strain selection guidance and advancement of commercial preparedness for Fall 2023

◦ Invited to join the U.S.

FDA Technology Working Group to evaluate emerging variants in preparation for strain selection at the June VRBPAC meeting

◦ Ongoing development of variant strains “at risk” to support regulatory and commercial readiness

◦ Modified U.S.

government agreement for up to 1.5 million additional doses of Novavax’s COVID vaccine for delivery in 2023, with initial delivery supplied in five-dose vials in the first quarter of 2023

• Continued expansion of Nuvaxovid label to enable broader uptake in the long-term commercial market

• Completed enrollment and on track to receive topline results mid-2023 for Part 2 of Phase 3 strain change study, which is a regulatory prerequisite for updating our 2023-2024 vaccine composition

• Expect to file U.S.

Biologics License Application in second half of 2023

Reduce our Rate of Spend, Manage our Cash Flow and Evolve our Scale & Structure

We are focused on significantly reducing our expenses while retaining the key capabilities needed to execute our operating plans.

• Announced a global restructuring and cost reduction plan, which is expected to reduce our annual combined 2024 R&D and SG&A expenses

◦ Includes consolidation of facilities and infrastructure and approximately 25% reduction in global workforce

◦ 2023 R&D and SG&A expense reduction expected to be based on timing of implementation, local laws and regulations and other factors

Leverage our Technology Platform, our Capabilities and our Portfolio of Assets to Drive Additional Value Beyond Nuvaxovid Alone

We continue to leverage our pipeline and technology with the intent of delivering long-term growth and protecting global health.

• Announced positive Phase 2 COVID-Influenza Combination (CIC) vaccine, standalone influenza, and high-dose COVID vaccine data, which evaluated safety and immunogenicity of different formulations

◦ All three vaccine candidates were well-tolerated, demonstrated a reassuring preliminary safety profile, and had reactogenicity comparable to authorized comparators

◦ Preliminary topline immune responses for all three vaccine candidates were robust

• Serum Institute of India has received authorizations in Ghana and Nigeria for R21/Matrix-M™ adjuvanted malaria vaccine

◦ Vaccine was developed by Jenner Institute, University of Oxford, and formulated with our proprietary Matrix-M™ adjuvant

Sales of Common Stock

During the three months ended March 31, 2022, we sold 2.2 million of shares of our common stock resulting in net proceeds of approximately $179 million, under our most recent At Market Issuance Sales agreement entered in June 2021 (the “June 2021 Sales Agreement”), which allows us to issue and sell up to $500 million in gross proceeds of shares of our common stock.

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

During the nine months ended September 30, 2021, we sold 2.6 million shares of our common stock resulting in net proceeds of approximately $565 million, under our various At Market Issuance Sales agreements then in effect.

In June 2021, we entered into an At Market Issuance Sales Agreement (the "June 2021 Sales Agreement"), which allows us 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, we sold 2.2 million shares of our common stock resulting in net proceeds of approximately $179 million, under the June 2021 Sales Agreement.

Critical Accounting Policies and Use of Estimates

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The preparation of our consolidated financial statements requires us to make estimates, assumptions, and judgments that affect the reported amounts of assets, liabilities, and equity and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period.

Our critical accounting policies and estimates are included under Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, as filed with the SEC, and are updated for inventory valuation below.

Inventory Valuation

We periodically analyze our inventories for excess amounts or obsolescence and write down obsolete or otherwise unmarketable inventory to its estimated net realizable value based on assumptions about expected future demand and market conditions.

Our assumptions about expected future demand are inherently uncertain and if we were to change any of these judgments or estimates, it could cause a material increase or decrease in the amount of inventory write down that we report in a particular period.

Expense incurred related to excess inventory and obsolete inventory is recorded as a component of cost of sales in the consolidated statement of operations.

Our critical accounting policies and estimates are included under Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, as filed with the SEC.

Recent Accounting Pronouncements Not Yet Adopted

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The following is a discussion of the historical financial condition and results of our operations that should be read in conjunction with the unaudited consolidated financial statements and notes set forth in this Quarterly Report.

Three Months Ended September 30, 2022 and 2021

Three Months Ended September 30,

Three Months Ended March 31, 2023 and 2022

Three Months Ended March 31,

2023 2022 Change

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Total revenue $ 80,951 $ 703,971 $ (623,020)

Revenue for the three months ended September 30, 2022 was $734.6 million as compared to $178.8 million for the same period in 2021, an increase of $555.7 million.

Revenue for the three months ended September 30, 2022 was primarily comprised of revenue from product sales of NVX-CoV2373 and revenue for services performed under the agreement with the U.S.

government partnership formerly known as OWS (“OWS Agreement”).

Revenue for the three months ended September 30, 2021 was primarily comprised of revenue for services performed under the OWS Agreement and our funding agreements with CEPI.

The increase in revenue was due to the commencement of commercial sales of NVX-CoV2373 in 2022, partially offset by decreased development activities under our funding agreements with CEPI.

We expect revenue in 2022 to significantly increase as compared to 2021 due to product sales of NVX-CoV2373 under various supply agreements, sometimes referred to as advance purchase agreements (“APAs”), as a result of multiple global regulatory approvals.

Three Months Ended September 30,

Revenue for the three months ended March 31, 2023 was $81.0 million as compared to $704.0 million for the same period in 2022, a decrease of $623.0 million.

Revenue for the three months ended March 31, 2023 was primarily for services performed under our U.S.

government agreement with Advanced Technology International (“USG Agreement”), the Consortium Management Firm acting on behalf of the Medical CBRN Defense Consortium in connection with the partnership formerly known as Operation Warp Speed, net of a credit related to product sales of NVX-CoV2373.

Revenue for the three months ended March 31, 2022 was primarily comprised of revenue from product sales of NVX-CoV2373, which commenced in 2022 and, to a lesser extent, revenue for services performed under the USG Agreement.

The reduction in revenue is primarily due to the decrease in product sales of NVX-CoV2373 during the three months ended March 31, 2023 as compared to the same period in 2022.

Product sales

Product sales for the three months ended March 31, 2023 were $(7.5) million as compared to $585.6 million during the three months ended March 31, 2022.

Product sales in the three months ended March 31, 2023, included a credit of $64.7 million for certain doses delivered in 2022 that qualified for replacement.

The 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 geographic distribution of product sales was as follows:

Three Months Ended March 31,

2023 2022 Change

North America

$ — $ 64,762 $ (64,762)

Europe 57,267 413,745 (356,478)

Rest of the world

(64,724) 107,121 (171,845)

Total product revenue $ (7,457) $ 585,628 $ (593,085)

Grant revenue during the three months ended March 31, 2023 was $87.4 million as compared to $99.3 million during the same period in 2022, a decrease of $11.9 million.

Grant revenue for 2023 and 2022, comprised revenue for services performed under the Project Agreement.

The decrease was primarily due to the net effect of a cumulative constraint on revenue as a result of the execution of Modification 17 to the Project Agreement during the three months ended March 31, 2023.

Three Months Ended March 31,

2023 2022 Change

Expenses (in thousands):

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Cost of Sales

Cost of sales was $434.6 million, or 69% of product sales, for the three months ended September 30, 2022, including expense of $249.0 million related to excess, obsolete, or expired inventory and losses on firm purchase commitments.

Cost of sales was $34.1 million for the three months ended March 31, 2023, including expense of $20.2 million related to excess, obsolete, or expired inventory and losses on firm purchase commitments.

Cost of sales was $15.2 million, or 3% of product sales, for the three months ended March 31, 2022, due to the significant write off of pre-launch inventory as research and development expenses.

Prior to receiving regulatory approval, we expensed manufacturing costs as research and development expenses.

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While we tracked the quantities of our manufactured vaccine product and components, we did not track pre-approval manufacturing costs and therefore the manufacturing cost of our pre-launch inventory produced prior to approval is not reasonably determinable.

However, based on our expectations for future manufacturing costs to produce our vaccine product and components inventory, we estimate at September 30, 2022 we had approximately $0.1 billion of commercial inventory that was expensed prior to approval.

We expect to utilize the majority of our reduced-cost inventory through 2023.

If inventory sold for the three months ended September 30, 2022 was valued at expected standard cost, including expenses related to excess and obsolete inventory, adjusted cost of sales for the period would have been approximately $444.0 million, or 71% of product sales, an adjustment of $9.4 million as compared to cost of sales recognized.

The cost of sales to high income countries is expected to be between 15% and 30% of product sales based on our standard cost.

The cost of sales as a percentage of product sales may fluctuate in the future as a result of changes to our customer mix or standard costs.

Research and Development Expenses

Research and development expenses decreased to $304.3 million for the three months ended September 30, 2022 as compared to $408.2 million for the three months ended September 30, 2021, a decrease of $103.9 million primarily due to research and development of coronavirus vaccines, including NVX-CoV2373, NVX-CoV2515, bivalent formulations, and CIC, as summarized in the table below (in thousands):

Three Months Ended September 30,

Coronavirus vaccines $ 208,004 $ 341,600

Influenza vaccine

Other vaccine development programs 843 126

Total direct external research and development expense 211,858 343,382

Employee expenses 45,150 36,574

Stock-based compensation expense 16,107 21,860

Facility expenses 16,770 4,983

Other expenses 14,412 1,396

Total research and development expenses $ 304,297 $ 408,195

Research and development expenses for coronavirus vaccines for the three months ended September 30, 2022 and 2021, included a benefit of $80.5 million related to previously accelerated manufacturing costs and an expense of $35.8 million related to the acceleration of manufacturing costs, respectively, for leases that we determined were embedded in multiple manufacturing supply agreements with Contract Manufacturing Organizations (“CMOs”) and contract manufacturing and development organizations (“CDMOs”).

Pursuant to the Fujifilm Se ttlement Agreement (see Note 4 to our consolidated financial statements in this Quarterly Report ), we are responsible for a Settlement Payment of up to $185.0 million to Fujifilm in connection with cancellation of manufacturing activity at FDBT under the CSA, of which $47.8 million, constituting the initial reservation fee under the CSA, was credited against the Settlement Payment on September 30, 2022.

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 months ended September 30, 2022, we recorded a benefit of $98.3 million as Research and development expense.

For 2022, we expect total research and development expenses to decrease as compared to 2021, primarily due to capitalization of manufacturing costs during 2022 that were previously recognized as research and development expenses in prior periods, partially offset by research and development expenses related to increased clinical activities as we continue to develop our coronavirus vaccines and other programs.

Selling, General, and Administrative Expenses

Selling, general, and administrative expenses increased to $122.9 million for the three months ended September 30, 2022 from $77.8 million for the same period in 2021, an increase of $45.1 million.

The increase in selling, general, and administrative expenses is primarily due to an increase in professional fees and marketing costs in support of our NVX-CoV2373 program.

For 2022, we expect selling, general, and administrative expenses to increase significantly as compared to 2021 due to increased activities related to supporting our NVX-CoV2373 program and increases in professional fees and marketing costs.

Other Expense

Three Months Ended September 30,

2022 2021 Change

Other Expense (in thousands):

Interest expense $ (4,169) $ (5,182) $ 1,013

Other expense (34,783) (4,064) (30,719)

Total other expense, net $ (38,952) $ (9,246) $ (29,706)

We had total other expense, net, of $39.0 million for the three months ended September 30, 2022 as compared to $9.2 million for the same period in 2021.

During the three months ended September 30, 2022 and 2021, other expense was primarily related to losses due to foreign exchange rate activity.

Income Tax Expense

During the three months ended September 30, 2022 and 2021, we recognized $2.5 million and $6.0 million, respectively, of income tax expense related to federal and state income taxes and foreign withholding tax on royalties.

Three Months Ended September 30,

2022 2021 Change

Net Loss (in thousands, except per share information):

Net loss $ (168,613) $ (322,431) $ 153,818

Net loss per share, basic and diluted $ (2.15) $ (4.31) $ 2.16

Weighted average shares outstanding, basic and diluted 78,274 74,745 3,529

Net loss for the three months ended September 30, 2022 was $168.6 million, or $2.15 per share, basic, as compared to $322.4 million, or $4.31 per share, basic, for the same period in 2021.

The decrease in net loss during the three months ended September 30, 2022, was primarily due to the commencement of commercial sales of NVX-CoV2373 in 2022 and a decrease in research and development expense, partially offset by the write-down of excess, obsolete, or expired inventory and losses on firm purchase commitments.

The increase in weighted average shares outstanding for the three months ended September 30, 2022 is primarily a result of sales of our common stock and exercises of stock-based awards in 2022 and 2021.

Nine Months Ended September 30, 2022 and 2021

Nine Months Ended September 30,

2022 2021 Change

Revenue (in thousands):

Product sales $ 1,267,174 $ — $ 1,267,174

Grants 313,348 854,390 (541,042)

Royalties and other 43,951 69,700 (25,749)

Total revenue $ 1,624,473 $ 924,090 $ 700,383

Revenue for the nine months ended September 30, 2022 was $1.6 billion as compared to $924.1 million for the same period in 2021, an increase of $700.4 million.

Revenue for the nine months ended September 30, 2022 was primarily comprised of revenue from product sales of NVX-CoV2373 and, to a lesser extent, revenue for services performed under the OWS Agreement.

Revenue for the nine months ended September 30, 2021 was primarily comprised of revenue for services performed under the OWS Agreement and our funding agreements with CEPI.

The increase in revenue was due to the commencement of commercial sales of NVX-CoV2373 in 2022, partially offset by decreased development activities under the OWS Agreement and our funding agreements with CEPI.

Nine Months Ended September 30,

2022 2021 Change

Expenses (in thousands):

Cost of sales $ 720,874 $ — $ 720,874

Research and development 977,428 1,571,551 (594,123)

Selling, general, and administrative 327,028 214,144 112,884

Total expenses $ 2,025,330 $ 1,785,695 $ 239,635

Cost of Sales

Cost of sales was $720.9 million, or 57% of product sales, for the nine months ended September 30, 2022, including expense of $504.3 million related to excess, obsolete, or expired inventory and losses on firm purchase commitments.

Prior to receiving approval, we expensed manufacturing costs as research and development expenses.

After receiving approval, we capitalize the costs of production for a particular supply chain when we determine that we have a present right to the economic benefit associated with the product.

However, based on our expectations for future manufacturing costs to produce our vaccine product and components inventory, we estimate at March 31, 2023, we had approximately $6.4 million of salable commercial inventory that was expensed prior to approval.

We expect to utilize the majority of our reduced-cost inventory through 2023.

If inventory sold for the nine months ended September 30, 2022 was valued at expected standard cost, adjusted cost of sales for the period would have been approximately $883.5 million, or 70% of product sales, an adjustment of $162.6 million as compared to cost of sales recognized.

The cost of sales to high income countries is expected to be between 15% and 30% of product sales based on our standard cost.

The cost of sales as a percentage of product sales may fluctuate in the future as a result of changes to our customer mix or standard costs.

If inventory sold for the three months ended March 31, 2023 was valued at expected standard cost, including expenses related to excess and obsolete inventory, adjusted cost of sales for the period would have been approximately $49.1 million, an adjustment of $15.0 million as compared to cost of sales recognized.

If inventory sold for the three months ended March 31, 2022 was valued at expected standard cost, adjusted cost of sales for the period would have been approximately $160.0 million, or 27% of product sales, an adjustment of $145.0 million.

The cost of sales as a percentage of product sales may fluctuate in the future as a result of changes to our customer pricing mix or standard costs.

Research and Development Expenses

Research and development expenses decreased to $977.4 million for the nine months ended September 30, 2022 from $1.6 billion for the same period in 2021, a decrease of $594.1 million, primarily due to decreased development activities relating to coronavirus vaccines, including NVX-CoV2373, NVX-CoV2515, bivalent formulations, and CIC, as summarized in the table below (in thousands):

Nine Months Ended September 30,

Research and development expenses decreased to $247.1 million for the three months ended March 31, 2023 as compared to $383.5 million for the three months ended March 31, 2022, a decrease of $136.4 million.

The decrease was primarily due to a reduction in overall expenditures relating to development activities on coronavirus vaccines, including NVX-CoV2373 and Omicron variant vaccine candidates, bivalent formulations, and CIC, as summarized in the table below (in thousands):

Three Months Ended March 31,

Coronavirus vaccines $ 140,014 $ 288,933

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Total research and development expenses $ 247,101 $ 383,483

Research and development expenses for coronavirus vaccines for the nine months ended September 30, 2022 and 2021, included a benefit of $147.8 million related to previously accelerated manufacturing costs and an expense of $78.8 million related to the acceleration of manufacturing costs, respectively, for leases that we determined were embedded in multiple manufacturing supply agreements with CMOs and CDMOs.

Research and development expenses for coronavirus vaccines for the three months ended March 31, 2023 and 2022, included a benefit of $11.7 million related to previously accelerated manufacturing costs and an expense of $21.0 million related to the acceleration of manufacturing costs, respectively, for leases that we determined were embedded in multiple

manufacturing supply agreements with Contract Manufacturing Organizations (“CMOs”) and contract manufacturing and development organizations (“CDMOs”).

Selling, General, and Administrative Expenses

Selling, general, and administrative expenses increased to $327.0 million for the nine months ended September 30, 2022 from $214.1 million for the same period in 2021, an increase of $112.9 million.

The increase in selling, general, and administrative expenses is primarily due to an increase in professional fees and marketing costs in support of our NVX-CoV2373 program.

Selling, general, and administrative expenses increased to $112.5 million for the three months ended March 31, 2023 from $96.0 million for the same period in 2022, an increase of $16.5 million.

The increase in selling, general, and administrative expenses is primarily due to an increase in expenses related to the expansion of our commercial sales operations in Europe and other costs in support of our NVX-CoV2373 program, partially offset by certain cost containment measures to reduce our operating spend.

For the remainder of 2023, we plan to restructure our global footprint to reduce our annual combined research and development, and selling, general, and administrative spend.

Other Expense

Nine Months Ended September 30,

Three Months Ended March 31,

2023 2022 Change

Other Expense (in thousands):

Other income (expense):

Interest expense $ (4,316) $ (4,876) $ 560

Other expense (53,002) (7,267) (45,735)

Total other expense, net $ (68,281) $ (23,256) $ (45,025)

We had total other expense, net of $68.3 million for the nine months ended September 30, 2022 as compared to $23.3 million for the same period in 2021.

During the nine months ended September 30, 2022 and 2021, other expense was primarily related to losses due to foreign exchange rate activity.

Other income 24,362 1,654 22,708

Total other income (expense), net $ 20,046 $ (3,222) $ 23,268

Total other income, net was $20.0 million for the three months ended March 31, 2023 as compared to a total other expense, net of $3.2 million for the same period in 2022.

The increase in other income is due to the favorable impact of exchange rates on foreign currency denominated balances and an increase in investment income due to higher interest rates.

Income Tax Expense

During the nine months ended September 30, 2022 and 2021, we recognized $6.6 million and $12.6 million, respectively, of income tax expense related to federal and state income taxes and foreign withholding tax on royalties.

Nine Months Ended September 30,

During the three months ended March 31, 2023 and 2022, we recognized $1.2 million and $2.7 million, respectively, of income tax expense related to federal, state, and foreign income taxes and foreign withholding tax expense on royalties.

Three Months Ended March 31,

2023 2022 Change

Net Loss (in thousands, except per share information):

Net loss $ (475,690) $ (897,467) $ 421,777

Net loss per share, basic and diluted $ (6.13) $ (12.13) $ 6.00

Weighted average shares outstanding, basic and diluted 77,631 73,972 3,659

Net loss for the nine months ended September 30, 2022 was $475.7 million, or $6.13 per share, as compared to $897.5 million, or $12.13 per share, for the same period in 2021.

The decrease in net loss during the nine months ended September 30, 2022 was primarily due to the commencement of commercial sales of NVX-CoV2373 in 2022 and a decrease in research and development expense, partially offset by decreased revenue under the OWS Agreement and the write-down of excess, obsolete, or expired inventory and losses on firm purchase commitments.

The increase in weighted average shares outstanding for the nine months ended September 30, 2022 is primarily a result of sales of our common stock in 2022 and 2021.

Net Income (Loss) (in thousands, except per share information):

Net income (loss) $ (293,905) $ 203,408 $ (497,313)

Net income (loss) per share, basic $ (3.41) $ 2.66 $ (6.07)

Net income (loss) per share, dilutive $ (3.41) $ 2.56 $ (5.97)

Weighted average shares outstanding, basic 86,158 76,457 9,701

Weighted average shares outstanding, dilutive 86,158 80,711 5,447

Net loss for the three months ended March 31, 2023 was $293.9 million, or $3.41 per share, basic, as compared to net income of $203.4 million, or $2.66 per share, basic, for the same period in 2022.

The decrease in income during the three months ended March 31, 2023, was primarily due to the decline in commercial sales of NVX-CoV2373 in the three months ended March 31, 2023, offset by a decrease in research and development expenses.

The increase in weighted average shares outstanding for the three months ended March 31, 2023 was primarily a result of the sale of common stock and exercises of stock-based awards.

Liquidity Matters and Capital Resources

Our future capital requirements depend on numerous factors including, but not limited to, revenue from our product sales and royalties under licensing arrangements with our strategic partners;

funding under our grant agreements;

our projected activities related to the development and commercial support of NVX-CoV2373 and variant candidates, including significant commitments under various CRO, CMO, and CDMO agreements;

funding and repayments under our grant

our projected activities related to the development and commercial support of NVX-CoV2373 and variant candidates, including significant commitments under various contract research organization, CMO, and CDMO agreements;

the progress of preclinical studies and clinical trials;

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We also have grant and license agreements.

As of September 30, 2022, the aggregate amount of the transaction price allocated to performance obligations that were unsatisfied (or partially unsatisfied), excluding amounts related to sales-based royalties under the license agreements, was approximately $4 billion.

Failure to meet regulatory milestones, timely obtain supportive recommendations from governmental advisory committees, or achieve product volume or delivery timing obligations under our APA agreements may require us to refund portions of upfront payments or result in reduced future payments, which could adversely impact our ability to realize revenue from our unsatisfied performance obligations.

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 under the license agreements, our advance purchase agreement with Gavi (the “Gavi APA”) and the reduction in doses related to the Amended and Restated UK Supply Agreement (as defined below), was approximately $3 billion, of which $689.8 million is included in Deferred revenue in our Consolidated balance sheet.

Failure to meet regulatory milestones, timely obtain supportive recommendations from governmental advisory committees, or achieve product volume or delivery timing obligations under our APAs may require us to refund portions of upfront payments or result in reduced future payments, which could adversely impact our ability to realize revenue from our unsatisfied performance obligations.

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

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The supply agreements typically contain terms that include upfront payments intended to assist us in funding investments related to building out and operating our manufacturing and distribution network, among other expenses, in support of our global supply commitment, and are applied to billings upon delivery of NVX-CoV2373.

Such upfront payments under our supply agreements generally become non-refundable upon our achievement of certain development, regulatory, and commercial milestones.

In addition, we continue to assess our manufacturing needs and intend to modify our global manufacturing footprint consistent with our contractual obligations to supply, and anticipated demand for, NVX-CoV2373, and in doing so recognize that significant costs may be incurred.

Pursuant to the Fujifilm Settlement Agreement (see Note 4 to our consolidated financial statements in this Quarterly Report), we are responsible for a Settlement Payment of up to $185.0 million to Fujifilm in connection with cancellation of manufacturing activity at FDBT under the CSA, of which $47.8 million, constituting the initial reservation fee under the CSA, was credited against the Settlement Payment on September 30, 2022.

Under the terms of our supply commitment with Gavi, which includes both our APA and the supply obligation of our licensed partner, 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 we will manufacture and distribute 350 million doses.

Under that agreement with Gavi, we 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 our 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, we were 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.

Our 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.

In July 2022, we entered into an Amended and Restated SARS-CoV-2 Vaccine Supply Agreement (the “Amended and Restated 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”), which amended and restated in its entirety the SARS-CoV-2 Vaccine Supply Agreement originally entered into in October 2020 (the “Original UK Supply Agreement”).

Pursuant to the Original UK Supply Agreement, the Authority agreed to purchase 60 million doses of NVX-CoV2373.

Under the Amended and Restated UK Supply Agreement, the Authority agreed to purchase a minimum of 1 million doses and up to an additional 15 million doses of NVX-CoV2373, with the number of additional doses contingent on our timely achievement of supportive recommendations from the United Kingdom’s Joint Committee on Vaccination and Immunisation (the “JCVI”).

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

As of September 30, 2022, we will be required to repay a minimum of $40.0 million related to the upfront payment.

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

Pursuant to the Fujifilm Settlement Agreement, we are responsible for a Settlement Payment of up to $185.0 million to Fujifilm in connection with the cancellation of manufacturing activity at FDBT under the Fujifilm 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.

We paid the first installment of $34.3 million during the three months ended March 31, 2023 and the remaining balance of $102.9 million is reflected in Accrued expenses (see Note 4 to our consolidated financial statements in this Quarterly Report).

During April 2023, we made a payment of $27.0 million to Par Sterile Products, LLC (“Par”) under the Settlement Agreement and Release of Claims (see Note 15 to our consolidated financial statements in this Quarterly Report).

In addition, we continue to assess our manufacturing needs and modify our global manufacturing footprint consistent with our contractual obligations to supply, and anticipated demand for, NVX-CoV2373, and in doing so recognize that significant costs may be incurred.

We have an APA with the Commonwealth of Australia for the purchase of doses of NVX-CoV2373 (the “Australia APA”).

In April 2023, we amended the Australia APA to reduce the number of doses to be delivered with a commensurate increase in the per-dose price, such that the total contract value of the Australia APA is maintained with doses to be delivered through 2024.

In May 2023, we extended a credit for certain doses delivered in 2022 to Australia that qualified for replacement under the Australia APA.

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 Australia.

We have 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, we amended the Canada APA to forfeit certain doses originally scheduled for delivery in 2022 for a payment of $100.4 million expected to be received in the second quarter of 2023.

In July 2022, we entered into an Amended and Restated SARS-CoV-2 Vaccine Supply Agreement (as 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 (the “Authority”), which amended and restated in its entirety the SARS-CoV-2 Vaccine Supply Agreement, dated October 22, 2020, between the parties (the “Original UK Supply Agreement”).

Under the Original UK Supply Agreement, the Authority agreed to purchase 60 million doses of NVX-CoV2373 and made an upfront payment to us.

Under the terms of the Amended and Restated UK Supply Agreement, the Authority agreed to purchase a

minimum of 1 million doses and up to an additional 15 million doses (the “Conditional Doses”) of NVX-CoV2373, with the number of Conditional Doses contingent on, and subject to reduction based on, our timely achievement of supportive recommendations from the Joint Committee on Vaccination and Immunisation (the “JCVI”) that is approved by the UK Secretary of State for Health, with respect to use of the vaccine for (a) the general adult population as part of a SARS-CoV-2 vaccine booster campaign in the United Kingdom or (b) the general adolescent population as part of a SARS-CoV-2 vaccine booster campaign in the United Kingdom or as a primary series SARS-CoV-2 vaccination, excluding where that recommendation relates only to one or more population groups comprising less than one million members in the United Kingdom.

If the Authority does not purchase the Conditional Doses or the number of such Conditional Doses is reduced below 15 million doses of NVX-CoV2373, we would have to repay up to $225.0 million related to the upfront payment previously received from the Authority under the Original UK Supply Agreement.

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

We have an APA with the EC acting on behalf of various EU 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, we were 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.

We are in the process of finalizing a revised delivery schedule for the remaining 23 million committed doses under our APA with the EC that were originally scheduled for delivery during the first and second quarters of 2022.

In July 2022, we 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.

Additionally, in July 2022, we entered into a modification to our existing agreement with the DoD that amended the terms of such agreement to provide for the initial delivery of 0.2 million doses of NVX-CoV2373 after receipt of EUA approval from the FDA, with delivery of the remaining 9.8 million doses of NVX-CoV2373 contemplated by the original agreement subject to DoD demand and available funding.

In the nine months ended September 30, 2022, we primarily funded our operations with cash and cash equivalents, upfront payments under APAs, revenue from product sales, royalties under licensing arrangements with our strategic partners, and proceeds from the sale of common stock, together with revenue under the OWS Agreement that supports our NVX-CoV2373 vaccine development activities.

We anticipate our future operations to be funded by revenue from product sales, royalties under licensing arrangements with our strategic partners, revenue under our OWS Agreement, our cash and cash equivalents, and other potential funding sources.

We may from time to time seek to retire or purchase, directly or indirectly, our outstanding debt through cash purchases and/or exchanges for equity or debt, in open market purchases, privately negotiated transactions, or otherwise.

Such purchases and/or exchanges, if any, will be on such terms and at such prices as we may determine, and will depend on prevailing market conditions, our liquidity requirements, contractual restrictions, and other factors.

The amounts involved may be material, which could impact our capital structure, the market for our debt securities, and the price of the indebtedness being purchased and/or exchanged, and affect our liquidity.

As of September 30, 2022, we had $1.3 billion in cash and cash equivalents and restricted cash as compared to $1.5 billion as of December 31, 2021.

The following table summarizes cash flows for the nine months ended September 30, 2022 and 2021 (in thousands):

Nine Months Ended September 30,

As of November 30, 2022, the JCVI had not yet made a supportive recommendation with respect to NVX-CoV2373, thereby triggering, under the terms of the Amended and Restated UK Supply Agreement, (i) a reduction of the number of Conditional Doses from 15 million doses to 7.5 million doses, which reduced number of Conditional Doses are contingent on, and subject to further reduction based on, our timely achievement by November 30, 2023 of a supportive recommendation from JCVI that is approved by the UK Secretary of State for Health as described in the paragraph above, and (ii) an obligation for us to repay $112.5 million related to the upfront payment previously received from the Authority under the Original UK Supply Agreement.

In April 2023, we repaid the $112.5 million related to the November 30, 2022 triggering event.

If we are unable to timely achieve a supportive recommendation from the JCVI by November 30, 2023, a reduction in the number of Conditional Doses from 7.5 million doses to zero will be triggered and we may be required to repay an additional $112.5 million in 2024.

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

On November 18, 2022, we 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 us as required by the Gavi APA.

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

On December 2, 2022, Gavi issued a written notice purporting to terminate the Gavi APA based on Gavi’s contention that the Company repudiated the agreement and, therefore, materially breached the Gavi APA.

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

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

We filed our Answer and Counterclaims on March 2, 2023.

On April 5, 2023, Gavi filed its Reply to our Counterclaims.

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

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

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

If the USG Agreement is not amended, as we had previously expected, then we may not receive all of the remaining $336.4 million in funding we had previously anticipated pursuant to the USG Agreement.

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.

Our funding agreements currently include funding from the Coalition for Epidemic Preparedness Innovations (“CEPI”) in the form of one or more forgivable no interest term loans (“CEPI Forgivable Loan Funding”).

Payments received under the CEPI Forgivable Loan Funding are only repayable if NVX-CoV2373 manufactured by the CMO network funded by CEPI is sold to one or more third parties (which would have previously included, but is not limited to, any sales under our Gavi APA prior to its termination), and such sales cover our costs of manufacturing such vaccine, not including manufacturing costs funded by CEPI.

The timing and amount of any loan repayments is currently uncertain.

As of March 31, 2023, we had $636.9 million in cash and cash equivalents and restricted cash as compared to $1.3 billion as of December 31, 2022.

We funded our operations for the three months ended March 31, 2023 with cash and cash equivalents and revenue from product sales, together with revenue under the USG Agreement that support our NVX-CoV2373 vaccine development

In May 2023, we announced our plan to restructure our global footprint to reduce our planned expenditures.

We anticipate our future operations to be funded primarily by revenue from product sales, revenue under our USG Agreement, our cash and cash equivalents, and other potential funding sources.

The following table summarizes cash flows for the three months ended March 31, 2023 and 2022 (in thousands):

Three Months Ended March 31,

2023 2022 Change

7 unchanged sentences

Cash, cash equivalents, and restricted cash at end of period $ 636,943 $ 1,584,100 $ (947,157)

Net cash used in operating activities was $298.1 million for the nine months ended September 30, 2022, as compared to net cash provided by operating activities of $665.4 million for the same period in 2021.

The decrease in cash provided is primarily due to the application of upfront payments under APAs resulting from sales of NVX-CoV2373 during the nine months ended September 30, 2022 as compared to an increase in cash due to the receipt of upfront payments under APAs during the nine months ended September 30, 2021.

During the nine months ended September 30, 2022 and 2021, our investing activities consisted primarily of capital expenditures and maturities and sale of marketable securities, net of purchases.

Capital expenditures for the nine months ended September 30, 2022 and 2021 were $66.0 million and $41.1 million, respectively.

For 2022, we expect our capital expenditures to continue to increase due to further development activities for our NVX-CoV2373 program, including the additional build-out of research and development and manufacturing facilities and related equipment, and the build-out of our new corporate office facility.

Our financing activities consisted primarily of sales of our common stock under our At Market Issuance Sales Agreements, payments of finance lease liabilities, and exercise of stock-based awards.

In the nine months ended September 30, 2022 and 2021, we received net proceeds of approximately $179 million and $565 million, respectively, from selling shares of common stock through our At Market Issuance Sales Agreements.

Net cash used in operating activities was $325.6 million for the three months ended March 31, 2023, as compared to $88.5 million for the same period in 2022.

The increase in cash used in operating activities is primarily due to a decrease in upfront payments received under our APAs, partially offset by the timing of payments to vendors.

Net cash used in investing activities was $23.6 million for the three months ended March 31, 2023, as compared to $16.8 million for the same period in 2022.

The increase in cash used in investing activities is primarily due to an increase in internal use software expenditure.

Net cash used in finance activities was $354.4 million for the three months ended March 31, 2023, as compared to net cash provided by finance activities of $159.9 million for the same period in 2022.

The increase in cash used in financing activities is primarily due to the $325 million repayment of our 3.75% Convertible notes during 2023 and net proceeds of approximately $179 million from the sales of our common stock under our June 2021 Sales Agreement during 2022.

Going Concern

The accompanying unaudited consolidated financial statements in Part I, Item 1, “Consolidated Financial Statements” of this Quarterly Report have been prepared assuming that we will continue as a going concern within one year after the date that the financial statements are issued.

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

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

While our current cash flow forecast for the one-year going concern look forward period estimates that we have sufficient capital available to fund operations, this forecast is subject to significant uncertainty, including as it relates to revenue for the next twelve months, funding from the U.S.

government, and a pending matter subject to arbitration proceedings.

Our revenue projections depend on our ability to successfully develop, manufacture, distribute, or 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, the U.S.

government indicated to us that the award may not be extended past its current period of performance, which may result in us not receiving all of the remaining $336.4 million in funding we had previously anticipated.

On January 24, 2023, Gavi filed a demand for arbitration with the International Court of Arbitration regarding an alleged material breach by us of the Gavi APA.

The outcome of that arbitration is inherently uncertain, and it is possible we could be required to refund all or a portion of the remaining Advance payment Amount of $697.4 million.

See Note 3 and Note 15 to our unaudited consolidated financial statements in Part I, Item 1, “Consolidated Financial Statements” of this Quarterly Report for additional information related to the arbitration with Gavi.

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

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

In May 2023, we announced a

global restructuring and cost reduction plan.

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

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

We expect 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 we operate.

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

Our ability to fund our operations is dependent upon revenue related to vaccine sales for our 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 our global restructuring and cost reduction plan.

Our plans may 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 us on commercially acceptable terms, or at all.

Also, any collaborations, strategic alliances, and marketing, distribution, or licensing arrangements may require us to give up some or all of our 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 our other vaccine candidates, including an influenza vaccine candidate, CIC vaccine candidate, or a COVID-19 variant strain-containing monovalent or bivalent formulation, remains uncertain.

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

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 2. Management’s Discussion and Analysis