What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2024-05-10 compared with 2023-11-09 · 282 added, 351 removed, 393 unchanged (62% of the section changed)

4 unchanged sentences

For the Three Months Ended

September 30, For the Nine Months Ended

September 30,

2023 2022 2023 2022

Product sales $ 82,324 $ ( 7,457 )

10 unchanged sentences

Interest expense ( 4,111 ) ( 4,316 )

Other income (expense) ( 2,982 ) ( 34,783 ) 26,912 ( 53,002 )

Loss before income taxes

( 145,288 ) ( 292,722 )

Income tax expense (benefit)

( 697 ) 2,472 343 6,552

Income tax expense

$ ( 147,550 ) $ ( 293,905 )

8 unchanged sentences

For the Three Months Ended

September 30, For the Nine Months Ended

September 30,

$ ( 147,550 ) $ ( 293,905 )

$ ( 130,776 ) $ ( 168,613 ) $ ( 366,673 ) $ ( 475,690 )

Other comprehensive loss:

Foreign currency translation adjustment ( 13,547 ) 3,211

Other comprehensive loss

Other comprehensive income (loss)

( 13,547 ) 3,211

5 unchanged sentences

(in thousands, except share and per share information)

September 30,

2024 December 31,

17 unchanged sentences

Current portion of finance lease liabilities 6,291 5,142

Convertible notes payable — 324,881

Other current liabilities 242,102 861,408

6 unchanged sentences

Commitments and contingencies (Note 13)

Preferred stock, $ 0.01 par value, 2,000,000 shares authorized at September 30, 2023 and December 31, 2022;

no shares issued and outstanding at September 30, 2023 and December 31, 2022

Preferred stock, $ 0.01 par value, 2,000,000 shares authorized at March 31, 2024 and December 31, 2023;

no shares issued and outstanding at March 31, 2024 and December 31, 2023

Stockholders' deficit:

Common stock, $ 0.01 par value, 600,000,000 shares authorized at September 30, 2023 and December 31, 2022;

119,641,667 shares issued and 118,730,398 shares outstanding at September 30, 2023 and 86,806,554 shares issued and 86,039,923 shares outstanding at December 31, 2022

Common stock, $ 0.01 par value, 600,000,000 shares authorized at March 31, 2024 and December 31, 2023;

141,700,972 shares issued and 140,373,255 shares outstanding at March 31, 2024 and 140,506,093 shares issued and 139,505,770 shares outstanding at December 31, 2023

Additional paid-in capital 4,204,775 4,192,164

Accumulated deficit ( 4,968,501 ) ( 4,820,951 )

Treasury stock, cost basis, 911,269 shares at September 30, 2023 and 766,631 shares at December 31, 2022

Treasury stock, cost bas is, 1,327,717 shares at March 31, 2024 and 1,000,323 shares at December 31, 2023

( 93,950 ) ( 92,267 )

Accumulated other comprehensive loss ( 11,863 ) ( 6,377 )

Accumulated other comprehensive income (loss)

( 10,825 ) 2,722

Total stockholders’ deficit ( 867,084 ) ( 716,927 )

3 unchanged sentences

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT

Three and Nine Ended September 30, 2023 and 2022

Three Months Ended March 31, 2024 and 2023

(in thousands, except share information)

4 unchanged sentences

Comprehensive

Loss Total Stockholders'

Shares Amount

Balance at June 30, 2023 95,183,750 $ 952 $ 3,855,916 $ ( 4,511,786 ) $ ( 91,424 ) $ ( 8,177 ) $ ( 754,519 )

Stock-based compensation — — 21,254 — — — 21,254

Stock issued under incentive programs 176,329 2 634 — ( 282 ) — 354

Issuance of common stock, net of issuance cost s $ 3,063

24,281,588 242 188,781 — — — 189,023

Foreign currency translation adjustment — — — — — ( 3,686 ) ( 3,686 )

— — — ( 130,776 ) — — ( 130,776 )

Balance at September 30, 2023 119,641,667 $ 1,196 $ 4,066,585 $ ( 4,642,562 ) $ ( 91,706 ) $ ( 11,863 ) $ ( 678,350 )

Balance at June 30, 2022 78,776,234 $ 788 $ 3,604,614 $ ( 3,925,027 ) $ ( 86,455 ) $ ( 10,870 ) $ ( 416,950 )

Stock-based compensation — — 33,386 — — — 33,386

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

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

Net loss — — — ( 168,613 ) — — ( 168,613 )

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

Common Stock Additional

Capital Accumulated

Deficit Treasury

Stock Accumulated Other

Comprehensive

Loss Total Stockholders'

Income (Loss)

Total Stockholders'

Shares Amount

2 unchanged sentences

Stock issued under incentive programs 1,194,879 12 1,055 — ( 1,683 ) — ( 616 )

Issuance of common stock, net of issuance costs of $ 3,924

32,229,542 322 256,673 — — — 256,995

Foreign currency translation adjustment — — — — — ( 13,547 ) ( 13,547 )

Net loss — — — ( 366,673 ) — — ( 366,673 )

Balance at September 30, 2023 119,641,667 $ 1,196 $ 4,066,585 $ ( 4,642,562 ) $ ( 91,706 ) $ ( 11,863 ) $ ( 678,350 )

— — — ( 147,550 ) — — ( 147,550 )

Balance at March 31, 2024 141,700,972 $ 1,417 $ 4,204,775 $ ( 4,968,501 ) $ ( 93,950 ) $ ( 10,825 ) $ ( 867,084 )

Balance at December 31, 2022 86,806,554 $ 868 $ 3,737,979 $ ( 4,275,889 ) $ ( 90,659 ) $ ( 6,377 ) $ ( 634,078 )

1 unchanged sentence

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

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

2,197,398 22 179,363 — — — 179,385

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

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

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

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

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

2 unchanged sentences

(in thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

Operating Activities:

5 unchanged sentences

Impairment of long-lived assets 1,669 —

Right-of-use assets expensed, net of credits received — 40,187

Other items, net ( 4,449 ) ( 1,252 )

21 unchanged sentences

Supplemental disclosure of non-cash activities:

Right-of-use assets from new lease agreements $ 96,492 $ 118,262

Capital expenditures included in accounts payable and accrued expenses $ 1,208 $ 10,847

2 unchanged sentences

Cash interest payments, net of amounts capitalized $ 1,206 $ 6,566

Cash paid for income taxes $ 128 $ 17,843

Cash paid for income taxes, net of refunds

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

1 unchanged sentence

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2023

March 31, 2024

Note 1 – Organization and Business

2 unchanged sentences

Novavax offers a differentiated vaccine platform that combines a recombinant protein approach, innovative nanoparticle technology and patented Matrix-M™ adjuvant to enhance the immune response.

Novavax currently has one commercial program, for vaccines to prevent COVID-19, which includes Nuvaxovid prototype COVID-19 vaccine ("NVX-CoV2373,” or “prototype vaccine”) and Nuvaxovid updated COVID-19 vaccine (“NVX-CoV2601,” or “updated vaccine”) (collectively, “COVID-19 Program,” or “COVID-19 Vaccine”).

Local authorities have also specified nomenclature for the prototype and updated vaccines within their labeling (“Novavax COVID-19 Vaccine, Adjuvanted” and “Novavax COVID-19, Adjuvanted (2023-2024 Formula), respectively, for the U.S.).

Novavax currently has one commercial program, for vaccines to prevent COVID-19, which includes Nuvaxovid™ prototype COVID-19 vaccine ("NVX-CoV2373,” or “prototype vaccine”) and Nuvaxovid™ updated COVID-19 vaccine (“NVX-CoV2601,” or “updated vaccine”) (collectively, “COVID-19 Vaccine”).

Local regulatory authorities have also specified nomenclature for the labeling of the prototype and updated vaccines within their territories (e.g., “Novavax COVID-19 Vaccine, Adjuvanted” and “Novavax COVID-19, Adjuvanted (2023-2024 Formula),” respectively, for the U.S.).

The Company’s partner, Serum Institute of India Pvt.

2 unchanged sentences

In October 2023, the U.S.

Food and Drug Administration (“U.S.

FDA”) amended the EUA for its prototype vaccine to include its updated vaccine.

Food and Drug Administration amended the EUA for its prototype vaccine to include its updated vaccine.

The amended EUA authorizes use of the Company’s updated vaccine in individuals 12 years and older.

In October 2023, the European Commission (“EC”) granted approval for the Company’s updated vaccine for active immunization to prevent COVID-19 caused by SARS-CoV-2 in individuals aged 12 and older.

The Company exclusively depends on its supply agreement with SIIPL and its subsidiary, Serum Life Sciences Limited (“SLS”), for co-formulation, filling and finishing (other than in Europe) and on its service agreement with PCI Pharma Services for finishing in Europe.

The Company plans to rely on these arrangements to supply its updated vaccine during the 2023-2024 vaccination season and subsequently (see Note 4).

Novavax is advancing development of other vaccine candidates, including its influenza vaccine candidate, its COVID19-Influenza Combination (“CIC”) vaccine candidate and additional vaccine candidates.

The Company’s COVID-19 Program and its other vaccine candidates incorporate the Company’s proprietary Matrix-M™ adjuvant to enhance the immune response and stimulate higher levels of functional antibodies and induce a cellular immune response.

Currently, the Company significantly depends on its supply agreement with SIIPL and its subsidiary, Serum Life Sciences Limited (“SLS”), for co-formulation, filling and finishing (other than in Europe) and on its service agreement with PCI Pharma Services for finishing in Europe.

Novavax is advancing development of other vaccine candidates, including its COVID-19-Influenza Combination (“CIC”) vaccine candidate and additional vaccine candidates.

The Company’s COVID-19 Vaccine and its other vaccine candidates incorporate the Company’s proprietary Matrix-M™ adjuvant to enhance the immune response and stimulate higher levels of functional antibodies and induce a cellular immune response.

Note 2 – Summary of Significant Accounting Policies

8 unchanged sentences

All intercompany accounts and transactions have been eliminated in consolidation.

Accumulated other comprehensive loss included a foreign currency translation loss of $ 11.9 million and $ 6.4 million at September 30, 2023 and December 31, 2022, respectively.

The aggregate foreign currency transaction gains and losses resulting from the conversion of the transaction currency to functional currency were a $ 12.2 million loss and a $ 3.9 million gain, and a $ 38.6 million loss and $ 59.6 million loss for the three and nine months ended September 30, 2023 and 2022, respectively, which are reflected in Other income (expense).

The aggregate foreign currency transaction gains and losses resulting from the conversion of the transaction currency to functional currency were a $ 5.1 million loss and a $ 16.3 million gain for the three months ended March 31, 2024 and 2023, respectively, which are reflected in Other income (expense).

The accompanying unaudited consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2023.

2 unchanged sentences

Liquidity and Going Concern

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

In addition, as of September 30, 2023, the Company had $ 666.4 million in cash and cash equivalents and restricted cash.

Pursuant to the June 2023 Amendment to the advance purchase agreement between the Company and the Canadian government (the “Canada APA”), the Company expects to receive the second installment of $ 174.8 million from the Canadian government that is contingent and payable upon the Company’s delivery of vaccine doses in the fourth quarter of 2023 (see Note 3).

During the nine months ended September 30, 2023, the Company incurred a net loss of $ 366.7 million and had net cash flows used in operating activities of $ 537.2 million.

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

While the Company’s current cash flow forecast for the one-year going concern look forward period estimates that there will be sufficient capital available to fund operations, this forecast is subject to significant uncertainty, including as it relates to revenue for the next 12 months, the Company’s ability to execute on certain cost-cutting initiatives and a pending matter subject to arbitration proceedings.

The Company’s revenue projections depend on its ability to successfully manufacture, distribute and market its updated vaccine for the 2023-2024 vaccination season, which is inherently uncertain and subject to a number of risks, including the Company’s ability to obtain regulatory authorizations, the incidence of COVID-19 during the 2023-2024 vaccination season, the Company’s ability to timely deliver doses and achieve commercial adoption and market acceptance of its updated vaccine.

Failure to meet regulatory milestones, timely obtain supportive recommendations from governmental advisory committees, or achieve product volume or delivery timing obligations under the Company’s advance purchase agreements (“APAs”) may require the Company to refund portions of upfront and other payments or result in reduced future payments which would adversely affect the Company’s ability to continue as a going concern.

For example, if the Company fails to deliver its updated vaccine doses to the Canadian government in the fourth quarter of 2023, the second installment payment of $ 174.8 million will be terminated and not be payable to the Company.

In addition, the Canadian government may terminate the Canada APA if the Company fails to achieve regulatory approval for use of the Biologics Manufacturing Centre, Inc.

(“BMC”) for COVID-19 Vaccine production on or before December 31, 2024.

Also, if the Company does not timely achieve supportive recommendations from the Joint Committee on Vaccination and Immunisation (the “JCVI”) of the government of the United Kingdom of Great Britain and Northern Ireland (the “Authority”) with respect to use of its COVID-19 Program 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, then the Company would be required to repay up to $ 112.5 million related to the upfront payment previously received from the Authority under the SARS-CoV-2 Vaccine Supply Agreement, dated October 22, 2020, between the Company and the Authority.

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

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

The outcome of that arbitration is inherently uncertain, and it is possible the Company could be required to refund all or a portion of the remaining advance payments of $ 696.4 million as of September 30, 2023 (see Note 3 and Note 14).

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

In May 2023, the Company announced a global restructuring and cost reduction plan (the “Restructuring Plan”), which includes a more focused investment in its COVID-19 Program, reduction to its pipeline spending, the continued rationalization of its manufacturing network, a reduction to the Company’s global workforce, as well as the consolidation of facilities, and infrastructure.

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

The Company has decided to progress its CIC vaccine candidate toward late-stage development and, as such, is assessing the impact on its workforce requirements.

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

During the nine months ended September 30, 2023, the Company recorded a charge of $ 4.5 million related to one-time employee severance and benefit costs and recorded an impairment charge of $ 10.1 million related to the consolidation of facilities and infrastructure (see Note 15).

The Company’s ability to fund Company operations is dependent upon revenue related to vaccine sales for its products and product candidates, if such product candidates receive marketing approval and are successfully commercialized, and in particular the 2023-2024 vaccination season, which is inherently uncertain and subject to a number of risks, including the incidence of COVID-19 during the 2023-2024 vaccination season, regulatory authorization, ability to timely deliver doses and commercial adoption and market acceptance of its updated vaccine, the resolution of certain matters, including whether, when, and how the dispute with Gavi is resolved, and management’s plans, which includes cost reductions associated with the Restructuring Plan.

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

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern within one year after the date that the financial statements are issued and contemplates the realization of assets and satisfaction of liabilities in the ordinary course of business.

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.

Management’s plans discussed below, including specifically the execution of the collaboration and license agreement (the “Collaboration and License Agreement”) and securities subscription agreement (the “Subscription Agreement”) effective May 10, 2024, with Sanofi Pasteur Inc.

(“Sanofi”) which will result in cash proceeds to the Company of $ 568.8 million during the second quarter of 2024, has alleviated the substantial doubt outlined below regarding the Company’s ability to continue as a going concern for the one year period from the date that these financial statements were issued.

As of March 31, 2024, the Company had $ 480.6 million in cash and cash equivalents and had a working capital deficiency.

During the three months ended March 31, 2024, the Company incurred a net loss of $ 147.6 million and had net cash flows used in operating activities of $ 83.6 million.

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

While the Company’s current cash flow forecast for the one-year going concern look forward period estimates that there will be sufficient capital available to fund operations, this forecast is subject to significant uncertainty, including as it relates to revenue for the next 12 months and the Company’s ability to execute on certain cost-reduction initiatives.

The Company’s revenue projections depend on its ability to successfully develop, manufacture, distribute, and market its updated vaccine for the 2024-2025 vaccination season, which is inherently uncertain and subject to a number of risks, including the Company’s 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, and the Company’s ability to timely deliver doses and achieve commercial adoption and market acceptance of its updated vaccine.

Further, the Company’s revenue projections also depend on its ability to achieve expected product sales and related cash flows under its advance purchase agreements (“APAs”), including APAs in Australia and Canada, which are subject to regulatory uncertainties as described in Note 3.

Failure to meet regulatory milestones or achieve product volume or delivery timing obligations under the Company’s APAs may require the Company to refund portions of upfront and other payments or result in reduced future payments, which would adversely affect the Company’s ability to continue as a going concern.

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

Management’s plans to potentially alleviate such conditions or events include the execution effective May 10, 2024, of the Collaboration and License Agreement with Sanofi that grants a co-exclusive license to Sanofi of the Company’s current COVID-19 and related vaccine products, which will provide the Company with an initial $ 500 million nonrefundable upfront payment, as well as the execution effective May 10, 2024, of the Subscription Agreement with Sanofi, which will provide the Company with a $ 68.8 million equity investment, both of which are expected to be received in the second quarter of 2024 and are described further below.

Management’s plans also include execution of its commercial plans and its ongoing restructuring and cost reduction measures.

On May 10, 2024, the Company entered into the Collaboration and License Agreement with Sanofi pursuant to which Sanofi received:

i) A co-exclusive license to commercialize with the Company all of the Company’s current stand-alone COVID-19 vaccine products, including the Company’s Nuvaxovid™ prototype COVID-19 vaccine and Nuvaxovid™ updated COVID-19 vaccine, and updated versions that address seasonal variants throughout the world (“COVID Mono Products”),

ii) A sole license to develop and commercialize combination products containing a potential combination of the Company’s COVID-19 vaccine and Sanofi’s seasonal influenza vaccine (“COVID and influenza Combination Products” or “CIC Products”),

iii) A non-exclusive license to develop and commercialize combination products containing both the Company’s COVID-19 vaccine and one or more non-influenza vaccines (“Other Combination Products” and together with the COVID Mono Products, CIC Products, and Other Combination Products (“Licensed COVID-19 Products” )), and

iv) A non-exclusive license to develop and commercialize other vaccine products selected by Sanofi that include the Company’s Matrix-M™ adjuvant (as described below, the “Adjuvant Products”).

Under the Collaboration and License Agreement, the Company will receive a non-refundable upfront payment of $ 500 million.

In addition, the Company will also be eligible to receive development, technology transfer, launch, and sales milestone payments totaling up to $ 700 million in the aggregate with respect to the Licensed COVID-19 Products and royalty payments on Sanofi’s sales of such licensed products.

In addition, the Company is eligible to receive development, launch, and sales milestone payments of up to $ 200 million for each of the first four Adjuvant Products and $ 210 million for each Adjuvant Product thereafter, and royalty payments on Sanofi’s sales of all such licensed products.

Commencing shortly after the Effective Date of the Collaboration and License Agreement, the Company will perform a technology transfer of its manufacturing process for the COVID Mono Products and Matrix-M™ components to Sanofi.

Until the successful completion of such transfer, the Company will supply Sanofi with both COVID Mono Products and Matrix-M™ intermediary components for Sanofi’s use and is eligible for reimbursement of such costs from Sanofi.

Additionally, Sanofi will reimburse the Company for its research and development and medical affairs costs related to the COVID Mono Products in accordance with agreed upon plans and budgets.

Under the Collaboration and License Agreement, the Company will continue to commercialize the COVID Mono Products in 2024.

Beginning in 2025 and continuing during the term of the Collaboration and License Agreement, Sanofi and the Company will commercialize the COVID Mono Products worldwide in accordance with a commercialization plan agreed by the Company and Sanofi, under which the Company will continue to supply its existing APA customers and strategic partners, including Takeda, SK Biosciences, and the Serum Institute of India.

Upon completion of the existing advance purchase agreements, Novavax and Sanofi will jointly agree on commercialization activities of each party in each jurisdiction.

Effective May 10, 2024, the Company also entered into the Subscription Agreement with Sanofi, pursuant to which the Company sold and issued to Sanofi, in a private placement, 6,880,481 shares of the Company’s common stock, par value $ 0.01 per share at a price of $ 10.00 per share for aggregate gross proceeds to the Company of $ 68.8 million.

In May 2023, the Company announced a global restructuring and cost reduction plan (the “2023 Restructuring Plan”), which includes a more focused investment in its COVID-19 Vaccine, reduction to its pipeline spending, the continued rationalization of its manufacturing network, a reduction to the Company’s global workforce, as well as the consolidation of facilities, and infrastructure.

In January 2024, as part of reducing combined research and development and selling, general and administrative expenses, the Company announced further reductions in its global workforce (the “2024 Cost Reduction Plan”).

The Company intends to prioritize improvements to its long-term supply chain efficiency.

The Company expects the full annual impact of the 2023 Restructuring Plan to be realized in 2024, the full annual impact of the 2024 Cost Reduction Plan to be realized in 2025, and approximately 85 % of the annual impact of the 2024 Cost Reduction Plan, excluding one-time charges, to be realized in 2024.

The 2024 Cost Reduction Plan supplemented the 2023 Restructuring Plan and hereafter both are jointly referred to as the “Restructuring Plan.” During the three months ended March 31, 2024, the Company recorded a charge of $ 4.4 million related to one-time employee severance and benefit costs and recorded an impairment charge of $ 1.7 million related to the impairment of capitalized internal-use software (see Note 14).

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

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

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

In addition, the regulatory and commercial success of the Company’s COVID-19 Program and the Company’s other vaccine candidates, including an influenza vaccine candidate, and a CIC vaccine candidate, remains uncertain.

Also, the impact of the Company’s more focused investment in its COVID-19 Program, reduction to its pipeline spending, continued rationalization of its manufacturing network, reduction to its global workforce, and consolidation of its facilities and infrastructure remain uncertain.

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

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

Management’s plans discussed above, including specifically the execution of the Collaboration and License Agreement and the Subscription Agreement effective May 10, 2024, with Sanofi which will result in cash proceeds to the Company of $ 568.8 million during the second quarter of 2024, has alleviated the substantial doubt outlined below regarding the Company’s ability to continue as a going concern for the one year period from the date that these financial statements were

Use of Estimates

2 unchanged sentences

Actual results could differ materially from those estimates.

Revenue Recognition Constraints

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

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

Restructuring

5 unchanged sentences

Recent Accounting Pronouncements

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

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

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

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

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

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

Not Yet Adopted

In October 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-06, Disclosure Improvements (“ASU 2023-06”), to clarify or improve disclosure and presentation requirements of a variety of topics and align the requirements in the FASB ASC with the SEC's regulations.

The Company is currently evaluating ASU 2023-06 to determine its impact on the Company's consolidated financial statements and disclosures.

In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures (“ASU 2023-09”).

The standard enhances transparency in income tax disclosures by requiring, on an annual basis, certain disaggregated information about a reporting entity’s effective tax rate reconciliation and income taxes paid.

The ASU also requires disaggregated disclosure related to pre-tax income (or loss) and income tax expense (or benefit) and eliminates certain disclosures related to the balance of an entity’s unrecognized tax benefit and the cumulative amount of certain temporary differences.

The ASU is effective for the Company beginning on January 1, 2025.

The Company is currently evaluating ASU 2023-09 to determine its impact on the Company's disclosures.

Note 3 – Revenue

The Company's accounts receivable included $ 71.1 million and $ 53.8 million related to amounts that were billed to customers and $ 52.6 million and $ 28.6 million related to amounts which had not yet been billed to customers as of September 30, 2023 and December 31, 2022, respectively.

During the nine months ended September 30, 2023, and 2022, changes in the Company’s accounts receivables, allowance for doubtful accounts, and deferred revenue balances were as follows (in thousands):

The Company's accounts receivable included $ 21.2 million and $ 286.4 million related to amounts that were billed to customers and $ 0.2 million and $ 10.8 million related to amounts which had not yet been billed to customers as of March 31, 2024 and December 31, 2023, respectively.

During the three months ended March 31, 2024 and 2023, changes in the Company’s accounts receivables, allowance for credit losses, and deferred revenue balances were as follows (in thousands):

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

Accounts receivable:

Nine Months Ended September 30, 2023 $ 96,210 $ 981,305 $ ( 946,182 ) $ 131,333

Nine Months Ended September 30, 2022 454,993 1,519,345 ( 1,862,693 ) 111,645

Allowance for doubtful accounts (1) :

Nine Months Ended September 30, 2023 $ ( 13,835 ) $ — $ 6,159 $ ( 7,676 )

Nine Months Ended September 30, 2022 — — — —

Three Months Ended March 31, 2024 $ 304,916 $ 136,510 $ ( 412,370 ) $ 29,056

Three Months Ended March 31, 2023 96,210 146,424 ( 115,950 ) 126,684

Allowance for credit losses (1) :

Three Months Ended March 31, 2024 $ ( 7,676 ) $ — $ — $ ( 7,676 )

Three Months Ended March 31, 2023 ( 13,835 ) — — ( 13,835 )

Deferred revenue:

Nine Months Ended September 30, 2023 $ 549,551 $ 422,766 $ ( 171,288 ) $ 801,029

Nine Months Ended September 30, 2022 1,595,472 96,298 ( 251,576 ) 1,440,194

(1) There was no bad debt expense recorded during the three and nine months ended September 30, 2023 or 2022.

There was a $ 6.2 million reversal of a bad debt allowance during the nine months ended September 30, 2023 due to the collection of a previously recognized allowance for doubtful accounts.

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

Three Months Ended March 31, 2024 $ 863,521 $ 225,000 $ ( 6,148 ) $ 1,082,373

Three Months Ended March 31, 2023 549,551 140,324 ( 49 ) 689,826

(1) There was no allowance for credit losses recorded during the three months ended March 31, 2024 or 2023.

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

(2) Deductions from Deferred revenue generally related to the recognition of revenue once performance obligations on a contract with a customer are met.

During the three and nine months ended September 30, 2023, deductions included a $ 112.5 million reclassification of refundable upfront payments previously included in Deferred revenue to Other current liabilities.

There were no such reclassifications during the three and nine months ended September 30, 2022.

As of September 30, 2023, the aggregate amount of the transaction price allocated to performance obligations that were unsatisfied (or partially unsatisfied), excluding amounts related to sales-based royalties, the Gavi APA, and the reduction in doses related to the Amended and Restated SARS-CoV-2 Vaccine Supply Agreement, dated as of July 1, 2022 (as amended on September 26, 2022, the “Amended and Restated UK Supply Agreement”) between the Company and the Authority, which amended and restated the Original UK Supply Agreement, was approximately $ 2 billion of which $ 801.0 million was included in Deferred revenue.

Failure to meet regulatory milestones, timely obtain supportive recommendations from governmental advisory committees, or achieve product volume or delivery timing obligations under the Company’s advance purchase agreements may require the Company to refund portions of upfront and other payments or result in reduced future payments, which could adversely impact the Company’s ability to realize revenue from its unsatisfied performance obligations.

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

The timing to fulfill performance obligations related to APAs will depend on the 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 the Company’s updated vaccine in place of the prototype vaccine under certain of the Company’s APAs.

Under the terms of the Gavi APA and a separate purchase agreement between Gavi and SIIPL, 1.1 billion doses of the prototype vaccine were to be made available to countries participating in the COVAX Facility.

The Company expected to manufacture and distribute 350 million doses of the prototype vaccine to countries participating under the COVAX Facility.

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

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

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

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

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

The Company maintains that its termination of the Advance Payment Amount was valid and denies that Gavi is entitled to a refund.

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

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

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

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

Since December 31, 2022, the remaining Gavi Advance Payment Amount, which is $ 696.4 million as of September 30, 2023, pending resolution of the dispute with Gavi related to a return of the remaining Advance Payment Amount, has been classified within Other current liabilities in the Company’s consolidated balance sheet.

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

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

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

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

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

During the three months ended March 31, 2024, deductions included a $ 2.2 million reclassification of refundable upfront payments previously included in Deferred revenue to Other current liabilities.

During the three months ended March 31, 2024, additions included a $ 225.0 million reclassification of refundable upfront payment from Other current liabilities to Deferred revenue related to the settlement with Gavi as discussed below.

There were no such reclassifications during the three months ended March 31, 2023.

As of March 31, 2024, the aggregate amount of the transaction price allocated to performance obligations that were unsatisfied (or partially unsatisfied), excluding amounts related to sales-based royalties, was approximately $ 2 billion of which $ 1.1 billion was included in Deferred revenue.

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

Under an APA with Gavi, the Vaccine Alliance (“Gavi”), entered into in May 2021 (the “Gavi APA”), the Company received upfront payments of $ 700 million from Gavi (the “Advance Payment Amount”) to be applied against purchases of the Company’s prototype vaccine by certain countries participating in the COVAX Facility.

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

On February 16, 2024, the Company entered into a Termination and Settlement Agreement with Gavi (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.

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

Pursuant to the Gavi Settlement Agreement, the Company is responsible for payment to Gavi of (i) an initial settlement payment of $ 75 million, which the Company paid in February 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 second quarter of 2024 and total $ 400 million during the deferred payment term.

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

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

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

Also, pursuant to the Gavi Settlement Agreement,

the Company granted Gavi an additional credit of up to $ 225 million that may be applied against qualifying sales of any of the Company’s vaccines for supply to such low-income and lower-middle income countries that exceed the $ 80 million deferred payment amount in any calendar year during the deferred payment term.

In total, the Gavi settlement agreement is comprised of $ 700 million of potential consideration, consisting of the $ 75 million initial settlement payment, deferred payments of up to $ 400 million that may be reduced through annual vaccine credits, and the additional credit of up to $ 225 million that may be applied for certain qualifying sales.

The Company recorded the $ 3.6 million difference between the refund liability recorded as of December 31, 2023 of $ 696.4 million and the $ 700 million of total consideration under the arrangement as a reduction to revenue during the three months ended March 31, 2024.

As of March 31, 2024, the remaining amounts included on the Company’s consolidated balance sheet are classified as $ 225 million in non-current Deferred revenue for the additional credit that may be applied against future qualifying sales, $ 80 million in Other current liabilities, and $ 320 million in Other non-current liabilities.

In addition, the Company and Gavi entered into a security agreement pursuant to which Novavax granted Gavi a security interest in accounts receivable from SIIPL under the SIIPL R21 Agreement (see Note 4), which will continue for the deferred payment term of the Gavi Settlement Agreement.

Product Sales

1 unchanged sentence

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

North America

4 unchanged sentences

Total product sales revenue $ 82,324 $ ( 7,457 )

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

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 the customer and, during the nine months ended September 30, 2023, the Company recorded a reduction of $ 64.7 million in product sales, with a corresponding increase to Deferred revenue, non-current.

In April 2023, the Company amended the Canada APA to forfeit certain doses originally scheduled for delivery in 2022 for a payment of $ 100.4 million received in the second quarter of 2023.

On June 30, 2023, the Company entered into an additional amendment (the “June 2023 Amendment”) to the Canada APA.

Pursuant to the June 2023 Amendment, the parties revised the Canadian government’s previous commitment by (i) forfeiting certain doses of COVID-19 Vaccine previously scheduled for delivery, (ii) reducing the amount of doses of COVID-19 Vaccine due for delivery, (iii) revising the delivery schedule for the remaining doses of COVID-19 Vaccine to be delivered, and (iv) requiring use of the Biologics Manufacturing Centre (“BMC”) Inc.

to produce bulk antigen for doses in 2024 and 2025.

In connection with the forfeiture of doses of COVID-19 Vaccine, the Canadian government agreed to pay a total amount of $ 349.6 million to the Company in two equal installments in 2023, which total amount equals the remaining balance owed by the Canadian government with respect to such forfeited vaccine doses.

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

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

If the Company fails to deliver COVID-19 Vaccine doses to the Canadian government in the fourth quarter of 2023, the second installment payment of $ 174.8 million will be terminated and not be payable to the Company.

The Canadian government may terminate the Canada APA, as amended, if the Company fails to achieve regulatory approval for use of BMC for COVID-19 Vaccine production on or before December 31, 2024.

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

Pursuant to the June 2023 Amendment, the Company and the Canadian government will endeavor to expand the Company’s previously agreed in-country commitment to Canada and to further 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 the Company’s 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 the Company.

As of September 30, 2023, the Company is in the process of negotiating the MOU.

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

Product sales in the U.S.

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

Product sales in the U.S.

are recorded net of gross-to-net deductions.

During the three months ended March 31, 2024, product sales in North America includes $ 6.4 million of gross-to-net deductions in excess of the WAC, primarily due to wholesale distributor fees for shipments expected to be returned and adjustments made to estimated returns of prior period product sales.

Product sales for the rest of the world includes a $ 3.6 million reduction to revenue recognized pursuant to the Gavi Settlement Agreement as discussed above.

As of March 31, 2024, changes in the Company’s gross-to-net deductions balances were as follows (in thousands):

Wholesale Distributor Fees, Discounts, and Chargebacks

Product Returns

Balance as of December 31, 2023

$ 21,072 $ 84,616 $ 105,688

Amounts charged against product sales (1)

16,076 19,296 35,372

Payments ( 26,979 ) ( 10,999 ) ( 37,978 )

Balance as of March 31, 2024

$ 10,169 $ 92,913 $ 103,082

(1) Amounts charged against product sales include $ 3.4 million of adjustments made to prior period product sales due primarily to changes in the estimate of product returns.

As of March 31, 2024 and December 31, 2023, $ 5.4 million and $ 2.6 million of gross-to-net deductions were included in Accounts receivable, respectively, and $ 97.7 million and $ 103.1 million were included in Accrued expenses, respectively.

The Company has an APA with the Commonwealth of Australia (“Australia”) for the purchase of doses of COVID-19 Vaccine (the “Australia APA”).

In November 2023, the Company filed with the Therapeutic Goods Administration (“TGA”) for authorization for its updated vaccine.

Based on subsequent communication from the TGA that it will not recommend

approval of the filing as submitted and new data and information generated since that filing, the Company is evaluating the regulatory path for approval, including the potential to update the filing with new data and information, and resubmit in the coming months.

In March 2024, the Company and Australia agreed to cancel the COVID-19 Vaccine doses previously scheduled for delivery in the fourth quarter of 2023.

As a result of the cancellation, the total contract value was reduced by $ 54.0 million, including $ 6.0 million of deferred revenue related to the cancelled doses that will be applied as a credit towards future deliveries of doses.

Under the Australia APA, Australia is not required to purchase the updated COVID-19 Vaccine doses until the Company receives authorization from TGA.

The Company plans to seek an amendment to the Australia APA to address performance obligations and future delivery schedule, which may not be achievable on acceptable terms or at all.

The Company had 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 prototype vaccine, 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 January 2023, the Company finalized a revised delivery schedule for the remaining committed doses under the APA that were originally scheduled for delivery during the first and second quarters of 2022.

The APA expired in August 2023 and required that any open and outstanding orders from European Union member states be satisfied by February 2024.

All outstanding orders were delivered to European Union Member states by February 2024.

The Company has an APA with His Majesty the King in Right of Canada as represented by the Minister of Public Works and Government Services, as successor in interest to Her Majesty the Queen in Right of Canada, as represented by the Minister of Public Works and Government Services (the “Canadian government”), for the purchase of doses of COVID-19 Vaccine (the “Canada APA”).

The Canadian government may terminate the Canada APA, as amended, if the Company fails to receive regulatory approval for its COVID-19 Vaccine using bulk antigen produced at Biologics Manufacturing Centre (“BMC”) Inc.

on or before December 31, 2024 .

The Company does not anticipate achieving regulatory approval of its COVID-19 Vaccine using bulk antigen produced at BMC on or before December 31, 2024 .

Therefore, the Company plans to seek an amendment to the Canada APA to address possible alternatives, which may not be achievable on acceptable terms or at all.

As of March 31, 2024, $ 110.6 million was classified as current Deferred revenue and $ 477.6 million was classified as non-current Deferred revenue with respect to the Canadian APA in the Company’s 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.

The Company’s U.S.

government agreement consists of a Project Agreement (the “Project Agreement”) and a Base Agreement with Advanced Technology International, the Consortium Management Firm acting on behalf of the Medical CBRN Defense Consortium in connection with the partnership formerly known as Operation Warp Speed (the Base Agreement together with the Project Agreement the “USG Agreement”).

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

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

Also, Modification 17 included provisions requiring that the payment of up to $ 60.0 million of consideration associated with manufacturing work now be contingent upon meeting certain milestones, including the delivery of up to 1.5 million doses of its prototype vaccine and

development and regulatory milestones related to commercial readiness, expansion of the EUA and development of multiple vial presentations.

As of September 30, 2023, the Company now expects to be entitled to the full $ 1.8 billion-funding under the USG Agreement by December 31, 2023, and accordingly, the Company recognized a $ 43.8 million cumulative increase to grant revenue under the contract during the three months ended September 30, 2023.

government agreement consisted of a Project Agreement (the “Project Agreement”) and a Base Agreement with Advanced Technology International, the Consortium Management Firm acting on behalf of the Medical CBRN Defense Consortium in connection with the partnership formerly known as Operation Warp Speed (the Base Agreement together with the Project Agreement the “USG Agreement”).

As of December 31, 2023, the Company recognized the full $ 1.8 billion funding in revenue.

Royalties and Other

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

During the three and nine months ended September 30, 2023, the Company recognized $ 6.0 million revenue related to sales-based royalties, and $ 13.8 million and $ 17.0 million, respectively in revenue related to a Matrix-M™ adjuvant sales.

During the three and nine months ended September 30, 2023, the Company did no t recognize revenue related to milestone payments.

During the three and nine months ended September 30, 2022, the Company recognized no revenue and $ 20.0 million, respectively, related to milestone payments, $ 1.3 million and $ 10.5 million, respectively, related to sales-based royalties, and $ 1.0 million and $ 13.4 million, respectively, related to a Matrix-M™ adjuvant sales.

During the three months ended March 31, 2024, the Company recognized $ 4.0 million in revenue related to license fees and $ 7.5 million in revenue related to a Matrix-M™ adjuvant sales.

During the three months ended March 31, 2024, the Company did not recognize revenue related to milestone payments.

During the three months ended March 31, 2023, the Company recognized $ 1.0 million in revenue related to a Matrix-M™ adjuvant sales.

During the three months ended March 31, 2023, the Company did not recognize revenue related to license fees or milestone payments.

Note 4 – Collaboration, License, and Supply Agreements

The Company previously granted SIIPL exclusive and non-exclusive licenses for the development, co-formulation, filling and finishing, registration, and commercialization of its prototype vaccine, its proprietary COVID-19 variant antigen candidate(s), its quadrivalent influenza vaccine candidate, and its CIC vaccine candidate.

SIIPL agreed to purchase the Company's Matrix-M™ adjuvant and the Company granted SIIPL a non-exclusive license to manufacture the antigen drug substance component of the Company’s COVID-19 Vaccine in SIIPL’s licensed territory solely for use in the manufacture of COVID-19 Vaccine.

The Company and SIIPL equally split the revenue from SIIPL’s sale of COVID-19 Vaccine in its licensed territory, net of agreed costs.

The Company also has a supply agreement with SIIPL and SLS under which SIIPL and SLS supply the Company with prototype vaccine, its proprietary COVID-19 variant antigen candidate(s), its quadrivalent influenza vaccine candidate, and its CIC vaccine candidate for commercialization and sale in certain territories, as well as a contract development manufacture agreement with SLS, under which SLS manufactures and supplies finished vaccine product to the Company using antigen drug substance and Matrix-M™ adjuvant supplied by the Company.

In March 2020, the Company entered into an agreement with SIIPL that granted SIIPL a non-exclusive license for the use of Matrix-M™ adjuvant supplied by the Company to develop, manufacture, and commercialize R21, a malaria candidate developed by the Jenner Institute, University of Oxford (“R21/Malaria”).

Under the agreement, SIIPL purchases the Company's Matrix-M™ adjuvant for use in development activities at cost and for commercial purposes at a tiered commercial supply price, and pays a royalty in the single-to low- double-digit range based on vaccine sales for a period of 15 years after the first commercial sale of the vaccine in each country.

The Company also has a supply agreement with SIIPL and SLS under which SIIPL and SLS supply the Company with prototype vaccine, its proprietary COVID-19 variant antigen candidate(s), and its CIC vaccine candidate for commercialization and sale in certain territories, as well as a contract development manufacture agreement with SLS, under which SLS manufactures and supplies finished vaccine product to the Company using antigen drug substance and Matrix-M™ adjuvant supplied by the Company.

In March 2020, the Company entered into an agreement with SIIPL that granted SIIPL a non-exclusive license for the use of Matrix-M™ adjuvant supplied by the Company to develop, manufacture, and commercialize R21/Matrix-M™ adjuvant (“SIIPL R21 Agreement”), a malaria vaccine created by the Jenner Institute, University of Oxford (“R21/Matrix-M™”).

In December 2023, R21/Matrix-M™ received prequalification by the World Health Organization (“WHO”).

Under the SIIPL R21 Agreement, SIIPL purchases the Company's Matrix-M™ adjuvant for use in development activities at cost and for commercial purposes at a tiered commercial supply price, and pays a royalty in the single-to low- double-digit range based on vaccine sales for a period of 15 years after the first commercial sale of the vaccine in each country.

Takeda Pharmaceutical Company Limited

4 unchanged sentences

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

Effective May 10, 2024, the Company entered into the Collaboration and License Agreement with Sanofi pursuant to which Sanofi received:

i) A co-exclusive license to commercialize with the Company all of the COVID Mono Products,

ii) A sole license to develop and commercialize combination COVID and influenza Combination Products,

iii) A non-exclusive license to develop and commercialize Other Combination Products, and

iv) A non-exclusive license to develop and commercialize Adjuvant Products.

Under the Collaboration and License Agreement, the Company will receive a non-refundable upfront payment of $ 500 million.

Additionally, Sanofi will reimburse the Company for its research and development and medical affairs costs related to the COVID Mono Products in accordance with agreed upon plans and budgets.

Under the Collaboration and License Agreement, the Company will continue to commercialize the COVID Mono Products in 2024.

Upon completion of the existing advance purchase agreements, Novavax and Sanofi will jointly agree on commercialization activities of each party in each jurisdiction.

Bill & Melinda Gates Medical Research Institute

In May 2023, the Company entered into a 3-year agreement with the Bill & Melinda Gates Medical Research Institute

to provide the Company’s Matrix-M™ adjuvant for use in preclinical vaccine research.

SK bioscience, Co., Ltd

In February 2021, the Company entered into a Collaboration and License Agreement (“CLA”) with SK bioscience, Co., Ltd.

(“SK”) to manufacture and commercialize its prototype vaccine for sale to the government of South Korea.

The CLA was amended in December 2021 and July 2022 to include the sale of its prototype vaccine to Thailand and Vietnam and to supply the Company with the antigen component of prototype vaccine for use in the final drug product globally, including product to be distributed by the COVAX Facility.

Under the CLA, as amended, SK agreed to pay the Company a royalty on the sale of its prototype vaccine in the low to middle double-digit range.

The CLA was in addition to the Company's existing manufacturing arrangement with SK under a Development and Supply Agreement (“DSA”) entered into in August 2020.

In July 2022, the Company signed an additional agreement with SK for the technology transfer of the Company’s proprietary COVID-19 variant antigen materials so that SK can manufacture the drug substance targeting COVID-19 variants, including the Omicron subvariants.

The companies also signed an agreement to manufacture and supply its prototype vaccine in a prefilled syringe.

In June 2023, the Company entered into a material transfer agreement with SK for the use by SK of the Company’s Matrix-M™ adjuvant in preclinical vaccine experiments for shingles, influenza, and pan-COVID-19.

In August 2023, the Company and SK entered into a Settlement Agreement and General Release (the “Settlement Agreement”) regarding mutual release by the parties of all claims arising from or in relation to statements of work (“SOWs”) canceled by the Company under the DSA and the CLA (collectively the “Business Agreements”), and other SOWs under the Business Agreements (collectively, the “Subject SOWs”), in each case, in connection with the cessation of all drug substance and drug product manufacturing activity at SK for supply to the Company.

Subject SOWs canceled by the Company under the Settlement Agreement included (i) Statement of Work No.

1 dated as of December 23, 2021 as amended to date under the CLA;

(ii) Statement of Work No.

5 dated as of July 18, 2022 under the DSA;

and (iii) Statement of Work No.

6 dated as of July 18, 2022, and as amended as of December 28, 2022 under the DSA.

Pursuant to the Settlement Agreement, the Company is responsible for payment of $ 149.8 million to SK in connection with the cancellation of manufacturing activity for the SOWs under the Business Agreements, of which (i) $ 130.4 million was paid in August 2023 and (ii) the remaining balance is to be paid on or before November 15, 2023.

Under the Settlement Agreement, the Company and SK agreed to a wind down plan with respect to the remaining products, materials and equipment under the SOWs.

Under the Settlement Agreement, the Company and SK agreed to remove certain restrictions under the CLA that have been triggered by the launch of SK’s competing vaccine SKYCovione™ in the Republic of Korea.

In addition, the Company agreed to extend the term of an exclusive license to SK under the CLA for the exploitation of antigen and vaccine products utilizing Company’s proprietary coronavirus vaccine antigens and Matrix-M adjuvant in certain territories.

The Company recorded $ 4.0 million to Deferred revenue related to the extended licenses granted to SK under the Settlement Agreement.

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

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

The fair value of the Company’s common stock on the date of closing, based on the quoted market price, was $ 46.5 million, which results in a premium paid by SK of approximately $ 38.0 million.

The Settlement Agreement and the Subscription Agreement were negotiated concurrently between the parties, and therefore were combined for accounting purposes and analyzed as a single arrangement.

As a result, the Company recorded the $ 46.5 million fair value of common stock issued to SK, based on the quoted market price on the date of close, as an equity transaction.

The remaining elements of the arrangement were deemed to relate to the settlement of the Company’s outstanding liabilities due to SK.

These elements consist primarily of the cash payable to SK of $ 149.8 million, offset by the premium paid on the common stock purchase by SK of $ 38.0 million, which resulted in a net gain upon derecognition of the liabilities due to SK of $ 79.2 million in connection with the settlement.

As a result, during the three and nine months ended September 30, 2023, the Company recorded this net gain of $ 79.2 million between research and development expense, for $ 57.7 million, and cost of sales, for $ 21.5 million, proportionally based on the where the underlying costs were originally recorded.

In May 2023, the Company entered into a three-year agreement with the Bill & Melinda Gates Medical Research Institute to provide the Company’s Matrix-M™ adjuvant for use in preclinical vaccine research.

Other Supply Agreements

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

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

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

Pursuant to the Fujifilm Settlement Agreement, the Company agreed to pay up to $ 185.0 million (the “Settlement Payment”) to Fujifilm in connection with cancellation of manufacturing activity at FDBT under the CSA, of which (i) $ 47.8 million, constituting the initial reservation fee under the CSA, was credited against the Settlement Payment on September 30, 2022 and (ii) the remaining balance is to be paid in four equal quarterly installments of $ 34.3 million each, which began on March 31, 2023.

As of September 30, 2023, the remaining payment of $ 68.6 million was reflected in Accrued expenses.

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

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

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

The Company withheld the $ 34.3 million installment payment due to Fujifilm on September 30, 2023, pending resolution of the issues identified in the notice of breach.

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

In March 2024, the Company, FUJIFILM Diosynth Biotechnologies UK Limited (“FDBK”), FUJIFILM Diosynth Biotechnologies Texas, LLC (“FDBT”) and FUJIFILM Diosynth Biotechnologies USA, Inc.

(“FDBU” and together with FDBK and FDBT, “Fujifilm”) entered into a Confidential Settlement Agreement and Release (the “Settlement Agreement”) to resolve disputes regarding amounts that Fujifilm claimed were due under a prior Confidential Settlement Agreement and Release effective September 30, 2022 (the “CSAR”) by and between the Company and Fujifilm.

Under the CSAR, the Company agreed to pay up to $ 185.0 million to Fujifilm in connection with the cancellation of manufacturing activity at FDBT.

The final two quarterly installments due to Fujifilm in 2023 under the CSAR, totaling $ 68.6 million, 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.

In October 2023, the Company sent Fujifilm a notice of breach and refused to pay the final two installments based on its contention that Fujifilm had not used commercially reasonable efforts to mitigate losses and should have offset some portion of the final two payments.

In October 2023, Fujifilm filed a demand for arbitration with Judicial Arbitration and Mediation Services (“JAMS”) seeking payment of the full amount (the “Fujifilm Arbitration”).

Pursuant to the Settlement Agreement, in March 2024 the Company paid $ 42.0 million to Fujifilm, the parties agreed to a mutual release of claims arising from, under or otherwise in connection with the CSAR, and Fujifilm agreed to dismiss the Fujifilm Arbitration.

This payment is less than amounts previously accrued for and reflected in Research and development expense, and accordingly, the Company recorded a benefit of $ 26.6 million as Research and development expense during the three months ended March 31, 2024 upon the execution of the Settlement Agreement.

The Company continues to assess its manufacturing needs and intends to modify its global manufacturing footprint consistent with its contractual obligations to supply, and anticipated demand for, its COVID-19 Program, and in doing so, recognizes that significant costs may be incurred.

Note 5 – Cash, Cash Equivalents, and Restricted Cash

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported in the consolidated balance sheets that sums to the total of such amounts shown in the consolidated statements of cash flows (in thousands):

September 30, 2023 December 31, 2022

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported in the consolidated

balance sheets that sums to the total of such amounts shown in the consolidated statements of cash flows (in thousands):

March 31, 2024 December 31, 2023

Cash and cash equivalents $ 480,586 $ 568,505

2 unchanged sentences

Cash, cash equivalents, and restricted cash $ 495,936 $ 583,810

(1) Classified as Other non-current assets as of September 30, 2023 and December 31, 2022, on the consolidated balance sheets.

(1) Classified as Other non-current assets as of March 31, 2024 and December 31, 2023, on the consolidated balance sheets.

Note 6 – Fair Value Measurements

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

Fair Value at September 30, 2023 Fair Value at December 31, 2022

Fair Value at March 31, 2024 Fair Value at December 31, 2023

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

7 unchanged sentences

— 61,428 — — — —

Agency securities (1)

— — — — 104,536 —

Total cash equivalents $ 118,470 $ 308,303 $ — $ 171,824 $ 245,622 $ —

1 unchanged sentence

$ — $ 109,088 $ — $ — $ 100,909 $ —

3.75 % Convertible notes due 2023

— — — — 322,111 —

Total convertible notes payable $ — $ 131,292 $ — $ — $ 494,900 $ —

(1) All investments are classified as Cash and cash equivalents as of September 30, 2023 and December 31, 2022, on the consolidated balance sheets.

(1) All investments are classified as Cash and cash equivalents as of March 31, 2024 and December 31, 2023, on the consolidated balance sheets.

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

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

During the nine months ended September 30, 2023 and 2022, the Company did not have any transfers between levels.

During the three months ended March 31, 2024 and 2023, the Company did not have any transfers between levels.

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

1 unchanged sentence

Inventory consisted of the following (in thousands):

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Raw materials $ 5,295 $ 6,614

3 unchanged sentences

Inventory write-downs as a result of excess, obsolescence, expiry, or other reasons, and losses on firm purchase commitments, offset by recoveries of such commitments, are recorded as a component of cost of sales in the Company’s consolidated statements of operations.

For the three and nine months ended September 30, 2023, inventory write-downs were $ 18.1 million and $ 49.6 million, respectively and losses on firm purchase commitments were $ 63.5 million and $ 71.9 million, respectively.

In addition, for the three and nine months ended September 30, 2023 the Company recorded recoveries on firm purchase commitments of $ 21.5 million and $ 40.3 million, respectively, related primarily to negotiated reductions to previously recognized firm purchase commitments.

For the three and nine months ended September 30, 2022, inventory write-downs were $ 202.4 million and $ 358.1 million, respectively.

For the three and nine months ended September 30, 2022, losses on firm purchase commitments were $ 46.6 million and $ 146.2 million, respectively.

For the three months ended March 31, 2024, inventory write-downs were $ 8.8 million.

For the three months ended March 31, 2023, inventory write-downs were $ 12.5 million and losses on firm purchase commitments were $ 7.7 million.

In addition, for the three months ended March 31, 2023 the Company recorded recoveries on

firm purchase commitments of $ 0.8 million related primarily to negotiated reductions to previously recognized firm purchase commitments .

Note 8 – Goodwill

The Company has one reporting unit, which has a negative equity balance as of September 30, 2023 and December 31,

The change in the carrying amounts of goodwill for the nine months ended September 30, 2023 was as follows (in thousands):

The Company has one reporting unit, which has a negative carrying amount as of March 31, 2024 and December 31, 2023.

The change in the carrying amounts of goodwill for the three months ended March 31, 2024 was as follows (in thousands):

Balance at December 31, 2023 $ 127,454

Currency translation adjustments ( 4,275 )

Balance at September 30, 2023 $ 123,780

Note 9 – Leases

The Company has embedded leases related to supply agreements with contract manufacturing organizations (“CMOs”) and contract manufacturing and development organizations to manufacture its COVID-19 Vaccine, as well as leases for its research and development and manufacturing facilities, corporate headquarters and offices, and certain equipment.

During the nine months ended September 30, 2023, the Company continued to align its global manufacturing footprint as a result of its ongoing assessment of manufacturing needs consistent with its contractual obligations related to the supply, and anticipated demand for, its COVID-19 Program.

During the three and nine months ended September 30, 2023, the Company recognized a short-term lease benefit of $ 39.5 million and $ 48.0 million, respectively, related to the reversal of previously recognized embedded lease expense on the settlement of CMO contracts.

During the three and nine months ended September 30, 2022, the Company recognized a short-term lease benefit of $ 46.6 million and expense of $ 37.3 million respectively, related to its embedded leases and expensed $ 24.2 million and $ 44.0 million respectively, for the write off of right of use (“ROU”) assets that represented assets acquired for research and development activities that did not have an alternative future use at the commencement or modification of the lease ROU written off.

There were no ROU assets written off during the three and nine months ended September 30, 2023, related to embedded leases.

During the three and nine months ended September 30, 2023, the Company recognized $ 0.5 million and $ 1.4 million of interest expense, respectively, on its finance lease liabilities.

During the three and nine months ended September 30, 2022, the Company recognized $ 0.9 million and $ 4.3 million of interest expense, respectively, on its finance lease liabilities.

During the nine months ended September 30, 2023, the Company recorded an impairment charge of $ 5.9 million related to ROU facility leases used for research and development, manufacturing and offices space that are impacted by the Restructuring Plan (see Note 15).

The Company has a lease agreement for approximately 170,000 square feet of space at 700 Quince Orchard Road, Gaithersburg, Maryland, which the Company uses for manufacturing, research and development, and corporate offices.

The term of the lease expires in 2035 with options to extend the lease.

The lease provides for an annual base rent of $ 5.8 million that is subject to future rent increases and obligates the Company to pay building operating costs.

During the three months ended September 30, 2023, the Company obtained the right to direct the use of, and obtain substantially all of the benefit from, certain floors located at the premises and recognized a ROU asset and related lease obligation of $ 96.5 million as the lease commencement dates for accounting purposes had occurred.

The lease obligation was reduced by $ 73.4 million for prepaid rent and prior costs incurred on behalf of the landlord.

Balance at March 31, 2024 $ 123,179

Note 9 – Long-Term Debt

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

September 30, 2023 December 31, 2022

Current portion:

3.75 % Convertible notes due 2023

$ — $ 325,000

Unamortized debt issuance costs — ( 119 )

Total current convertible notes payable $ — $ 324,881

Non-current portion:

March 31, 2024 December 31, 2023

5.00 % Convertible notes due 2027

1 unchanged sentence

Unamortized debt issuance costs ( 6,818 ) ( 7,234 )

Total convertible notes payable

$ 168,432 $ 168,016

Total non-current convertible notes payable $ 167,621 $ 166,466

In February 2023, the Company repaid the outstanding principal amount of $ 325.0 million on its 3.75 % Convertible notes due in 2023, together with accrued but unpaid interest on the maturity date.

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

The effective interest rate of the 2027 Convertible notes is 6.2 %.

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

The interest expense incurred in connection with the convertible notes payable consisted of the following (in thousands):

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Coupon interest $ 2,192 $ 3,206

3 unchanged sentences

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

During the three months ended September 30, 2023, the Company sold 17.8 million shares of its common stock under its August 2023 Sales Agreement resulting in net proceeds of approximately $ 143 million.

During the nine months ended September 30, 2023, the Company sold 25.7 million shares of its common stock under its June 2021 and August 2023 Sales Agreement resulting in net proceeds of approximately $ 211 million.

As of September 30, 2023, the remaining balance available under the August 2023 Sales Agreement was approximately $ 354 million.

During the nine months ended September 30, 2022, the Company sold 2.2 million shares of its common stock resulting in net proceeds of approximately $ 179 million, under its June 2021 Sales Agreement.

There was no sale of shares of common stock recorded during the three months ended September 30, 2022.

In August 2023, pursuant to the Securities Subscription Agreement with SK, the Company agreed to sell and issue to SK 6.5 million shares of the Company’s common stock, par value $ 0.01 per share at a price of $ 13.00 per share (the “Shares”) in a Private Placement for aggregate gross proceeds to the Company of approximately $ 84.5 million.

The Company recognized the Shares at the settlement date fair value of $ 46.5 million (see Note 4 for additional discussion of the Securities Subscription Agreement with SK).

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

During the three months ended March 31, 2024, there were no sales recorded under the August 2023 Sales Agreement.

As of March 31, 2024, the remaining balance available under the August 2023 Sales Agreement was approximately $ 242 million.

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

Note 11 – Stock-Based Compensation

1 unchanged sentence

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

As of September 30, 2023, there were 0.2 million shares available for issuance under the 2023 Inducement Plan.

As of March 31, 2024, there were 0.2 million shares available for issuance under the 2023 Inducement Plan.

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

Under the 2015 Plan, equity awards may be granted to officers, directors, employees, and consultants of and advisors to the Company and any present or future subsidiary.

The 2015 Plan authorizes the issuance of up to 21.0 million shares of common stock under equity awards granted under the 2015 Plan, which includes an increase of 6.2 million shares approved for issuance under the 2015 Plan at the Company's 2023 annual meeting of stockholders.

The 2015 Plan authorizes the issuance of up to 21.0 million shares of common stock under equity awards granted under the 2015 Plan.

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

The 2015 Plan will expire on March 30, 2033.

As of September 30, 2023, there were 7.1 million shares available for issuance under the 2015 Plan.

As of March 31, 2024, there were 2.6 million shares available for issuance under the 2015 Plan.

The Amended and Restated 2005 Stock Incentive Plan (“2005 Plan”) expired in February 2015 and no new awards may be made under such plan, although awards will continue to be outstanding in accordance with their terms.

5 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Cost of sales $ 594 $ 519

2 unchanged sentences

Total stock-based compensation expense $ 11,556 $ 28,647

During the three and nine months ended September 30, 2023, total stock-based compensation capitalized in inventory was $ 0.5 million.

During the three and nine months ended September 30, 2022, total stock-based compensation capitalized in inventory was $ 1.7 million.

As of September 30, 2023, there was approximately $ 102 million of total unrecognized compensation expense related to unvested stock options, SARs, RSUs, and the Company’s Employee Stock Purchase Plan, as amended (“ESPP”).

This unrecognized non-cash compensation expense is expected to be recognized over a weighted-average period of approximately one year .

During the three months ended March 31, 2024, and March 31, 2023, there was no stock-based compensation capitalized in inventory.

As of March 31, 2024, there was approximately $ 87 million of total unrecognized compensation expense related to unvested stock options, SARs, RSUs, and the ESPP.

This unrecognized non-cash compensation expense is expected to be recognized over a weighted-average period of approximately two years and will be allocated between cost of sales, research and development, and general and administrative expenses accordingly.

This estimate does not include the impact of other possible stock-based awards that may be made during future periods.

The aggregate intrinsic value represents the total intrinsic value (the difference between the Company’s closing stock price on the last trading day of the period and the exercise price, multiplied by the number of in-the-money stock options and SARs) that would have been received by the holders had all stock option and SAR holders exercised their stock options and SARs on September 30, 2023.

This amount is subject to change based on changes to the closing price of the Company's common stock.

The aggregate intrinsic value of stock options and SARs exercises and vesting of RSUs for the nine months ended September 30, 2023 and 2022 was approximately $ 3 million and $ 19 million, respectively.

The aggregate intrinsic value of stock options and SARs exercises and vesting of RSUs for the three months ended March 31, 2024 and 2023 was approximately $ 4.5 million and $ 1.5 million, respectively.

Stock Options and Stock Appreciation Rights

The following is a summary of stock options and SARs activity under the 2023 Inducement Plan, 2015 Plan, and 2005 Plan for the nine months ended September 30, 2023:

The following is a summary of stock options and SARs activity under the 2023 Inducement Plan, 2015 Plan, and 2005

Plan for the three months ended March 31, 2024:

2023 Inducement Plan 2015 Plan 2005 Plan

6 unchanged sentences

Canceled — — ( 284,823 ) 37.60 ( 57,569 ) 120.01

Outstanding at September 30, 2023 422,800 $ 10.67 4,806,014 $ 38.94 58,275 $ 119.79

Shares exercisable at September 30, 2023 — $ — 3,437,364 $ 40.58 58,275 $ 119.79

Outstanding at March 31, 2024 422,800 $ 10.67 5,096,444 $ 34.31 706 $ 102.11

Shares exercisable at March 31, 2024 101,762 $ 11.08 3,411,898 $ 41.21 706 $ 102.11

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

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Weighted average Black-Scholes fair value of stock options granted $ 4.34

$ 37.66 $ 7.27

Risk-free interest rate 4.3 %

2 unchanged sentences

127.7 %- 140.3 %

120.4 %- 140.3 %

120.5 %- 136.7 %

Expected term (in years) 3.9 - 4.4

The total aggregate intrinsic value and weighted-average remaining contractual term of stock options and SARs outstanding under the 2023 Inducement Plan, 2015 Plan and 2005 Plan as of September 30, 2023 was approximately $ 1.4 million and 7.1 years, respectively.

The total aggregate intrinsic value and weighted-average remaining contractual term of stock options and SARs exercisable under the 2023 Inducement Plan, 2015 Plan and 2005 Plan as of September 30, 2023 was approximately $ 1.1 million and 6.1 years, respectively.

The total aggregate intrinsic value and weighted-average remaining contractual term of stock options and SARs outstanding under the 2023 Inducement Plan, 2015 Plan and 2005 Plan as of March 31, 2024 was less than $ 0.1 million and 7.1 years, respectively.

The total aggregate intrinsic value and weighted-average remaining contractual term of stock options and SARs exercisable under the 2023 Inducement Plan, 2015 Plan and 2005 Plan as of March 31, 2024 was less than $ 0.1 million and 6.0 years, respectively.

Restricted Stock Units

The following is a summary of RSU activity for the nine months ended September 30, 2023:

The following is a summary of RSU activity for the three months ended March 31, 2024:

2023 Inducement Plan 2015 Plan

6 unchanged sentences

Forfeited — — ( 359,910 ) 20.66

Outstanding and unvested at September 30, 2023 363,990 $ 10.66 3,738,885 $ 23.95

Outstanding and unvested at March 31, 2024 261,193 $ 10.55 6,935,305 $ 10.03

Employee Stock Purchase Plan

The ESPP was approved at the Company’s annual meeting of stockholders in June 2013.

The ESPP currently authorized an aggregate of 1.2 million shares of common stock to be purchased, and the aggregate amount of shares will continue to increase 5 % on each anniversary of its adoption up to a maximum of 1.65 million shares.

The ESPP allows employees to purchase shares of common stock of the Company at each purchase date through payroll deductions of up to a maximum of 15 % of their compensation, at 85 % of the lesser of the market price of the shares at the time of purchase or the market price on the beginning date of an option period (or, if later, the date during the option period when the employee was first eligible to participate).

As of September 30, 2023, there were 0.5 million shares available for issuance under the ESPP.

The ESPP currently authorized an aggregate of 1.2 million shares of common stock to be purchased, and the aggregate number of shares will continue to increase 5 % on each anniversary of its adoption up to a maximum of 1.6 million shares.

The ESPP allows

employees to purchase shares of common stock of the Company at each purchase date through payroll deductions of up to a maximum of 15 % of their compensation, at 85 % of the lesser of the market price of the shares at the time of purchase or the market price on the beginning date of an option period (or, if later, the date during the option period when the employee was first eligible to participate).

As of March 31, 2024, there were 0.2 million shares available for issuance under the ESPP.

Note 12 – Income Taxes

The Company evaluates the available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit use of the existing deferred tax assets.

A significant piece of objective evidence evaluated was the cumulative loss incurred over the three-year period ended September 30, 2023 and that the Company has historically generated pretax losses.

Significant pieces of objective evidence evaluated by the Company were the cumulative loss incurred over the three-year period ended March 31, 2024 and that the Company has historically generated pretax losses.

Such objective evidence limits the ability to consider other subjective evidence, such as projections for future growth.

On the basis of this evaluation, as of September 30, 2023, the Company continued to maintain a full valuation allowance against its deferred tax assets, except to the extent Net Operating Losses (“NOLs”) have been used to reduce taxable income.

The Company’s remaining U.S.

Federal NOLs are subject to limitation in accordance with the 2017 Tax Cuts and Jobs Act (“TCJA”), which limits allowable NOL deductions to 80% of federal taxable income.

Effective January 1, 2022, a provision of the TCJA has taken effect creating a significant change to the treatment of research and experimental expenditures under Section 174 of the IRC (“Sec.

174 expenses”).

Historically, businesses have had the option of deducting Sec.

174 expenses in the year incurred or capitalizing and amortizing the costs over five years.

The new TCJA provision, however, eliminates this option and will require Sec.

174 expenses associated with research conducted in the U.S.

to be capitalized and amortized over a five-year period.

For expenses associated with research outside of the U.S., Sec.

174 expenses will be capitalized and amortized over a 15-year period.

During the three months ended September 30, 2023, the Company recognized $ 0.7 million of federal, state, and foreign income tax benefit.

During the three months ended September 30, 2022, the Company recognized $ 2.4 million of federal, state, and foreign income tax expense.

During the nine months ended September 30, 2023 and 2022, the Company recognized income tax expense of $ 0.3 million and $ 4.3 million, respectively.

The Company recognized income tax expense related to foreign withholding tax on royalties of $ 0.1 million and $ 2.3 million, respectively, for the three and nine months ended September 30, 2022.

The Company did no t recognize any foreign withholding tax expense on royalties for the three and nine months ended September 30, 2023.

On the basis of this evaluation, as of March 31, 2024, the Company continued to maintain a full valuation allowance against its deferred tax assets, except to the extent Net Operating Losses (“NOLs”) have been used to reduce taxable income.

As of March 31, 2024, the Company has $ 2.4 billion of U.S.

Federal NOLs carryforward, and all but $ 11.3 million are subject to limitation in accordance with the 2017 Tax Cuts and Jobs Act (“TCJA”), which limits allowable NOL deductions to 80% of federal taxable income.

For the three months ended March 31, 2024 and March 31, 2023, the Company recognized $ 2.3 million and $ 1.2 million of federal, state, and foreign income tax expense, respectively.

Note 13 – Commitments and Contingencies

15 unchanged sentences

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

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

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

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

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

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

Ahead of the May 23 settlement hearing, on April 11, 2024, Plaintiffs filed a motion seeking the Maryland Court’s final approval of the settlement.

The Company determined that the settlement is probable and the insurance funding is realizable and, as such, recorded the $ 47 million estimated settlement liability within Accrued expenses and the $ 47 million estimated insurance recovery within Prepaid expenses and other current assets on the consolidated balance sheet as of December 31, 2023 and March 31, 2024.

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

39 unchanged sentences

On October 6, 2023, the Board of Directors of the Company formed a Special Litigation Committee (“SLC”) with full and exclusive power and authority of the Board to, among other things, investigate, review, and analyze the facts and circumstances surrounding the claims asserted in the pending derivative actions, including the claims that remain following the court’s order on the motion to dismiss in the Second Consolidated Derivative Action.

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

On November 7, 2023, the court entered an order granting the parties’ request to stay the Second Consolidated Derivative Action for up to six months from the date of entry of the order, and, on April 15, 2024, the court entered a further order extending the stay by an additional month, and, on April 15, 2024, the court entered a further order extending the stay by an additional month.

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

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

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

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

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

1 unchanged sentence

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

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

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

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

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

4 unchanged sentences

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

On October 17, 2023, the Mesa plaintiff filed his reply in further support of his motion to lift the stay.

Plaintiff filed his reply on October 17, 2023.

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

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

5 unchanged sentences

The court entered that order on July 17, 2023.

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

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

On October 6, 2023, the Company’s board of directors voted unanimously to form a Special Litigation Committee (“SLC”) vested with full power and authority with respect to, among other things, claims in the derivative lawsuits related to certain sales of Company stock by certain Company officers, directors, or employees.

The SLC has retained its own independent counsel.

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

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

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

On May 3, 2024, the plaintiffs filed a consolidated complaint.

The parties are discussing whether to extend defendants' deadline to respond to the consolidated complaint through early June.

The financial impact of the above derivative claims is not estimable.

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

1 unchanged sentence

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

Since December 31, 2022, the remaining Gavi Advance Payment Amount, which was $ 696.4 million as of December 31, 2023, pending resolution of the dispute with Gavi related to a return of the remaining Advance Payment Amount, has been classified within Other current liabilities in the Company’s consolidated balance sheet.

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

1 unchanged sentence

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

On August 24, 2023, Gavi filed a Statement of Claim, and on September 21, 2023, the Company filed a Statement of Defense and Counterclaim.

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

On September 30, 2022, the Company and Fujifilm entered into the Fujifilm Settlement Agreement regarding amounts due to Fujifilm in connection with the termination of manufacturing activity at FDBT under the CSA dated August 20, 2021 and the MSA by and between the Company and Fujifilm.

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

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

Also, pursuant to the Gavi Settlement Agreement, the Company granted Gavi an additional credit of up to $ 225 million that may be applied against qualifying sales of any of the Company’s vaccines for supply to such low-income and lower-middle income countries that exceed the $ 80 million deferred payment amount in any calendar year during the deferred payment term.

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

On September 30, 2022, the Company and Fujifilm entered into the CSAR regarding amounts due to Fujifilm in

connection with the termination of manufacturing activity at FDBT under the Commercial Supply Agreement dated August 20, 2021 (the “CSA”) and the Master Services Agreement dated June 30, 2020 and associated statements of work (the “MSA”) by and between the Company and Fujifilm.

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

Under the CSAR, 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.

1 unchanged sentence

The Company withheld the $ 34.3 million installment payment due to Fujifilm on September 30, 2023, pending resolution of the issues identified in the notice of breach (see Note 4).

On October 30, 2023, FDBT filed a demand for arbitration with JAMS seeking payment of the withheld installment payment.

On October 30, 2023, FDBT filed a demand for arbitration with JAMS seeking payment of the third quarter installment of the Settlement Payment.

An arbitration hearing was scheduled for May 2024.

As of December 31, 2023, the remaining payment of $ 68.6 million was reflected in Accrued expenses.

On March 21, 2024, the Company and Fujifilm entered into a Settlement Agreement to resolve disputes regarding amounts that Fujifilm claimed were due under the CSAR.

This payment is less than amounts previously accrued for and reflected in Research and development expense, and accordingly, the Company recorded a benefit of $ 26.6 million as Research and development expense in the first quarter of 2024 upon the execution of the Settlement Agreement.

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

1 unchanged sentence

Note 14 – Restructuring

During the nine months ended September 30, 2023, the restructuring charge recorded by the Company comprised (in thousands):

During the three months ended March 31, 2024, the restructuring charge recorded by the Company comprised (in thousands):

Severance and employee benefit costs $ 4,401

1 unchanged sentence

Total Restructuring charge (1)

(1) Restructuring charges of $ 0.5 million, $ 2.3 million and $ 11.5 million are included in Cost of sales, Research and development and Selling, general, and administrative expenses, respectively, in the Consolidated Statements of Operations for the nine months ended September 30, 2023.

All impairment charges were taken in the three months ended June 30, 2023.

These charges reflect substantially all expected restructuring charges under the Restructuring Plan.

(1) Restructuring charges of $ 1.6 million and $ 4.5 million are included in Research and development and Selling, general, and administrative expenses, respectively, in the Consolidated Statements of Operations for the three months ended March 31, 2024.

During the three months ended March 31, 2023, the Company did not recognize any restructuring charges.

Severance and employee benefit costs

Employees affected by the reduction in force under the Restructuring Plan are entitled to receive severance payments and certain termination benefits.

The Company recorded a severance and termination benefit cost in full for employees who were notified of their termination in the three months ended June 30, 2023 and had no requirements for future service.

The Company paid a total of $ 4.3 million for the severance and employee benefit costs during the nine months ended September 30, 2023 and the remaining liability of $ 0.2 million is included in Accrued expenses in the Company’s consolidated balance sheet as of September 30, 2023.

The Company recorded a severance and termination benefit cost in full for employees who were notified of their termination in the three months ended March 31, 2024 and had no requirements for future service.

The Company paid a total of $ 3.9 million for the severance and employee benefit costs during the three months ended March 31, 2024 and the remaining liability of $ 0.5 million is included in Accrued expenses in the Company’s consolidated balance sheet as of March 31, 2024.

Impairment of assets

1 unchanged sentence

The Company performed an impairment evaluation for the applicable long-lived assets, which is subject to judgment and actual results may vary from the estimates, resulting in potential future adjustments to amounts recorded.

During the three months ended June 30, 2023, the Company recorded an impairment charge of $ 10.1 million related to the impairment of long-lived assets, including $ 5.9 million related to ROU assets for facility leases.

During the three months ended March 31, 2024, the Company

recorded an impairment charge of $ 1.7 million related to the impairment of capitalized internal-use software.

Note 15 – Subsequent Events

The Company withheld the $ 34.3 million installment payment due to Fujifilm on September 30, 2023, pending resolution of issues identified in the notice of breach (see Note 4).

On October 30, 2023, FDBT filed a demand for arbitration with JAMS seeking payment of the third quarter installment of the Settlement Payment.

On October 2, 2023, the World Health Organization (“WHO”) announced its recommendation of the R21/Matrix-M™ malaria vaccine to prevent malaria in children following advice from its Strategic Advisory Group of Experts and Malaria Policy Advisory Group.

The vaccine contains R21 antigen developed by University of Oxford, specific to the malaria parasite, and Novavax’s Matrix-M™ adjuvant.

This recommendation is a required step on the pathway to the WHO’s prequalification (“PQ”) of the vaccine.

PQ designation is necessary for United Nations agencies and partners, for example UNICEF and Gavi, to procure the vaccine for eligible countries.

This is the first recommendation from WHO to support the use of a vaccine containing the Company’s Matrix-M™ adjuvant in children as young as five months of age and it is based on the results from the Phase 3 clinical trial.

The R21/Matrix-M™ malaria vaccine is being developed and manufactured by SIIPL.

On October 3, 2023, the Company announced that the updated vaccine has received EUA from the U.S.

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

Immediately upon authorization, the Company’s updated vaccine has also been included in the recommendations issued by the U.S.

Centers for Disease Control and Prevention on September 12, 2023.

On October 18, 2023, the Company announced that the Medicines and Healthcare products Regulatory Agency in the United Kingdom has granted full marketing authorization for its prototype vaccine for individuals aged 12 and older for active immunization to help prevent COVID-19.

On October 18, 2023, the Company announced that Singapore's Health Sciences Authority has granted full approval for Novavax's prototype vaccine for active immunization to prevent COVID-19 in individuals aged 12 and older.

The Singapore Ministry of Health has included Novavax’s prototype vaccine in the National Vaccination Programme as a protein-based non-mRNA option for COVID-19 prevention.

On October 31, 2023, the Company announced that the EC has granted approval for the updated vaccine for active immunization to prevent COVID-19 caused by SARS-CoV-2 in individuals aged 12 and older.

This decision follows positive opinion for approval from the Committee for Medicinal Products for Human Use.