What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-08-08 compared with 2024-05-10 · 342 added, 215 removed, 207 unchanged (73% of the section changed)

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Such forward-looking statements include, without limitation, statements about our capabilities, goals, expectations regarding future revenue and expense levels, and capital raising activities;

our operating plans and prospects, including our ability to continue as a going concern through one year from the date of our unaudited financial statements for the period ended March 31, 2024 are issued;

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

our cash flow forecast and projected revenue;

our operating plans and prospects, including our ability to continue as a going concern through one year from the date of our unaudited financial statements for the period ended June 30, 2024 are issued;

our global restructuring and cost reduction plan (“Restructuring Plan”), which includes a more focused investment in our COVID-19 program (which currently includes our prototype COVID-19 vaccine ("NVX-CoV2373” or “prototype vaccine”) and XBB COVID-19 vaccine (“NVX-CoV2601”) and our updated vaccine for the 2024-2025 vaccination season (“NVX-CoV2705,” or “updated vaccine” and, collectively with NVX-CoV2373 and NVX-CoV2601, our “COVID-19 Vaccine” or “COVID-19 Program”), 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 our (“COVID-19 Program,” or “COVID-19 Vaccine”));

our cash flow forecast and projected revenue, including potential royalties and milestones pursuant to our collaboration and license agreement (the “Sanofi CLA”) with Sanofi Pasteur Inc.

potential market sizes and demand for our products and product candidates;

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Forward-looking statements involve estimates, assumptions, risks, and uncertainties that could cause actual results or outcomes to differ materially from those expressed or implied in any forward-looking statements, and, therefore, you should not place considerable reliance on any such forward-looking statements.

Such risks and uncertainties include, without limitation, our ability to successfully and timely manufacture, distribute, or market our updated COVID-19 vaccine including as a single dose vial or pre-filled syringe product presentation for the 2024-2025 vaccination season and our ability to receive a Biologics License Application (“BLA”) from the U.S.

Such risks and uncertainties include, without limitation, our ability to successfully and timely manufacture, distribute, or market our COVID-19 Vaccine including as a single dose vial or pre-filled syringe product presentation for the 2024-2025 vaccination season and our ability to receive a Biologics License Application (“BLA”) from the U.S.

Food and Drug Administration (“U.S.

FDA”) for the 2024-2025 vaccination season;

challenges related to the transition to our new partnership with Sanofi;

challenges satisfying, alone or together with partners, various safety, efficacy, and product characterization requirements, including those related to process qualification, assay validation, and stability testing, necessary to satisfy applicable regulatory authorities;

challenges or delays in conducting clinical trials;

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

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

manufacturing, distribution or export delays or challenges;

our substantial dependence on Serum Institute of India Pvt.

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

difficulty obtaining scarce raw materials and supplies;

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

(“SII”) and Serum Life Sciences Limited (“SLS” and together with SII, “Serum”) for co-formulation and filling, and PCI Pharma Services for finishing our COVID-19 Vaccine and the impact of any delays or disruptions in their operations on the delivery of customer orders;

difficulty obtaining scarce raw materials and supplies, including for our proprietary adjuvant;

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

challenges in implementing the Restructuring Plan;

our ability to timely deliver doses;

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

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

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

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

to deliver doses that may require us to refund portions of upfront and other payments previously received or result in reduced future payments pursuant to such agreements;

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

and other risks and uncertainties identified in Part I, Item 1A “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2023 and this Quarterly Report on Form 10-Q, which may be detailed and modified or updated in other documents filed with the SEC from time to time, and are available at www.sec.gov and at www.novavax.com.

challenges related to the demand for vaccinations against COVID-19;

and other risks and uncertainties identified in Part I, Item 1A “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2023, Part II, Item 1A.

“Risk Factors” of our Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2024 and this Quarterly Report on Form 10-Q, which may be detailed and modified or updated in other documents filed with the SEC from time to time, and are available at www.sec.gov and at www.novavax.com.

You are encouraged to read these filings as they are made.

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

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

We are a global company advancing protein-based vaccines with our Matrix-M TM adjuvant.

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

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

We previously developed an updated COVID-19 vaccine for the 2023-2024 vaccination season, for which the U.S.

FDA granted emergency use authorization (“EUA”) in October 2023 for active immunization to prevent COVID-19.

We are in the process of developing an updated COVID-19 vaccine for the 2024-2025 vaccination season and expect our updated COVID-19 vaccine to be available at U.S.

pharmacy retailers in September 2024.

During the first quarter of 2024, we completed the submission of the BLA for our prototype COVID-19 vaccine with the U.S.

In addition, we aligned with the U.S.

FDA on pathway for EUA for our updated COVID-19 vaccine for the 2024-2025 vaccination season.

Outside the U.S., in January 2024, our updated vaccine was granted marketing authorization by the United Kingdom’s (“UK”) Medicines and Healthcare products Regulatory Agency (“MHRA”).

We are committed to meeting the full supply of our key target markets through APAs covering such markets.

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

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

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

Additionally, our near-term focus is on developing a CIC vaccine candidate as well as seasonal influenza vaccine candidate, and we are on track to initiate a Phase 3 trial in the second half of 2024 for both vaccines.

Furthermore, we provide our Matrix-M™ adjuvant for collaborations, including in R21/Matrix-M™ adjuvant malaria vaccine, which recently received authorization in several countries, as well as other preclinical vaccine research with our Matrix-M™ adjuvant, including through a partnership with the Bill & Melinda Gates Medical Research Institute.

We intend to focus our organization to align our investments and activities with our top priority of delivering our updated COVID-19 vaccine for the 2024-2025 vaccination season.

To maximize our opportunities and mitigate the significant risks and uncertainties of the COVID-19 market, we have progressed our cost restructuring measures to reduce spend, extend our cash runway, and operate efficiently to seek the best position for the Company to deliver longer-term growth.

We have developed an updated vaccine for individuals aged 12 and older for the upcoming 2024-2025 vaccination season and are seeking authorization of our updated vaccine globally.

We submitted an amendment to our previously granted October 2023 Emergency Use Authorization (“EUA”) to the U.S.

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

These submissions follow the guidance from the U.S.

FDA, EMA, the World Health Organization (“WHO”), and the National Advisory Committee on Immunization on the use of the JN.1 lineage strain for the updated formulation.

We intend to ship our updated vaccine upon authorization in these markets.

In the U.S., we were notified by the U.S.

FDA that our BLA for our prototype vaccine and for NVX-CoV2601 was accepted for review with an action date of April 2025.

In May 2024, we entered into the Sanofi CLA with Sanofi, to co-commercialize our COVID-19 Vaccine, including future updated versions that address seasonal COVID-19 variants.

We will continue commercialization of our updated vaccine.

Beginning in 2025 and continuing during the term of the Sanofi CLA, we and Sanofi will commercialize the COVID-19 Vaccine worldwide in accordance with a commercialization plan agreed by us and Sanofi, under which we will continue to supply its existing APA customers and strategic partners, including Takeda and SII.

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

Additionally, Sanofi has the right to develop novel influenza-COVID-19 combination vaccines utilizing our COVID-19 Vaccine and Sanofi’s seasonal influenza vaccine, combination products containing our COVID-19 Vaccine and one or more non-influenza vaccines, and multiple new vaccines utilizing our Matrix-M TM adjuvant.

We are eligible to receive royalties and milestones associated with the ongoing sales of our COVID-19 Vaccine and Sanofi’s influenza-COVID-19 combination vaccine and any other combination vaccines Sanofi may develop, as well as ongoing product royalties for vaccines developed with our Matrix-M TM adjuvant.

This partnership provides the opportunity for us to focus more on research and development and pipeline expansion.

We discuss this agreement in further detail in Note 6 to our consolidated financial statements.

Additionally, our near-term focus is on developing a CIC vaccine candidate, as well as a stand-alone seasonal influenza vaccine candidate, and we are on track to initiate a Phase 3 trial in the fourth quarter of 2024 for both vaccine candidates.

Furthermore, we provide our Matrix-M™ adjuvant for collaborations, including in R21/Matrix-M™ adjuvant malaria vaccine, which is authorized in several countries, as well as other preclinical vaccine research with our Matrix-M™ adjuvant, including through a partnership with the Bill & Melinda Gates Medical Research Institute.

We intend to focus our organization to align our investments and activities with our top priorities of prioritizing the successful transition to our new partnership with Sanofi, executing our Phase 3 programs for the CIC and stand-alone seasonal influenza vaccine candidates, and delivering our updated vaccine.

We discuss these cost restructuring strategies in greater detail in Note 2 to our consolidated financial statements.

Technology Overview

We believe our recombinant nanoparticle vaccine technology, together with our proprietary Matrix-M™ adjuvant, is well suited for the development and commercialization of vaccine candidates targeting a broad scope of respiratory and other endemic and emerging infectious diseases.

We believe our recombinant nanoparticle vaccine technology and our proprietary Matrix-M™ adjuvant are well suited for the development and commercialization of vaccine candidates targeting a broad scope of respiratory and other endemic and emerging infectious diseases.

Recombinant Nanoparticle Vaccine Technology

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Matrix-M™ adjuvant is being evaluated in combination with several partner-led malaria vaccine candidates, including for R21/Matrix-M™ adjuvant, a malaria vaccine candidate created by the Jenner Institute, University of Oxford.

The R21/Matrix-M™ adjuvant vaccine has been licensed to Serum Institute of India Pvt.

(“SIIPL”) for commercialization and in December 2023 received prequalification by the World Health Organization (“WHO”), along with authorizations received earlier in the year in Burkino Faso, Ghana, and Nigeria.

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

The R21/Matrix-M™ adjuvant vaccine has been licensed to SII for commercialization, and in December 2023, received prequalification by the WHO.

In July 2024, first commercial doses of the R21/Matrix-M™ adjuvant malaria vaccine were administered to children in Cote d’Ivoire and South Sudan.

Additionally, in May 2023, we entered into a three-

year agreement with the Bill & Melinda Gates Medical Research Institute to provide our Matrix-M™ adjuvant for use in preclinical vaccine research.

In June 2023, we signed a material transfer agreement with SK bioscience Co., Ltd.

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Our adjuvant technology is also being used by commercial partners as a key component in veterinary vaccines against equine influenza and Strangles, as well as the manufacture of black-widow anti-venom.

In May 2024, pursuant to the Sanofi CLA, Sanofi received a non-exclusive license to develop and commercialize other vaccine products that include our Matrix-M™ adjuvant.

COVID-19 Vaccine Regulatory and Licensure

We continue to receive authorizations for our updated vaccine developed for the 2023-2024 COVID-19 vaccination season in accordance with the updated strain protocol guidance.

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

Additionally, we continue to progress our regulatory authorizations for our updated vaccine and plan to continue to do so for subsequent future variant strains for each annual respiratory season, including the upcoming 2024-2025 vaccination season.

Within the U.S.

market, our updated vaccine received EUA in October 2023 from the U.S.

FDA to prevent COVID-19 in individuals aged 12 and older and is marketed in the U.S.

under the name Novavax COVID-19 Vaccine, Adjuvanted (2023-2024 Formula).

The formulation for our updated vaccine aligns with global harmonized guidance from the U.S.

FDA, the European Medicines Agency (“EMA”), and WHO recommendations for the 2023-2024 vaccination season.

Outside the U.S.

market, we continue to progress regulatory authorizations for our updated vaccine globally.

In January 2024, we were granted marketing authorization by the UK MHRA for our updated vaccine, marketed under the name Nuvaxovid™ XBB.1.5 Vaccine, in individuals aged 12 and older.

We have previously received authorizations for our prototype COVID-19 vaccine in over 40 countries globally, including from major regulatory agencies such as the U.S.

FDA, WHO, EMA, and MHRA.

To date, we have received full MA, approval, interim authorization, provisional approval, CMA, and EUA for the adult population, aged 18 and older, the adolescent population, aged 12 to 17 years, and the pediatric population, aged 7 to 11 years in select territories.

The regulatory authorizations for our prototype vaccine include primary series and both homologous and heterologous booster indications within specific countries.

For the territories in which our vaccine has received regulatory authorizations, our prototype vaccine is marketed under the names (i) Nuvaxovid™ (SARS-CoV-2 rS Recombinant, adjuvanted), (ii) Covovax™ (manufacturing and commercialization by SIIPL), or (iii) Novavax COVID-19 Vaccine, Adjuvanted.

For our updated vaccine for the 2024-2025 vaccination season, we submitted an amendment to our previously granted October 2023 EUA to the U.S.

FDA, filed for a type II variation of our existing MA with the EMA, and the UK’s MHRA, and filed for authorization with Health Canada.

FDA grants an amended EUA for our updated vaccine, we expect that initial stocking orders of our updated vaccine will be available for shipment in pre-filled syringes to customers.

In the European Union, we intend to have our updated vaccine available for distribution in unit-dose vials for immediate release post-approval.

Additionally, in the U.K., we intend to have our updated vaccine available on the private market and in Canada, in five-dose vials for immediate release post-authorization should Canadian public health programs choose to provide the option for five-dose vials.

We are working to continue to expand our label for primary and re-vaccination in younger children, and to achieve supportive policy recommendations enabling broad market access.

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Product Pipeline

Our clinical pipeline encompasses vaccine candidates for infectious diseases, with our COVID-19 prototype vaccine (NVX-CoV2373) and our COVID-19 updated vaccine (NVX-CoV2601), as our lead products.

Our updated vaccine has received authorization from the U.S.

FDA, the EC, the WHO, and several other countries globally.

Beyond our COVID-19 vaccine, our clinical pipeline includes a CIC vaccine candidate, and a seasonal influenza vaccine candidate in addition to our Matrix-M™ adjuvant being used for collaboration in R21/Matrix-M™ adjuvant malaria vaccine.

Novavax continues to optimize preclinical candidates, including a new approach to H5N1 pandemic bird flu vaccination, and expand our core technology for novel applications including mucosal vaccination and high-density nanoparticles.

Our clinical pipeline encompasses vaccine candidates for infectious diseases.

Our COVID-19 vaccine, partnered with Sanofi, is our most advanced product.

We are seeking authorization of our 2024-2025 formulated JN.1 COVID vaccine globally.

We will continue to commercialize our JN.1 COVID vaccine through the end of the 2024-2025 vaccination season.

Beyond our COVID-19 vaccine, our clinical pipeline includes a CIC vaccine candidate and a stand-alone seasonal influenza vaccine candidate in addition to our Matrix-M™ adjuvant being used for collaboration in R21/Matrix-M™ adjuvant malaria vaccine.

Novavax continues to optimize preclinical candidates, including an RSV vaccine and a new approach to H5N1 pandemic bird flu vaccination.

In addition, we are seeking to expand our core technology to new targets and novel applications including mucosal vaccination and high-density nanoparticles.

We continue to evaluate the potential of Matrix-M™ to augment immune responses to new and existing vaccines, including marketed products.

We are conducting a prioritization review of our preclinical candidates to inform future early-stage clinical study investments to advance Novavax’s product pipeline.

(1) Authorized in select geographies under trade names Novavax COVID-19 Vaccine, Adjuvanted;

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Ongoing post-authorization Phase 3 strain change trial.

(2) Authorized in Ghana, Nigeria, and Burkina Faso;

Commercialized by Serum Institute of India;

Granted prequalification by the WHO.

(2) Commercialized by SII;

Granted prequalification by the WHO and distributed by UNICEF to endemic countries in Africa.

Coronavirus Vaccine Clinical Development

We remain focused on expanding our COVID-19 vaccine label within the booster, adolescent, and pediatric indications.

We continue to evaluate vaccine safety, immunogenicity, and effectiveness through ongoing clinical trials and collaborative evidence-generating real-world studies.

We expect to leverage these clinical insights to advance additional regulatory approvals of our COVID-19 vaccine globally, amidst the evolving COVID-19 landscape.

We continue to work on our efforts to expand our COVID-19 vaccine label within the adolescent and pediatric indications.

Additionally, we continue to evaluate vaccine safety, immunogenicity, and effectiveness through ongoing clinical trials and collaborative evidence-generating real-world studies.

Phase 3 Strain-Change and Re-vaccination Studies

Study 311 Part 2:

In August 2023, we announced primary endpoint topline results demonstrating immunologic superiority of our bivalent prototype and Omicron BA.5 vaccine compared to our prototype vaccine (NVX-CoV2373) for Omicron BA.5 specific responses.

This study was designed to support our 2023-2024 strain change for our updated vaccine (NVX-CoV2601).

In March 2024, interim results of this study were published in The Lancet.

In November 2023, we fully enrolled 338 adults aged 18 and older and in Part 2 of the study we will evaluate the immunogenicity of our updated vaccine (NVX-CoV2601) in previously unvaccinated individuals.

Topline results are expected by the second quarter of 2024.

Data from Study 313 are intended to support BLA supplements and similar

regulatory submissions in other territories for future variant strain formulations.

In November 2023, we fully enrolled 338 adults aged 18 and older in Part 2 of the study which will evaluate the immunogenicity of a single dose of NVX-CoV2601 in previously unvaccinated individuals.

Data from Study 313 are intended to support BLA supplements and similar regulatory submissions in other territories for future variant strain formulations.

Phase 2b/3 Pediatric Hummingbird™ Study

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This ongoing trial is evaluating the safety, effectiveness (immunogenicity), and efficacy of two doses of our prototype vaccine (NVX-CoV2373), followed by a booster 6 months after the primary vaccination series.

The trial includes three age de-escalation cohorts of 1,200 children each.

Cohorts aged 2 through 5 years and 6 to 23 months are fully enrolled.

In consultation with regulatory bodies, the filing strategy includes filing a supplemental BLA for these cohorts once the initial BLA is approved.

The trial completed enrollment in September 2023 and includes three age de-escalation cohorts of 1,200 children each.

In consultation with the U.S.

FDA, the filing strategy includes filing a supplemental BLA for these cohorts once the initial BLA is approved.

We are in discussion with the U.S.

FDA regarding additional analyses in light of the progressive increase in the number of children with baseline COVID-19 natural immunity during the enrollment period, which began in August 2022.

Therefore, we do not anticipate authorization for these age groups for the 2024-2025 vaccination season.

COVID-Influenza Combination and Stand-alone Influenza Program

For our CIC vaccine, we have previously received agreement with the U.S.

FDA on a Phase 3 design, study endpoints, trivalent comparators, and size of licensure enabling safety database.

We have recently decided to modify the study to focus on individuals at higher risk by enrolling adults aged 60 years and older and to include a stand-alone influenza vaccine comparative component.

We remain on track to submit an investigational new drug application, inclusive of this new study design and initiate the study in the second half of 2024, with potential accelerated approval and launch of the CIC vaccine in the fall of 2026.

While our focus remains on the combination product, our development plans will maintain optionality to advance our stand-alone influenza vaccine, as described above, creating a pathway to potentially seek licensure.

For our stand-alone influenza vaccine, we have generated positive data through our previous Phase 2 trial.

We expect to confirm and expand on these findings in the planned Phase 3 trial.

For our CIC vaccine candidate, we continue to interact with the U.S.

FDA as part of the pre-investigational new drug application (“IND”) process and incorporate their recommendations into the Phase 3 design, study endpoints, comparators, and size of licensure enabling safety database.

We previously disclosed our plan to modify the study to include a stand-alone influenza vaccine comparative component.

We remain on track to initiate the study in the fourth quarter of 2024.

While our focus remains on the combination product, our development plans will maintain optionality to advance our stand-alone seasonal influenza vaccine, as described above, creating a pathway to potentially seek licensure.

For our stand-alone seasonal influenza vaccine, we have generated positive data through our previous Phase 2 and Phase 3 trials.

We expect to confirm and expand on these findings in the newly planned Phase 3 trial.

We continue to believe this asset may also be attractive from a pandemic preparedness perspective and that similar performance in terms of comparative immunogenicity may be expected for A/H5N1 pandemic strains.

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In October 2023, we completed enrollment in a Phase 2 trial to evaluate our high-dose COVID-19 vaccine for annual vaccination in 994 adults ages 50 years and older.

The trial will compare immunogenicity levels of 5 micrograms of our prototype vaccine (NVX-CoV2373) against 5 micrograms, 35 micrograms, and 50 micrograms of our updated vaccine (NVX-CoV2601) that are matched with different levels of adjuvant.

Data from this trial is intended to potentially support further development of a higher-dose formulation for older adults, similar to that of influenza vaccines.

The trial measured immunogenicity levels of 5 micrograms of NVX-CoV2373 and of 5 micrograms, 35 micrograms, and 50 micrograms of NVX-CoV2601 matched with different levels of Matrix-M TM adjuvant.

Analysis of the complete dataset is ongoing to determine the utility of pursuing a high dose formulation.

R21/Matrix-M™ Adjuvant Malaria Vaccine

R21/Matrix-M™ adjuvant malaria vaccine, formulated with our Matrix-M™ adjuvant is developed by our partner, the Jenner Institute, University of Oxford, and manufactured by SIIPL.

We have an agreement with SIIPL related to its manufacture of R21/Matrix-M™ adjuvant malaria vaccine under which SIIPL purchases our Matrix-M™ adjuvant for use in development activities at cost and for commercial purposes at a tiered commercial supply price, and pays a royalty in the single- to low-double digit range based on vaccine sales for a period of 15 years after the first commercial sale of the vaccine in each country.

In February 2024, peer-reviewed results from the Phase 3 efficacy trial were published in The Lancet reporting R21/Matrix-M™ adjuvant malaria vaccine has a well-tolerated safety profile and offers high-level efficacy against clinical malaria in African children at sites of both seasonal and perennial transmission.

In December 2023, the WHO announced it prequalified the R21/Matrix-M™ adjuvant malaria vaccine to prevent malaria disease in children caused by the P.

R21/Matrix-M™ adjuvant malaria vaccine, formulated with our Matrix-M™ adjuvant is developed by our partner, the Jenner Institute, University of Oxford, and manufactured by SII.

We have an agreement with SII related to its manufacture of R21/Matrix-M™ adjuvant malaria vaccine under which SII purchases our Matrix-M™ adjuvant for use in development activities at cost and for commercial purposes at a tiered commercial supply price, and pays a royalty in the single- to low-double digit range based on vaccine sales for a period of 15 years after the first commercial sale of the vaccine in each country.

In December 2023, the WHO announced it prequalified the R21/Matrix-M TM adjuvant malaria vaccine to prevent malaria disease in children caused by the P.

falciparum parasite in endemic areas.

Prequalification status enables United Nations agencies to procure the vaccine for eligible countries and will enable rollout of the vaccine in mid-2024.

The WHO recommended that the R21/Matrix-M™ adjuvant malaria vaccine be administered in a four-dose schedule beginning at five months of age.

Previously, R21/Matrix-M™ adjuvant malaria vaccine received authorization in Burkina Faso, Ghana and Nigeria.

In July 2024, first commercial doses of R21/Matrix-M™ adjuvant malaria vaccine have been administered to children in Cote d’Ivoire and South Sudan.

As part of the WHO malaria program, at their discretion, the vaccine is expected to be included in countries such as Central African Republic, Chad, Democratic Republic of Congo, Mozambique, Nigeria and Uganda.

Business Highlights

First Quarter 2024 and Recent Highlights

We and Sanofi Pasteur Inc.

(“Sanofi”) announced that we entered into a co-exclusive licensing agreement.

The terms of the agreement include:

a co-exclusive license to co-commercialize our current stand-alone adjuvanted COVID-19 vaccine worldwide (except in countries with existing APAs and in India, Japan and South Korea where we have existing partnership agreements);

a sole license to our adjuvanted COVID-19 vaccine for use in combination with Sanofi’s influenza vaccines while we retain the right to and is developing its own COVID-19-Influenza Combination vaccine candidate;

a non-exclusive license to use our adjuvanted COVID-19 vaccine for use in combination with non-influenza vaccines;

and a non-exclusive license to use the Matrix-M™ adjuvant in vaccine products.

In addition, Sanofi will take a minority (<5%) equity investment in our Company.

First Quarter 2024 and Recent Highlights

• Updated our protein-based non-mRNA COVID-19 vaccine to JN.1 with anticipated pre-filled syringe presentation.

• Completed the submission of the BLA for Novavax's COVID-19 vaccine with the U.S.

• Aligned with the U.S.

FDA on pathway for EUA for updated COVID-19 vaccine for the 2024-2025 vaccination season, with the intent of facilitating product availability at the beginning of the season.

• Advanced retail pharmacy contract negotiations for the 2024-2025 vaccination season.

We have taken steps to enable a successful operationalization of the collaboration and license agreement (the Sanofi Agreement) with Sanofi.

• Effective January 1, 2025, Sanofi will assume primary commercial responsibility for our updated 2024-2025 formula COVID-19 vaccine (NVX-CoV2705) in the U.S., Europe and select major markets not currently subject to our APAs or existing partnership agreements.

• Received $500 million upfront payment and an approximately $70 million equity investment from Sanofi

• We are eligible to receive up to $700 million in development, regulatory and launch milestones for activities related to commercializing Nuvaxovid™ and advancing Sanofi’s flu-COVID-19 combination vaccine candidate plus royalties.

In addition, we are eligible to receive royalties associated with any other Nuvaxovid™ combination vaccine Sanofi chooses to develop.

• For each additional Sanofi vaccine product developed under the non-exclusive license with our Matrix-M™ adjuvant technology, we are eligible to receive additional launch and sales milestones of up to $210 million per product plus ongoing product royalties.

We continued to leverage our technology platform to drive value creation.

• On track to initiate the Phase 3 immunogenicity trial for both CIC and stand-alone influenza vaccine candidates in the fourth quarter of 2024, with data expected by mid-2025.

• Conducting pipeline prioritization activities to determine our lead portfolio programs.

We continued to progress our cost reduction program to create a more lean and agile organization and accelerate its focus on Research and Development (“R&D”).

• On track with global restructuring and cost reduction plan with an approximately 34% reduction in combined R&D and Selling, General and Administrative (“SG&A”) expenses in the second quarter of 2024 compared to the same period for 2023.

• Prepared to initiate an additional cost reduction program to reduce R&D plus SG&A expenses, with a portion of expenses to be reimbursed by Sanofi under the Sanofi Agreement.

We plan to continue assessing existing capabilities to further refine the shape, size and scope of its organization this year and into 2025.

We expect to deliver our updated 2024-2025 formula COVID-19 vaccine to the market by the start of the season.

• Submitted an EUA amendment to the U.S.

• Advanced manufacturing of pre-filled syringe presentation of updated 2024-2025 formula COVID-19 vaccine following FDA strain selection guidance.

Expect doses will be ready to ship upon receipt of EUA.

FDA accepted the BLA for our COVID-19 vaccine with a Prescription Drug User Fee Act date of April 2025.

• Advanced retail pharmacy contract negotiations to enhance access for the 2024-2025 vaccination season.

Global Markets:

• Delivered doses of Nuvaxovid™ XBB.1.5 vaccine to Europe and for distribution by the Taiwan Centers for Disease Control.

• Received marketing authorization from the UK’s MHRA for Nuvaxovid™ XBB.1.5 in individuals aged 12 and older in January and progressed preparations for participation in the UK spring campaign for private healthcare providers.

• Granted full approval from Singapore’s Health Sciences Authority for Nuvaxovid™ XBB.1.5 for active immunization to prevent COVID-19 in individuals aged 12 and older.

Clinical development and technology platform updates:

• Made strategic decision to add a stand-alone influenza vaccine comparative component and to focus on individuals at higher risk by enrolling adults aged 60 and older for both the stand-alone influenza and CIC arms of the trial.

• On track to submit an investigational new drug application and initiate the pivotal Phase 3 trial for both CIC and stand-alone influenza vaccine candidates in the second half of 2024, with potential for accelerated approval and launch in 2026.

• Continued to optimize preclinical candidates, including a new approach to H5N1 pandemic bird flu vaccination, and expanded our core technology for novel applications including mucosal vaccination and high-density nanoparticles.

We are on track with our global restructuring and cost reduction plan, as we continue to transform the Company into a more lean and agile organization, with an approximately 50% reduction to combined research and development and Selling, general, and administrative expenses in the first quarter of 2024, compared to 2023.

• For 2024, made decision to conduct lean and targeted commercial launch in Europe in select key countries including Germany, Italy and Poland.

• Submitted marketing authorization amendments to the EMA and expect doses will be ready to ship upon receipt of market authorization.

Sales of Common Stock

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

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

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

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

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

During the three and six months ended June 30, 2024, we sold 12.2 million shares of our 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, we sold 7.9 million shares of our common stock under our June 2021 Sales Agreement resulting in net proceeds of approximately $68 million, of which $6.0 million was included in prepaid expenses and other current assets as of June 30, 2023 and received in cash in July 2023.

In May 2024, we also entered into a securities subscription agreement (the “Subscription Agreement”) with Sanofi, pursuant to which we sold and issued to Sanofi, in a private placement, 6,880,481 shares of our common stock, par value $0.01 per share at a price of $10.00 per share for aggregate gross proceeds to us of $68.8 million.

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

Critical Accounting Policies and Use of Estimates

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

Our critical accounting policies and estimates are included under Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, as filed with the SEC.

Our critical accounting policies and estimates are included under Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, as filed with the SEC and are updated below to incorporate revenue recognition from licensing and transition services included in Licensing, royalties and other in our consolidated financial statements.

Revenue Recognition, Licensing and Transition Services

The terms of licensing agreements may contain multiple performance obligations, which may include licenses and transition services.

We evaluate licensing agreements under ASC 606, Revenue from Contracts with Customers (“ ASC 606”), to determine the distinct performance obligations.

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

Variable consideration is 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 distinct performance obligation arrangements, we allocate 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, we consider discounted, probability-weighted cash flows related to the performance obligation transferred.

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

These estimates are subjective and require us any 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, we recognize revenue using an input method to measure progress by utilizing costs incurred to-date relative to total expected costs.

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

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

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

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

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

Recent Accounting Pronouncements Not Yet Adopted

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The following is a discussion of the historical financial condition and results of our operations that should be read in conjunction with the unaudited consolidated financial statements and notes set forth in this Quarterly Report.

Three Months Ended March 31, 2024 and 2023

Three Months Ended March 31,

Three Months Ended June 30, 2024 and 2023

Three Months Ended June 30,

2024 2023 Change

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Product sales $ 19,904 $ 285,163 $ (265,259)

Grants — 87,379 (87,379)

Royalties and other 11,531 1,029 10,502

Licensing, royalties, and other 395,580 2,184 393,396

— 137,079 (137,079)

Total revenue $ 415,484 $ 424,426 $ (8,942)

Revenue for the three months ended March 31, 2024 was $93.9 million as compared to $81.0 million for the same period in 2023, an increase of $12.9 million.

Revenue for the three months ended March 31, 2024 was primarily comprised of revenue from product sales of COVID-19 Vaccine.

Revenue for the three months ended March 31, 2023 was primarily comprised of services performed under our U.S.

Revenue for the three months ended June 30, 2024 was $415.5 million as compared to $424.4 million for the same period in 2023, an decrease of $8.9 million.

Revenue for the three months ended June 30, 2024 was primarily comprised of revenue from licensing and revenue from product sales of COVID-19 Vaccine.

Revenue for the three months ended June 30, 2023 was primarily comprised of product sales of COVID-19 Vaccine and services performed under our U.S.

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

The increase in revenue is due to an increase in the quantity of dose sales of COVID-19 Vaccine, sales-based royalties, and Matrix-M™ adjuvant sales during the three months ended March 31, 2024, partially offset by a decrease in revenue under the USG Agreement.

The decrease in revenue is due to a decrease in the quantity of dose sales of COVID-19 Vaccine and a decrease in revenue under the USG Agreement during the three months ended June 30, 2024 because we recognized the full funding in revenue by the end of 2023, partially offset by additional licensing revenue from the Sanofi Collaboration and Licensing Agreement (“Sanofi CLA”).

Product sales

Product sales for the three months ended March 31, 2024 were $82.3 million as compared to $(7.5) million during the three months ended March 31, 2023.

Product sales for the three months ended June 30, 2024 were $19.9 million as compared to $285.2 million during the three months ended June 30, 2023.

Our product sales related to revenue from commercial sales of COVID-19 Vaccine, which commenced in 2022.

Product sales in the three months ended March 31, 2023, included a credit of $64.7 million for certain doses delivered in 2022 that qualified for replacement.

The credit is the result of a single lot sold to the Australian government that upon pre-planned 6-month stability testing was found to have fallen below the defined specifications and the lot was

therefore removed from the market.

The geographic distribution of product sales was as follows:

Three Months Ended March 31,

Three Months Ended June 30,

2024 2023 Change

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$ 19,904 $ 285,163 $ (265,259)

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

Product sales for the rest of the world includes a $3.6 million reduction to revenue recognized in prior periods due to the Gavi Settlement Agreement (see Note 3 to our consolidated financial statements).

We did not have any Grant revenue during the three months ended March 31, 2024, as compared to $87.4 million during the same period in 2023, a decrease of $87.4 million.

Licensing, royalties, and other

Licensing, royalties, and other includes licensing payments, Transition Services revenue, and Technology Transfer revenue from the Sanofi CLA;

royalty milestone payments;

sales-based royalties;

and Matrix-M™ adjuvant sales.

Licensing, royalties, and other revenue during the three months ended June 30, 2024 was $395.6 million as compared to $2.2 million during the same period in 2023, an increase of $393.4 million.

The increase was primarily due to $386.3 million of licensing revenue from the Sanofi CLA, which represents the amount of the $500 million upfront payment recognized at a point-in-time.

The remaining amount of the upfront payment will be recognized in revenue as Transition Services and Technology Transfer are performed over time.

During the three months ended June 30, 2024, we recognized $6.6 million based on progress completed of Transition Services.

We did not have any Grant revenue during the three months ended June 30, 2024, as compared to $137.1 million during the same period in 2023, a decrease of $137.1 million.

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

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

Royalties and other

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

Royalties and other revenue during the three months ended March 31, 2024 was $11.5 million as compared to $1.0 million during the same period in 2023, an increase of $10.5 million.

The increase was primarily due to $4.0 million in revenue related to license fees and $7.5 million in revenue related to a Matrix-M™ adjuvant sales.

Three Months Ended March 31,

Three Months Ended June 30,

2024 2023 Change

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Cost of Sales

Cost of sales was $59.2 million for the three months ended March 31, 2024, including expenses of $8.8 million related to excess, obsolete, or expired inventory, and $6.0 million related to unutilized manufacturing capacity.

Cost of sales was $34.1 million for the three months ended March 31, 2023, including expense of $19.4 million related to excess, obsolete, or expired inventory and losses on firm purchase commitments, partially offset by negotiated reductions to certain previously recognized firm purchase commitments, and $4.6 million related to unutilized manufacturing capacity.

Cost of sales was $46.2 million for the three months ended June 30, 2024, including expenses of $11.4 million related to excess, obsolete, or expired inventory and losses on certain firm purchase commitments, and $12.9 million related to unutilized manufacturing capacity.

Cost of sales was $55.8 million for the three months ended June 30, 2023, including expense of $19.8 million related to excess, obsolete, or expired inventory and losses on firm purchase commitments, partially offset by $17.9 million of negotiated reductions to certain previously recognized firm purchase commitments, and $11.4 million related to unutilized manufacturing capacity.

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

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While we tracked the quantities of our manufactured vaccine product and components, we did not track pre-approval manufacturing costs and therefore the manufacturing cost of our pre-launch inventory produced prior to approval is not reasonably determinable.

If inventory sold for the three months ended March 31, 2024 was valued at expected standard cost, including expenses related to excess and obsolete inventory, adjusted cost of sales for the period would have been approximately $60.8 million, an adjustment of $1.6 million as compared to cost of sales recognized.

If inventory sold for the three months ended March 31, 2023 was valued at expected standard cost, adjusted cost of

sales for the period would have been approximately $49.1 million, an adjustment of $15.0 million.

During the three months ended June 30, 2024, we did not sell any pre-launch inventory.

If inventory sold for the three months ended June 30, 2023 was valued at expected standard cost, adjusted cost of sales for the period would have been approximately $71.7 million, an adjustment of $15.9 million.

The cost of sales as a percentage of product sales may fluctuate in the future as a result of changes to our customer pricing mix or standard costs.

Research and Development Expenses

Research and development expenses were $92.7 million for the three months ended March 31, 2024 as compared to $247.1 million for the three months ended March 31, 2023, a decrease of $154.4 million.

Research and development expenses were $106.9 million for the three months ended June 30, 2024 as compared to $219.5 million for the three months ended June 30, 2023, a decrease of $112.5 million.

The decrease was primarily due to a reduction in overall expenditures relating to development activities on coronavirus vaccines, including our COVID-19 Program, and CIC, as summarized in the table below (in thousands):

Three Months Ended March 31,

Three Months Ended June 30,

Coronavirus vaccines $ 40,812 $ 139,646

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Total research and development expenses $ 106,946 $ 219,475

Research and development expenses for coronavirus vaccines for the three months ended March 31, 2024 and 2023 decreased from $140.0 million to $26.1 million primarily as a result of a reduction in manufacturing and support costs due, in part, to a reduction in our global manufacturing footprint consistent with our contractual obligations to supply, and anticipated demand for, COVID-19 Vaccine, including embedded lease costs, under manufacturing supply agreements with Contract Manufacturing Organizations (“CMOs”) and contract manufacturing and development organizations (“CDMOs”).

The decrease was also due to a benefit of $26.6 million for the three months ended March 31, 2024 resulting from the Confidential Settlement Agreement and Release agreement executed with Fujifilm resulting in a reduction to previously recorded expense (see Note 4 to our consolidated financial statements).

Research and development expenses for coronavirus vaccines for the three months ended June 30, 2024 and 2023 decreased from $139.6 million to $40.8 million primarily as a result of a reduction in manufacturing and support costs due, in part, to a reduction in our global manufacturing footprint consistent with our contractual obligations to supply, and anticipated

demand for, COVID-19 Vaccine, including embedded lease costs, under manufacturing supply agreements with Contract Manufacturing Organizations (“CMOs”) and contract manufacturing and development organizations (“CDMOs”).

Selling, General, and Administrative Expenses

Selling, general, and administrative expenses were $86.8 million for the three months ended March 31, 2024 as compared to $112.5 million for the same period in 2023, a decrease of $25.7 million.

The decrease in selling, general, and administrative expenses is primarily due to certain cost containment measures to reduce our operating spend.

For the remainder of 2024, we expect a reduction in our annual combined research and development, and selling, general, and administrative spend as a result of our Restructuring Plan announced during the three months ended March 31, 2024.

Selling, general, and administrative expenses were $101.3 million for the three months ended June 30, 2024 as compared to $93.7 million for the same period in 2023, an increase of $7.6 million.

Excluding the Sanofi transaction related costs of $29.5 million, the decrease in selling, general, and administrative expenses is primarily due to certain cost containment measures to reduce our operating spend.

For the remainder of 2024, we expect a reduction in our annual combined research and development, and selling, general, and administrative spend as a result of our Restructuring Plan as discussed in Note 16 to our consolidated financial statements.

Other Income (Expense)

Three Months Ended March 31,

Three Months Ended June 30,

2024 2023 Change

Other income (expense):

Other income, net (in thousands):

Interest expense $ (4,143) $ (3,124) $ (1,019)

7,731 5,532 2,199

Total other income (expense), net $ (457) $ 20,046 $ (20,503)

Total other expense, net was $0.5 million for the three months ended March 31, 2024 as compared to a total other income, net of $20.0 million for the same period in 2023.

The decrease in other income, net is due to the unfavorable impact in 2024 as compared to 2023 of exchange rates on foreign currency denominated balances, including an intercompany loan with Novavax CZ.

Total other income, net

$ 3,588 $ 2,408 $ 1,180

Total other income, net was $3.6 million for the three months ended June 30, 2024 as compared to a total other income, net of $2.4 million for the same period in 2023.

The increase in other income, net is primarily due to additional interest income from higher Cash and cash equivalents and Marketable securities balances.

Income Tax Expense

During the three months ended March 31, 2024, we recognized an income tax expense of $2.3 million related to foreign income taxes.

During the three months ended March 31, 2023, we recognized an income tax expense of $1.2 million related to federal, state, and foreign income taxes.

During the three months ended June 30, 2024, we recognized an income tax expense of $2.2 million related to federal, state, and foreign income taxes.

During the three months ended June 30, 2023, we recognized an income tax benefit of $0.1 million related to federal, state, and foreign income taxes.

Three Months Ended June 30,

2024 2023 Change

Net Income (in thousands, except per share information):

$ 162,381 $ 58,008 $ 104,373

Net income per share, basic

$ 1.09 $ 0.65 $ 0.44

Net income per share, dilutive

$ 0.99 $ 0.58 $ 0.41

Weighted average shares outstanding, basic 148,379 89,362 59,017

Weighted average shares outstanding, dilutive 165,855 104,065 61,790

Net income for the three months ended June 30, 2024 was $162.4 million, or $1.09 per share, basic, as compared to net income of $58.0 million, or $0.65 per share, basic, for the same period in 2023.

The increase in net income during the three months ended June 30, 2024, was primarily due to a decrease in research and development expenses.

The increase in weighted average shares outstanding for the three months ended June 30, 2024 was primarily a result of sales of our common stock.

Six Months Ended June 30, 2024 and 2023

Six Months Ended June 30,

2024 2023 Change

Revenue (in thousands):

Product sales $ 102,228 $ 277,706 $ (175,478)

Licensing, royalties, and other 407,111 3,213 403,898

— 224,458 (224,458)

Total revenue $ 509,339 $ 505,377 $ 3,962

Revenue for the six months ended June 30, 2024 was $509.3 million as compared to $505.4 million for the same period in 2023, an increase of $4.0 million.

Revenue for the six months ended June 30, 2024 was primarily comprised of revenue from licensing and product sales of COVID-19 Vaccine.

Revenue for the six months ended June 30, 2023 was primarily comprised of revenue from product sales of COVID-19 Vaccine and services performed under our USG Agreement.

The increase in revenue is due to $392.9 million of licensing and other revenue from the Sanofi CLA, partially offset by a decrease in revenue under the USG Agreement and in the quantity of dose sales of COVID-19 Vaccine.

Product sales

Product sales for the six months ended June 30, 2024 were $102.2 million as compared to $277.7 million during the six months ended June 30, 2023.

Our product sales related to revenue from commercial sales of COVID-19 Vaccine, which commenced in 2022.

Our product sales primarily related to sales of COVID-19 Vaccine under our APA agreements.

The geographic distribution of product sales was as follows:

Six Months Ended June 30,

North America

$ (4,755) $ — $ (4,755)

Europe 90,586 58,785 31,801

Rest of the world

16,397 218,921 (202,524)

Total product sales

$ 102,228 $ 277,706 $ (175,478)

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 wholesaler acquisition costs (“WAC”), primarily due to wholesale distributor fees for shipments expected to be returned and adjustments made to estimated returns of prior period product sales.

Licensing, royalties, and other

Licensing, royalties, and other includes licensing payments, Transition Services revenue, and Technology Transfer revenue from the Sanofi CLA;

royalty milestone payments;

sales-based royalties;

and Matrix-M™ adjuvant sales.

Licensing, royalties, and other revenue during the six months ended June 30, 2024 was $407.1 million as compared to $3.2 million during the same period in 2023, an increase of $403.9 million.

The increase was primarily due to $386.3 million of licensing revenue from the Sanofi CLA, which represents the amount of the $500 million upfront payment recognized at a point-in-time.

The remaining amount of the upfront payment will be recognized in revenue as Transition Services and Technology Transfer are performed over time.

During the six months ended June 30, 2024, we recognized $6.6 million based on progress completed of Transition Services.

We did not have any Grant revenue during the six months ended June 30, 2024 as compared to $224.5 million during the same period in 2023, a decrease of $224.5 million.

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

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

Six Months Ended June 30,

2024 2023 Change

Expenses (in thousands):

Cost of sales $ 105,451 $ 89,863 $ 15,588

Research and development 199,625 466,576 (266,951)

Selling, general, and administrative 188,096 206,249 (18,153)

Total expenses $ 493,172 $ 762,688 $ (269,516)

Cost of Sales

Cost of sales was $105.5 million for the six months ended June 30, 2024, including expenses of $20.2 million related to excess, obsolete, or expired inventory and losses on certain firm purchase commitments, and $18.8 million related to unutilized manufacturing capacity.

Cost of sales was $89.9 million for the six months ended June 30, 2023, including expense of $40.0 million related to excess, obsolete, or expired inventory and losses on firm purchase commitments, and a credit of $18.8 million related to negotiated reductions to certain previously recognized firm purchase commitments, and $15.9 million related to unutilized manufacturing capacity.

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

After receiving regulatory approval, we capitalize the costs of production for a particular supply chain when we determine that we have a present right to the economic benefit associated with the product.

If inventory sold for the six months ended June 30, 2024 was valued at expected standard cost, including expenses related to excess and obsolete inventory, adjusted cost of sales for the period would have been approximately $107.1 million, an adjustment of $1.6 million as compared to cost of sales recognized.

If inventory sold for the six months ended June 30, 2023 was valued at expected standard cost, adjusted cost of sales for the period would have been approximately $120.8 million, an adjustment of $30.9 million.

The cost of sales as a percentage of product sales may fluctuate in the future as a result of changes to our customer pricing mix or standard costs.

Research and Development Expenses

Research and development expenses decreased to $199.6 million for the six months ended June 30, 2024 from $466.6 million for the same period in 2023, a decrease of $267.0 million.

Six Months Ended June 30,

Coronavirus vaccines $ 65,962 $ 279,869

Other vaccine development programs 736 2,033

Total direct external research and development expense 66,698 281,902

Employee expenses 74,191 99,545

Stock-based compensation expense 11,663 23,804

Facility expenses 24,696 33,561

Other expenses 22,377 27,764

Total research and development expenses $ 199,625 $ 466,576

Research and development expenses for coronavirus vaccines for the six months ended June 30, 2024 and 2023 decreased from $279.9 million to $66.0 million primarily as a result of a reduction in manufacturing and support costs due, in part, to a reduction in our global manufacturing footprint consistent with our contractual obligations to supply, and anticipated demand for, COVID-19 Vaccine, including embedded lease costs, under manufacturing supply agreements with CMOs and CDMOs.

The decrease was also due to a benefit of $26.6 million for the six months ended June 30, 2024 resulting from the Confidential Settlement Agreement and Release agreement entered into with Fujifilm resulting in a reduction to previously recorded expense (see Note 6 to our consolidated financial statements).

Selling, General, and Administrative Expenses

Selling, general, and administrative expenses decreased to $188.1 million for the six months ended June 30, 2024 from $206.2 million for the same period in 2023, a decrease of $18.2 million.

Excluding the Sanofi transaction related costs of $30.8 million, the decrease in selling, general, and administrative expenses is primarily due to certain cost containment measures to reduce our operating spend.

Six Months Ended June 30,

Other income, net (in thousands):

Interest expense $ (8,254) $ (7,440) $ (814)

11,385 29,894 (18,509)

Total other income, net

$ 3,131 $ 22,454 $ (19,323)

Total other income, net for the six months ended June 30, 2024 was $3.1 million as compared to $22.5 million for the same period in 2023.

This is primarily due to a decrease in Other income as a result of the unfavorable impact in 2024 as compared to 2023 of exchange rates on foreign currency denominated balances, including an intercompany loan with Novavax CZ.

Income Tax Expense

During the six months ended June 30, 2024, we recognized an income tax expense of $4.5 million related to federal, state, and foreign income taxes.

During the six months ended June 30, 2023, we recognized an income tax expense of $1.0 million related to federal, state, and foreign income taxes.

Net Income (Loss)

Three Months Ended March 31,

Six Months Ended June 30,

2024 2023 Change

Net Loss (in thousands, except per share information):

Net Income (Loss) (in thousands, except per share information):

Net Income (Loss)

$ 14,831 $ (235,897) $ 250,728

Net loss per share, basic and diluted

Net Income (Loss) per share, basic

$ 0.10 $ (2.69) $ 2.79

Weighted average shares outstanding, basic and diluted

Net Income (Loss) per share, dilutive

$ 0.10 $ (2.69) $ 2.79

Net loss for the three months ended March 31, 2024 was $147.6 million, or $1.05 per share, as compared to net loss of $293.9 million, or $3.41 per share, for the same period in 2023.

The decrease in net loss during the three months ended March 31, 2024, was primarily due to a decrease in research and development expenses.

The increase in weighted average shares outstanding for the three months ended March 31, 2024 was primarily a result of sales of our common stock.

Weighted average shares outstanding, basic 144,147 87,769 56,378

Weighted average shares outstanding, dilutive 145,121 87,769 57,352

Net income for the six months ended June 30, 2024 was $14.8 million, or $0.10 per share, basic, as compared to Net loss of $235.9 million, or $2.69 per share, basic, for the same period in 2023.

The increase in net income during the six months ended June 30, 2024, was primarily due to a decrease in research and development expenses.

The increase in weighted average shares outstanding for the six months ended June 30, 2024 is primarily a result of sales of our common stock.

Liquidity Matters and Capital Resources

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

Effective May 10, 2024, we entered into a collaboration and license agreement (the “Collaboration and License Agreement”) with Sanofi pursuant to which Sanofi received:

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

Our ability to generate revenue from product sales is subject

to uncertainty specifically as it relates to our ability to successfully develop, manufacture, distribute, and market our updated vaccine and to successfully execute on our APAs, as discussed below.

Additionally, our plans include our ongoing restructuring and cost reduction measures (see Note 16 to the consolidated financial statements), and may also include raising additional capital through a combination of additional equity and debt financing, collaborations, strategic alliances, asset sales, and marketing, distribution, or licensing arrangements.

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

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

In May 2024, we entered into the Sanofi CLA pursuant to which Sanofi received:

i) A co-exclusive license to commercialize our current stand-alone COVID-19 Vaccine, including our 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 our 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 our COVID-19 vaccine and one or more non-influenza vaccines (“Other Combination Products” and together with the COVID Mono Products, CIC Products, and Other Combination Products (“Licensed COVID-19 Products”)), and

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

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

iii) A non-exclusive license to develop and commercialize combination products containing both our COVID-19 Vaccine and one or more non-influenza vaccines (“Other Combination Products” and together with the COVID-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 our Matrix-M™ adjuvant.

Under the Sanofi CLA, we received a non-refundable upfront payment of $500 million.

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

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

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

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

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

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

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

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

Effective May 10, 2024, we also entered into a securities subscription agreement (the “Subscription Agreement”) with Sanofi, pursuant to which we sold and issued to Sanofi, in a private placement, 6,880,481 shares of our common stock, par value $0.01 per share at a price of $10.00 per share for aggregate gross proceeds to us of $68.8 million.

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

We also have license agreements.

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

Commencing shortly after the effective date of the Sanofi CLA, we commenced activities related to the technology transfer of our manufacturing process for the COVID-19 Vaccine Products and Matrix-M™ components to Sanofi.

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

Additionally, Sanofi will reimburse us for our research and development and medical affairs costs related to the COVID-19 Vaccine Products in accordance with agreed upon plans and budgets.

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

Beginning in 2025 and continuing during the term of the Sanofi CLA, we and Sanofi will commercialize the COVID-19 Vaccine Products worldwide in accordance with a commercialization plan agreed by us and Sanofi, under which we will continue to supply our existing APA customers and strategic partners, including Takeda and SII.

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

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

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

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

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 under the licensing agreements, was approximately $2 billion, of which $1.2 billion is included in Deferred revenue on our consolidated balance sheet.

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

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

demand, and the ability of the customer to request variant vaccine under certain of our APAs.

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

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

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

Additionally, for the remaining APA agreements, our intent is to amicably negotiate or deliver doses or when appropriate, exit agreements.

In October 2023, NVX-CoV2601 received EUA from the U.S.

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

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

Immediately upon authorization, NVX-CoV2601 has also been included in the recommendations issued by the CDC in September 2023.

Doses became available within the U.S.

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

As of March 31, 2024, gross-to-net reserve balances were $92.9 million related to product returns and $10.2 million related to wholesale distributor fees, discounts, and chargebacks, of which $5.4 million was included in Accounts receivable and $97.7 million was included in Accrued expenses on our consolidated balance sheet.

As of June 30, 2024, gross-to-net reserve balances were $54.6 million related to product returns and $0.9 million related to wholesale distributor fees, discounts, and chargebacks and was included in Accrued expenses on our consolidated balance sheet.

Pursuant to the Settlement Agreement with Fujifilm (see Note 6 to our consolidated financial statements), in March 2024, we paid $42.0 million to Fujifilm, the parties agreed to a mutual release of claims arising from, under or otherwise in connection with the prior confidential settlement agreement and release effective September 30, 2022, and Fujifilm agreed to dismiss its demand for arbitration with the Judicial Arbitration and Mediation Services (“JAMS”).

This payment is less than amounts previously recognized as embedded lease expense and reflected in Research and development expenses from Fujifilm manufacturing activity and accordingly, during the three ended March 31, 2024, we recorded a benefit of $26.6 million as Research and development expenses.

This payment is less than amounts previously recognized as embedded lease expense and reflected in Research and development expenses from Fujifilm manufacturing activity and accordingly, during the six months ended June 30, 2024, we recorded a benefit of $26.6 million as Research and development expenses.

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

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

Based on subsequent communication from the TGA that it will not recommend approval of the filing as submitted and new data and information generated since that filing, we are evaluating the regulatory path for approval, including the potential to withdraw the filing, update with new data and information, and resubmit in the coming months.

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

In March 2024, we 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.

Australia is not required to purchase the updated COVID-19 Vaccine doses until we receive authorization from TGA.

We plan 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.

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

We do 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.

We plan 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 our consolidated balance sheet.

If we are unable to satisfy our 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.

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 the APA in our consolidated balance sheet.

New Zealand has requested a refund of certain advanced payments and we are 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 .

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

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

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

As of March 31, 2024, $110.6 million was classified as current Deferred revenue and $477.6 million was classified as non-current Deferred revenue with respect to the Canadian APA in our consolidated balance sheet.

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 our consolidated balance sheet.

If the Canadian government terminates the Canada APA, $28.0 million of the deferred revenue would become refundable and approximately $224 million of the contract value related to future deliverables would no longer be available.

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

assigned to the UK Health Security Agency), acting on behalf of the government of the United Kingdom of Great Britain and Northern Ireland (the “Authority”), which amended and restated in its entirety the SARS-CoV-2 Vaccine Supply Agreement, dated October 22, 2020, between the parties (the “Original UK Supply Agreement”).

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

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

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

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

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

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

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

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

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

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

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

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

Pursuant to the Gavi Settlement Agreement, we are responsible for payment to Gavi of (i) an initial settlement payment of $75 million, which we paid in February 2024, and (ii) deferred payments, in equal annual amounts of $80 million payable each calendar year through a deferred payment term ending December 31, 2028.

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

countries that exceed the $80 million deferred payment amount in any calendar year during the deferred payment term.

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

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

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

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

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

As of June 30, 2024, the remaining amounts included on our consolidated balance sheet are classified as $225 million in non-current Deferred revenue for the additional credit that may be applied against future qualifying sales, $90 million in Other current liabilities, and $305 million in Other non-current liabilities.

In addition, we and Gavi entered into a security agreement pursuant to which we granted Gavi a security interest in accounts receivable from SII under the SII R21 Agreement (see Note 6 to our consolidated financial statements), which will continue for the deferred payment term of the Gavi Settlement Agreement.

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

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

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

under the Gavi Settlement Agreement), and such sales cover our costs of manufacturing such vaccine, not including manufacturing costs funded by CEPI.

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

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

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

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

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

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

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

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

Pursuant to the SLS Supply Agreement, SLS or its authorized manufacturer is responsible for obtaining and maintaining all necessary permits or other regulatory approvals to manufacture drug substance and drug product.

Unless otherwise earlier terminated, the SLS Supply Agreement will expire on the later of June 30, 2028 or two years after the expiration or termination of the last firm purchase order under the SLS Supply Agreement.

Either party may terminate the SLS Supply Agreement if the other party commits a material breach of the SLS Supply Agreement that is not timely cured or is not curable.

The SLS Supply Agreement contains certain customary representations and warranties of the parties along with certain customary covenants, including confidentiality and indemnity provisions.

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

As of March 31, 2024, we had $495.9 million in cash and cash equivalents and restricted cash as compared to $583.8 million as of December 31, 2023.

We funded our operations for the three months ended March 31, 2024 primarily with cash and cash equivalents, upfront payments under APAs, revenue from product sales, and royalties under licensing arrangements with our strategic partners.

As of June 30, 2024, we had $1.1 billion in cash and cash equivalents, restricted cash and marketable securities as compared to $583.8 million as of December 31, 2023.

We funded our operations for the six months ended June 30, 2024 primarily with cash and cash equivalents, non-refundable upfront payment under the Sanofi CLA and Subscription Agreement, proceeds from the sale of securities under our August 2023 Sales Agreement, upfront payments under APAs, and revenue from product sales.

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

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

The following table summarizes cash flows for the three months ended March 31, 2024 and 2023 (in thousands):

Three Months Ended March 31,

We anticipate our future operations to be funded primarily by milestone payments, royalties and transition services under our Sanofi CLA, revenue from product sales, our cash and cash equivalents and investments in marketable securities, and other potential funding sources including equity financings, which may include at the market offerings, debt financings, collaborations, strategic alliances, asset sales, and marketing, distribution or licensing arrangements.

The following table summarizes cash flows for the six months ended June 30, 2024 and 2023 (in thousands):

Six Months Ended June 30,

2024 2023 Change

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Effect on exchange rate on cash, cash equivalents, and restricted cash (3,111) (8,992) 5,881

Net decrease in cash, cash equivalents, and restricted cash

Net increase (decrease) in cash, cash equivalents, and restricted cash

111,748 (830,904) 942,652

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Cash, cash equivalents, and restricted cash at end of period $ 695,558 $ 517,941 $ 177,617

Net cash used in operating activities was $83.6 million for the three months ended March 31, 2024, as compared to

$325.6 million for the same period in 2023.

The decrease in cash used in operating activities is primarily due to an increase in amounts received under our APAs and an overall decrease in operating expenses period over period, partially offset by the timing of payments to vendors.

Net cash used in investing activities was $7.3 million for the three months ended March 31, 2024, as compared to $23.6 million for the same period in 2023.

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

Net cash provided by financing activities was $5.9 million for the three months ended March 31, 2024, as compared to net cash used in financing activities of $354.4 million for the same period in 2023.

The decrease in cash used in financing activities is primarily due to the $325 million repayment of our 3.75% Convertible notes and finance lease payments during 2023.

Net cash provided by operating activities was $230.7 million for the six months ended June 30, 2024, as compared to net cash used in operating activities of $497.5 million for the same period in 2023.

The increase in cash provided by operating activities is primarily due to the non-refundable upfront payment under the Sanofi CLA, an increase in amounts received under our APAs and an overall decrease in operating expenses period-over-period, partially offset by the timing of payments to vendors.

Net cash used in investing activities was $380.0 million for the six months ended June 30, 2024, as compared to $31.3 million for the same period in 2023.

The increase in cash used in investing activities is primarily due to our investment in marketable securities, partially offset by lower expenditures on equipment and leasehold improvements.

Net cash provided by financing activities was $264.1 million for the six months ended June 30, 2024, as compared to net cash used in financing activities of $293.0 million for the same period in 2023.

The increase in cash provided by financing activities is primarily as a result of proceeds from the sale of shares under our August 2023 Sales Agreement of approximately $188 million and Subscription Agreement of $68.8 million in 2024 as compared with the $325 million repayment of our 3.75% Convertible notes and finance lease payments during 2023.

Going Concern

As described in Note 2 to our consolidated financial statements, conditions or events existed that raised substantial doubt about our ability to continue as a going concern for at least one year from the date that the financial statements were issued.

However, management’s plans, including specifically the execution of the Collaboration and License Agreement and Subscription Agreement with Sanofi effective May 10, 2024, which will result in cash proceeds to us of $568.8 million during the second quarter of 2024, has alleviated the substantial doubt regarding our ability to continuing as a going concern for the one-year period from the date these the financial statements were issued.

As described in Note 2 to our consolidated financial statements, we evaluated our ability to continue as a going concern and concluded that we will have sufficient capital available to fund our operations for at least one-year from the date that the financial statements were issued.

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis