What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-08-08 compared with 2023-05-09 · 282 added, 160 removed, 191 unchanged (70% of the section changed)

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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, 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;

our operating plans and prospects, including our ability to continue as a going concern through one year from the date of our unaudited financial statements for the period ended June 30, 2023;

our global restructuring and cost reduction plan (“Restructuring 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 our workforce reduction;

the impact of our decision to progress our COVID-19-Influenza Combination (“CIC”) vaccine candidate toward late-stage development on our workforce requirements;

the amount and timing of the charges and cash expenditures resulting from our 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;

the efficacy, safety, and intended utilization of our product candidates;

the development of our clinical-stage product candidates and our recombinant vaccine and adjuvant technologies;

the development of our preclinical product candidates;

our expectations related to enrollment in our clinical trials;

the conduct, timing, and potential results from clinical trials and other preclinical studies;

plans for and potential timing of regulatory filings;

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, 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 development of our clinical-stage product candidates and our recombinant vaccine and adjuvant technologies, including our updated monovalent Omicron XBB.1.5 COVID-19 vaccine, which is referred to as our “XBB COVID vaccine”;

the conduct, timing, and potential results from clinical trials;

plans for and potential timing of regulatory filings, including our submission to the U.S.

Food and Drug Administration (“FDA”) for the Biologics License Application for the full approval of the Novavax COVID-19 Vaccine, Adjuvanted;

our expectation of manufacturing capacity, timing, production, distribution, and delivery for NVX-CoV2373 by us and our partners;

our expectations with respect to the anticipated ongoing development and commercialization or licensure of NVX-CoV2373, ongoing development of our influenza vaccine candidate, COVID-19-Influenza Combination (“CIC”) vaccine candidate, high-dose COVID-19 vaccine candidate, and COVID-19 variant strain-containing monovalent formulation, including the Phase 2b/3 Hummingbird™ trial, and the timing of anticipated results from 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;

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

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Forward-looking statements involve estimates, assumptions, risks, and uncertainties that could cause actual results or outcomes to differ materially from those expressed or implied in any forward-looking statements, and, therefore, you should not place considerable reliance on any such forward-looking statements.

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”), 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;

Such risks and uncertainties include, without limitation, our ability to successfully develop, manufacture, distribute, or market an XBB COVID vaccine for COVID-19 for the fall 2023 COVID vaccine season, which is inherently uncertain and subject to a number of risks, including regulatory authorization, ability to timely deliver doses and commercial adoption and market acceptance;

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

challenges satisfying, alone or together with partners, various safety, efficacy, and product characterization requirements, including those related to process qualification, assay validation, and stability testing, necessary to satisfy applicable regulatory authorities, such as the 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;

challenges or delays in conducting clinical trials;

or obtaining regulatory authorization for our product candidates, including for our monovalent XBB COVID vaccine in time for the fall 2023 vaccination season, or for future COVID variant strain changes manufacturing distribution or export delays or challenges, including the requirement to obtain approval from the drug licensing body in India for the distribution of our XBB COVID vaccine to timely deliver such vaccine candidate for the fall 2023 vaccination season;

our exclusive dependence on SIIPL and SLS for co-formulation and filling, and PCI for finishing NVX-CoV2373 and the impact of any delays or disruptions in these suppliers’ operations on the delivery of customer orders;

difficulty obtaining scarce raw materials and supplies;

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

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.

challenges in implementing our global restructuring and cost

reduction plan;

and other risks and uncertainties identified in Part II, Item 1A “Risk Factors” of this Quarterly Report on Form 10-Q for the quarter ended June 30, 2023, in Part II, Item 1A “Risk Factors” of our Quarterly Report on Form 10-Q for the quarter ended March 31, 2023 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.

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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.

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 have developed a COVID-19 vaccine, NVX-CoV2373 (“Nuvaxovid™,” “Covovax™,” “Novavax COVID-19 Vaccine, Adjuvanted”) that has received full marketing authorization (“MA”), 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.

Additionally, in partnership with regulators and public health authorities, we have been developing and manufacturing at commercial scale our XBB COVID vaccine that is in line with the FDA, WHO, and EMA recommendations for the 2023 fall season.

We intend to deliver our XBB COVID vaccine for the 2023 fall vaccination campaign pending authorization from regulatory authorities.

We are also developing a stand-alone influenza vaccine candidate, high-dose COVID-19 vaccine candidate, and a CIC vaccine candidate.

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, as well as other preclinical vaccine research with our Matrix-M™ adjuvant in partnership with the Bill & Melinda Gates Medical Research Institute.

We intend to focus the organization to align our investments and activities with our top priority of delivering our XBB COVID vaccine for the 2023 fall season.

To maximize our opportunities and mitigate the significant risks and uncertainties of the COVID-19 market, we have progressed our cost restructuring measures to reduce spend, extend our cash runway, and operate efficiently to seek 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 endemic and emerging infectious diseases at scale.

endemic and emerging infectious diseases.

Recombinant Nanoparticle Vaccine Technology

Once a pathogenic threat has been identified, the genetic sequence encoding the antigen is selected for subsequent use in developing the vaccine construct.

Once a pathogen of interest has been identified, the genetic sequence encoding an antigen is selected for developing the vaccine construct.

The genetic sequence may be optimized to enhance protein stability or confer resistance to degradation.

This genetic construct is inserted into the baculovirus Spodoptera frugiperda (“Sf-/BV”) insect cell-expression system, which enables efficient, large-scale expression of the optimized protein.

The Sf-/BV system produces proteins that are properly folded and modified—which can be critical for functional, protective immunity—as the vaccine antigen.

The Sf-/BV system produces protein-based antigens that are properly folded and modified—which can be critical for functional, protective immunity.

Protein antigens are purified and organized around a polysorbate-based nanoparticle core in a configuration that resembles their native presentation.

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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.

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 promote the production of high affinity antibodies, an immune boosting response.

This potent mechanism of action enables a lower dose of antigen 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.

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(“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 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.

Additionally, in May 2023, we entered into a 3-year agreement with the Bill & Melinda Gates Medical Research Institute to provide our Matrix-M™ adjuvant for use in preclinical vaccine research.

Our adjuvant technology is also being used by commercial partners as a key component in veterinary vaccines against equine influenza and Strangles as well as the manufacture of black-widow anti-venom.

COVID-19 Vaccine Regulatory and Licensure

We continue to expand the regulatory authorizations for our COVID-19 vaccine and remain focused on the planned EUA request for our XBB COVID vaccine for the 2023 fall season.

We have received authorizations for NVX-CoV2373 in over 40 countries globally including from major regulatory agencies including the FDA, the WHO, the EMA, and the MHRA.

To date, we have received full MA, 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.

For the territories in which our vaccine has received regulatory authorizations, 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 second quarter 2023 and subsequent regulatory progress made for NVX-CoV2373 through the date of this filing on Form 10-Q.

In July 2023, we initiated the rolling submission to the U.S.

FDA for the Biologics License Application for the full approval of the Novavax COVID-19 Vaccine, Adjuvanted in individuals aged 12 years and older.

In July 2023, the European Commission in the European Union granted our first full MA for Nuvaxovid™ as primary series in individuals aged 12 and older and as a booster in adults aged 18 and older.

This decision followed the positive opinion in May 2023 for full MA from the Committee for Medicinal Products for Human Use of the European Medicines Agency.

In May 2023, the Singapore Health Sciences Authority granted extended interim authorization for Nuvaxovid™ as a non-mRNA option in adolescents aged 12 through 17 years.

Additionally in May 2023, Taiwan’s Food and Drug Administration granted EUA for Nuvaxovid™ as a booster in adolescents aged 12 through 17 years.

We are working to continue to expand our label for heterologous boosting in adults and adolescents, for primary and re-vaccination in 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 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.

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, while maintaining a favorable safety profile.

Our clinical pipeline is comprised of vaccine candidates for infectious diseases, with our COVID-19 vaccine, NVX-CoV2373, as our lead product.

NVX-CoV2373 has received authorizations for both adult and adolescent populations 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 during the conduct of the trials, while maintaining a favorable safety profile.

We are in the process of developing our XBB COVID vaccine, which is in line with the FDA, WHO, and EMA recommendations for the 2023 fall season.

In June 2023, at the U.S.

Vaccines and Related Biological Products Advisory Committee's meeting we shared nonclinical data demonstrating that our XBB COVID vaccine induced functional immune responses for Omicron XBB.1.5, XBB1.16, and XBB.2.3 subvariants indicating broad responses that could be applicable to forward-drift variants.

We are finalizing our COVID-19 Phase 3 Strain-Change interim study report and additional nonclinical and manufacturing data summaries to support our XBB COVID vaccine for EUA and other regulatory authorizations.

This is in-line with the expectation set by the U.S.

Health and Human Services letter to all COVID-19 manufacturers communicating that the FDA will take regulatory action on submissions and the Centers for Disease Control and Prevention will provide vaccination recommendations in the latter part of September 2023.

Pending EUA and additional regulatory authorizations, we expect to commercialize our XBB COVID vaccine for the 2023 fall season providing access and accessibility to a protein-based choice within the market.

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.

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.

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

Coronavirus Vaccine Clinical Development

We continue to evaluate vaccine effectiveness through ongoing and planned booster studies to support our planned requests for authorization to the FDA, WHO, and EMA for our XBB COVID vaccine for the upcoming 2023 fall season.

We expect to leverage these studies to pursue additional regulatory authorizations of our COVID-19 vaccine for primary, re-vaccination, and pediatric indications globally.

Phase 3 Strain-Change Trial

In August 2023, we announced topline results from the Phase 3 Strain-Change Trial that achieved all three co-primary

endpoints demonstrating immunologic superiority for the Omicron BA.5 variant of a bivalent prototype and Omicron BA.5 vaccine compared to our prototype vaccine (NVX-CoV2373).

The study compared our prototype vaccine (NVX-CoV2373), to a monovalent Omicron BA.5 vaccine and a bivalent vaccine (prototype and Omicron BA.5) in 750 adults who had previously received three or more doses of mRNA vaccine.

This study design was developed in consultation with regulatory agencies to support the upcoming strain-change EUA request to the FDA for our XBB COVID vaccine.

The data also showed that the monovalent Omicron BA.5 vaccine performed better with higher neutralization titers and seroresponse rates than the bivalent vaccine (prototype and Omicron BA.5), supporting the use of our XBB COVID vaccine for the 2023 fall vaccination season.

These results show that our protein-based vaccine can be successfully adapted to new variant strains.

Phase 2b/3 Hummingbird™ Trial

In August 2023, we announced topline results from our Phase 2b/3 Hummingbird™ trial that met its primary endpoints in children aged 6 through 11 years confirming immunologic effectiveness.

This ongoing trial is evaluating the safety, effectiveness (immunogenicity), and efficacy of two doses of NVX-CoV2373, followed by a booster 6 months after the primary vaccination series.

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

The next cohort aged 2 through 5 years is fully enrolled, with topline results expected in the fourth quarter of 2023.

COVID-Influenza Combination and Stand-alone Influenza Program

In May 2023, we announced preliminary topline data from our Phase 2 trial for CIC, stand-alone influenza and high-dose COVID-19 vaccine candidates.

All three vaccine candidates contain our Matrix-M™ adjuvant, showed preliminary robust immune responses, reassuring safety profiles, and reactogenicity that was comparable to the licensed influenza vaccine comparator arms.

We intend to further explore our options to progress select candidates into late-stage development.

R21/Matrix-M™ Adjuvant Malaria Vaccine

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 and manufactured by SIIPL, which is formulated with our Matrix-M™ adjuvant.

In April 2023, the R21/Matrix-M™ adjuvant malaria vaccine received multiple authorizations including in Ghana and Nigeria as well as in July 2023 received authorization in Burkina Faso.

Business Highlights

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

Second Quarter 2023 and Recent Highlights

During the second quarter, we continued to make progress on our three key priorities for 2023.

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

During the second quarter, we continued preparations to deliver our updated XBB COVID vaccine for the 2023 fall season.

In most of our key target markets, including the U.S., the Novavax vaccine, if authorized, would be the only non-mRNA protein-based XBB COVID vaccine available.

• Continue to prepare to deliver our updated XBB COVID vaccine for the fall, consistent with recommendations from the FDA, EMA and WHO

◦ Initiated filing in the U.S., with submissions in the European Union (“EU”) and Canada to follow in the coming weeks

◦ Manufacturing ongoing at commercial scale to supply global markets

◦ Fully deployed commercial teams across the U.S., EU and other select markets, with executed contracts to support market access

• Received first Full Marketing Authorization in the EU for Nuvaxovid™ as a primary series in individuals aged 12 and older and as a booster in adults aged 18 and older

• Initiated rolling submission of U.S.

Biologics License Application (BLA) for full approval of the Novavax COVID-19 Vaccine, Adjuvanted for adults and adolescents aged 12 through 18

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

We have made significant progress towards strengthening our financial position.

We continued to deliver on our commitments to reduce our spend, address our one-time liabilities, and improve our cash flow, with the goal of building a solid financial foundation for long-term value creation.

• Reduced current liabilities by $323 million during the second quarter and by $864 million in the first half of 2023

• Reduced combined research and development and selling, general and administrative expenses to $313 million in the second quarter of 2023, compared to $398 million in the same period in 2022

• On track with our Restructuring Plan and reiterate target to reduce our annual combined research and development and selling, general and administrative expenses by approximately 20% to 25% in 2023 versus 2022, and by approximately 40% to 50% in 2024 versus 2022

• Executed amended Canada APA in June 2023, outlining an updated delivery schedule for Nuvaxovid™ and negotiated up to $350 million in 2023 payments

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

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

• Based on the ongoing receipt and analysis of our Phase 2 safety and immunogenicity results for CIC, decision to make strategic stage gate investments in 2023 and 2024 to advance our co-formulated CIC vaccine candidate in preparation for late-stage development

• Continued to advance partnerships with Matrix-M TM adjuvant technology

◦ In partnership with Oxford University and SIIPL, secured authorizations in Ghana, Nigeria and Burkina Faso for R21/Matrix-M TM malaria vaccine leveraging our Matrix-M TM adjuvant technology

• Announced partnership with Bill & Melinda Gates Medical Research Institute to provide our Matrix-M TM adjuvant for use in preclinical vaccine research

Sales of Common Stock

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 $500.0 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.

During the three and six months ended June 30, 2023, we sold 7.9 million shares of our common stock under our June 2021 Sales Agreement resulting in net proceeds of approximately $68 million, of which $6 million was included in prepaid expenses and other current assets as of June 30, 2023 and received in cash in July 2023.

As of June 30, 2023, the remaining balance available under the June 2021 Sales Agreement was approximately $249 million.

During the six months ended June 30, 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

The discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements (unaudited) and the accompanying notes, which have been prepared in accordance with generally accepted accounting principles in the United States.

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.

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, 2022, as filed with the SEC.

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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 March 31, 2023 and 2022

Three Months Ended March 31,

Three Months Ended June 30, 2023 and 2022

Three Months Ended June 30,

2023 2022 Change

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Total revenue $ 424,426 $ 185,925 $ 238,501

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.

Revenue for the three months ended June 30, 2023 was $424.4 million as compared to $185.9 million for the same period in 2022, an increase of $238.5 million.

Revenue for the three months ended June 30, 2023 and June 30, 2022 was primarily comprised of revenue from product sales of NVX-CoV2373 and services performed under our U.S.

The increase in revenue is primarily due to an increased quantity of dose sales of NVX-CoV2373 during the three months ended June 30, 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.

Product sales for the three months ended June 30, 2023 were $285.2 million as compared to $55.5 million during the three months ended June 30, 2022.

Our product sales related to sales of NVX-CoV2373 under our APA agreements.

The geographic distribution of product sales was as follows:

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North America

$ — $ 64,762 $ (64,762)

Europe 1,518 — 1,518

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283,645 55,455 228,190

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,

Total product sales revenue $ 285,163 $ 55,455 $ 229,708

Grant revenue during the three months ended June 30, 2023 was $137.1 million as compared to $107.8 million during the same period in 2022, an increase of $29.3 million.

Grant revenue for 2023 and 2022, comprised revenue for services performed under our USG Agreement.

The increase was primarily due to increased support activities under the USG Agreement during the three months ended June 30, 2023.

Three Months Ended June 30,

2023 2022 Change

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Cost of Sales

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.

Cost of sales was $55.8 million for the three months ended June 30, 2023, including expenses of $19.8 million related to excess, obsolete, or expired inventory and losses on certain firm purchase commitments and a credit of $17.9 million related to negotiated certain reductions to previously recognized firm purchase commitments.

Cost of sales was $271.1 million for the three months ended June 30, 2022, including expense of $255.3 million related to excess, obsolete, or expired inventory and losses on firm purchase commitments.

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 March 31, 2023, we had approximately $6.4 million of salable commercial inventory that was expensed prior to approval.

However, based on our expectations for future manufacturing costs to produce our vaccine product and components inventory, we estimate at June 30, 2023, we had approximately $25.9 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 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.

If inventory sold for the three months ended June 30, 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 $71.7 million, an adjustment of $15.9 million as compared to cost of sales recognized.

If inventory sold for the three months ended June 30, 2022 was valued at expected standard cost, adjusted cost of sales for the period would have been approximately $279.5 million, an adjustment of $8.4 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 $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,

Research and development expenses were $219.5 million for the three months ended June 30, 2023 as compared to $289.6 million for the three months ended June 30, 2022, a decrease of $70.2 million.

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

Three Months Ended June 30,

Coronavirus vaccines $ 139,646 $ 201,015

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Total research and development expenses $ 219,475 $ 289,648

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”).

Research and development expenses for coronavirus vaccines for the three months ended June 30, 2023 and 2022, decreased from $201.0 million to $139.6 million primarily as a result of a reduction in manufacturing and support costs under manufacturing supply agreements with Contract Manufacturing Organizations (“CMOs”) and contract manufacturing and development organizations (“CDMOs”), a reduction in clinical study costs and the commercialization of internal manufacturing

capabilities, as offset by a benefit of $20.5 million and $87.2 million, respectively, related to previously accelerated manufacturing costs for leases that we determined were embedded in manufacturing supply agreements with CMOs and CDMOs.

Selling, General, and Administrative Expenses

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

Three Months Ended March 31,

Selling, general, and administrative expenses were $93.7 million for the three months ended June 30, 2023 as compared to $108.2 million for the same period in 2022, a decrease of $14.4 million.

The decrease in selling, general, and administrative expenses is primarily due to certain cost containment measures to reduce our operating spend, partially offset by restructuring expenses of $11.5 million.

For the remainder of 2023, we expect a reduction in our annual combined research and development, and selling, general, and administrative spend as a result of our Restructuring Plan announced during the three months ended June 30, 2023.

Other Income (Expense)

Three Months Ended June 30,

2023 2022 Change

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Interest expense $ (3,124) $ (6,234) $ 3,110

Other income 24,362 1,654 22,708

Other income (expense) 5,532 (19,873) 25,405

Total other income (expense), net $ 2,408 $ (26,107) $ 28,515

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.

Total other income, net was $2.4 million for the three months ended June 30, 2023 as compared to a total other expense, net of $26.1 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, including an intercompany loan with Novavax CZ.

Income Tax Expense

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,

During the three months ended June 30, 2023 and 2022, we recognized an income tax benefit of $0.1 million and income tax expense $1.4 million, respectively, of income tax expense related to federal, state, and foreign income taxes.

Net Income (Loss)

Three Months Ended June 30,

2023 2022 Change

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Weighted average shares outstanding, dilutive 104,065 78,143 25,922

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.

Net income for the three months ended June 30, 2023 was $58.0 million, or $0.65 per share, basic, as compared to net loss of $510.5 million, or $6.53 per share, basic, for the same period in 2022.

The increase in income during the three months ended June 30, 2023, was primarily due to the increase in commercial sales of NVX-CoV2373 in the three months ended June 30, 2023 and by a decrease in excess, obsolete, or expired inventory and losses on firm purchase commitments, research and development, and selling, general and administrative expenses as a result of the implementation of our Restructuring Plan.

The increase in weighted average shares outstanding for the three months ended June 30, 2023 was primarily a result of the sale of common stock.

Six Months Ended June 30, 2023 and 2022

Six Months Ended June 30,

2023 2022 Change

Revenue (in thousands):

Product sales $ 277,706 $ 641,083 $ (363,377)

Grants 224,458 207,075 17,383

Royalties and other 3,213 41,738 (38,525)

Total revenue $ 505,377 $ 889,896 $ (384,519)

Revenue for the six months ended June 30, 2023 was $505.4 million as compared to $889.9 million for the same period in 2022, a decrease of $384.5 million.

Revenue for the six months ended June 30, 2023 was primarily comprised of revenue from product sales of NVX-CoV2373 and services performed under our USG Agreement.

The decrease in revenue was primarily due to a decrease in quantity of doses sold of NVX-CoV2373 during the six months ended June 30, 2023 as compared to the same period in 2022.

Product sales

Product sales for the six months ended June 30, 2023 were $277.7 million as compared to $641.1 million during the six months ended June 30, 2022.

Our product sales related to sales of NVX-CoV2373 under our APA agreements.

The geographic distribution of product sales was as follows:

Six Months Ended June 31,

2023 2022 Change

North America

$ — $ 64,762 $ (64,762)

Europe 58,785 413,745 (354,960)

Rest of the world

218,921 162,576 56,345

Total product sales revenue $ 277,706 $ 641,083 $ (363,377)

Grant revenue during the six months ended June 30, 2023 was $224.5 million as compared to $207.1 million during the same period in 2022, an increase of $17.4 million.

Grant revenue for 2023 and 2022, comprised revenue for services performed under our USG Agreement.

The increase was primarily due to increased clinical and development activities under the USG Agreement during the six months ended June 30, 2023.

Six Months Ended June 30,

2023 2022 Change

Expenses (in thousands):

Cost of sales $ 89,863 $ 286,281 $ (196,418)

Research and development 466,576 673,131 (206,555)

Selling, general, and administrative 206,249 204,152 2,097

Total expenses $ 762,688 $ 1,163,564 $ (400,876)

Cost of Sales

Cost of sales was $89.9 million for the six months ended June 30, 2023, including expense of $40.0 million related to excess, obsolete, or expired inventory and losses on certain firm purchase commitments and a credit of $18.8 million related to negotiated reductions to certain previously recognized firm purchase commitments.

Cost of sales was $286.3 million for the six months ended June 30, 2022, including expense of $255.3 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 June 30, 2023 we had approximately $25.9 million 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 six months ended June 30, 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 $120.8 million, an adjustment of $30.9 million as compared to cost of sales recognized.

If inventory sold for the three months ended June 30, 2022 was valued at expected standard cost, adjusted cost of sales for the period would have been approximately $439.5 million, an adjustment of $153.2 million.

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 $466.6 million for the six months ended June 30, 2023 from $673.1 million for the same period in 2022, a decrease of $206.6 million.

Six Months Ended June 30,

Coronavirus vaccines $ 279,869 $ 489,948

Influenza vaccine

Other vaccine development programs 557 1,027

Total direct external research and development expense 281,902 494,545

Employee expenses 99,545 86,919

Stock-based compensation expense 23,804 36,582

Facility expenses 33,561 24,072

Other expenses 27,764 31,013

Total research and development expenses $ 466,576 $ 673,131

Research and development expenses for coronavirus vaccines for the six months ended June 30, 2023 and 2022, decreased from $489.9 million to $279.9 million primarily as a result of a reduction in manufacturing and support costs under manufacturing supply agreements with CMO and CDMO, a reduction in clinical study costs and the commercialization of internal manufacturing capabilities, as offset by a benefit of $32.2 million and $67.4 million, respectively, related to previously accelerated manufacturing costs for leases that we determined were embedded in manufacturing supply agreements with CMOs and CDMOs.

Selling, General, and Administrative Expenses

Selling, general, and administrative expenses increased to $206.2 million for the six months ended June 30, 2023 from $204.2 million for the same period in 2022, an increase of $2.1 million.

The increase in selling, general, and administrative expenses is primarily due to restructuring expenses, partially offset by cost containment measures to reduce our operating spend including a decrease in professional fees and marketing costs in support of our NVX-CoV2373 program.

Other Income (Expense)

Six Months Ended June 30,

2023 2022 Change

Other income (expense) (in thousands):

Interest expense $ (7,440) $ (11,110) $ 3,670

Other income (expense) 29,894 (18,219) 48,113

Total other income (expense), net $ 22,454 $ (29,329) $ 51,783

We had total other income, net of $22.5 million for the six months ended June 30, 2023 as compared to total other expense, net of $29.3 million for the same period in 2022.

During the six months ended June 30, 2023, other income increased due to the favorable impact of exchange rates on foreign currency denominated balances, including an intercompany loan with Novavax CZ, and an increase in investment income due to higher interest rates.

During the six months ended June 30, 2022, Other expense was primarily related to the unfavorable impact of foreign exchange rate differences on the intercompany loan with Novavax CZ.

Income Tax Expense

During the six months ended June 30, 2023 and 2022, we recognized $1.0 million and $4.1 million, respectively, of income tax expense related to federal and state income taxes and foreign withholding tax on royalties.

Six Months Ended June 30,

2023 2022 Change

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

Net loss $ (235,897) $ (307,077) $ 71,180

Net loss per share, basic and diluted $ (2.69) $ (3.97) $ 1.28

Weighted average shares outstanding, basic and diluted 87,769 77,305 10,464

Net loss for the six months ended June 30, 2023 was $235.9 million, or $2.69 per share, as compared to $307.1 million, or $3.97 per share, for the same period in 2022.

The decrease in net loss during the six months ended June 30, 2023 was primarily due to the decline in research and development expenses associated with NVX-CoV2373 and cost of sales, partially offset by reduced product sales revenue.

The increase in weighted average shares outstanding for the six months ended June 30, 2023 is primarily a result of sales of our common stock in 2023 and 2022.

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 and repayments under our grant

funding and repayments 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 contract research organization, CMO, and CDMO agreements;

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We also have grant and license agreements.

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.

As of June 30, 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 $2 billion, of which $907.4 million is included in Deferred revenue in our Consolidated balance

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 or other 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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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).

We paid the first and second installment during the three and six months ended June 30, 2023, respectively, and the remaining balance of $68.6 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 currently depend exclusively on SIIPL and SLS for co-formulation and filling, and PCI for finishing NVX-CoV2373 and any delays or disruptions in these suppliers’ operations could prevent or delay the delivery of customer orders.

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

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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 2023, we amended the Australia APA to provide for replacement doses and to extend the delivery schedule through 2025.

We have an APA with His Majesty the King in Right of Canada as represented by the Minister of Public Works and Government Services, as successor in interest to Her Majesty the Queen in Right of Canada, as represented by the Minister of Public Works and Government Services (the “Canadian government”), 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 received in the second quarter of 2023.

In June 2023, we entered into an additional amendment (the “June 2023 Amendment”) to the Canada APA.

Pursuant to the June 2023 Amendment, the parties revised the Canadian government’s previous commitment by (i) forfeiting certain doses of the NVX-CoV2373 previously scheduled for delivery, (ii) reducing the amount of doses of NVX-CoV2373 due for delivery, (iii) revising the delivery schedule for the remaining doses of NVX-CoV2373 to be delivered, and (iv) requiring use of the Biologics Manufacturing Centre (“BMC”) Inc.

to produce bulk antigen for doses in 2024 and 2025.

In connection with the forfeiture of doses of NVX-CoV2373, the Canadian government agreed to pay a total payment amount of $349.6 million to the Company in two equal installments in 2023, which total amount equals the remaining balance owed by the Canadian government with respect to such forfeited vaccine doses.

The first installment was payable upon execution of the June 2023 Amendment and the second installment is contingent and payable upon our delivery of vaccine doses in the second half of 2023.

The first installment of $174.8 million was received from the Canadian government in July 2023.

If the Company fails to deliver COVID-19 vaccine doses to the Canadian government by the second half of 2023, the second installment of $174.8 million will be terminated and not be payable to the Company.

The Canadian government may terminate the Canada APA, as amended, if we fail to achieve regulatory approval for use of BMC for NVX-CoV2373 production on or before December 31, 2024.

The June 2023 Amendment maintained the total contract value of the original Canada APA.

Pursuant to the June 2023 Amendment, we and the Canadian government will endeavor to expand our previously agreed in-country commitment to Canada and to partner to provide health, economic, and future pandemic preparedness benefits to Canada, which value may be provided through a number of activities, including without limitation, capital investments, the performance of activities or services, or the provision of technology or intellectual property licenses.

Further, the parties will endeavor to enter into a memorandum of understanding (the “MOU”) to illustrate our ability to deliver such benefits over a 15 year period with an aggregate value of not less than 100% of the amount remaining to be paid under the June 2023 Amendment and ultimately received by us.

We agreed to hold $20.0 million in escrow for the benefit of the Canadian government, which amount is the sole recourse available to the Canadian government in the event of non-performance under the MOU.

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.

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.

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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.

Since December 31, 2022, the remaining Gavi Advance Payment Amount, which is $696.4 million as of June 30, 2023, pending resolution of the dispute with Gavi related to a return of the remaining Advance Payment Amount, has been classified within 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.

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

The arbitration hearing is scheduled for July 2024, with a written decision to follow.

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.

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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.

If the USG Agreement is not amended, as we had previously expected, then we may not receive all of the remaining $250.6 million in funding of June 30,

2023 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.

As of June 30, 2023, we constrained $48.0 million of these contingent milestones related that we are eligible to recognize in the 2023 fall vaccination campaign.

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”).

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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

As of June 30, 2023, we had $517.9 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 six months ended June 30, 2023 primarily with cash and cash equivalents and revenue from product sales, together with revenue under the USG Agreement that support our NVX-CoV2373 vaccine development activities.

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,

The following table summarizes cash flows for the six months ended June 30, 2023 and 2022 (in thousands):

Six Months Ended June 30,

2023 2022 Change

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Cash, cash equivalents, and restricted cash at end of period $ 517,941 $ 1,387,515 $ (869,574)

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.

Net cash used in operating activities was $497.5 million for the six months ended June 30, 2023, as compared to $259.4 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.

Net cash used in investing activities was $31.3 million for the six months ended June 30, 2023, as compared to $41.4 million for the same period in 2022.

The decrease in cash used in investing activities is primarily due to lower expenditure on equipment and leasehold improvements.

Net cash used in financing activities was $293.0 million for the six months ended June 30, 2023, as compared to net cash provided by finance activities of $164.5 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.

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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.

At June 30, 2023, we had $517.9 million in cash and cash equivalents and restricted cash.

During the six months ended June 30, 2023, we incurred a net loss of $235.9 million and had net cash flows used in operating activities of $497.5 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.

Our revenue projections depend on our ability to successfully develop, manufacture, distribute, or market an updated monovalent 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 authorization, ability to timely deliver doses and commercial adoption and market acceptance.

Further, 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 may require the Company to refund portions of upfront and other payments or result in reduced future payments.

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.

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 $250.6 million in funding as of June 30, 2023 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.

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 $696.4 million as of June 30, 2023.

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.

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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.

In May 2023, we announced our Restructuring 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 workforce reduction plan included 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.

We have decided to progress CIC toward late-stage development and, as such, we are assessing the impact on our workforce requirements and ability to meet our future needs.

We incurred one time restructuring expenses of $14.7 million during the three months ended June 30, 2023.

See Note 16 to our unaudited consolidated financial statements in Part I for more details on restructuring.

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, and in particular the 2023 Fall vaccination campaign, which is inherently uncertain and subject to a number of risks, including regulatory authorization, ability to timely deliver doses and commercial adoption and market acceptance;

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.

and management’s plans, which include completing 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 financings, 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