What changed in this filing

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Item 3. Legal Proceedings

2024-02-28 compared with 2023-02-28 · 83 added, 49 removed, 43 unchanged (75% of the section changed)

1 unchanged sentence

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

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

Novavax, Inc., et al.

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

Sothinathan Sinnathurai v.

Novavax, Inc., et al., No.

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

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

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

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

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

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

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

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

2 unchanged sentences

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

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

On March 16, 2023, the plaintiffs filed a motion for class certification and to appoint class representatives and counsel.

Due to the Maryland Court’s ruling on the dismissal motion, the motion sought to certify a class of stockholders who purchased the Company’s securities between May 11, 2021, and October 19, 2021.

The Company filed its opposition to the plaintiffs’ motion on September 22, 2023.

On December 4, 2023, the parties agreed to a binding settlement in principle (the “Proposed Settlement”) to fully resolve the surviving claims in the Sinnathurai Action.

Under the Proposed Settlement’s terms, the Company agreed to pay $47 million into a settlement fund, which will be funded by the Company’s directors and officers’ liability insurance and paid to members of a putative settlement class.

On January 12, 2024, after the parties negotiated and executed a written agreement governing the Proposed Settlement, plaintiffs filed an unopposed motion for the Proposed Settlement’s preliminary approval.

On January 23, 2024, the Maryland Court granted the motion for preliminary approval and, as requested by the parties, preliminarily certified, for the purposes of settlement only, the settlement class.

The court also scheduled a settlement hearing to consider final approval of the settlement for May 23, 2024.

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

(i) Robert E.

Erck, et al., No.

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

Erck, et al., No.

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

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

Erck, et al., No.

C-15-CV-21-000618 (the “Kirst Action”), (iv) Amy Snyder v.

Erck, et al., No.

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

Blackburn, et al.

Erck, et al., No.

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

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

(the “Acosta Action”).

Erck, et al., No.

2022-0770-NAC (the “Mesa Action”), (vii) Sean Acosta v.

Erck, et al., No.

2022-1133-NAC (the “Acosta Action”), and (viii) Jared Needelman v.

Erck, et al., No.

C-15-CV-23-001550 (the “Needelman Action”).

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

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

The Kirst and Needelman Actions were filed in the Circuit Court for Montgomery County, Maryland.

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

8 unchanged sentences

On June 10, 2022, the Snyder and Blackburn Actions were filed.

On October 5, 2022, the Maryland Court entered an order granting a request by the plaintiffs in the First Consolidated Derivative Action and the Snyder and Blackburn Actions to consolidate all

three actions and appoint co-lead plaintiffs and co-lead and liaison counsel (the “Second Consolidated Derivative Action”).

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

The co-lead plaintiffs in the Second Consolidated Derivative Action filed a consolidated amended complaint on November 21, 2022.

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

The plaintiffs filed their opposition to the motion to dismiss on April 11, 2023.

Defendants filed their reply brief in further support of their motion to dismiss on May 11, 2023.

On August 21, 2023, the court entered an order granting in part and denying in part the motion to dismiss;

the court allowed claims for alleged insider selling under Brophy v.

Cities Service Co., et al., 70 A.2d 5 (Del.

1949) and unjust enrichment claims to proceed, but dismissed the remaining claims in the second consolidated amended complaint.

On September 5, 2023, the Company filed an Answer to the consolidated amended complaint.

On September 6, 2023, the court entered an order granting the individual defendants an extension of time to file their answer until November 6, 2023.

On October 6, 2023, the Board of Directors of the Company formed a Special Litigation Committee (“SLC”) with full and exclusive power and authority of the Board to, among other things, investigate, review, and analyze the

facts and circumstances surrounding the claims asserted in the pending derivative actions, including the claims that remain following the court’s order on the motion to dismiss in the Second Consolidated Derivative Action.

On November 7, 2023, the court entered an order granting the parties’ request to stay the Second Consolidated Derivative Action for up to six months from the date of entry of the order.

This includes staying the deadline for the individual defendants to respond to the consolidated amended complaint.

The Kirst Action was filed on December 28, 2021, and the defendants immediately removed the case to the Maryland Court.

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

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

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

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

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

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

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

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

On March 22, 2023, the Court entered the parties’ stipulated stay of the Kirst Action pending resolution of the motion to dismiss in the Second Consolidated Derivative Action.

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

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

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

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

On January 18, 2023, defendants filed a motion to stay the Mesa Action pending a final judgment in the Second Consolidated Derivative Action.

The plaintiff filed his opposition on February 8, 2023.

Defendants filed their reply on February 22, 2023.

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

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

On August 31, 2023, the plaintiff filed a motion to lift the stay.

On October 6, 2023, the Company filed an opposition to plaintiff’s motion to lift the stay.

Plaintiff filed his reply on October 17, 2023.

On December 27, 2023, the parties filed a letter informing the Court that the Second Consolidated Derivative Action had been stayed for a period of six months and asked the Court to stay further proceedings in the Mesa Action until expiration of that stay.

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

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

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

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

Douglas, et al., No.

2021-0172-JRS.

The Company is deemed a nominal defendant.

Golubinski challenged equity awards made in April 2020 and in June 2020 on the ground that they were “spring-loaded,” that is, made at a time when such board members or members of senior management allegedly possessed undisclosed positive material information concerning the Company.

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

The plaintiff sought an award of damages to the Company, an order rescinding both awards or requiring disgorgement, and an award of attorneys’ fees incurred in connection with the litigation.

On May 10, 2021, the defendants moved to dismiss the complaint in its entirety.

On June 17, 2021, the Company’s stockholders voted FOR ratification of the April 2020 awards and ratification of the June 2020 awards.

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

The results of the vote were disclosed in the Company’s Current Report on Form 8-K filed on June 24, 2021.

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

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

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

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

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

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

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

On March 29, 2022, Par Sterile Products, LLC (“Par”) submitted a demand for arbitration against the Company with the American Arbitration Association, alleging that the Company breached certain provisions of the Manufacturing and Services Agreement (the “Par MSA”) that the Company entered into with Par in September 2020 to provide fill-finish manufacturing services for NVX-CoV2373.

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

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

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

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

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

On October 13, 2023, the parties filed, and the Delaware Court entered, a stipulated order providing that (i) if the Delaware Court declines to lift the stay in the Mesa Action, the Acosta Action will also remain stayed, and (ii) if the Delaware Court lifts the stay in the Mesa Action, the stay in the Acosta Action will also be lifted.

On April 17, 2023, the Needelman Action was filed.

On July 12, 2023, the parties filed a stipulation and proposed order to stay the Needelman Action pending the Maryland Court’s decision on the motion to dismiss in the Second Consolidated Derivative Action.

The court entered that order on July 17, 2023.

The parties continue to discuss next steps in the litigation following the Maryland Court’s ruling on the motion to dismiss the Second Consolidated Derivative Action.

The court entered that order on July 17, 2023.

On November 30, 2023, the court entered an order consolidating the Kirst and Needelman Actions.

On December 14, 2023, the parties filed a stipulation (i) extending the plaintiffs’ deadline to file a consolidated complaint until January 29, 2024, and (ii) otherwise staying all other proceedings in the case (including the defendants’ deadline to respond to the consolidated complaint) until February 12, 2024.

The stipulation entered by the court instructs the parties to discuss whether the stay should be further extended in light of the then-current status of the SLC’s investigation.

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

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

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

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

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

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

On 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 contended that, based on its purported termination of the Gavi APA, it was 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.

Since December 31, 2022, the remaining Gavi Advance Payment Amount, which is $696.4 million as of December 31, 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 the Company’s consolidated balance sheet.

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

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

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

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

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

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

On February 16, 2024, the Company and Gavi entered into a Termination and Settlement Agreement (the “Settlement Agreement”) terminating the Gavi APA, which related to the supply of the Company’s vaccine against SARS-COV-2 for the prevention of COVID-19,

settling the arbitration proceedings initiated by Gavi against the Company relating to the APA and releasing both parties of all claims arising from, under or otherwise in connection with the APA.

Pursuant to the Settlement Agreement, the Company is responsible for payment to Gavi of (i) an initial settlement payment of $75 million, which the Company paid on February 20, 2024, and (ii) deferred payments, in equal annual amounts of $80 million payable each calendar year through a deferred payment term ending December 31, 2028.

The deferred payments are due in variable quarterly installments beginning in the first quarter of 2024 and total $400 million during the deferred payment term.

Such deferred payments may be reduced through Gavi’s use of an annual vaccine credit equivalent to the unpaid balance of such deferred payments each year, which may be applied to qualifying sales of any of the Company’s vaccines funded by Gavi for supply to certain low-income and lower-middle income countries.

The Company has the right to price the vaccines offered to such low-income and lower-middle income countries in its discretion, and, when utilized by Gavi, the Company will credit the actual price per vaccine paid against the applicable credit.

The Company intends to price vaccines offered via the tender process, consistent with its shared goal with Gavi to provide equitable access to those countries.

On February 22, 2024, the claims and counterclaims were dismissed with prejudice.

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

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

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

Pursuant to the Fujifilm Settlement Agreement, the Company agreed to pay up to $185.0 million (the “Settlement Payment”) to Fujifilm in connection with cancellation of manufacturing activity at FDBT.

Under the Fujifilm Settlement Agreement, the final two quarterly installments due to Fujifilm were subject to Fujifilm’s obligation to use commercially reasonable efforts to mitigate losses associated with the vacant manufacturing capacity caused by the termination of manufacturing activities at FDBT under the CSA.

Any replacement revenue achieved by Fujifilm’s mitigation efforts between July 1, 2023 and December 31, 2023 would offset the final two settlement payments owed by the Company.

On October 2, 2023, the Company sent a notice of breach under the Fujifilm Settlement Agreement to Fujifilm setting forth the Company’s position that Fujifilm had not used commercially reasonable efforts to mitigate losses.

The Company withheld two installments of $34.3 million due to Fujifilm on September 30, 2023 and December 31, 2023, pending resolution of the issues identified in the notice of breach.

On October 30, 2023, FDBT filed a demand for arbitration with Judicial Arbitration and Mediation Services (“JAMS”) seeking payment of the third quarter installment of the Settlement Payment.

An arbitration hearing has been scheduled for May 2024.

The Company is also involved in various legal proceedings arising in the normal course of business.

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

2 unchanged sentences

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

What changed 10-K

Item 3. Legal Proceedings