NOVAVAX INC 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations Any statements in the discussion below and elsewhere in this Quarterly Report on Form 10-Q (“Quarterly Report”) about expectations, beliefs, plans, objectives, assumptions, or future events or performance of Novavax, Inc. (“Novavax,” together with its wholly owned subsidiaries, the “Company,” “we,” or “us”) are not historical facts and are forward-looking statements. Such forward-looking statements include, without limitation, statements about our capabilities, goals, expectations regarding future revenue and expense levels, and capital raising activities; our operating plans and prospects, including our ability to continue as a going concern through one year from the date of our unaudited financial statements for the period ended March 31, 2024 are issued; our global restructuring and cost reduction plan (“Restructuring Plan”), which includes a more focused investment in our COVID-19 program (which currently includes Nuvaxovid™ prototype COVID-19 vaccine ("NVX-CoV2373” or “prototype vaccine”) and Nuvaxovid™ updated COVID-19 vaccine (“NVX-CoV2601” or “updated vaccine”) collectively referred to as our (“COVID-19 Program,” or “COVID-19 Vaccine”)); our cash flow forecast and projected revenue; potential market sizes and demand for our products and product candidates; the efficacy, safety, and intended utilization of our products and product candidates; the development of our clinical-stage product candidates and our recombinant vaccine and adjuvant technologies; the development of our preclinical product candidates; our expectations related to enrollment in our clinical trials; the conduct, timing, and potential results from clinical trials and other preclinical studies; plans for and potential timing of regulatory filings; our expectation of manufacturing capacity, timing, production, distribution, and delivery for our COVID-19 Vaccine by us and our partners; our expectations with respect to the anticipated ongoing development and commercialization or licensure of the COVID-19 Vaccine, ongoing development of COVID-19 variant strain-containing monovalent or bivalent formulations, including the Phase 2b/3 Hummingbird™ trial, and our COVID-19 Influenza Combination (“CIC”) vaccine candidate and our stand-alone influenza vaccine candidate; efforts to expand the COVID-19 Vaccine label worldwide as a booster, and to various age groups and geographic locations; the expected timing, content, and outcomes of regulatory actions; funding under our advance purchase agreements (“APAs”) and supply agreements and amendments to, termination of, discussion regarding, or legal disputes relating to any such agreement; our available cash resources and usage and the availability of financing generally; plans regarding partnering activities and business development initiatives; our plans regarding APA amendments; and other matters referenced herein. Generally, forward-looking statements can be identified through the use of words or phrases such as “believe,” “may,” “could,” “will,” “would,” “possible,” “can,” “estimate,” “continue,” “ongoing,” “consider,” “anticipate,” “intend,” “seek,” “plan,” “project,” “expect,” “should,” “would,” “aim,” or “assume,” the negative of these terms, or other comparable terminology, although not all forward-looking statements contain these words. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs and expectations about the future of our business, future plans and strategies, projections, anticipated events and trends, the economy, and other future conditions. Forward-looking statements involve estimates, assumptions, risks, and uncertainties that could cause actual results or outcomes to differ materially from those expressed or implied in any forward-looking statements, and, therefore, you should not place considerable reliance on any such forward-looking statements. Such risks and uncertainties include, without limitation, our ability to successfully and timely manufacture, distribute, or market our updated COVID-19 vaccine including as a single dose vial or pre-filled syringe product presentation for the 2024-2025 vaccination season and our ability to receive a Biologics License Application (“BLA”) from the U.S. Food and Drug Administration (“U.S. FDA”) for the 2024-2025 vaccination season; challenges satisfying, alone or together with partners, various safety, efficacy, and product characterization requirements, including those related to process qualification, assay validation, and stability testing, necessary to satisfy applicable regulatory authorities; challenges or delays in conducting clinical trials; challenges or delays in obtaining regulatory authorization for our product candidates, including our updated COVID-19 vaccine in time for the 2024-2025 vaccination season or for future COVID-19 variant strain changes, our CIC vaccine candidate and our stand-alone influenza vaccine candidate; manufacturing, distribution or export delays or challenges; our substantial dependence on Serum Institute of India Pvt. Ltd. and Serum Life Sciences Limited for co-formulation and filling, and PCI Pharma Services for finishing our COVID-19 vaccine and the impact of any delays or disruptions in their operations on the delivery of customer orders; difficulty obtaining scarce raw materials and supplies; resource constraints, including human capital and manufacturing capacity, constraints on the ability of Novavax to pursue planned regulatory pathways, alone or with partners, in multiple jurisdictions simultaneously, leading to staggering of regulatory filings, and potential regulatory actions; challenges in implementing the Restructuring Plan; our ability to timely deliver doses; challenges in obtaining commercial adoption and market acceptance of our updated COVID-19 Vaccine or any COVID-19 variant strain containing formulation; challenges meeting contractual requirements under agreements with multiple commercial, governmental, and other entities including requirements to deliver doses that may require us to refund portions of upfront and other payments previously received or result in reduced future payments pursuant to such agreements; challenges related to the seasonality of vaccinations against COVID-19; and other risks and uncertainties identified in Part I, Item 1A “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2023 and this Quarterly Report on Form 10-Q, which may be detailed and modified or updated in other documents filed with the SEC from time to time, and are available at www.sec.gov and at www.novavax.com. You are encouraged to read these filings as they are made. 24 We cannot guarantee future results, events, level of activity, performance, or achievement. Any or all of our forward-looking statements in this Quarterly Report may turn out to be inaccurate or materially different from actual results. Further, any forward-looking statement speaks only as of the date when it is made, and we undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, unless required by law. New factors emerge from time to time, and it is not possible for us to predict which factors will arise. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Information in this Quarterly Report includes a financial measure that was not prepared in accordance with U.S. generally accepted accounting principles (“GAAP”), which we refer to as adjusted cost of sales. We are presenting this non-GAAP financial measure to assist an understanding of our business and its performance. Adjusted cost of sales includes an estimate of standard manufacturing costs that were previously expensed to research and development prior to regulatory approvals for our COVID-19 Vaccine that would otherwise have been capitalized to inventory. Any non-GAAP financial measures presented are not, and should not be viewed as, substitutes for financial measures required by GAAP, have no standardized meaning prescribed by GAAP, and may not be comparable to the calculation of similar measures of other companies. Overview We are a biotechnology company that promotes improved global health through the discovery, development, and commercialization of innovative vaccines to prevent serious infectious diseases. Our proprietary recombinant technology platform harnesses the power and speed of genetic engineering to efficiently produce highly immunogenic nanoparticle vaccines designed to address global health needs. Our vaccine candidates are nanostructures of conformationally correct recombinant proteins that mimic those found on pathogens. This technology enables the immune system to recognize target proteins and develop protective immune responses. We believe that our vaccine technology may lead to the induction of a differentiated immune response that may be more efficacious than naturally occurring immunity or some other vaccine approaches. Our vaccine candidates also incorporate our proprietary saponin-based Matrix-M™ adjuvant to enhance the immune response, stimulate higher levels of functional antibodies, and induce a cellular immune response. We previously developed an updated COVID-19 vaccine for the 2023-2024 vaccination season, for which the U.S. FDA granted emergency use authorization (“EUA”) in October 2023 for active immunization to prevent COVID-19. We are in the process of developing an updated COVID-19 vaccine for the 2024-2025 vaccination season and expect our updated COVID-19 vaccine to be available at U.S. pharmacy retailers in September 2024. During the first quarter of 2024, we completed the submission of the BLA for our prototype COVID-19 vaccine with the U.S. FDA. In addition, we aligned with the U.S. FDA on pathway for EUA for our updated COVID-19 vaccine for the 2024-2025 vaccination season. Outside the U.S., in January 2024, our updated vaccine was granted marketing authorization by the United Kingdom’s (“UK”) Medicines and Healthcare products Regulatory Agency (“MHRA”). We are committed to meeting the full supply of our key target markets through APAs covering such markets. We continue to work closely with regulatory authorities globally for authorization of our updated vaccine. We previously developed a prototype COVID-19 vaccine, which has received full marketing authorization (“MA”), marketing approval, interim authorization, provisional approval, or conditional marketing authorization (“CMA”), from multiple regulatory authorities in over 40 countries globally. We continue to progress our regulatory authorizations for our prototype vaccine in select territories, as we believe these may facilitate authorization of our vaccine candidates for updated strains in the future. Additionally, our near-term focus is on developing a CIC vaccine candidate as well as seasonal influenza vaccine candidate, and we are on track to initiate a Phase 3 trial in the second half of 2024 for both vaccines. Furthermore, we provide our Matrix-M™ adjuvant for collaborations, including in R21/Matrix-M™ adjuvant malaria vaccine, which recently received authorization in several countries, as well as other preclinical vaccine research with our Matrix-M™ adjuvant, including through a partnership with the Bill & Melinda Gates Medical Research Institute. We intend to focus our organization to align our investments and activities with our top priority of delivering our updated COVID-19 vaccine for the 2024-2025 vaccination season. To maximize our opportunities and mitigate the significant risks and uncertainties of the COVID-19 market, we have progressed our cost restructuring measures to reduce spend, extend our cash runway, and operate efficiently to seek the best position for the Company to deliver longer-term growth. We discuss these cost restructuring strategies in greater detail in Note 2 to our consolidated financial statements. 25 Technology Overview We believe our recombinant nanoparticle vaccine technology, together with our proprietary Matrix-M™ adjuvant, is well suited for the development and commercialization of vaccine candidates targeting a broad scope of respiratory and other endemic and emerging infectious diseases. Recombinant Nanoparticle Vaccine Technology Once a target of interest has been identified, the genetic sequence encoding an antigen is selected for developing the vaccine construct. The genetic sequence may be optimized to enhance protein stability or confer resistance to degradation. This genetic construct is inserted into the baculovirus Spodoptera frugiperda (“Sf-/BV”) insect cell-expression system, which enables efficient, large-scale expression of the optimized protein. The Sf-/BV system produces protein-based antigens that are properly folded and modified, which can be critical for functional, protective immunity. Protein antigens are purified and organized around a polysorbate-based nanoparticle core in a configuration that resembles their native presentation. This results in a highly immunogenic nanoparticle that is ready to be formulated with Matrix-M™ adjuvant. Matrix-M™ Adjuvant Our proprietary Matrix-M™ adjuvant is a key differentiator within our platform. This adjuvant has enabled potent, well tolerated, and durable efficacy by stimulating the entry of antigen presenting cells (“APCs”) into the injection site and enhancing antigen presentation in local lymph nodes. This in turn activates APCs, T-cell and B-cell populations, and plasma cells, which promote the production of high affinity antibodies, an immune boosting response. This potent mechanism of action enables a lower dose of antigen to achieve the desired immune response, thereby contributing to increased vaccine supply and manufacturing capacity. These immune-boosting and dose-sparing capabilities contribute to the adjuvant’s highly unique profile. We continue to evaluate commercial opportunities for the use of our Matrix-M™ adjuvant alongside vaccine antigens produced by other manufacturers. Matrix-M™ adjuvant is being evaluated in combination with several partner-led malaria vaccine candidates, including for R21/Matrix-M™ adjuvant, a malaria vaccine candidate created by the Jenner Institute, University of Oxford. The R21/Matrix-M™ adjuvant vaccine has been licensed to Serum Institute of India Pvt. Ltd. (“SIIPL”) for commercialization and in December 2023 received prequalification by the World Health Organization (“WHO”), along with authorizations received earlier in the year in Burkino Faso, Ghana, and Nigeria. Additionally, in May 2023, we entered into a three-year agreement with the Bill & Melinda Gates Medical Research Institute to provide our Matrix-M™ adjuvant for use in preclinical vaccine research. In June 2023, we signed a material transfer agreement with SK bioscience Co., Ltd. (“SK”) for use of our Matrix-M™ adjuvant in preclinical vaccine experiments for shingles, influenza, and pan-COVID-19. Our adjuvant technology is also being used by commercial partners as a key component in veterinary vaccines against equine influenza and Strangles, as well as the manufacture of black-widow anti-venom. COVID-19 Vaccine Regulatory and Licensure We continue to receive authorizations for our updated vaccine developed for the 2023-2024 COVID-19 vaccination season in accordance with the updated strain protocol guidance. We are also continuing to progress our regulatory authorizations for our prototype vaccine in select territories, as we believe these may facilitate authorization of our vaccine candidates for updated strains in the future. Additionally, we continue to progress our regulatory authorizations for our updated vaccine and plan to continue to do so for subsequent future variant strains for each annual respiratory season, including the upcoming 2024-2025 vaccination season. Within the U.S. market, our updated vaccine received EUA in October 2023 from the U.S. FDA to prevent COVID-19 in individuals aged 12 and older and is marketed in the U.S. under the name Novavax COVID-19 Vaccine, Adjuvanted (2023-2024 Formula). The formulation for our updated vaccine aligns with global harmonized guidance from the U.S. FDA, the European Medicines Agency (“EMA”), and WHO recommendations for the 2023-2024 vaccination season. Outside the U.S. market, we continue to progress regulatory authorizations for our updated vaccine globally. In January 2024, we were granted marketing authorization by the UK MHRA for our updated vaccine, marketed under the name Nuvaxovid™ XBB.1.5 Vaccine, in individuals aged 12 and older. 26 We have previously received authorizations for our prototype COVID-19 vaccine in over 40 countries globally, including from major regulatory agencies such as the U.S. FDA, WHO, EMA, and MHRA. To date, we have received full MA, approval, interim authorization, provisional approval, CMA, and EUA for the adult population, aged 18 and older, the adolescent population, aged 12 to 17 years, and the pediatric population, aged 7 to 11 years in select territories. The regulatory authorizations for our prototype vaccine include primary series and both homologous and heterologous booster indications within specific countries. For the territories in which our vaccine has received regulatory authorizations, our prototype vaccine is marketed under the names (i) Nuvaxovid™ (SARS-CoV-2 rS Recombinant, adjuvanted), (ii) Covovax™ (manufacturing and commercialization by SIIPL), or (iii) Novavax COVID-19 Vaccine, Adjuvanted. We are working to continue to expand our label for primary and re-vaccination in younger children, and to achieve supportive policy recommendations enabling broad market access. We continue to work closely with governments, regulatory authorities, and non-governmental organizations in our commitment to facilitate global access to our COVID-19 vaccine. Product Pipeline Our clinical pipeline encompasses vaccine candidates for infectious diseases, with our COVID-19 prototype vaccine (NVX-CoV2373) and our COVID-19 updated vaccine (NVX-CoV2601), as our lead products. Our updated vaccine has received authorization from the U.S. FDA, the EC, the WHO, and several other countries globally. Beyond our COVID-19 vaccine, our clinical pipeline includes a CIC vaccine candidate, and a seasonal influenza vaccine candidate in addition to our Matrix-M™ adjuvant being used for collaboration in R21/Matrix-M™ adjuvant malaria vaccine. Novavax continues to optimize preclinical candidates, including a new approach to H5N1 pandemic bird flu vaccination, and expand our core technology for novel applications including mucosal vaccination and high-density nanoparticles. (1) Authorized in select geographies under trade names Novavax COVID-19 Vaccine, Adjuvanted; Covovax™; and Nuvaxovid™, and authorized in the U.S. under trade name, Novavax COVID-19 Vaccine, Adjuvanted (2023-2024 Formula); Ongoing post-authorization Phase 3 strain change trial. (2) Authorized in Ghana, Nigeria, and Burkina Faso; Commercialized by Serum Institute of India; Granted prequalification by the WHO. Coronavirus Vaccine Clinical Development We remain focused on expanding our COVID-19 vaccine label within the booster, adolescent, and pediatric indications. We continue to evaluate vaccine safety, immunogenicity, and effectiveness through ongoing clinical trials and collaborative evidence-generating real-world studies. We expect to leverage these clinical insights to advance additional regulatory approvals of our COVID-19 vaccine globally, amidst the evolving COVID-19 landscape. Phase 3 Strain-Change and Re-vaccination Studies Study 311 Part 2: In August 2023, we announced primary endpoint topline results demonstrating immunologic superiority of our bivalent prototype and Omicron BA.5 vaccine compared to our prototype vaccine (NVX-CoV2373) for Omicron BA.5 specific responses. This study was designed to support our 2023-2024 strain change for our updated vaccine (NVX-CoV2601). In March 2024, interim results of this study were published in The Lancet. Study 313: In November 2023, we fully enrolled 338 adults aged 18 and older and in Part 2 of the study we will evaluate the immunogenicity of our updated vaccine (NVX-CoV2601) in previously unvaccinated individuals. Topline results are expected by the second quarter of 2024. Data from Study 313 are intended to support BLA supplements and similar 27 regulatory submissions in other territories for future variant strain formulations. Phase 2b/3 Pediatric Hummingbird™ Study In August 2023, we announced topline results from our Phase 2b/3 Hummingbird™ trial that met its primary endpoints in children aged 6 through 11 years demonstrating both tolerability and immunologic responses. This ongoing trial is evaluating the safety, effectiveness (immunogenicity), and efficacy of two doses of our prototype vaccine (NVX-CoV2373), followed by a booster 6 months after the primary vaccination series. The trial includes three age de-escalation cohorts of 1,200 children each. Cohorts aged 2 through 5 years and 6 to 23 months are fully enrolled. In consultation with regulatory bodies, the filing strategy includes filing a supplemental BLA for these cohorts once the initial BLA is approved. Therefore, we do not anticipate authorization for these age groups for the 2024-2025 vaccination season. COVID-Influenza Combination and Stand-alone Influenza Program For our CIC vaccine, we have previously received agreement with the U.S. FDA on a Phase 3 design, study endpoints, trivalent comparators, and size of licensure enabling safety database. We have recently decided to modify the study to focus on individuals at higher risk by enrolling adults aged 60 years and older and to include a stand-alone influenza vaccine comparative component. We remain on track to submit an investigational new drug application, inclusive of this new study design and initiate the study in the second half of 2024, with potential accelerated approval and launch of the CIC vaccine in the fall of 2026. While our focus remains on the combination product, our development plans will maintain optionality to advance our stand-alone influenza vaccine, as described above, creating a pathway to potentially seek licensure. For our stand-alone influenza vaccine, we have generated positive data through our previous Phase 2 trial. We expect to confirm and expand on these findings in the planned Phase 3 trial. We continue to believe this asset may also be attractive from a pandemic preparedness perspective and that similar performance in terms of comparative immunogenicity may be expected for A/H5N1 pandemic strains. High-dose COVID-19 Vaccine Study Study 205: In October 2023, we completed enrollment in a Phase 2 trial to evaluate our high-dose COVID-19 vaccine for annual vaccination in 994 adults ages 50 years and older. The trial will compare immunogenicity levels of 5 micrograms of our prototype vaccine (NVX-CoV2373) against 5 micrograms, 35 micrograms, and 50 micrograms of our updated vaccine (NVX-CoV2601) that are matched with different levels of adjuvant. Data from this trial is intended to potentially support further development of a higher-dose formulation for older adults, similar to that of influenza vaccines. Analysis of the complete dataset is ongoing to determine the utility of pursuing a high dose formulation. R21/Matrix-M™ Adjuvant Malaria Vaccine R21/Matrix-M™ adjuvant malaria vaccine, formulated with our Matrix-M™ adjuvant is developed by our partner, the Jenner Institute, University of Oxford, and manufactured by SIIPL. We have an agreement with SIIPL related to its manufacture of R21/Matrix-M™ adjuvant malaria vaccine under which SIIPL purchases our 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. In February 2024, peer-reviewed results from the Phase 3 efficacy trial were published in The Lancet reporting R21/Matrix-M™ adjuvant malaria vaccine has a well-tolerated safety profile and offers high-level efficacy against clinical malaria in African children at sites of both seasonal and perennial transmission. In December 2023, the WHO announced it prequalified the R21/Matrix-M™ adjuvant malaria vaccine to prevent malaria disease in children caused by the P. falciparum parasite in endemic areas. Prequalification status enables United Nations agencies to procure the vaccine for eligible countries and will enable rollout of the vaccine in mid-2024. The WHO recommended that the R21/Matrix-M™ adjuvant malaria vaccine be administered in a four-dose schedule beginning at five months of age. Previously, R21/Matrix-M™ adjuvant malaria vaccine received authorization in Burkina Faso, Ghana and Nigeria. 28 Business Highlights First Quarter 2024 and Recent Highlights We and Sanofi Pasteur Inc. (“Sanofi”) announced that we entered into a co-exclusive licensing agreement. The terms of the agreement include: a co-exclusive license to co-commercialize our current stand-alone adjuvanted COVID-19 vaccine worldwide (except in countries with existing APAs and in India, Japan and South Korea where we have existing partnership agreements); a sole license to our adjuvanted COVID-19 vaccine for use in combination with Sanofi’s influenza vaccines while we retain the right to and is developing its own COVID-19-Influenza Combination vaccine candidate; a non-exclusive license to use our adjuvanted COVID-19 vaccine for use in combination with non-influenza vaccines; and a non-exclusive license to use the Matrix-M™ adjuvant in vaccine products. In addition, Sanofi will take a minority (<5%) equity investment in our Company. First Quarter 2024 and Recent Highlights U.S. Market: • Updated our protein-based non-mRNA COVID-19 vaccine to JN.1 with anticipated pre-filled syringe presentation. • Completed the submission of the BLA for Novavax's COVID-19 vaccine with the U.S. FDA. • Aligned with the U.S. FDA on pathway for EUA for updated COVID-19 vaccine for the 2024-2025 vaccination season, with the intent of facilitating product availability at the beginning of the season. • Advanced retail pharmacy contract negotiations for the 2024-2025 vaccination season. Global Markets: • Delivered doses of Nuvaxovid™ XBB.1.5 vaccine to Europe and for distribution by the Taiwan Centers for Disease Control. • Received marketing authorization from the UK’s MHRA for Nuvaxovid™ XBB.1.5 in individuals aged 12 and older in January and progressed preparations for participation in the UK spring campaign for private healthcare providers. • Granted full approval from Singapore’s Health Sciences Authority for Nuvaxovid™ XBB.1.5 for active immunization to prevent COVID-19 in individuals aged 12 and older. Clinical development and technology platform updates: • Made strategic decision to add a stand-alone influenza vaccine comparative component and to focus on individuals at higher risk by enrolling adults aged 60 and older for both the stand-alone influenza and CIC arms of the trial. • On track to submit an investigational new drug application and initiate the pivotal Phase 3 trial for both CIC and stand-alone influenza vaccine candidates in the second half of 2024, with potential for accelerated approval and launch in 2026. • Continued to optimize preclinical candidates, including a new approach to H5N1 pandemic bird flu vaccination, and expanded our core technology for novel applications including mucosal vaccination and high-density nanoparticles. We are on track with our global restructuring and cost reduction plan, as we continue to transform the Company into a more lean and agile organization, with an approximately 50% reduction to combined research and development and Selling, general, and administrative expenses in the first quarter of 2024, compared to 2023. Sales of Common Stock In August 2023, we entered into an At Market Issuance Sales Agreement (the “August 2023 Sales Agreement”), which allows us to issue and sell up to $500 million in gross proceeds of shares of our common stock, and terminated our then-existing At Market Issuance Sales agreement entered in June 2021 (the "June 2021 Sales Agreement"). There were no sales recorded under the August 2023 Sales Agreement during the three months ended March 31, 2024. As of March 31, 2024, the remaining balance available under the August 2023 Sales Agreement was approximately $242 million. There were no sales recorded under the June 2021 Sales Agreement during the three months ended March 31, 2023. 29 Critical Accounting Policies and Use of Estimates The discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements (unaudited) and the accompanying notes, which have been prepared in accordance with generally accepted accounting principles in the United States. The preparation of our consolidated financial statements requires us to make estimates, assumptions, and judgments that affect the reported amounts of assets, liabilities, and equity and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Our critical accounting policies and estimates are included under Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, as filed with the SEC. Recent Accounting Pronouncements Not Yet Adopted See “Note 2―Summary of Significant Accounting Policies” included in our Notes to Consolidated Financial Statements (under the caption “ Recent Accounting Pronouncements ”). Results of Operations The following is a discussion of the historical financial condition and results of our operations that should be read in conjunction with the unaudited consolidated financial statements and notes set forth in this Quarterly Report. Three Months Ended March 31, 2024 and 2023 Revenue Three Months Ended March 31, 2024 2023 Change Revenue (in thousands): Product sales $ 82,324 $ (7,457) $ 89,781 Grants — 87,379 (87,379) Royalties and other 11,531 1,029 10,502 Total revenue $ 93,855 $ 80,951 $ 12,904 Revenue for the three months ended March 31, 2024 was $93.9 million as compared to $81.0 million for the same period in 2023, an increase of $12.9 million. Revenue for the three months ended March 31, 2024 was primarily comprised of revenue from product sales of COVID-19 Vaccine. Revenue for the three months ended March 31, 2023 was primarily comprised of services performed under our U.S. government agreement with Advanced Technology International (“USG Agreement”), the Consortium Management Firm acting on behalf of the Medical CBRN Defense Consortium in connection with the partnership formerly known as Operation Warp Speed. The increase in revenue is due to an increase in the quantity of dose sales of COVID-19 Vaccine, sales-based royalties, and Matrix-M™ adjuvant sales during the three months ended March 31, 2024, partially offset by a decrease in revenue under the USG Agreement. Product sales Product sales for the three months ended March 31, 2024 were $82.3 million as compared to $(7.5) million during the three months ended March 31, 2023. Our product sales related to revenue from commercial sales of COVID-19 Vaccine, which commenced in 2022. Product sales in the three months ended March 31, 2023, included a credit of $64.7 million for certain doses delivered in 2022 that qualified for replacement. The credit is the result of a single lot sold to the Australian government that upon pre-planned 6-month stability testing was found to have fallen below the defined specifications and the lot was 30 therefore removed from the market. The geographic distribution of product sales was as follows: Three Months Ended March 31, 2024 2023 Change North America $ (6,361) $ — $ (6,361) Europe 90,416 57,267 33,149 Rest of the world (1,731) (64,724) 62,993 Total product sales $ 82,324 $ (7,457) $ 89,781 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 wholesaler acquisition costs (“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 in prior periods due to the Gavi Settlement Agreement (see Note 3 to our consolidated financial statements). Grants We did not have any Grant revenue during the three months ended March 31, 2024, as compared to $87.4 million during the same period in 2023, a decrease of $87.4 million. Grant revenue comprised revenue for services performed under our USG Agreement. As of December 31, 2023, we had recognized the full contract funding under the USG Agreement in revenue. Royalties and other Royalties and other includes royalty milestone payments, sales-based royalties, and Matrix-M™ adjuvant sales. Royalties and other revenue during the three months ended March 31, 2024 was $11.5 million as compared to $1.0 million during the same period in 2023, an increase of $10.5 million. The increase was primarily due to $4.0 million in revenue related to license fees and $7.5 million in revenue related to a Matrix-M™ adjuvant sales. Expenses Three Months Ended March 31, 2024 2023 Change Expenses (in thousands): Cost of sales $ 59,209 $ 34,086 $ 25,123 Research and development 92,679 247,101 (154,422) Selling, general, and administrative 86,798 112,532 (25,734) Total expenses $ 238,686 $ 393,719 $ (155,033) Cost of Sales Cost of sales was $59.2 million for the three months ended March 31, 2024, including expenses of $8.8 million related to excess, obsolete, or expired inventory, and $6.0 million related to unutilized manufacturing capacity. Cost of sales was $34.1 million for the three months ended March 31, 2023, including expense of $19.4 million related to excess, obsolete, or expired inventory and losses on firm purchase commitments, partially offset by negotiated reductions to certain previously recognized firm purchase commitments, and $4.6 million related to unutilized manufacturing capacity. Prior to receiving regulatory approval, we expensed manufacturing costs as research and development expenses. After receiving regulatory approval, we capitalize the costs of production for a particular supply chain when we determine that we have a present right to the economic benefit associated with the product. While we tracked the quantities of our manufactured vaccine product and components, we did not track pre-approval manufacturing costs and therefore the manufacturing cost of our pre-launch inventory produced prior to approval is not reasonably determinable. If inventory sold for the three months ended March 31, 2024 was valued at expected standard cost, including expenses related to excess and obsolete inventory, adjusted cost of sales for the period would have been approximately $60.8 million, an adjustment of $1.6 million as compared to cost of sales recognized. If inventory sold for the three months ended March 31, 2023 was valued at expected standard cost, adjusted cost of 31 sales for the period would have been approximately $49.1 million, an adjustment of $15.0 million. The cost of sales as a percentage of product sales may fluctuate in the future as a result of changes to our customer pricing mix or standard costs. Research and Development Expenses Research and development expenses were $92.7 million for the three months ended March 31, 2024 as compared to $247.1 million for the three months ended March 31, 2023, a decrease of $154.4 million. The decrease was primarily due to a reduction in overall expenditures relating to development activities on coronavirus vaccines, including our COVID-19 Program, and CIC, as summarized in the table below (in thousands): Three Months Ended March 31, 2024 2023 Coronavirus vaccines $ 26,061 $ 140,014 Other vaccine development programs 336 1,957 Total direct external research and development expense 26,397 141,971 Employee expenses 37,953 53,413 Stock-based compensation expense 5,505 13,858 Facility expenses 11,797 19,402 Other expenses 11,027 18,457 Total research and development expenses $ 92,679 $ 247,101 Research and development expenses for coronavirus vaccines for the three months ended March 31, 2024 and 2023 decreased from $140.0 million to $26.1 million primarily as a result of a reduction in manufacturing and support costs due, in part, to a reduction in our global manufacturing footprint consistent with our contractual obligations to supply, and anticipated demand for, COVID-19 Vaccine, including embedded lease costs, under manufacturing supply agreements with Contract Manufacturing Organizations (“CMOs”) and contract manufacturing and development organizations (“CDMOs”). The decrease was also due to a benefit of $26.6 million for the three months ended March 31, 2024 resulting from the Confidential Settlement Agreement and Release agreement executed with Fujifilm resulting in a reduction to previously recorded expense (see Note 4 to our consolidated financial statements). Selling, General, and Administrative Expenses Selling, general, and administrative expenses were $86.8 million for the three months ended March 31, 2024 as compared to $112.5 million for the same period in 2023, a decrease of $25.7 million. The decrease in selling, general, and administrative expenses is primarily due to certain cost containment measures to reduce our operating spend. For the remainder of 2024, we expect a reduction in our annual combined research and development, and selling, general, and administrative spend as a result of our Restructuring Plan announced during the three months ended March 31, 2024. Other Income (Expense) Three Months Ended March 31, 2024 2023 Change Other income (expense): Interest expense $ (4,111) $ (4,316) $ 205 Other income 3,654 24,362 (20,708) Total other income (expense), net $ (457) $ 20,046 $ (20,503) Total other expense, net was $0.5 million for the three months ended March 31, 2024 as compared to a total other income, net of $20.0 million for the same period in 2023. The decrease in other income, net is due to the unfavorable impact in 2024 as compared to 2023 of exchange rates on foreign currency denominated balances, including an intercompany loan with Novavax CZ. 32 Income Tax Expense During the three months ended March 31, 2024, we recognized an income tax expense of $2.3 million related to foreign income taxes. During the three months ended March 31, 2023, we recognized an income tax expense of $1.2 million related to federal, state, and foreign income taxes. Net Income (Loss) Three Months Ended March 31, 2024 2023 Change Net Loss (in thousands, except per share information): Net loss $ (147,550) $ (293,905) $ 146,355 Net loss per share, basic and diluted $ (1.05) $ (3.41) $ 2.36 Weighted average shares outstanding, basic and diluted 139,916 86,158 53,758 Net loss for the three months ended March 31, 2024 was $147.6 million, or $1.05 per share, as compared to net loss of $293.9 million, or $3.41 per share, for the same period in 2023. The decrease in net loss during the three months ended March 31, 2024, was primarily due to a decrease in research and development expenses. The increase in weighted average shares outstanding for the three months ended March 31, 2024 was primarily a result of sales of our common stock. Liquidity Matters and Capital Resources Our future capital requirements depend on numerous factors including, but not limited to, revenue from our product sales, milestone payments, royalties and reimbursements under licensing arrangements with our strategic partners; our projected activities related to the development and commercial support of our COVID-19 Vaccine and our CIC vaccine candidate, including significant commitments under various clinical research organizations, CMO, and CDMO agreements; the progress of preclinical studies and clinical trials; the time and costs involved in obtaining regulatory approvals; the costs of filing, prosecuting, defending, and enforcing patent claims and other intellectual property rights; and other manufacturing, sales, and distribution costs. We plan to continue developing other vaccines and product candidates, such as our potential combination vaccines candidates, which are in various stages of development. Effective May 10, 2024, we entered into a collaboration and license agreement (the “Collaboration and License Agreement”) with Sanofi pursuant to which Sanofi received: i) A co-exclusive license to commercialize with us all of our current stand-alone COVID-19 vaccine products, including the our 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 our 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 our 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 our Matrix-M™ adjuvant (as described below, the “Adjuvant Products”). Under the Collaboration and License Agreement, we will receive a non-refundable upfront payment of $500 million. In addition, we 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, we are 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. 33 Commencing shortly after the Effective Date of the Collaboration and License Agreement, we will perform a technology transfer of our manufacturing process for the COVID Mono Products and Matrix-M™ components to Sanofi. Until the successful completion of such transfer, we will supply Sanofi with both COVID Mono Products and Matrix-M™ intermediary components for Sanofi’s use and are eligible for reimbursement of such costs from Sanofi. Additionally, Sanofi will reimburse us for our 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, we 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 we will commercialize the COVID Mono Products worldwide in accordance with a commercialization plan agreed by us and Sanofi, under which we will continue to supply our existing APA customers and strategic partners, including Takeda, SK Biosciences, and the Serum Institute of India. Upon completion of the existing advance purchase agreements, we and Sanofi will jointly agree on commercialization activities of each party in each jurisdiction. Effective May 10, 2024, we also entered into a securities subscription agreement (the “Subscription Agreement”) with Sanofi, pursuant to which we sold and issued to Sanofi, in a private placement, 6,880,481 shares of our common stock, par value $0.01 per share at a price of $10.00 per share for aggregate gross proceeds to us of $68.8 million. We have entered into supply agreements, sometimes referred to as APAs, with the EC and various countries globally. We also have license agreements. 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 under the licensing agreements, was approximately $2 billion, of which $1.1 billion is included in Deferred revenue on our consolidated balance sheet. Failure to timely meet regulatory milestones, obtain timely supportive recommendations from governmental advisory committees, or achieve product volume or delivery timing obligations under our APAs may require us to refund portions of upfront or other payments or result in reduced future payments, which could adversely impact our ability to realize revenue from our unsatisfied performance obligations. The timing to fulfill performance obligations related to 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 under certain of our APAs. The supply agreements typically contain terms that include upfront payments intended to assist us in funding investments related to building out and operating our manufacturing and distribution network, among other expenses, in support of our global supply commitment, and are applied to billings upon delivery of COVID-19 Vaccine. Such upfront payments generally become non-refundable upon our achievement of certain development, regulatory, and commercial milestones. On October 3, 2023, our updated vaccine received EUA from the U.S. FDA for active immunization to prevent COVID-19 in individuals aged 12 and older. Immediately upon authorization, our updated vaccine has also been included in the recommendations issued by the CDC in September 2023. Doses became available within the U.S. at many major pharmacy retailers, following the Center for Biologics Evaluation and Research release of vaccine batches. We have established reserves for gross-to-net deductions for amounts that we expect to return to our customers. As of March 31, 2024, gross-to-net reserve balances were $92.9 million related to product returns and $10.2 million related to wholesale distributor fees, discounts, and chargebacks, of which $5.4 million was included in Accounts receivable and $97.7 million was included in Accrued expenses on our consolidated balance sheet. Pursuant to the Settlement Agreement with Fujifilm (see Note 4 to our consolidated financial statements), in March 2024 we paid $42.0 million to Fujifilm, the parties agreed to a mutual release of claims arising from, under or otherwise in connection with the prior confidential settlement agreement and release effective September 30, 2022, and Fujifilm agreed to dismiss its demand for arbitration with the Judicial Arbitration and Mediation Services (“JAMS”). This payment is less than amounts previously recognized as embedded lease expense and reflected in Research and development expenses from Fujifilm manufacturing activity and accordingly, during the three ended March 31, 2024, we recorded a benefit of $26.6 million as Research and development expenses. 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, 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. Australia is not required to purchase the updated COVID-19 Vaccine doses until we receive authorization from TGA. We plan to seek an 34 amendment to the Australia APA to address performance obligations and future delivery schedule, which may not be achievable on acceptable terms or at all. 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 anticipate achieving regulatory approval of our COVID-19 Vaccine using bulk antigen produced at BMC on or before December 31, 2024. Therefore, we plan 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 our consolidated balance sheet. If the Canadian government terminates the Canada APA, $28.0 million of the deferred revenue would become refundable and approximately $224 million of the contract value related to future deliverables would no longer be available. In September 2022, we entered into an Amended and Restated SARS-CoV-2 Vaccine Supply Agreement (the “Amended and Restated UK Supply Agreement”) with The Secretary of State for Business, Energy and Industrial Strategy (as assigned to the UK Health Security Agency), acting on behalf of the government of the United Kingdom of Great Britain and Northern Ireland (the “Authority”), which amended and restated in its entirety the SARS-CoV-2 Vaccine Supply Agreement, dated October 22, 2020, between the parties (the “Original UK Supply Agreement”). Under the 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 Joint Committee on Vaccination and Immunisation (“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 entered into an APA with the Vaccine Alliance (“Gavi”) in May 2021 (the “Gavi APA”), pursuant to which we received upfront payments of $700 million from Gavi (the “Advance Payment Amount”) to be applied against purchases of our 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, we and Gavi entered into a Termination and Settlement Agreement (the “Gavi Settlement Agreement”) terminating the Gavi APA, settling the arbitration proceedings, and releasing both parties of all claims arising from, under, or otherwise in connection with the Gavi APA. Pursuant to the Gavi Settlement Agreement, we are responsible for payment to Gavi of (i) an initial settlement payment of $75 million, which we paid 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 our vaccines funded by Gavi for supply to certain low-income and lower-middle income countries. We have the right to price the vaccines offered to such low-income and lower-middle income countries in our discretion, and, when utilized by Gavi, we will credit the actual price per vaccine paid against the applicable credit. We intend to price vaccines offered via the tender process, consistent with our shared goal with Gavi to provide equitable access to those countries. Also, pursuant to the Gavi Settlement Agreement, we granted Gavi an additional credit of up to $225 million that may be applied against qualifying sales of any of our vaccines for supply to such low-income and lower-middle income 35 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. We 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 revenue adjustment during the three months ended March 31, 2024. As of March 31, 2024, the remaining amounts included on our 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, we and Gavi entered into a security agreement pursuant to which we granted Gavi a security interest in accounts receivable from SIIPL under the SIIPL R21 Agreement (see Note 4 to our consolidated financial statements), which will continue for the deferred payment term of the Gavi Settlement Agreement. On February 22, 2024, the claims and counterclaims were dismissed with prejudice. Our funding agreements currently include funding from the Coalition for Epidemic Preparedness Innovations (“CEPI”) in the form of one or more forgivable no interest term loans (“CEPI Forgivable Loan Funding”). Payments received under the CEPI Forgivable Loan Funding are only repayable if project vaccine, as defined under the CEPI funding agreement, manufactured by the CMO network funded by CEPI is sold to one or more third parties (which could include sales credited under the Gavi Settlement Agreement), and such sales cover our costs of manufacturing such vaccine, not including manufacturing costs funded by CEPI. The timing and amount of any loan repayments is currently uncertain. We continue to assess our manufacturing needs and modify our global manufacturing footprint consistent with our contractual obligations to supply, and anticipated demand for, COVID-19 Vaccine, and in doing so recognize that significant costs may be incurred. For the 2023-2024 vaccination season, we have depended exclusively on SIIPL and SLS for co-formulation and filling (other than in Europe), and PCI Pharma Services for finishing COVID-19 Vaccine in Europe. For the 2024-2025 vaccination season, we are seeking to expand our supply chain network and introduce new single-dose vial or pre-filled syringe product presentations in certain markets. Any delays or disruptions in these suppliers’ operations could prevent or delay the delivery of customer orders. As of March 31, 2024, we had $495.9 million in cash and cash equivalents and restricted cash as compared to $583.8 million as of December 31, 2023. We funded our operations for the three months ended March 31, 2024 primarily with cash and cash equivalents, upfront payments under APAs, revenue from product sales, and royalties under licensing arrangements with our strategic partners. In May 2023, we announced our plan to restructure our global footprint to reduce our planned expenditures and in January 2024, we announced further reductions in our global workforce. We anticipate our future operations to be funded primarily by milestone payments, royalties and reimbursements under our Collaboration and License Agreement and equity investment under the Subscription Agreement with Sanofi, revenue from product sales, our cash and cash equivalents, and other potential funding sources including equity financings, which may include at the market offerings under our August 2023 Sales Agreement, debt financings, collaborations, strategic alliances, asset sales, and marketing, distribution or licensing arrangements. The following table summarizes cash flows for the three months ended March 31, 2024 and 2023 (in thousands): Three Months Ended March 31, 2024 2023 Change Net cash provided by (used in): Operating activities $ (83,555) $ (325,593) $ 242,038 Investing activities (7,250) (23,558) 16,308 Financing activities 5,886 (354,379) 360,265 Effect on exchange rate on cash, cash equivalents, and restricted cash (2,955) (8,372) 5,417 Net decrease in cash, cash equivalents, and restricted cash (87,874) (711,902) 624,028 Cash, cash equivalents, and restricted cash at beginning of period 583,810 1,348,845 (765,035) Cash, cash equivalents, and restricted cash at end of period $ 495,936 $ 636,943 $ (141,007) Net cash used in operating activities was $83.6 million for the three months ended March 31, 2024, as compared to 36 $325.6 million for the same period in 2023. The decrease in cash used in operating activities is primarily due to an increase in amounts received under our APAs and an overall decrease in operating expenses period over period, partially offset by the timing of payments to vendors. Net cash used in investing activities was $7.3 million for the three months ended March 31, 2024, as compared to $23.6 million for the same period in 2023. The decrease in cash used in investing activities is primarily due to lower expenditures on equipment and leasehold improvements. Net cash provided by financing activities was $5.9 million for the three months ended March 31, 2024, as compared to net cash used in financing activities of $354.4 million for the same period in 2023. The decrease in cash used in financing activities is primarily due to the $325 million repayment of our 3.75% Convertible notes and finance lease payments during 2023. Going Concern As described in Note 2 to our consolidated financial statements, conditions or events existed that raised substantial doubt about our ability to continue as a going concern for at least one year from the date that the financial statements were issued. However, management’s plans, including specifically the execution of the Collaboration and License Agreement and Subscription Agreement with Sanofi effective May 10, 2024, which will result in cash proceeds to us of $568.8 million during the second quarter of 2024, has alleviated the substantial doubt regarding our ability to continuing as a going concern for the one-year period from the date these the financial statements were issued.