What changed in this filing

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Item 7. Management’s Discussion and Analysis

2024-02-28 compared with 2023-02-28 · 280 added, 181 removed, 185 unchanged (71% of the section changed)

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

potential market sizes and demand for our product candidates;

our global restructuring and cost reduction plan (“Restructuring Plan”), which includes a more focused investment in our COVID-19 commercial program (which currently includes Nuvaxovid™ prototype COVID-19 vaccine ("NVX-CoV2373” or “prototype vaccine”) and Nuvaxovid™ updated COVID-19 vaccine (“NVX-CoV2601” or “updated vaccine”) collectively referred to as our (“COVID-19 Vaccine”)), potential market sizes and demand for our product candidates;

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

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plans for and potential timing of regulatory filings;

our expectation of manufacturing capacity, timing, production, distribution, and delivery for NVX-CoV2373 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-containing monovalent or bivalent formulation, efforts to expand the NVX-CoV2373 label worldwide as a booster, and to various age groups and geographic locations, and our seasonal quadrivalent influenza vaccine, previously known as NanoFlu;

our expectation of manufacturing capacity, timing, production, distribution, and delivery for our COVID-19 Vaccine by us and our partners;

our estimate of the number of individuals who may potentially be reached by our COVID-19 Vaccine;

our expectations with respect to the anticipated ongoing development and commercialization or licensure of the COVID-19 Vaccine, ongoing development of COVID-19 variant strain-containing monovalent or bivalent formulation, efforts to expand our COVID-19 Vaccine 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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Department of Defense (“DoD”), and CEPI;

funding under our APAs and supply agreements and amendments to, termination of, or legal disputes relating to any such agreement;

funding under our APAs and supply agreements and amendments to, termination of, discussion regarding, or legal disputes relating to any such agreement;

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

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

unanticipated challenges or delays in conducting clinical trials;

Such risks and uncertainties include, without limitation, our ability to successfully manufacture, distribute, or market our updated COVID-19 vaccine in a single dose vial or pre-filled syringe product presentation for the 2024-2025 vaccination season;

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;

challenges or delays in conducting clinical trials;

challenges or delays in obtaining regulatory authorization for our product candidates, including our updated COVID-19 vaccine in time for the 2024-2025 vaccination season or for future COVID-19 variant strain changes;

manufacturing, distribution or export delays or challenges;

our substantial dependence on Serum Institute of India Pvt.

and Serum Life Sciences Limited for co-formulation and filling and PCI Pharma Services for finishing our COVID-19 vaccines and the impact of any delays or disruptions in their operations on the delivery of customer orders;

difficulty obtaining scarce raw materials and supplies;

resource constraints, including human capital and manufacturing

capacity, constraints on the ability of Novavax to pursue planned regulatory pathways, alone or with partners, in multiple jurisdictions simultaneously, leading to staggering of regulatory filings, and potential regulatory actions;

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

resource constraints, including human capital and manufacturing capacity, constraints on the ability of Novavax to pursue planned regulatory pathways, alone or with partners, in multiple jurisdictions simultaneously, leading to staggering of regulatory filings, and potential regulatory actions;

challenges in implementing our global restructuring and cost reduction plan;

our ability to timely deliver doses;

challenges in obtaining commercial adoption and market acceptance of our updated COVID-19 vaccine or any COVID-19 variant strain-containing formulation;

challenges meeting contractual requirements under agreements with multiple commercial, governmental, and other entities, including requirements to deliver doses that may require Novavax to refund portions of upfront and other payments previously received or result in reduced future payments pursuant to such agreements;

challenges related to the seasonality of vaccinations against COVID-19;

and other risks and uncertainties identified in Part I, Item 1A “Risk Factors” of this Annual Report on Form 10-K, 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.

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

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

Adjusted cost of sales includes an estimate of standard manufacturing costs that were previously expensed to research and development prior to regulatory approvals for our COVID-19 Vaccine that would otherwise have been capitalized to inventory.

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

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

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

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

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

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

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

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

We have developed a COVID-19 vaccine NVX-CoV2373 (“Nuvaxovid™,” “Covovax™,” “Novavax COVID-19 Vaccine, Adjuvanted”) and are developing an influenza vaccine candidate, a COVID-19-Influenza Combination (“CIC”) vaccine candidate, and additional vaccine candidates, including a COVID-19 variant strain-containing monovalent or bivalent formulation.

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

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

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

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

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

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

We have developed an updated COVID-19 vaccine for the 2023-2024 vaccination season.

In October 2023, the U.S.

FDA granted emergency use authorization (“EUA”) for our updated vaccine for active immunization to prevent COVID-19.

The updated vaccine is authorized as (1) a single dose in individuals 12 years and older who have been vaccinated with any COVID-19 vaccine at least 2 months after receipt of the last previous dose of COVID-19 vaccine, and (2) a series of 2 doses administered 3 weeks apart to individuals 12 years and older who were not previously vaccinated with any COVID-19 vaccine.

Our updated vaccine is available within the U.S.

at many major pharmacy retailers.

Outside the U.S.

for our updated vaccine, in January 2024, we were granted marketing authorization by the United Kingdom’s (“UK”) Medicines and Healthcare products

Regulatory Agency (“MHRA”), in December 2023, we were granted expanded authorization by Health Canada, and in October 2023, we were granted approval by the European Commission (“EC”).

We are committed to meeting the full supply of our key target markets through advance purchase agreements (“APAs”) covering such markets.

We continue to work closely with regulatory authorities globally for authorization of our updated vaccine.

We previously developed a prototype COVID-19 vaccine, which has received full marketing authorization (“MA”), marketing approval, interim authorization, provisional approval, conditional marketing authorization (“CMA”), from multiple regulatory authorities in over 40 countries globally.

We continue to progress our regulatory authorizations for our prototype vaccine in select territories, as we believe these may facilitate authorization of our vaccine candidates for updated strains in the future.

Additionally, we are developing a CIC vaccine candidate.

In addition to COVID-19, our other areas of focus include providing Matrix-M™ adjuvant for collaborations, including in 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, including through a 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 updated vaccine for the 2023-2024 vaccination 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 Annual Report.

Business Highlights

Fourth Quarter 2023 and Recent Highlights

COVID-19 Vaccine Orders and Plans for the 2023 Fall Vaccination Season

• Delivered over 100 million doses of Nuvaxovid, Novavax’s COVID-19 vaccine, globally to date

• Modified agreement with the U.S.

government for up to 1.5 million additional doses of Novavax’s COVID-19 vaccine for delivery in 2023

◦ Agreement maintains the U.S.

public’s access to Novavax’s COVID-19 vaccine and supports the development of smaller dose vials, strain selection in line with U.S.

Food and Drug Administration (FDA) recommendations and a smooth transition to the commercial market

• Reaffirmed intent to deliver an updated mono- or bivalent strain vaccine for the 2023 fall vaccination season, consistent with public health recommendations

• Secured European Medicines Agency (EMA) and FDA approval of Nuvaxovid five-dose vial variation and EMA approval of the Company’s Czech Republic facility to manufacture antigen and supply Nuvaxovid to the E.U.

COVID-19 Vaccine Clinical Development Program and Expanded Authorizations

• Presented data to the U.S.

FDA Vaccine and Related Biological Products Advisory Committee demonstrating that when used as a booster, Novavax’s COVID-19 vaccine induces broad functional immune responses, including for contemporary variants

• Announced topline results from Phase 3 COVID-19 Omicron BA.1 vaccine candidate, achieving the primary strain-change endpoint

◦ Part 2 to evaluate our prototype vaccine compared to an Omicron BA.5 vaccine, as well as a bivalent containing prototype and Omicron BA.5 vaccine

• Expanded Nuvaxovid label in adult booster and adolescent primary series to enable broader uptake in the long-term commercial market

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

• Initiated Phase 2 dose-confirming trial to 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

• CIC Phase 2 trial includes additional study arms exploring alternate influenza stand-alone formulations

Demonstrated ability to update COVID-19 vaccine and deliver the only protein-based non-mRNA option to market.

• Gained commercial experience in the U.S.

after receiving EUA with future efforts to focus on a recalibration of U.S.

field teams to focus on the retail segment

• Progressed efforts to position Novavax for a stronger performance in 2024-2025 COVID-19 vaccination season with focus on a single-dose product presentation for delivery at the start of the season and planned BLA approval to enable marketing and promotion for Nuvaxovid™ during season

• Progressed efforts to streamline manufacturing and to advance strain selection at risk while advocating for more timely identification of strains by regulatory authorities

• Continued advancement of discussions for 2024-2025 COVID-19 vaccination season with major retailers who have driven 90% of the pharmacy business

Global Markets:

Delivered on 2023 APA obligations in Europe, Canada, Australia, New Zealand, Singapore and Taiwan.

• For 2024, made strategic decision to prioritize and focus commercial effort in Europe on select key countries including Italy, Spain, France and the UK.

• Spring 2024 U.K.

private market launch expected for Novavax’s COVID-19 vaccine as enabled by the recent Green Book addition by the UK Health Security Agency

Novavax has made significant progress on its commitment to improve its financial position while maintaining the capabilities that support long-term value creation.

• Reduced full year 2023 operating expenses by $1.1 billion, or 41%, as compared to 2022

• Reduced workforce by a total of 30% compared to first quarter of 2023

• Delivered fourth quarter 2023 doses under the Canada APA agreement and received $175 million contingent payment in January 2024

• Settled arbitration with Gavi, removing financial uncertainty and enabling focus on shared public health mission

Novavax remains focused on leveraging its technology platform, including its proprietary Matrix-M™ adjuvant, to drive long-term growth and protect global public health.

• Expect to initiate a pivotal Phase 3 trial for CIC vaccine candidate in the second half of 2024, with potential for accelerated approval and anticipated launch in 2026

• R21/Matrix-M™ adjuvant malaria vaccine received prequalification by the WHO based on Phase 3 efficacy trial results, which were recently published in The Lancet, enabling global rollout of the vaccine in eligible United Nation countries

Financing Transactions

In December 2022, we completed a public offering of 7,475,000 shares of our common stock, including 975,000 shares of common stock that were issued upon the exercise in full of the option to purchase additional shares granted to the underwriters, at a price of $10.00 per share, resulting in net proceeds of $69.8 million.

Concurrently with this public offering, we issued $175.3 million aggregate principal amount of 5.00% convertible senior unsecured notes due 2027 (the “2027 Notes”), including $25.3 million that was issued upon the exercise of the full option to purchase additional notes in a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended.

The 2027 Notes will mature on December 15, 2027, unless earlier converted, redeemed, or repurchased.

We received $166.4 million in net proceeds from the issuance of the 2027 Notes after deducting the initial purchasers’ fees and our offering expenses.

See Note 11 to our consolidated financial statements in Part II, Item 8, “Financial Statements and Supplementary Data,” of this Annual Report on Form 10-K for additional information related to the 2027 Notes.

In June 2021, we entered into an At Market Issuance Sales Agreement (the “June 2021 Sales Agreement”), which allows us to issue and sell up to $500 million in gross proceeds of shares of our common stock, and terminated our then-existing At Market Issuance Sales Agreement.

As of December 31, 2022, the remaining balance under the June 2021 Sales Agreement was approximately $318 million.

During the years ended December 31, 2022 and 2021, we sold 2.2 million and 2.6 million, respectively, of shares of our common stock resulting in net proceeds of approximately $179 million and $565 million, respectively, under our various At Market Issuance Sales Agreements.

In August 2023, we entered into an At Market Issuance Sales Agreement (the "August 2023 Sales Agreement"), which allows us to issue and sell up to $500 million in gross proceeds of shares of our common stock, and terminated our then-existing At Market Issuance Sales agreement entered in June 2021 (the “June 2021 Sales Agreement”).

During the year ended December 31, 2023, we sold 38.3 million shares of our common stock under our August 2023 Sales Agreement and 7.9 million shares of our common stock under our June 2021 Sales Agreement, resulting in net proceeds of approximately $321 million, of which $6.9 million was included in Prepaid expenses and other current assets as of December 31, 2023 and received in cash in January 2024.

As of December 31, 2023, the remaining balance available under the August 2023 Sales Agreement was approximately $242 million.

During the year ended December 31, 2022, we sold 2.2 million shares of our common stock resulting in net proceeds of approximately $179 million , under our June 2021 Sales Agreement.

In August 2023, pursuant to the Securities Subscription Agreement with SK, we agreed to sell and issue to SK 6.5 million shares of our common stock at a price of $13.00 per share (the “Shares”) in a Private Placement for aggregate gross proceeds to us of approximately $84.5 million.

We recognized the Shares at the settlement date fair value of $46.5 million (see Note 4 to our consolidated financial statements for additional discussion of the Securities Subscription Agreement with SK).

The closing of the Private Placement occurred on August 10, 2023.

We completed this public offering concurrent with the issuance of the 2027 Notes (see Note 10 to our consolidated financial statements).

Critical Accounting Policies and Use of Estimates

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

These estimates, particularly estimates relating to accounting for grant revenue, lease accounting, pre-launch inventory, inventory valuation, and research and development expenses have a material impact on our consolidated financial statements and are discussed in detail throughout our analysis of the results of operations discussed below.

These estimates, particularly estimates relating to accounting for product sales revenue, pre-launch inventory, inventory realizability, and research and development expenses have a material impact on our consolidated financial statements and are discussed in detail throughout our analysis of the results of operations discussed below.

We base our estimates on historical experience and various other assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets, liabilities, and equity that are not readily apparent from other sources.

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For an in-depth discussion of each of our significant accounting policies, including our critical accounting policies and further information regarding estimates and assumptions involved in their application, see Note 2 to the accompanying consolidated financial statements included in Part II, Item 8, “Financial Statements and Supplementary Data” of this Annual Report on Form 10-K.

Grant Revenue Recognition

Our grant revenue primarily consists of funding under U.S.

government contracts including the USG Agreement and the DoD Contract and was $382.9 million in 2022.

We measure progress toward satisfaction of our grant performance obligations using an Estimate-at-Completion (“EAC”) process, which is a cost-based input method that reviews and monitors the progress towards the completion of our performance obligation.

Under this process, we consider the costs that have been incurred to-date, as well as projections to completion using various inputs and assumptions, including, but not limited to, progress towards completion, labor costs and level of effort, material and subcontractor costs, indirect administrative costs, and other identified risks.

Estimating the total allowable cost at completion of our performance obligation under a contract is subjective and requires us to make assumptions about future activity and cost drivers.

Changes in these estimates can occur for a variety of reasons and, if significant, may impact the timing of revenue and fee recognition on our contracts.

For our cost-reimbursable-plus-fixed-fee contracts, we recognize the fixed fee based on the proportion of reimbursable contract costs incurred to total estimated allowable contract costs expected to be incurred on completion of the underlying performance obligation as determined under the EAC process.

Changes in estimates related to the EAC process are recognized in the period when such changes are made on a cumulative catch-up basis.

We have not experienced any material difference as a result of change in estimate arising from the EAC process.

Lease Accounting

We enter into manufacturing supply agreements with CMOs and contract development and manufacturing organizations (“CDMOs”) to manufacture our vaccine candidates.

Certain of these manufacturing supply agreements include the use of identified manufacturing facilities and equipment that are controlled by us and for which we obtain substantially all the output and may qualify as an embedded lease.

The evaluation of leases that are embedded in our CMO and CDMO agreements is complex and requires judgment in determining whether the contract, either explicitly or implicitly, is for the use of an identified asset, which generally is the use of a portion of the manufacturing facility;

whether we have the right to direct the use of, and obtain substantially all of the benefit from, the identified asset;

the term of the lease;

and the fixed lease payments under the contract.

Determining the lease commencement date may require judgment because the lease commencement date may be different than the inception date of the contract.

We determine the non-cancellable lease term of our embedded leases based on the impact of certain expected milestones on our option to terminate the lease where we are reasonably certain to not exercise that option.

For leases that have a lease term of more than 12 months at the lease commencement date, we recognize lease liabilities and corresponding right-of-use (“ROU”) assets based on the present value of the fixed future payments over the lease term.

We calculate the present value of future payments using the discount rate implicit in the lease, if available, or our incremental borrowing rate.

In determining the lease period, we evaluate facts and circumstances that could affect the period over which we are reasonably certain to use the underlying asset while taking into consideration the non-cancelable period over which we have the right to use the underlying asset and any option period to extend or terminate the lease if we are reasonably certain to exercise the option.

We use significant assumptions and judgment in evaluating our lease contracts and other agreements under ASC 842, including the determination of whether an agreement is or contains a lease, whether a change in the terms and conditions of a lease contract represent a new or modified lease, whether

a lease represents an operating or finance lease, the discount rate used to determine the present value of lease obligations, and the term of embedded leases in our manufacturing supply agreements.

As of December 31, 2022, we had total noncurrent ROU assets of $106.2 million, current lease liabilities of $44.1 million, and noncurrent lease liabilities of $81.3 million.

Revenue Recognition, Product Sales - Advance Purchase Agreements

Product sales include sales associated with COVID-19 Vaccine supply agreements, sometimes referred to as advance purchase agreements (“APAs”), with various international governments.

We recognize revenue from product sales related to these APA’s based on the transaction price per dose calculated in accordance with Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers, at the point in time when control of the product transfers to the customer and customer acceptance has occurred, unless such acceptance provisions are deemed perfunctory.

The APAs typically contain terms that include upfront payments which are reflected in Deferred revenue.

We constrain the transaction price for APA’s until it is probable that a significant reversal in revenue recognized will not occur.

Specifically, if an APA includes a provision whereby the customer may request a discount, return, or refund, or includes a term that may have the effect of decreasing the price per dose of previously delivered shipments, revenue is constrained based on an estimate of the impact of the transaction price until it is probable that a significant reversal in revenue recognized will not occur.

Revenue Recognition, Product Sales - U.S.

In the fourth quarter of 2023, we commenced sales of COVID-19 Vaccine to the U.S.

commercial market.

Product sales in the U.S.

are primarily made through large pharmaceutical wholesale distributors at the wholesale acquisition cost (“WAC”).

We recognize revenue upon title transfer (which is typically at time of delivery), provided all other revenue recognition criteria have been met.

The transaction price includes estimates of variable consideration for which reserves are established that primarily result from invoice discounts for prompt payment, wholesale distributor fees, chargebacks, and product returns (collectively, “gross-to-net deductions”).

These estimates are based on the amounts earned or to be claimed for related sales and are classified as either reductions of gross accounts receivable or a current liability based on the nature of the estimate, the expected settlement method, and net position by individual customer.

Where appropriate, these estimates are based on factors such as industry data and forecasted customer buying and payment patterns, our experience, current contractual and statutory requirements, specific known market events, and trends.

Variable consideration is included in the transaction price only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved.

If actual results vary from estimates, we will adjust the estimates, which would affect product sales in the period such variances become known.

Gross-to-net deductions include the following :

• Wholesale distributor fees, discounts, and chargebacks:

We have arrangements under which our indirect customers such as retailers and healthcare providers receive discounts to the WAC.

The chargeback represents the difference between the WAC and this negotiated discounted price.

For distribution and related services, we pay service fees to our wholesale distributors.

In addition, we typically offer wholesale distributor customers invoice discounts on product sales for prompt payments.

We estimate chargebacks, discounts, and fees we will owe and deduct these amounts from gross product sales at the time the revenue is recognized based on the contractual terms and our expectations regarding future customer behaviors.

• Product returns:

We offer U.S.

customers the right to return COVID-19 Vaccine.

These return rights include the right of wholesale distributors to return unsold and expired doses and the right of indirect customers to return any partial or unused vials upon expiry.

Estimated returns for COVID-19 Vaccine are determined considering levels of inventory in the distribution channel, projected market demand, utilization data, returns claims received, and product shelf life.

Our estimates of product returns are subject to significant uncertainty.

Actual customer product returns could vary significantly from our estimates, resulting in changes to the estimates in subsequent periods.

The estimated amount for product returns is deducted from gross product sales in the period the related product sales are recognized.

Fees payable to retailers, healthcare providers, and buying groups, including certain patient assistance programs, are deducted from gross product sales in the period the related product sales are recognized.

During the year ended December 31, 2023, we recognized gross-to-net deductions against U.S.

commercial product sales of $84.7 million for product returns and $47.0 million for wholesale distributor fees, discounts and chargebacks.

As of December 31, 2023, $82.5 million related to product returns and $20.6 million related to wholesale distributor fees, discounts,

and chargebacks were included in Other current liabilities and $2.6 million was included in Accounts receivable on our consolidated balance sheet.

Pre-Launch Inventory

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Our estimate of when commercialization is probable is based primarily on our experience with obtaining regulatory approval of comparable products.

We began to capitalize inventory in 2022 and, as of December 31, 2022, we had approximately $30.6 million of commercial inventory that was expensed prior to approval.

We began to capitalize inventory in 2022.

Inventory Realizability

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We began to capitalize inventory in 2022.

Subsequently, we recorded inventory write-downs of $447.6 million and losses on firm purchase commitments of inventory of $155.9 million to the extent the cost cannot be recovered based on estimates about future demand.

Subsequently, for the year ended, December 31, 2022 we recorded inventory write-downs of $447.6 million and losses on firm purchase commitments of inventory of $155.9 million to the extent the cost cannot be recovered based on estimates about future demand.

For the year ended December 31, 2023, we recorded inventory write-downs of $72.4 million and losses on firm purchase commitments of inventory of $73.5 million.

In addition, for the year ended December 31, 2023, we recorded recoveries on firm purchase commitments of $40.2 million related primarily to negotiated reductions to previously recognized firm purchase commitments.

Accounting for Research and Development Expenses

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• expenses incurred under agreements with contract research organizations (“CROs”) that conduct our clinical trials and third party consultants;

• the cost of developing and manufacturing vaccine components under third-party CMOs and CDMOs agreements, including expenses incurred for the procurement of raw materials, laboratory supplies and equipment.

• the cost of developing and manufacturing vaccine components under third-party CMOs and contract development and manufacturing organizations (“CDMOs”) agreements, including expenses incurred for the procurement of raw materials, laboratory supplies and equipment.

We base our expenses on our estimates of the services provided and efforts expended pursuant to contracts, statements of work and related change orders with the service provider, and discussion with internal personnel and external service providers as to the progress of the services and the agreed-upon fee to be paid for such services.

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Total revenue $ 983,705 $ 1,981,872 $ (998,167)

Revenue for the year ended December 31, 2023 was $983.7 million as compared to $2.0 billion for the year ended December 31, 2022, a decrease of $1.0 billion.

Revenue for the years ended December 31, 2023 and 2022 was primarily comprised of revenue from product sales of COVID-19 Vaccine and 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.

The decrease in revenue is primarily due to a decreased quantity of dose sales of COVID-19 Vaccine.

Product sales

Product sales for 2022 were $1.6 billion as compared to no product sales for 2021.

Product sales for 2022 related to revenue from commercial sales of NVX-CoV2373, which commenced in 2022.

Product sales for 2023 were $531.4 million as compared to $1.6 billion for 2022, a decrease of $1.0 billion.

The decrease in product sales is primarily due to a decreased quantity of dose sales of COVID-19 Vaccine during the year ended December 31, 2023 as compared to 2022.

Product sales for 2023 related to revenue from commercial sales of COVID-19 Vaccine, which commenced in 2022.

The geographic distribution of product sales in 2023 was as follows:

2023 2022 Change

Product Sales (in thousands)

North America

$ 29,959 $ 194,480 $ (164,521)

Europe 268,361 823,542 (555,181)

Rest of the world

Total product revenue $ 1,554,961

233,069 536,939 (303,870)

Total product sales revenue

$ 531,389 $ 1,554,961 $ (1,023,572)

We recognized grant revenue as follows:

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— 1,925 (1,925)

— 135,445 (135,445)

Other grant revenue

— 2,628 (2,628)

Total grant revenue $ 427,323 $ 382,921 $ 44,402

Grant revenue for 2022 was $382.9 million compared to $948.7 million for 2021, a decrease of $565.8 million.

Grant revenue for 2022 primarily comprised revenue for services performed under the USG Agreement and grant revenue for 2021 primarily comprised revenue for services performed under the USG Agreement and the CEPI funding agreement.

The decrease in revenue was primarily due to decreased development activities under the USG Agreement and our funding agreement with CEPI.

Grant revenue for 2023 was $427.3 million compared to $382.9 million for 2022, an increase of $44.4 million.

Grant revenue comprised revenue for services performed under our USG Agreement.

The increase was primarily due to increased support activities under the USG Agreement during 2023.

As of December 31, 2023, the Company has recognized the full contract funding under the USG Agreement in revenue.

Royalties and Other

Royalties and other includes royalty milestone payments, sales-based royalties, and Matrix-M™ adjuvant sales.

Royalties and other revenue for 2023 was $25.0 million as compared to $44.0 million for 2022, a decrease of $19.0 million.

Royalties and other revenue primarily related to royalties under our licensing arrangements, and the decrease in revenue was due to lower sales-based royalties from our license partners.

The decrease was primarily due to decreased revenue related to milestone payments, partially offset by an increase in Matrix-M™ adjuvant sales.

2023 2022 Change

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Cost of Sales

Cost of sales was $902.6 million, or 58% of product sales, for 2022, including expense of $603.5 million related to excess or obsolete inventory and losses on firm purchase commitments.

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

After receiving regulatory 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.

Cost of sales was $343.8 million, or 65% of product sales, for the year ended December 31, 2023, including expense of $145.9 million related to excess, obsolete, or expired inventory and losses on certain firm purchase commitments, $6.1 million ROU asset impairment charges for CMO manufacturing capacity of excess quantities, $64.0 million related to unutilized manufacturing capacity, and a credit of $40.2 million related to negotiated reductions to certain previously recognized firm purchase commitments.

Cost of sales was $902.6 million, or 58% of product sales, for 2022, including expense of $603.5 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.

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 December 31, 2022 we had approximately $30.6 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 and pre-launch inventory sold in 2022 was valued at expected standard cost, including expenses related to excess and obsolete inventory and losses on firm purchase commitments, adjusted cost of sales for the period would have been approximately $1,067.4 million, or 69% of product sales, an adjustment of $164.8 million as compared to cost of sales recognized.

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.

If inventory sold during 2023 was valued at expected standard cost, including expenses related to excess and obsolete inventory, adjusted cost of sales for the year would have been $382.8 million, an adjustment of $39.0 million as compared to cost of sales recognized.

If inventory sold during 2022 was valued at expected standard cost, adjusted cost of sales for the year would have been approximately $1.1 billion, an adjustment of $164.8 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 approximately $1.2 billion for 2022 as compared to $2.5 billion for 2021, a decrease of $1.3 billion.

The decrease was primarily due to a decrease in development activities relating to coronavirus vaccines, including NVX-CoV2373, an Omicron BA.1 vaccine candidate, bivalent formulations, and CIC, as summarized in the table below (in thousands):

Research and development expenses decreased to $737.5 million for 2023 as compared to $1.2 billion for 2022, a decrease of $497.8 million.

The decrease was primarily due to a reduction in overall expenditures relating to development

activities on coronavirus vaccines, including our COVID-19 Vaccine and CIC, as summarized in the table below (in thousands):

Research and Development Expenses (in thousands):

Coronavirus vaccines $ 413,448 $ 848,042

Influenza vaccine 7,163 7,761

Other vaccine development programs 3,241 9,821

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Total research and development expenses $ 737,502 $ 1,235,278

Research and development expenses for coronavirus vaccines for 2022 and 2021 included a benefit of $201.4 million, inclusive of a $98.3 million benefit pursuant to the Fujifilm Settlement Agreement (see Note 4 to our consolidated financial statements in Part II, Item 8, “Financial Statements and Supplementary Data,” of this Annual Report on Form 10-K), and an

expense of $239.2 million, respectively, related to previously accelerated manufacturing costs for leases that we determined were embedded in multiple manufacturing supply agreements with CMOs and CDMOs.

Research and development expenses for coronavirus vaccines for the year ended December 31, 2023 and 2022 decreased to $413.4 million from $848.0 million primarily as a result of a reduction in manufacturing and support costs due, in part, to a reduction in our global manufacturing footprint consistent with our contractual obligations to supply, and anticipated demand for, COVID-19 Vaccine, including under manufacturing supply agreements with CMOs and CDMOs, and a reduction in clinical study costs and the commercialization of internal manufacturing capabilities.

The decrease was also due to a benefit of $57.7 million during the year ended December 31, 2023 resulting from our settlement agreement and Private Placement with SK (see Note 4 to our consolidated financial statements).

The decrease was partially offset by a benefit of $35.2 million and $201.4 million for the years ended December 31, 2023 and 2022, respectively, related to previously accelerated manufacturing costs for leases that we determined were embedded in manufacturing supply agreements with CMOs and CDMOs.

We do not provide forward-looking estimates of costs and time to complete our research programs due to the many uncertainties associated with vaccine development.

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As a result of these uncertainties, we are unable to determine the duration and completion costs of our research and development projects or when, and to what extent, we will generate future cash flows from our research projects.

For 2023, we expect research and development expenses to decrease as compared to 2022 as 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 as additional manufacturing activities that were previously recognized as research and development expenses begin to meet the criteria for capitalization as inventory.

We are gating funding for our potential Phase 3 research and development expenses related to our influenza and CIC vaccine candidates based on the assessment of our Phase 2 clinical trial results anticipated for mid 2023.

For 2024, we expect research and development expenses to decrease as compared to 2023 as we continue to assess our manufacturing needs and modify our global manufacturing footprint consistent with our contractual obligations to supply, and anticipated demand for, COVID-19 Vaccine and as additional manufacturing activities that were previously recognized as research and development expenses begin to meet the criteria for capitalization as inventory.

Selling, General, and Administrative Expenses

Selling, general, and administrative expenses increased to $488.7 million for 2022 from $298.4 million for 2021, an increase of $190.3 million.

The increase in selling, general, and administrative expenses is primarily due to a $149.5 million increase in expenses related to the commencement of our commercial sales operations.

For 2023, our expected selling, general, and administrative expenses levels may vary depending 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.

Due to this uncertainty, we have announced our intention to reduce and control our operating spend to focus on key priorities and we will continue to evaluate our level of investment as the year progresses.

Selling, general, and administrative expenses decreased to $468.9 million for 2023 from $488.7 million for 2022, a decrease of $19.7 million.

The decrease in selling, general, and administrative expenses is primarily due to cost containment measures to reduce our operating spend including a decrease in professional fees and advertising and promotion costs in support of our COVID-19 commercial program, partially offset by restructuring expenses.

Other Expense, Net:

2023 2022 Change

Other Expense, Net (in thousands):

Other income (expense) (in thousands):

Interest expense $ (14,416) $ (19,880) $ 5,464

Other income (expense) 37,896 10,969 26,927

Total other expense, net $ (8,911) $ (27,960) $ 19,049

We had total net other expense of $8.9 million for 2022 compared to total net other expense of $28.0 million for 2021, a decrease of $19.0 million.

During 2022 and 2021, other income (expense) was primarily related to foreign exchange rate activity.

Total other income (expense), net

$ 23,480 $ (8,911) $ 32,391

We had total net other income of $23.5 million for 2023 compared to total net other expense of $8.9 million for 2022, an increase of $32.4 million.

During 2023, other income, net increased primarily due to the favorable impact in 2023 as compared to 2022 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.

Income Tax Expense:

During the years ended December 31, 2022 and 2021, we recognized $4.3 million and $29.2 million, respectively, of income tax expense related to federal and state income taxes and foreign withholding tax on royalties.

During the years ended December 31, 2023 and 2022, we recognized $2.0 million and $4.3 million of income tax expense, respectively, related to federal, state, and foreign income taxes.

2023 2022 Change

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Weighted average shares outstanding, basic and diluted 100,768 78,183 22,585

Net loss for 2022 was $0.7 billion, or $8.42 per share, as compared to $1.7 billion, or $23.44 per share, for 2021, a decrease of $1.1 billion.

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

The increase in weighted average shares outstanding for 2022 is primarily a result of sales of our common stock and common stock issued under our incentive programs.

Net loss for 2023 was $545.1 million, or $5.41 per share, as compared to $657.9 million, or $8.42 per share, for 2022, a decrease of $112.9 million, or $3.01 per share.

The decrease in net loss was primarily due to the decline in cost of sales and research and development expenses associated with our COVID-19 Vaccine, partially offset by a decrease in revenue from product sales.

The increase in weighted average shares outstanding for 2023 is primarily a result of sales of our common stock.

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 agreements;

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

repayments under our grant agreements;

our projected activities related to the development and commercial support of our COVID-19 Vaccine and our CIC vaccine candidate, including significant commitments under various CRO, CMO, and CDMO agreements;

the progress of preclinical studies and clinical trials;

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and other manufacturing, sales, and distribution costs.

We plan to continue developing other vaccines and product candidates, such as our influenza vaccine candidate and potential combination vaccines candidates, which are in various stages of development.

We plan to continue developing other vaccines and product candidates, such as our potential combination vaccines candidates, which are in various stages of development.

We have entered into supply agreements, sometimes referred to as APAs, with the EC and various countries globally.

We also have grant and license agreements.

As of December 31, 2022, the aggregate amount of the transaction price allocated to performance obligations that were unsatisfied (or partially unsatisfied), excluding amounts related to sales-based royalties under the licensing agreements, was approximately $3 billion, which excludes amounts related to the Gavi APA and the reduction in doses related to the Amended and Restated UK Supply Agreement, as defined below.

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

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

The timing to fulfill performance obligations related to supply agreements will depend on timing of product manufacturing, receipt of marketing authorizations for additional indications, delivery of doses based on customer demand, and the ability of the customer to request variant vaccine in place of the prototype NVX-CoV2373 vaccine under certain of our APAs.

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

We also have license agreements.

As of December 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 licensing agreements, was approximately $2 billion, of which $863.5 million is included in Deferred revenue on our

consolidated balance sheet.

Failure to timely meet regulatory milestones, 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.

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

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, as a result, significant costs may be incurred.

Pursuant to the Fujifilm Settlement Agreement (see Note 4 to our consolidated financial statements in Part II, Item 8, “Financial Statements and Supplementary Data,” of this this Annual Report on Form 10-K), we are responsible for a Settlement Payment of up to $185.0 million to Fujifilm in connection with cancellation of manufacturing activity at FDBT

under the Fujifilm CSA, of which $47.8 million, constituting the initial reservation fee under the Fujifilm CSA, was credited against the Settlement Payment on September 30, 2022.

We have an APA with the EC, acting on behalf of various European Union member states to supply a minimum of 20 million and up to 100 million initial doses of NVX-CoV2373, with the option for the EC to purchase an additional 100 million doses up to a maximum aggregate of 200 million doses in one or more tranches through 2023.

In 2022, we were notified by the EC that it was cancelling approximately 7 million doses of its prior commitment originally scheduled for delivery in the first and second quarters of 2022, in accordance with the APA, and reducing the order to approximately 63 million doses.

In January 2023, we finalized a revised delivery schedule for the remaining 20 million committed doses under the APA that were originally scheduled for delivery during the first and second quarters of 2022 and are expected to be delivered in 2023.

In July 2022, we entered into an Amended and Restated SARS-CoV-2 Vaccine Supply Agreement (as amended on September 26, 2022, the “Amended and Restated UK Supply Agreement”) with The Secretary of State for Business, Energy and Industrial Strategy (as assigned to the UK Health Security Agency), acting on behalf of the government of the United Kingdom of Great Britain and Northern Ireland (the “Authority”), which amended and restated in its entirety the SARS-CoV-2 Vaccine Supply Agreement, dated October 22, 2020, between the parties (the “Original UK Supply Agreement”).

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

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

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

On October 3, 2023, our updated vaccine received EUA from the U.S.

FDA for active immunization to prevent COVID-19 in individuals aged 12 and older.

Immediately upon authorization, our updated vaccine has also been included in the recommendations issued by the CDC in September 2023.

Doses became available within the U.S.

at many major pharmacy retailers, following the Center for Biologics Evaluation and Research release of vaccine batches.

We have established reserves for gross-to-net deductions for amounts that we expect to return to our customers.

As of December 31, 2023, gross-to-net reserve balances are $84.6 million related to product returns and $21.1 million related to wholesale distributor fees, discounts, and chargebacks, of which $103.1 million is included in Accrued expenses and $2.6 million is included in Accounts receivable on our consolidated balance sheet.

Pursuant to the Fujifilm Settlement Agreement (see Note 4 to our consolidated financial statements), we agreed to pay up to $185.0 million (the “Settlement Payment”) 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 was to be paid in four equal quarterly installments of $34.3 million each, which began on March 31, 2023.

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, we 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.

We 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.

We paid the first two installments totaling $68.6 million during the twelve months ended December 31, 2023, and the remaining balance of $68.6 million is reflected in Accrued expenses on our consolidated balance sheet.

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.

In August 2023, we entered into a Settlement Agreement and General Release (the “Settlement Agreement”) with SK regarding the mutual release by the parties of all claims arising from or in relation to certain statements of work (“SOWs”) under the Development and Supply Agreement entered into in August 2020 and the Collaboration and License Agreement, entered into in February 2021 as amended in December 2021 and July 2022 in connection with the cessation of all drug substance and drug product manufacturing activity at SK for supply to us.

Pursuant to the Settlement Agreement, we agreed to pay $149.8 million, of which (i) $130.4 million was paid in August 2023 and (ii) the remaining balance was paid in November 2023.

Under the Settlement Agreement, we also agreed with SK to a wind down plan with respect to the remaining products, materials and equipment under the SOWs (see Note 4 to our consolidated financial statements).

In August 2023, we entered into a Securities Subscription Agreement (the “Subscription Agreement”) with SK, pursuant to which we agreed to sell and issue to SK, in a private placement (the “Private Placement”), 6.5 million shares of our common stock, par value $0.01 per share at a price of $13.00 per share for aggregate gross proceeds to us of approximately $84.5 million.

The closing of the Private Placement occurred on August 10, 2023 (see Note 4 to our consolidated financial statements).

We have an APA with the Commonwealth of Australia for the purchase of doses of COVID-19 Vaccine (the “Australia APA”).

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

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

This credit is the result of a single lot sold to the Australian government that upon pre-

planned 6-month stability testing was found to have fallen below the defined specifications and the lot therefore was removed from the market.

The credit will be applied against the future sale of doses to Australia.

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

As of February 2024, we had not yet received TGA authorization or delivered doses as contemplated in the July 2023 amendment and are in active discussions with the Australian government on both the TGA authorization and delivery of the doses previously scheduled for the fourth quarter of 2023.

In February 2024, we received notice from the Australian government purporting to cancel its order for such prototype vaccine doses.

We believe the cancellation was not proper under the amended Australia APA.

However, if such a cancellation were determined to be allowable, $6.0 million of the deferred revenue would become a credit towards future deliveries of doses and approximately $48 million of the contract value related to future deliverables would no longer be available.

In April 2023, we amended the Canada APA, pursuant to which the Canadian government forfeited certain doses originally scheduled for delivery in 2022 for a payment of $100.4 million, which we 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, (i) the Canadian government forfeited certain doses of COVID-19 Vaccine previously scheduled for delivery and agreed to pay a total amount of $349.6 million to us in two equal installments, which total amount equaled the remaining balance owed by the Canadian government with respect to such forfeited vaccine doses, (ii) the amount of doses of COVID-19 Vaccine due for delivery was reduced, (iii) the delivery schedule for the remaining doses of COVID-19 Vaccine to be delivered was revised, and (iv) the parties agreed Novavax would use the Biologics Manufacturing Centre (“BMC”) Inc.

to produce bulk antigen for doses in 2024 and 2025.

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

The first Installment of $174.8 million was payable upon execution of the June 2023 Amendment and received by Novavax in July 2023, and the second installment of $174.8 million was contingent and payable upon the delivery of vaccine doses in the second half of 2023 and received by Novavax in January 2024.

The Canadian government may terminate the Canada APA, as amended, if we fail to receive regulatory approval for our COVID-19 Vaccine using bulk antigen produced at BMC on or before December 31, 2024.

Our 2024 plans do not currently anticipate the submission for regulatory approval of our COVID-19 Vaccine using bulk antigen produced at BMC, and we plan to work with the Canadian government on an amendment that addresses possible alternatives, which may not be achievable.

As of December 31, 2023, $102.8 million was classified as short-term Deferred revenue and $485.3 million was classified as long-term Deferred revenue with respect to the Canadian APA on our consolidated balance sheet.

If the Canadian government terminates the Canada APA, $28.0 million of the deferred revenue would become refundable and approximately $224 million of the contract value related to future deliverables would no longer be available (see Note 3 to our consolidated financial statements).

In the event that the contract is terminated, we would consider competing in the Canadian commercial market.

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.

As of December 31, 2023, discussions regarding the MOU were ongoing.

We agreed to hold $20.0 million of the second installment payment received in January 2024 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 September 2022, we entered into an Amended and Restated SARS-CoV-2 Vaccine Supply Agreement (the “Amended and Restated UK Supply Agreement”) with the Authority.

If the Authority did not purchase the Conditional Doses or the number of such Conditional Doses was reduced below 15 million doses of our prototype vaccine, we would have to repay up to $225.0 million related to the upfront payment previously received from the Authority under the Original UK Supply Agreement.

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

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

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

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

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

to repay $112.5 million related to the upfront payment previously received from the Authority under the Original UK Supply Agreement.

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

As of November 30, 2023, the JCVI had not made a supportive recommendation with respect to the prototype vaccine, thereby triggering a reduction in the number of Conditional Doses from 7.5 million doses to zero.

As of February 2024, the Company is in discussions with the Authority regarding the treatment of the remaining upfront amount previously received of $112.5 million, which is reflected in Other current liabilities on our consolidated balance sheet.

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

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

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

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

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

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

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.

As of December 31, 2023, the remaining Gavi Advance Payment Amount of $696.4 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 on 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.

Our 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.

In July 2022, we entered into a modification to the USG Agreement that amended the terms of such agreement to provide for (i) an initial delivery to the U.S.

government of approximately 3 million doses of NVX-CoV2373 and (ii) any additional manufacture and delivery to the U.S.

government up to an aggregate of 100 million doses of NVX-CoV2373 contemplated by the original USG Agreement (inclusive of the initial batch of approximately 3 million doses) dependent on U.S.

government demand, FDA guidance on strain selection, agreement between the parties on the price of such doses, and available funding.

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

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

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

If the USG Agreement is not amended, as we had previously expected, then we may not receive all of the remaining $416 million in funding we had previously anticipated pursuant to the USG Agreement.

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

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

On February 16, 2024, we and Gavi entered into a Termination and Settlement Agreement (the “Gavi Settlement Agreement”) terminating the Gavi APA, settling the arbitration proceedings, and releasing both parties of all claims arising from, under or otherwise in connection with the Gavi APA.

Pursuant to the Gavi Settlement Agreement, we are responsible for payment to Gavi of (i) an initial settlement payment of $75 million, which we 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 our vaccines funded by Gavi for supply to certain low-income and lower-middle income countries.

We have the right to price the vaccines offered to such low-income and lower-middle income countries at our discretion, and, when utilized by Gavi, we will credit the actual price per vaccine paid against the applicable credit.

We intend to price vaccines offered via the tender process, consistent with our shared goal with Gavi to provide equitable access to those countries.

Also in the Gavi Settlement Agreement, we grant Gavi an additional credit of up to $225 million, which may be applied against any additional qualifying sales, exceeding the $80 million deferred payment amount in any calendar year, of our vaccines in such countries during such deferred payment term.

In addition, we and Gavi entered into a security agreement pursuant to which we granted Gavi a security interest in accounts receivable from SIIPL under the SIIPL R21 Agreement (see Note 4 to our consolidated financial statements for more details on SIIPL R21 Agreement), which will continue for the deferred payment term of the Gavi Settlement Agreement.

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

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

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

Payments received under the CEPI Forgivable Loan Funding are only repayable if project vaccine, as defined under the CEPI funding agreement, manufactured by the CMO network funded by CEPI is sold to one or more third parties (which could include sales credited under the Gavi Settlement Agreement), and such sales cover our costs of manufacturing such vaccine, not including manufacturing costs funded by CEPI.

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

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

On January 31, 2023, we funded the outstanding principal amount of $325.0 million on the 2023 Notes, due February 1, 2023.

We funded our operations in 2022 with cash and cash equivalents, upfront payments under APAs, revenue from product sales, royalties under licensing arrangements with our strategic partners, and proceeds from the sale of common stock, together with revenue under the USG Agreement that support our NVX-CoV2373 vaccine development activities.

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.

We continue to assess our manufacturing needs and modify our global manufacturing footprint consistent with our contractual obligations to supply, and anticipated demand for, COVID-19 Vaccine, and in doing so recognize that significant costs may be incurred.

For the 2023-2024 vaccination season, we depend exclusively on SIIPL and SLS for co-formulation and filling (other than in Europe), and PCI Pharma Services for finishing COVID-19 Vaccine in Europe.

For the 2024-2025 vaccination season, we are seeking to expand our supply chain network and introduce new single-dose vial or pre-filled syringe product presentations in certain markets.

Any delays or disruptions in these suppliers’ operations could prevent or delay the delivery of customer orders.

As of December 31, 2023, we had $583.8 million in cash and cash equivalents and restricted cash as compared to $1.3 billion as of December 31, 2022.

We funded our operations in 2023 primarily with cash and cash equivalents, upfront payments under APAs, revenue from product sales, royalties under licensing arrangements with our strategic partners, and proceeds from the sale of common stock, together with revenue under the USG Agreement that support our COVID-19 Vaccine development activities.

In May 2023, we announced our plan to restructure our global footprint to reduce our planned expenditures and in January 2024, we announced further reductions in our global workforce.

We anticipate our future operations to be funded primarily by revenue from product sales, our cash and cash equivalents, and other potential funding sources including equity financings, which may include at the market offerings under our August 2023 Sales Agreement, debt financings, collaborations, strategic alliances, asset sales, and marketing, distribution or licensing arrangements.

The following table summarizes cash flows for 2023 and 2022:

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Cash, cash equivalents, and restricted cash at end of year $ 583,810 $ 1,348,845 $ (765,035)

Net cash used in operating activities was $415.9 million for 2022, as compared to cash provided by operating activities of $322.9 million in 2021.

The decrease in cash from operating activities is primarily due to a decrease in upfront payments received under our APAs, timing of payments to vendors, and an increase in inventory production, partially offset by a reduction in our net loss.

Our investing activities primarily consisted of capital expenditures and, in 2021, $159.8 million in proceeds from maturities and sale of marketable securities, net of purchases.

Net cash used in operating activities was $714.0 million for 2023, as compared to cash used in operating activities of $415.9 million in 2022.

The increase in cash used in operating activities is primarily due to the timing of payments to vendors and cash receipts from customers, primarily APAs.

Net cash used in investing activities was $58.8 million for 2023, as compared to $93.0 million in 2022.

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

Capital expenditures for the years ended December 31, 2023 and 2022 were $53.8 million and $89.1 million, respectively.

Our financing activities consisted primarily of sales of our common stock, issuance of our 2027 Notes, payments of finance lease liabilities, and exercises of stock-based awards.

In 2022, we received net proceeds of approximately $179 million and $70 million from the sale of shares of common stock through our At Market Issuance Sales Agreements and a public offering at $10.00 per share, respectively.

In addition, we received net proceeds of $166.4 million during 2022 through the issuance of our 2027 Notes (see Note 11 to the accompanying consolidated financial statements).

In 2021, we received net proceeds of approximately $565 million from the sale of shares of common stock through our At Market Issuance Sales Agreements.

Net cash provided by financing activities was $4.5 million for 2023, as compared to $325.0 million in 2022.

The decrease in cash provided by financing activities is primarily due to the repayment of our 3.75% Convertible notes of $325.0 million in 2023 as compared to gross proceeds of $175.3 million through the issuance of our 2027 Notes in 2022, partially offset by an increase in net proceeds from the sales of our common stock under our June 2021 and August 2023 Sales Agreements and the Private Placement with SK in 2023.

Going Concern

The accompanying consolidated financial statements in Part II, Item 8, “Financial Statements and Supplementary Data,” of this Annual Report on Form 10-K 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 December 31, 2022, we had $1.3 billion in cash and cash equivalents and restricted cash, of which $236.2 million was raised in December 2022 through concurrent sales of our common stock and issuance of our 2027 Notes.

On January 31, 2023, the Company funded the outstanding principal amount of $325.0 million on the 2023 Notes.

The consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of the uncertainty described below.

At December 31, 2023, we had $568.5 million in cash and cash equivalents and had a working capital deficiency.

During 2023, we incurred a net loss of $545.1 million and had net cash flows used in operating activities of $714.0 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 2023 revenue, funding from the U.S.

government, and pending arbitration.

Our 2023 revenue depends 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.

See “Risk Factors—Risks Related to Product Development and Commercialization—The emergence and transmissibility of variants of the SARS-CoV-2 virus, and the demand for bivalent vaccines, may affect market acceptance or sales of NVX-CoV2373, and our strategy to develop versions of our COVID-19 vaccine to protect against certain variants may not be successful.” 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 $416 million in funding we had previously anticipated.

See “Risk Factors—Risks Related to Our Financial Condition and Capital Requirements—Our existing funding and supply agreements do not assure success of our vaccine candidates or that we will be able to fully fund our vaccine candidates.” On January 24, 2023, Gavi filed a demand for arbitration with the International Court of Arbitration regarding an alleged material breach by us of the Gavi APA.

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

See Note 3 and Note 18 to our consolidated financial statements in Part II, Item 8,

“Financial Statements and Supplementary Data,” of this Annual Report on Form 10-K for additional information related to the arbitration with Gavi.

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

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

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

and management’s plans, which include resolving the dispute with Gavi and may include raising additional capital through a combination of equity and debt financing, collaborations, strategic alliances, and marketing, distribution, or licensing arrangements.

In accordance with ASC Topic 205-40, Presentation of Financial Statements - 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 consolidated financial statements are issued.

Our revenue projections depend on our ability to successfully develop, manufacture, distribute, or market our COVID-19 Vaccine for the 2024-2025 vaccination season, which is inherently uncertain and subject to a number of risks, including our ability to obtain regulatory authorizations, introduce a single-dose vial or pre-filled syringe product presentation for the U.S.

commercial and certain other markets, the incidence of COVID-19 during

the 2024-2025 vaccination season, our ability to timely deliver doses and commercial adoption and market acceptance of our updated vaccine.

Further, failure to meet regulatory milestones or achieve product volume or delivery timing obligations under our advance purchase agreements may require us to refund portions of upfront and other payments or result in reduced future payments which could adversely affect our ability to continue as a going concern.

Management believes that, given our history of recurring losses, negative working capital and accumulated deficit, conditions or events exist that raise substantial doubt about our ability to continue as a going concern through one year from the date that these financial statements are issued.

Our plans to alleviate the conditions that exist include restructuring and cost reduction measures and successful execution of its commercial plans.

In May 2023, we announced our Restructuring Plan, which includes a more focused investment in our COVID-19 Vaccine, 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.

In our May 2023 announcement, the workforce reduction plan included an approximately 25% reduction in the Company’s global workforce, comprised of an approximately 20% reduction in full-time Company employees and the remainder comprised of contractors and consultants.

We incurred one time restructuring expenses of $14.6 million during the twelve months ended December 31, 2023.

See Note 17 to our consolidated financial statements for more details on restructuring.

We expect the full annual impact of the cost savings to be realized in 2024 due to timing of implementing the measures, and the applicable laws, regulations, and other factors in the jurisdictions in which we operate.

In November 2023, we announced that we anticipated further reducing our research and development and selling, general and administrative expenses and our supply network costs.

We intend to prioritize improvements to our long-term supply chain efficiency.

In January 2024, as part of reducing combined research and development and selling.

general and administrative expenses, we announced an approximately 12% reduction of our global workforce, comprised of an approximately 9% reduction in our full-time employees and the remainder comprised of contractors and consultants.

We expect the full annual impact of the cost savings to be realized in 2025 and approximately 85% of the annual impact, excluding one-time charges, to be realized in 2024 due to the timing of implementing the measures and the applicable laws, regulations and other factors in the jurisdictions in which it operates.

We expect to record a charge of approximately $4 million to $7 million related to one-time employee severance and benefit costs, the majority of which is expected to be incurred in the first quarter of 2024.

Upon completion, our resulting workforce is expected to be approximately 30% lower as compared to the end of the first quarter of 2023.

Our plans may include raising additional capital through a combination of equity financings, which may include at the market offerings under our August 2023 Sales Agreement, debt financings, collaborations, strategic alliances, asset sales 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 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.

Also, any collaborations, strategic alliances, asset sales 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.

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.

Due to the uncertainties associated with our plans, there is substantial doubt about our ability to continue as a going concern for at least one year from the date that these financial statements are issued.

Contractual Obligations

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46,996 46,996 — — —

Facilities lease agreement (3)

56,109 3,397 7,050 7,407 38,255

Total contractual obligations $ 383,078 $ 81,349 $ 30,808 $ 203,625 $ 67,296

(1) We had $325.0 million of 3.75% convertible senior unsecured notes due February 1, 2023, which we repaid in full.

(1) In 2022, we issued $175.3 million of 5.00% convertible senior unsecured notes due in 2027.

See “Note 10—Long-term Debt” included in our Notes to Consolidated Financial Statements for additional information related to our convertible notes.

(2) This amount primarily represents our non-cancelable fixed payment obligations under certain CMO, CDMO, and lab supply agreements that we are not contractually able to terminate for convenience.

(2) Purchase commitments primarily represent our non-cancelable fixed payment obligations under certain CMO, CDMO, and laboratory supply agreements that we are not contractually able to terminate for convenience.

Certain agreements provide for termination rights subject to termination fees.

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The amount of such obligations is dependent on the timing of termination and the terms of the relevant agreement, and cannot be reasonably estimated.

Our current obligations under non-cancelable purchase agreements are reflected in our consolidated balance sheets.

(3) This relates to the lease of floor space at 700 Quince Orchard that had not commenced as of December 31, 2022 (see Note 10 to the consolidated financial statements).

Our current obligations under non-cancelable purchase agreements are reflected on our consolidated balance sheets.

In addition to the above obligations, we enter into a variety of agreements and financial commitments in the normal course of business.

2 unchanged sentences

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What changed 10-K

Item 7. Management’s Discussion and Analysis