What changed in this filing

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Item 1. Financial Statements

2024-08-08 compared with 2024-05-10 · 355 added, 270 removed, 405 unchanged (61% of the section changed)

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For the Three Months Ended

June 30, For the Six Months Ended

2024 2023 2024 2023

Product sales $ 19,904 $ 285,163 $ 102,228 $ 277,706

Licensing, royalties, and other 395,580 2,184 407,111 3,213

Grants — 137,079 — 224,458

Royalties and other 11,531 1,029

Total revenue 415,484 424,426 509,339 505,377

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Total expenses 254,486 368,969 493,172 762,688

Loss from operations

Income (loss) from operations

160,998 55,457 16,167 ( 257,311 )

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Interest expense ( 4,143 ) ( 3,124 ) ( 8,254 ) ( 7,440 )

Loss before income taxes

( 145,288 ) ( 292,722 )

Income tax expense

Other income, net

7,731 5,532 11,385 29,894

Net loss per share:

Basic and diluted

Income (loss) before income tax expense (benefit)

164,586 57,865 19,298 ( 234,857 )

Income tax expense (benefit) 2,205 ( 143 ) 4,467 1,040

Net income (loss) $ 162,381 $ 58,008 $ 14,831 $ ( 235,897 )

Net income (loss) per share:

Basic $ 1.09 $ 0.65 $ 0.10 $ ( 2.69 )

Diluted $ 0.99 $ 0.58 $ 0.10 $ ( 2.69 )

Weighted average number of common shares outstanding:

Basic and diluted

139,916 86,158

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

Basic 148,379 89,362 144,147 87,769

Diluted 165,855 104,065 145,121 87,769

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in thousands)

For the Three Months Ended

June 30, For the Six Months Ended

2024 2023 2024 2023

Other comprehensive loss:

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

Net income (loss) $ 162,381 $ 58,008 $ 14,831 $ ( 235,897 )

Other comprehensive income (loss):

Net unrealized loss on available-for-sale marketable securities

( 150 ) — ( 150 ) —

Comprehensive loss

Foreign currency translation adjustment 467 ( 5,011 ) ( 13,080 ) ( 1,800 )

Other comprehensive income (loss)

317 ( 5,011 ) ( 13,230 ) ( 1,800 )

Comprehensive income (loss) $ 162,698 $ 52,997 $ 1,601 $ ( 237,697 )

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

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Cash and cash equivalents $ 680,162 $ 568,505

Marketable securities 369,432 —

Restricted cash 10,486 10,424

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Commitments and contingencies (Note 15)

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

Preferred stock, $ 0.01 par value, 2,000,000 shares authorized at June 30, 2024 and December 31, 2023;

no shares issued and outstanding at June 30, 2024 and December 31, 2023

Stockholders' deficit:

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

Common stock, $ 0.01 par value, 600,000,000 shares authorized at June 30, 2024 and December 31, 2023;

161,267,120 shares issued and 159,891,014 shares outstanding at June 30, 2024 and 140,506,093 shares issued and 139,505,770 shares outstanding at December 31, 2023

Additional paid-in capital 4,477,748 4,192,164

Accumulated deficit ( 4,806,120 ) ( 4,820,951 )

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

Treasury stock, cost basis, 1,376,106 shares at June 30, 2024 and 1,000,323 shares at December 31, 2023

( 94,439 ) ( 92,267 )

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CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT

Three Months Ended March 31, 2024 and 2023

Three and Six Months Ended June 30, 2024 and 2023

(in thousands, except share information)

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Comprehensive

Income (Loss)

Total Stockholders'

Loss Total Stockholders'

Shares Amount

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

Stock-based compensation — — 14,099 — — — 14,099

Stock issued under incentive programs 472,751 5 2,656 — ( 489 ) — 2,172

Issuance of common stock, net of issuance cost s of $ 3,830

19,093,397 191 256,218 — — — 256,409

Unrealized loss on available-for-sale marketable securities — — — — — ( 150 ) ( 150 )

Foreign currency translation adjustment — — — — 467 467

Net income — — — 162,381 — — 162,381

Balance at June 30, 2024 161,267,120 $ 1,613 $ 4,477,748 $ ( 4,806,120 ) $ ( 94,439 ) $ ( 10,508 ) $ ( 431,706 )

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

Stock-based compensation — — 20,292 — — — 20,292

Stock issued under incentive programs 95,965 1 ( 1 ) — ( 198 ) — ( 198 )

Issuance of common stock, net of issuance costs of $ 861

7,947,954 80 67,892 — — — 67,972

Foreign currency translation adjustment — — — — — ( 5,011 ) ( 5,011 )

Net income — — — 58,008 — — 58,008

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

Common Stock Additional

Capital Accumulated

Deficit Treasury

Stock Accumulated Other

Comprehensive

Income (Loss) Total Stockholders'

Shares Amount

Balance at December 31, 2023 140,506,093 $ 1,405 $ 4,192,164 $ ( 4,820,951 ) $ ( 92,267 ) $ 2,722 $ ( 716,927 )

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Stock issued under incentive programs 1,667,630 17 3,711 — ( 2,172 ) — 1,556

Issuance of common stock, net of issuance costs of $ 3,830

19,093,397 191 256,218 — — — 256,409

Unrealized loss on available-for-sale marketable securities — — — — — ( 150 ) ( 150 )

Foreign currency translation adjustment — — — — — ( 13,080 ) ( 13,080 )

— — — 14,831 — — 14,831

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

Balance at June 30, 2024 161,267,120 $ 1,613 $ 4,477,748 $ ( 4,806,120 ) $ ( 94,439 ) $ ( 10,508 ) $ ( 431,706 )

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

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Stock issued under incentive programs 429,242 4 1,106 — ( 765 ) — 345

Issuance of common stock, net of issuance costs of $ 861

7,947,954 80 67,892 — — — 67,972

Foreign currency translation adjustment — — — — — ( 1,800 ) ( 1,800 )

Net loss — — — ( 235,897 ) — — ( 235,897 )

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

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

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

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(in thousands)

Three Months Ended March 31,

Six Months Ended June 30,

Operating Activities:

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

Net income (loss) $ 14,831 $ ( 235,897 )

Reconciliation of net loss to net cash used in operating activities:

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Deferred revenue 111,037 357,860

Net cash used in operating activities ( 83,555 ) ( 325,593 )

Net cash provided by (used in) operating activities

230,714 ( 497,531 )

Investing Activities:

Capital expenditures ( 9,753 ) ( 26,774 )

Purchases of available-for-sale marketable securities

( 369,582 ) —

Internal-use software ( 622 ) ( 4,563 )

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Effect of exchange rate on cash, cash equivalents, and restricted cash ( 3,111 ) ( 8,992 )

Net decrease in cash, cash equivalents, and restricted cash ( 87,874 ) ( 711,902 )

Net increase (decrease) in cash, cash equivalents, and restricted cash 111,748 ( 830,904 )

Cash, cash equivalents, and restricted cash at beginning of period 583,810 1,348,845

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Supplemental disclosure of non-cash activities:

Sale of common stock under the Sales Agreement not settled at quarter-end $ — $ 5,986

Right-of-use asset leases, net of tenant improvement allowance on facility leases

$ ( 8,289 ) $ —

Capital expenditures included in accounts payable and accrued expenses $ 2,137 $ 6,591

Internal-use software included in accounts payable and accrued expenses

Supplemental disclosure of cash flow information:

1 unchanged sentence

Cash paid for income taxes, net of refunds

$ ( 649 ) $ 128

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

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2024

June 30, 2024

Note 1 – Organization and Business

Novavax, Inc.

(“Novavax,” and together with its wholly owned subsidiaries, the “Company”) is a biotechnology company that promotes improved health by discovering, developing, and commercializing innovative vaccines to prevent serious infectious diseases.

(“Novavax,” and together with its wholly owned subsidiaries, the “Company”) is a global company that is advancing protein-based vaccines with its Matrix-M TM adjuvant.

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 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.

(“SIIPL”), markets NVX-CoV2373 as “Covovax™.”

Beginning in 2022, the Company received approval, interim authorization, provisional approval, conditional marketing authorization, and emergency use authorization (“EUA”) from multiple regulatory authorities globally for its prototype vaccine for both adult and adolescent populations as a primary series and for both homologous and heterologous booster indications in select territories.

In October 2023, the U.S.

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.

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.

In May 2024, Novavax entered into a collaboration and licensing agreement (the “Collaboration and License Agreement” or “ Sanofi CLA”) with Sanofi Pasteur Inc.

(“Sanofi”) to co-commercialize Novavax’s current standalone COVID-19 vaccines (“COVID-19 Vaccine”), including Novavax’s Nuvaxovid TM , prototype COVID-19 vaccine (“NVX-CoV2373,” or “prototype vaccine”) and XBB COVID-19 vaccine (“NVX-CoV2601”), and the Company’s updated vaccine for the 2024-2025 vaccination season (“NVX-CoV2705,” or “updated vaccine” and, collectively with NVX-CoV2373 and NVX-CoV2601, the Company’s “COVID-19 Vaccine” or “COVID-19 Program”).

This agreement is discussed in greater detail in Note 6 of Novavax’s consolidated financial statements.

The partnership with Sanofi allows Novavax to broaden access to its vaccine and adjuvant and refocus on clinical-stage research and development and pipeline expansion beginning in 2025.

Through the end of the 2024-2025 vaccination season, Novavax will continue commercialization of its COVID-19 Vaccine.

Local regulatory authorities have also specified nomenclature for the labeling of NVX-CoV2373 and NVX-CoV2601 within their territories (e.g., “Novavax COVID-19 Vaccine, Adjuvanted”, “Novavax COVID-19, Adjuvanted (2023-2024 Formula),” respectively, for the U.S., and “Nuvaxovid™” for ex-US territories) collectively referred to as the Company’s “COVID-19 Program,” or “COVID-19 Vaccine”).

In 2024, the Company has submitted an amendment to the previously granted October 2023 Emergency Use Authorization (“EUA”) to the U.S.

Food and Drug Administration (“U.S.

FDA”), filed for a type II variation of the existing Marketing Authorization (“MA”) with the European Medicines Agency (“EMA”) and the United Kingdom's (“U.K.”) Medicines and Healthcare products Regulatory Agency (“MHRA”), and filed for authorization with Health Canada for the Company’s updated vaccine.

Currently, the Company significantly depends on its supply agreement with Serum Institute of India Pvt.

(“SII”) and its subsidiary, Serum Life Sciences Limited (“SLS” and together with SII, “Serum”), 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”) and stand-alone influenza vaccine candidates.

In addition, Novavax’s adjuvant is included in the University of Oxford and SII’s R21/Matrix-M TM malaria vaccine which has received authorizations in a number of countries with doses administered in 2024.

Novavax’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

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GAAP”) for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X.

The consolidated financial statements are unaudited but include all adjustments (consisting of normal recurring adjustments) that the Company considers necessary for a fair presentation of the financial position, operating results, comprehensive loss, changes in stockholders’ deficit, and cash flows for the periods presented.

The consolidated financial statements are unaudited but include all adjustments (consisting of normal recurring adjustments) that the Company considers necessary for a fair presentation of the financial position, operating results, comprehensive income (loss), changes in stockholders’ deficit, and cash flows for the periods presented.

Although the Company believes that the disclosures in these unaudited consolidated financial statements are adequate to make the information presented not misleading, certain information and footnote information normally included in consolidated financial statements prepared in accordance with U.S.

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All intercompany accounts and transactions have been eliminated in consolidation.

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 aggregate foreign currency transaction gains and losses resulting from the conversion of the transaction currency to functional currency were a $ 1.6 million loss and a $ 6.7 million loss, and a $ 0.2 million loss and $ 16.1 million gain for the three and six months ended June 30, 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.

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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 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

In May 2024, the Company entered into the Sanofi CLA and a securities subscription agreement (the “Subscription Agreement”) with Sanofi as a result of which, the Company received a total of $ 568.8 million during the second quarter of 2024 (See Note 6).

As of June 30, 2024, the Company had $ 680.2 million in cash and cash equivalents, $ 369.4 million in marketable securities, and working capital of $ 45.6 million.

During the six months ended June 30, 2024, the Company recognized net income of $ 14.8 million, and had net cash flows provided by operating activities of $ 230.7 million.

In accordance with Accounting Standards Codification (“ASC”) Topic 205-40, Presentation of Financial Statements - Going Concern , the Company evaluated its ability to continue as a going concern within one year after the date that these consolidated financial statements are issued.

Based on the Company’s current cash and cash equivalents and marketable securities balances and its current cash flow forecast for the one-year going concern look forward period, the Company has concluded that it will have sufficient capital available to fund its operations for the one-year period from the date that these financial statements are issued.

As of December 31, 2023, the Company had concluded that there was substantial doubt about its ability to continue as a going concern primarily due to significant uncertainty related to its ability to successfully develop, manufacture, distribute, and market its updated vaccine and execute on certain cost-reduction initiatives as described in Note 16.

The Sanofi CLA has alleviated the substantial doubt.

Revenue Recognition, Licensing and Transition Services

The terms of the Company’s third-party licensing agreements may contain multiple performance obligations, including licenses and transition services.

The Company evaluates licensing agreements under ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”) to determine the distinct performance obligations.

Prior to recognizing revenue, the Company estimates the transaction price, including variable consideration that is subject to a constraint.

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

Total consideration may include nonrefundable upfront license fees, transition service fees, other payments based upon the achievement of specified milestones, and royalty payments based on product sales from licensed products.

For multiple performance obligation arrangements, the Company allocates the transaction price to each distinct performance obligation based on its relative standalone selling price.

The standalone selling price is generally determined for each performance obligation based on the prices charged to customers, discounted cash flows, or using expected cost-plus margin.

For standalone selling prices determined using discounted cash flows, the Company considers discounted, probability-weighted cash flows related to the performance obligation transferred.

In developing such estimates, the Company applies judgment in determining the forecasted revenue, expected margins, and the discount rate.

These estimates are subjective and require the Company to make assumptions about future cash flows.

Revenue related to performance obligations satisfied at a point in time is recognized when the customer obtains control of the promised asset.

For performance obligations recognized over time, the Company recognizes revenue using an input method to measure progress by utilizing costs incurred to-date relative to total expected costs.

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

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

Changes in these estimates can occur for a variety of reasons and may impact the timing of revenue recognition on the Company’s contracts.

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

The Company has not experienced any material adjustments as a result of changes in estimates arising from this process.

Use of Estimates

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Ongoing benefits are expensed when restructuring activities are probable and the benefit estimable.

See Note 14 for additional information on the severance and employee benefit costs for terminated employees and impairment of assets in connection with the Company’s Restructuring Plan.

See Note 16 for additional information on the severance and employee benefit costs for terminated employees and impairment of assets in connection with the Company’s Restructuring Plan as defined in Note 16.

Recent Accounting Pronouncements

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

Note 3 – Marketable Securities

Marketable securities were classified as available-for-sale as of June 30, 2024 and comprised of (in thousands):

June 30, 2024 December 31, 2023

Losses Fair Value Amortized

Losses Fair Value

Corporate debt securities $ 369,582 $ — $ ( 150 ) $ 369,432 $ — $ — $ — $ —

Total marketable securities $ 369,582 $ — $ ( 150 ) $ 369,432 $ — $ — $ — $ —

As of June 30, 2024, investments in marketable securities, comprising corporate debt securities, were due to mature within one year.

Based on the Company’s policy under the expected credit loss model, including an assessment of unrealized losses on the portfolio as of June 30, 2024, the Company concluded that the unrealized losses for its marketable securities were not attributable to credit and therefore an allowance for credit losses for these securities has not been recorded as of June 30, 2024.

Also, based on the scheduled maturities of the investments, the Company was more-likely-than-not to hold these investments for a period of time sufficient for a recovery of the Company’s cost basis.

As of June 30, 2024, the Company held no securities that were in an unrealized loss position for more than 12 months.

Note 4– Fair Value Measurements

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

Fair Value at June 30, 2024 Fair Value at December 31, 2023

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

Money market funds (1)

$ 188,086 $ — $ — $ 171,824 $ — $ —

Government-backed securities (1)

— 225,000 — — 200,000 —

Treasury securities (1)

— — — — 45,622 —

Corporate debt securities (2)

— 601,466 — — — —

Total cash equivalents and marketable securities

$ 188,086 $ 826,466 $ — $ 171,824 $ 245,622 $ —

5.00 % Convertible notes due 2027

$ — $ 217,587 $ — $ — $ 100,909 $ —

(1) Classified as cash and cash equivalents as of June 30, 2024 and December 31, 2023, respectively, on the consolidated balance sheets.

(2) Includes $ 232.0 million classified as Cash and cash equivalents and $ 369.4 million classified as marketable securities as of June 30, 2024, 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 six months ended June 30, 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.

Note 5 – Revenue

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):

The Company's accounts receivable included $ 29.8 million and $ 286.4 million related to amounts that were billed to customers and $ 2.3 million and $ 10.8 million related to amounts which had not yet been billed to customers as of June 30, 2024 and December 31, 2023, respectively.

During the six months ended June 30, 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:

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

Six Months Ended June 30, 2024 $ 304,916 $ 672,326 $ ( 937,462 ) $ 39,780

Six Months Ended June 30, 2023 96,210 793,039 ( 486,684 ) 402,565

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 )

Six Months Ended June 30, 2024 $ ( 7,675 ) $ — $ — $ ( 7,675 )

Six Months Ended June 30, 2023 ( 13,835 ) — 6,160 ( 7,675 )

Deferred revenue:

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.

Six Months Ended June 30, 2024 $ 863,520 $ 365,150 $ ( 28,849 ) $ 1,199,821

Six Months Ended June 30, 2023 549,551 414,816 ( 56,957 ) 907,410

(1) There was no allowance for credit losses recorded during the six months ended June 30, 2024 or 2023.

During the six months ended June 30, 2023, there was a $ 6.2 million reversal of a credit loss allowance due to the collection of a previously recognized allowance for credit losses.

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 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.

During the six months ended June 30, 2024, deductions included a $ 2.2 million reclassification of refundable upfront payments previously included in Deferred revenue to Other current liabilities.

During the six months ended June 30, 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 six months ended June 30, 2023.

As of June 30, 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 and constrained variable consideration, was approximately $ 2 billion, of which $ 1.2 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.

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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.

In February 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.

The deferred payments are due in variable quarterly installments 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.

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.

As of June 30, 2024, the remaining amounts included on the Company’s consolidated balance sheet were $ 225 million in non-current Deferred revenue for the additional credit that may be applied against future qualifying sales, $ 90 million in Other current liabilities, and $ 305 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 SII under the SII R21 Agreement (see Note 6), which will continue for the deferred payment term of the Gavi Settlement Agreement.

Product Sales

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Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

North America

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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):

During the six months ended June 30, 2024, product sales in North America includes $ 4.8 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, partially offset by updates to estimated product returns.

During the six months ended June 30, 2024, 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 June 30, 2024, changes in the Company’s gross-to-net deductions balances were as follows (in thousands):

Wholesale Distributor Fees, Discounts, and Chargebacks

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15,436 21,302 36,738

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

Balance as of March 31, 2024

Credits/deductions

( 35,621 ) ( 51,331 ) ( 86,952 )

Balance as of June 30, 2024

$ 887 $ 54,587 $ 55,474

(1) Amounts charged against product sales include $ 4.0 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.

As of June 30, 2024 no gross-to-net deductions were included in Accounts receivable.

As of December 31, 2023, $ 2.6 million of gross-to-net deductions were included in Accounts receivable.

As of June 30, 2024 and December 31, 2023, $ 55.5 million and $ 103.1 million of gross-to-net deductions 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 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.

Australia is not required to purchase updated vaccine doses until the Company receives authorization from Therapeutic Goods Administration (“TGA”).

The Company does not expect approval in time for product delivery in 2024 which could result in a loss or deferral of approximately $ 240 million of contract value.

The Company plans to seek an amendment to the Australia APA which may not be achievable on acceptable terms or at all.

As of June 30, 2024, $ 119.1 million was classified as current Deferred revenue and $ 14.7 million was classified as non-current Deferred revenue with respect to the Australia APA in the Company’s consolidated balance sheet.

If the Company is unable to satisfy its obligations under the Australia APA, $ 92.5 million of deferred revenue may become refundable and approximately $ 225 million of remaining funds under the contract may no longer be available.

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”).

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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.

As of June 30, 2024, $ 452.1 million was classified as current Deferred revenue and $ 136.1 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.

In July 2024, the Pharmaceutical Management Agency (“Pharmac”), a New Zealand Crown entity, provided notice of its termination of its APA (the “New Zealand APA”).

As of June 30, 2024, $ 31.3 million was classified as current Deferred revenue with respect to such agreement in the Company’s consolidated balance sheet.

New Zealand has requested a refund of certain advanced payments and the Company is in discussion with Pharmac on both, whether its termination of the New Zealand APA was appropriate under the New Zealand APA, and whether a refund of the advanced payments is appropriate under the New Zealand APA.

Ap proximately $ 125 million of the contract value related to future deliverables may no longer be available if the APA is terminated.

Licensing, Royalties, and Other

Licensing, royalties, and other includes Licensing payments, Transition Services revenue, and Technology Transfer revenue from the Company’s Collaboration and License Agreement with Sanofi (“Sanofi CLA”);

royalty milestone payments;

sales-based royalties;

and Matrix-M™ adjuvant sales.

During the three and six months ended June 30, 2024, respectively, the Company recognized $ 386.3 million and $ 390.3 million in revenue related to license fees and $ 2.7 million and $ 10.2 million in revenue related to Matrix-M™ adjuvant sales, respectively.

During the three and six months ended June 30, 2024, the Company recognized $ 6.6 million of Transition Services revenue.

During the three and six months ended June 30, 2023, the Company recognized $ 2.2 million and $ 3.2 million in revenue related to Matrix-M™ adjuvant sales.

During the three and six months ended June 30, 2023, the Company did not recognize revenue related to license fees or milestone payments.

The Company’s U.S.

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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 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 6 – 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), 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), 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™”).

As of June 30, 2024, the Company’s material collaborations, license and supply agreements were as follows:

The Company previously granted SII exclusive and non-exclusive licenses for the development, co-formulation, filling and finishing, registration, and commercialization of its prototype vaccine, NVX-CoV2601, its updated vaccine, and its CIC vaccine candidate.

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

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

In May 2024, the Company and SLS entered into a supply agreement (the “SLS Supply Agreement”) under which SLS will supply the Company with antigen drug substance and finished COVID-19 Vaccine doses.

The SLS Supply Agreement includes the general terms and conditions of supply orders between the Company and SLS.

The Company and SLS intend to execute statements of work and firm purchase orders to included specific quantities to be delivered under the SLS Supply Agreement.

The Company will supply SLS with all Matrix-M™ adjuvant needed to manufacture finished COVID-19 Vaccine doses.

In March 2020, the Company entered into an agreement with SII that granted SII a non-exclusive license for the use of Matrix-M™ adjuvant supplied by the Company to develop, manufacture, and commercialize R21/Matrix-M™ adjuvant (“SII 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.

Under the SII R21 Agreement, SII 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

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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.

In May 2024, the Company entered into the Sanofi CLA under which the Company granted and Sanofi received the following:

i) A co-exclusive license to commercialize the Company’s current stand-alone COVID-19 Vaccine, including the Company’s prototype vaccine and updated vaccines, that address seasonal variants throughout the world (the “COVID-19 Vaccine 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-19 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-19 Vaccine Products, CIC Products, and Other Combination Products, “Licensed COVID-19 Products”);

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”).

The Company is also responsible for performing services related to the technology transfer of its manufacturing process for the COVID-19 Vaccine Products and Matrix-M™ components to Sanofi.

Until the successful completion of such transfer, the Company will supply Sanofi with both COVID-19 Vaccine Products and Matrix-M™ intermediary components for Sanofi’s use and is eligible for reimbursement of such costs from Sanofi.

In addition, the Company is responsible for certain research and development and medical affairs services related to the COVID-19 Vaccine.

Under the Sanofi CLA, the Company will continue to commercialize its updated vaccine.

Beginning in 2025 and continuing during the term of the Sanofi CLA, Sanofi and the Company will commercialize the COVID-19 Vaccine 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 and SII.

Upon completion of the existing APAs, the Company and Sanofi will jointly agree on commercialization activities of each party in each jurisdiction.

Pursuant to the Sanofi CLA, the Company received a non-refundable upfront payment of $ 500 million in the second quarter of 2024.

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 COVID-19 Vaccine Products and royalty payments on Sanofi’s sales of such licensed products.

Milestone payments are comprised of a payment of $ 175 million upon the approval of the marketing authorization for a COVID-19 Vaccine Product in a pre-filled syringe from the FDA, $ 25 million upon the transfer of such approval to Sanofi, $ 25 million upon the transfer of EMA approval of a COVID-19 Vaccine Product in a pre-filled syringe to Sanofi, $ 50 million upon database lock of an existing Phase 2/3 clinical trial (identifier 2019nCoV-503), $ 75 million upon the completion of the technology transfer of the Company’s manufacturing process for the COVID-19 Vaccine Products to Sanofi, and up to $ 350 million in CIC Product-related development and launch milestones.

The Company is also 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.

In addition, a portion of the technology transfer costs and research and development costs incurred by the Company will be reimbursed by Sanofi in accordance with agreed upon plans and budgets.

The Company assessed whether the Sanofi CLA fell within the scope of ASC 808, Collaborative Arrangements (“ASC 808”) based on whether the arrangement involved joint operating activities and whether both parties have active participation in the arrangement and are exposed to significant risks and rewards.

The Company determined that the Sanofi CLA did not fall within the scope of ASC 808, as the Company does not share in the significant financial risks of Sanofi's development or commercialization activities.

The Company then analyzed the arrangement pursuant to the provisions of ASC 606 and determined that the arrangement represents a contract with a customer and is therefore within the scope of ASC 606.

The Company identified the following performance obligations in the Sanofi CLA and determined that they were within the scope of ASC 606:

delivery of (i) the licenses described above (the COVID-19 Vaccine license, CIC Products license, Other Combination Product license, and Adjuvant Products license) (collectively the “Sanofi CLA Licenses’), (ii) research and development transition services that support further regulatory approval and development of the COVID-19 Vaccine, referred to as the Sanofi Transition Services, and (iii) technology transfer of the existing manufacturing process for the COVID-19 Vaccine Products and Matrix-M™ adjuvant, referred to as the “Sanofi Technology Transfer”.

The Company also evaluated whether certain options outlined in the Sanofi Agreement represented material rights that would give rise to a performance obligation and concluded that none of the options convey a material right to Sanofi and therefore are not considered separate performance obligations within the Sanofi CLA.

The Sanofi CLA Licenses performance obligations are considered functional intellectual property and distinct from other promises under the contract as Sanofi can benefit from the licenses on their own or together with other readily available resources.

Also, the Sanofi Transition Services provide a distinct benefit to Sanofi within the context of the contract, separate from the licenses, as the services could be provided by Sanofi or another third party without the Company’s assistance.

The Sanofi Technology Transfer obligation is distinct as Sanofi can benefit from the Sanofi CLA Licenses transferred by the Company at the inception of the agreement with other readily available resources.

Therefore, each represents a separate performance obligation within the contract with a customer under the scope of ASC 606 at contract inception.

The Company determined the initial transaction price at inception of the Sanofi CLA to be $ 620.2 million, consisting of (i) fixed consideration (the $ 500 million upfront nonrefundable fee), (ii) and $ 120.2 million of variable consideration attributed to a $ 50.0 million clinical milestone and $ 70.2 million of estimated cost reimbursement related to Sanofi Transition Services and Sanofi Technology Transfer.

Since the clinical milestone allocated to Sanofi Transition Services is entirely within the Company’s control, and the cost reimbursement variable consideration allocated to Sanofi Transition Services and Sanofi Technology Transfer would be recognized as revenue only as the costs are incurred, the Company determined it is not probable that a significant reversal of cumulative revenue would occur.

The Company utilized the expected value method to determine the amount of these payments.

The Company excluded certain regulatory and technology transfer milestones from the transaction price that were determined to be inherently uncertain of achievement and are highly susceptible to factors outside of the Company’s control.

Sales-based royalties and launch milestones are related to the license of the intellectual property rights and the Company will recognize revenue for these in the period when subsequent sales are made or sale-based milestones are achieved pursuant to the sales-based royalty exception under ASC 606.

The Company will re-evaluate the transaction price in each reporting period as uncertain events are resolved or other changes in circumstances occur.

The Company allocated the fixed consideration (i.e., the $ 500 million nonrefundable upfront fee) to the performance obligations in the Sanofi CLA based on each performance obligation’s relative standalone selling price, or SSP, as follows:

• $ 386.3 million for the upfront transfer of the licenses;

• $ 110.2 million for Transition Services;

• $ 3.5 million for Technology Transfer.

The SSP for the licenses were determined using an approach that considered discounted, probability-weighted cash flows related to the license transferred.

In developing such estimates, the Company applied judgment in determining the forecasted revenues, expected margins, and the discount rate.

The SSP for the ongoing Transition Services and Technology Transfer were based on estimates of the associated effort and cost of these services, adjusted for a reasonable gross profit margin that would be expected to be realized under similar contracts.

The Company recognized revenue related to the licenses at a point in time upon transfer of the rights and control of the license to Sanofi during the second quarter 2024.

The Sanofi Transition Services and Technology Transfer are recognized in revenue over time using an input method to measure progress by utilizing costs incurred to-date relative to total expected costs.

Revenue recognized related to Sanofi Transition Services and Technology Transfer for the three and six month period ended June 30, 2024 was $ 6.6 million.

The Company’s consolidated balance sheet as of June 30, 2024 includes a deferred revenue balance of $ 109.2 million ($ 50.9 million included in Deferred revenue, current portion and $ 58.3 million included in Deferred revenue, non-current portion) related to Transition Services and Technology Transfer.

The Company recognized an asset for $ 35.0 million of direct costs incurred to obtain the Sanofi CLA.

These costs are amortized to expense over the expected period of the benefit in a manner that is consistent with the transfer of the related goods and services in the Sanofi CLA.

The Company recognized $ 27.1 million of amortization expense related to the asset in Selling, general, and administrative expense in the second quarter of 2024.

In May 2024, the Company also entered into the Subscription Agreement, 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.

The opening price of the Company’s common stock on the date of the sale approximated $ 10.00 per share and therefore all gross proceeds were allocated to stockholders’ deficit.

Bill & Melinda Gates Medical Research Institute

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.

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

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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.

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 six months ended June 30, 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 7 – Earnings (Loss) per Share

Basic and diluted net income (loss) per share were calculated as follows (in thousands, except per share data):

Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

Net income (loss), basic $ 162,381 $ 58,008 $ 14,831 $ ( 235,897 )

Interest on convertible notes 2,608 2,582 — —

Net income (loss), dilutive 164,989 60,590 14,831 ( 235,897 )

Weighted average number of common shares outstanding, basic 148,379 89,362 144,147 87,769

Effect of dilutive securities 17,476 14,703 974 —

Weighted average number of common shares outstanding, dilutive 165,855 104,065 145,121 87,769

Net income (loss) per share:

Basic $ 1.09 $ 0.65 $ 0.10 $ ( 2.69 )

Diluted $ 0.99 $ 0.58 $ 0.10 $ ( 2.69 )

Anti-dilutive securities excluded from calculations of diluted net income (loss) per share 4,544 6,791 21,654 23,447

Note 8 – 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):

March 31, 2024 December 31, 2023

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):

June 30, 2024 December 31, 2023

Cash and cash equivalents $ 680,162 $ 568,505

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Cash, cash equivalents, and restricted cash $ 695,558 $ 583,810

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

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

Money market funds (1)

$ 118,470 $ — $ — $ 171,824 $ — $ —

Government-backed securities (1)

— 200,000 — — 200,000 —

Treasury securities (1)

— 46,875 — — 45,622 —

Corporate debt securities (1)

— 61,428 — — — —

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

5.00 % Convertible notes due 2027

$ — $ 109,088 $ — $ — $ 100,909 $ —

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

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 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) Classified as Other non-current assets as of June 30, 2024 and December 31, 2023, on the consolidated balance sheets.

Note 9 – Inventory

Inventory consisted of the following (in thousands):

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Raw materials $ 1,406 $ 6,614

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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 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 .

For the three and six months ended June 30, 2024, inventory write-downs were $ 9.7 million and $ 18.5 million, respectively, and losses on firm purchase commitments were $ 1.7 million.

For the three and six months ended June 30, 2023, inventory write-downs were $ 19.1 million and $ 31.5 million, respectively, and losses on firm purchase commitments were $ 0.7 million and $ 8.5 million.

In addition, for the three and six months ended June 30, 2023 the Company recorded recoveries on firm purchase commitments of $ 17.9 million and $ 18.8 million, respectively, related primarily to negotiated reductions to previously recognized firm purchase commitments .

Note 10 – Goodwill

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):

The Company has one reporting unit, which has a negative carrying amount as of June 30, 2024 and December 31, 2023.

The change in the carrying amounts of goodwill for the six months ended June 30, 2024 was as follows (in thousands):

Balance at December 31, 2023 $ 127,454

Currency translation adjustments ( 4,077 )

Balance at March 31, 2024 $ 123,179

Balance at June 30, 2024 $ 123,377

Note 11 – Long-Term Debt

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

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

5.00 % Convertible notes due 2027

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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.

During the six months ended June 30, 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

June 30, Six Months Ended

2024 2023 2024 2023

Coupon interest $ 2,192 $ 2,191 $ 4,384 $ 5,397

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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 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.

During the three and six months ended June 30, 2024, the Company sold $ 12 million shares of its common stock resulting in net proceeds of approximately $ 188 million, under the August 2023 Sales Agreement.

As of June 30, 2024, the remaining balance available under the August 2023 Sales Agreement was approximately $ 51 million.

During the three and six months ended June 30, 2023, the Company sold 7.9 million shares of its common stock under its June 2021 Sales Agreement resulting in net proceeds of approximately $ 68 million, of which $ 6 million was included in prepaid expenses and other current assets as of June 30, 2023 and received in cash in July 2023.

Note 13 – Stock-Based Compensation

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

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

As of June 30, 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.

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

The 2015 Plan will expire on March 30, 2033.

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

The 2015 Plan will expire on April 18, 2034.

As of June 30, 2024, there were 9.4 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.

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Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

Cost of sales $ 1,104 $ 998 $ 1,698 $ 1,516

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Total stock-based compensation expense $ 14,099 $ 20,292 $ 25,655 $ 48,939

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.

During the three and six months ended June 30, 2024 and 2023, there was no stock-based compensation expense capitalized into inventory.

As of June 30, 2024, there was approximately $ 73 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 one year 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 March 31, 2024.

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 three months ended March 31, 2024 and 2023 was approximately $ 4.5 million and $ 1.5 million, respectively.

The aggregate intrinsic value of stock options and SARs exercises and vesting of RSUs for the six months ended June 30, 2024 and 2023 was approximately $ 8 million and $ 2 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 three months ended March 31, 2024:

The following is a summary of stock options and SARs activity under the 2023 Inducement Plan, 2015 Plan, and 2005 Plan for the six months ended June 30, 2024:

2023 Inducement Plan 2015 Plan 2005 Plan

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Canceled — — ( 518,519 ) 46.18 ( 57,831 ) 119.88

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:

Outstanding at June 30, 2024 422,800 $ 10.67 4,642,946 $ 34.61 444 $ 108.67

Shares exercisable at June 30, 2024 124,174 $ 11.06 3,076,820 $ 43.67 444 $ 108.67

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

June 30, Six Months Ended

2024 2023 2024 2023

Weighted average Black-Scholes fair value of stock options granted $ 14.13

$ 6.79 $ 5.86

Risk-free interest rate 4.3 %

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120.4 %- 131.3 %

114.3 %- 121.8 %

120.4 %- 140.3 %

Expected term (in years) 6.3

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.

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 June 30, 2024 was $ 12.3 million and 7.0 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 June 30, 2024 was $ 3.7 million and 6.0 years, respectively.

Restricted Stock Units

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

The following is a summary of RSU activity for the six months ended June 30, 2024:

2023 Inducement Plan 2015 Plan

6 unchanged sentences

Forfeited — — ( 605,480 ) 18.36

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

Outstanding and unvested at June 30, 2024 261,193 $ 10.55 6,629,493 $ 9.49

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 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.

The ESPP currently authorizes an aggregate of 2.2 million shares of common stock to be purchased, and the aggregate number of shares will continue to increase 5 % on January 1 of each year up to a maximum of 3.5 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 June 30, 2024, there were 1.2 million shares available for issuance under the ESPP.

Note 14 – 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.

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.

Significant pieces of objective evidence evaluated by the Company were the cumulative loss incurred over the three-year period ended June 30, 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 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.

On the basis of this evaluation, as of June 30, 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 June 30, 2024, the Company has $ 2.3 billion of U.S.

Federal NOLs carryforward, and all 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 June 30, 2024 and 2023, the Company recognized $ 2.2 million and $( 0.1 ) million of federal, state, and foreign income tax expense (benefit), respectively.

During the six months ended June 30, 2024 and 2023, the Company recognized $ 4.5 million and $ 1.0 million of federal, state, and foreign income tax expense, respectively.

Note 15 – Commitments and Contingencies

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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.

At the May 23 settlement hearing, the Maryland Court granted final approval of the settlement.

The Maryland Court closed the Sinnathurai Action on May 24, 2024.

Upon the Maryland Court’s final approval, the Company relieved 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.

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

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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, 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.

On June 7, 2024, the court entered another order extending the stay until August 5, 2024.

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

On August 5, 2024, the parties agreed to a further 90-day extension to November 4, 2024, which remains subject to court approval.

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

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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.

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 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.

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 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.

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.

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 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.

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 (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.

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.

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 in the first quarter of 2024 upon the execution of the Settlement Agreement.

On May 14, 2024, the parties filed a stipulation staying the action until June 6, 2024.

On July 12, 2024, the court entered an order staying the action until August 5, 2024.

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

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

1 unchanged sentence

Note 16 – Restructuring

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

In January 2024, the Company announced further reductions to its global workforce which supplemented the 2023 Restructuring Plan and both are jointly referred to as the “Restructuring Plan.”

The Company recorded the following restructuring charge related to the Restructuring Plan in the consolidated statements of operations (in thousands):

Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

Severance and employee benefit costs $ 1,119 $ 4,643 $ 5,520 $ 4,643

1 unchanged sentence

Total Restructuring charge (1)

(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.

$ 1,119 $ 14,724 $ 7,189 $ 14,724

(1) Restructuring charges of $ 0.5 million, $ 0.3 million and $ 0.3 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 three months ended June 30, 2024.

Restructuring charges of $ 0.5 million, $ 1.9 million and $ 4.8 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 six months ended June 30, 2024.

Restructuring charges of $ 0.5 million, $ 2.7 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 three and six months ended June 30, 2023 .

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 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.

The Company recorded a severance and termination benefit cost in full for employees who were notified of their termination during the reporting period and had no requirements for future service.

The Company paid a total of $ 5.5 million for the severance and employee benefit costs during the six months ended June 30, 2024 and had no remaining liability as of June 30, 2024 or December 31, 2023.

Impairment of assets

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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 March 31, 2024, the Company

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

During the six months ended June 30, 2024, the Company recorded an impairment charge of $ 1.7 million related to the impairment of capitalized internal-use software.

During the three and six 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.

The Company did not recognize any impairment of assets related restructuring charges during the three months ended June 30, 2024.

Note 17 – Subsequent Events