What changed in this filing

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Item 1A. Risk Factors

2024-05-10 compared with 2023-11-09 · 55 added, 27 removed, 1 unchanged (99% of the section changed)

Information regarding risk and uncertainties related to our business appears in Part I, Item 1A.

“Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, which was filed with the SEC on February 28, 2023, and Part II, Item 1A.

“Risk Factors” of our Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2023, which was filed with the SEC on May 9, 2023 and our Quarterly Report on Form 10-Q for the quarter ended June 30, 2023, which was filed with the SEC on August 8, 2023.

There have been no material changes from the risk factors previously disclosed in the Annual Report on Form 10-K, for the fiscal year ended December 31, 2022, the Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2023 and the Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2023 other than as described below.

Risks Related to Employee Matters, Managing Growth and Information Technology

Given our current cash position and cash flow forecast, and significant uncertainties related to 2023 revenue, and our pending arbitration with Gavi, substantial doubt exists regarding our ability to continue as a going concern through one year from the date that the financial statements included in this Quarterly Report were issued.

Our management must evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about our ability to continue as a going concern within one year after the date the financial statements are issued.

At September 30, 2023, we had $666.4 million in cash and cash equivalents and restricted cash.

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

While our current cash flow forecast for the one-year going concern look forward period estimates that we have sufficient capital available to fund operations, this forecast is subject to significant uncertainty, including as it relates to the following:

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

Further, failure to meet regulatory milestones, timely obtain supportive recommendations from governmental advisory committees, or achieve product volume or delivery timing obligations under the Company’s advance purchase agreements may require the Company to refund portions of upfront and other payments or result in reduced future payments.

• Pending Arbitration:

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

The outcome of that arbitration is inherently uncertain, and it is possible we could be required to refund all or a portion of the remaining advance payments of $696.4 million.

See Note 3 and Note 14 to our consolidated financial statements in this Quarterly Report for additional information related to the arbitration with Gavi.

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

Our ability to fund Company operations is dependent upon revenue related to vaccine sales for our products and product candidates, if such product candidates receive marketing authorization 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 achieve 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 include cost reductions associated with the restructuring of our global footprint.

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.

In May 2023, we announced a global restructuring and cost reduction plan.

This plan includes a more focused investment in our COVID-19 Program, reduction to our pipeline spending, the continued rationalization of our manufacturing network, a reduction to our global workforce, as well as the consolidation of facilities and infrastructure.

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

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

In addition, the regulatory and commercial success of our COVID-19 Program and our other vaccine candidates, including an influenza vaccine candidate and 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.

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

“Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, which was filed with the SEC on February 28, 2024.

There have been no material changes from the risk factors previously disclosed in the Annual Report on Form 10-K, for the fiscal year ended December 31, 2023, other than as described below.

Risks Related to Regulatory and Compliance Matters

We may not succeed in obtaining full U.S.

FDA licensure or foreign regulatory approvals necessary to sell our vaccine candidates.

The development, manufacture and marketing of our pharmaceutical and biological products are subject to government regulation by the U.S.

FDA and regulatory authorities in other jurisdictions, including the EMA, the Czech Republic’s State Institute for Drug Control (“SUKL”) with respect to our manufacturing facility in the Czech Republic and the Swedish Medical Products Agency (Läkemedelsverket, LV) with respect to our adjuvant product being developed in Sweden, as well as other country authorities into which active pharmaceutical ingredients and excipients are imported and/or manufactured by us or our sub-contracted manufacturers.

and most foreign countries, we must complete rigorous preclinical testing and extensive clinical trials that demonstrate the safety and efficacy of a product in order to apply for regulatory approval to market the product.

For example, while we have completed the submission of the BLA for our COVID-19 Vaccine, we have decided, based on discussions with U.S.

FDA, to also seek EUA for our updated COVID-19 Vaccine for the 2024-2025 vaccination season.

Operating under an EUA for the 2024-2025 vaccination season, rather than an approved BLA, could have a negative impact on our ability to successfully market and commercialize our updated COVID-19 Vaccine and therefore our financial condition and results of operation.

Additionally, we must demonstrate that our manufacturing facilities, processes and controls are adequate with respect to such product to assure safety, purity and potency and comply with applicable good manufacturing practice requirements.

None of our vaccine candidates has yet gained full regulatory approval in the U.S., although our COVID-19 Vaccine has received provisional registration, conditional marketing authorization, emergency use authorization, or full approval in the various jurisdictions.

We also have vaccine candidates in clinical trials and preclinical laboratory or animal studies.

Risks Related to Our Financial Condition and Capital Requirements

Our existing funding and supply agreements or our advance purchase agreements do not assure success of our vaccine candidates or vaccines or that we will be able to fully fund our vaccine candidates or vaccines or our company operations, and if we are unable to satisfy the performance obligations under such agreements the agreements may be terminated, the purchase commitments may be reduced or we may be required to refund advance payments.

Our funding agreements with the U.S.

government (“USG”) and CEPI each reimburse a portion of the expenses associated with the development and commercialization of our COVID-19 Vaccine.

To the extent funding commitments in such agreements are conditioned on our meeting certain milestones or conditions, we may not ultimately receive the full amount of committed funds and may require additional funding to support our COVID-19 Vaccine development and commercialization activities, and we may be unable to timely obtain additional funding.

For example, in July 2021, in connection with funding from the USG partnership formerly known as Operation Warp Speed, the USG instructed us to prioritize alignment with the U.S.

FDA on our analytic methods before conducting additional U.S.

manufacturing, and the USG indicated that it would not fund additional U.S.

manufacturing until such alignment was reached, which did not occur until June 2022.

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

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

The USG Agreement also includes provisions giving the USG termination rights based on a determination that the funded project will not produce beneficial results commensurate with the expenditure of resources and that termination would be in the USG’s interest.

Such a determination would result in the loss of funding under that agreement and could result in other actions by the USG.

The CEPI funding agreement, meanwhile, provides CEPI certain “march-in” rights in the event of certain breaches of that agreement.

Additionally, we have entered into, and plan to continue entering into, supply agreements (also sometimes referred to as advance purchase agreements) for our COVID-19 Vaccine that include prepayments from the purchasers to help fund our development and manufacture of the vaccine.

Under certain supply agreements, if we do not timely achieve requisite regulatory milestones for our COVID-19 Vaccine in the relevant jurisdictions, obtain supportive recommendations from governmental advisory committees, and/or achieve product volume or delivery timing obligations, purchasers may seek to terminate such agreements, reduce their purchase commitments, require us to refund all or some prepayments we have received, or renegotiate such agreements, each of which could have a material and adverse effect on our financial condition.

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

The supply agreements typically contain terms that include upfront payments intended to assist us in funding investments related to building out and operating our manufacturing and distribution network, among other expenses, in support of our global supply commitment, and are applied to billings upon delivery of COVID-19 Vaccine.

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

We may not achieve such milestones, which could have a material and adverse effect on our financial condition.

For example, in September 2022, following a delay in obtaining regulatory approval in the United Kingdom, we entered into the Amended and Restated UK Supply Agreement, which amended and restated in its entirety the Original UK Supply Agreement, which reduced the volume of vaccine doses that the Authority is committed to purchase as compared to the Original UK Supply Agreement.

Under the terms of the Amended and Restated UK Supply Agreement, the Authority agreed to purchase a minimum of 1 million doses and up to an additional 15 million doses (the “Conditional Doses”) of our prototype vaccine, with the number of Conditional Doses contingent on, and subject to reduction based on, our timely achievement of supportive recommendations from the JCVI that is approved by the UK Secretary of State for Health.

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

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

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

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

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

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

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

In November 2023, we filed with the Therapeutic Goods Administration (“TGA”) for authorization for our 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, we are evaluating the regulatory path for approval, including the potential to withdraw the filing for authorization, update with new data and information, and resubmit in the coming months.

In March 2024, we and Australian 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.

We are working with Australia on an amendment to the APA that addresses performance obligations and future delivery schedules.

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

The Canadian government may terminate the Canada APA, as amended, if we fail 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.

We do not currently anticipate achieving regulatory approval of our COVID-19 Vaccine using bulk antigen produced at BMC on or before December 31, 2024.

Therefore, in parallel, we plan to work with the Canadian government on an amendment that addresses 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 our consolidated balance sheet.

If the Canadian government terminates the Canada APA, $28.0 million of the deferred revenue would become refundable and approximately $224.0 million of the contract value related to future deliverables would no longer be available.

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

What changed 10-Q

Item 1A. Risk Factors