NOVAVAX INC 10-Q

Item 1. Financial Statements 1 Table of Contents NOVAVAX, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share information) (unaudited) For the Three Months Ended September 30, For the Nine Months Ended September 30, 2024 2023 2024 2023 Revenue: Product sales $ 38,210 $ 2,231 $ 140,438 $ 279,937 Licensing, royalties, and other 46,302 19,833 453,413 23,046 Grants — 164,922 — 389,380 Total revenue 84,512 186,986 593,851 692,363 Expenses: Cost of sales 60,619 98,929 166,070 188,792 Research and development 87,164 106,229 286,789 572,805 Selling, general, and administrative 70,747 107,460 258,843 313,709 Total expenses 218,530 312,618 711,702 1,075,306 Loss from operations ( 134,018 ) ( 125,632 ) ( 117,851 ) ( 382,943 ) Other income (expense): Interest expense ( 4,236 ) ( 2,859 ) ( 12,490 ) ( 10,299 ) Other income (expense), net 15,922 ( 2,982 ) 27,307 26,912 Loss before income tax expense (benefit) ( 122,332 ) ( 131,473 ) ( 103,034 ) ( 366,330 ) Income tax expense (benefit) ( 1,032 ) ( 697 ) 3,435 343 Net loss $ ( 121,300 ) $ ( 130,776 ) $ ( 106,469 ) $ ( 366,673 ) Net loss per share: Basic and diluted $ ( 0.76 ) $ ( 1.26 ) $ ( 0.71 ) $ ( 3.94 ) Weighted average number of common shares outstanding: Basic and diluted 160,049 103,429 149,486 93,046 CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (in thousands) (unaudited) For the Three Months Ended September 30, For the Nine Months Ended September 30, 2024 2023 2024 2023 Net loss $ ( 121,300 ) $ ( 130,776 ) $ ( 106,469 ) $ ( 366,673 ) Other comprehensive income (loss): Net unrealized gain on available-for-sale marketable securities 393 — 243 — Foreign currency translation adjustment 13,713 ( 3,686 ) 633 ( 5,486 ) Other comprehensive income (loss) 14,106 ( 3,686 ) 876 ( 5,486 ) Comprehensive loss $ ( 107,194 ) $ ( 134,462 ) $ ( 105,593 ) $ ( 372,159 ) The accompanying notes are an integral part of these financial statements. 2 Table of Contents NOVAVAX, INC. CONSOLIDATED BALANCE SHEETS (in thousands, except share and per share information) September 30, 2024 December 31, 2023 (unaudited) ASSETS Current assets: Cash and cash equivalents $ 573,630 $ 568,505 Marketable securities 335,901 — Restricted cash 10,547 10,424 Accounts receivable 94,962 297,240 Inventory 8,638 41,696 Prepaid expenses and other current assets 80,002 226,023 Total current assets 1,103,680 1,143,888 Property and equipment, net 285,724 305,771 Right of use asset, net 165,766 185,218 Goodwill 126,766 127,454 Other non-current assets 30,547 35,159 Total assets $ 1,712,483 $ 1,797,490 LIABILITIES AND STOCKHOLDERS’ DEFICIT Current liabilities: Accounts payable $ 57,517 $ 132,610 Accrued expenses 218,674 394,668 Deferred revenue 613,418 241,310 Current portion of finance lease liabilities 9,675 5,142 Other current liabilities 281,715 861,408 Total current liabilities 1,180,999 1,635,138 Deferred revenue 515,370 622,210 Convertible notes payable 169,265 168,016 Non-current finance lease liabilities 54,368 55,923 Other non-current liabilities 318,917 33,130 Total liabilities 2,238,919 2,514,417 Commitments and contingencies (Note 14) Preferred stock, $ 0.01 par value, 2,000,000 shares authorized at September 30, 2024 and December 31, 2023; no shares issued and outstanding at September 30, 2024 and December 31, 2023 — — Stockholders' deficit: Common stock, $ 0.01 par value, 600,000,000 shares authorized at September 30, 2024 and December 31, 2023; 161,558,247 shares issued and 160,148,088 shares outstanding at September 30, 2024 and 140,506,093 shares issued and 139,505,770 shares outstanding at December 31, 2023 1,616 1,405 Additional paid-in capital 4,490,630 4,192,164 Accumulated deficit ( 4,927,420 ) ( 4,820,951 ) Treasury stock, cost basis, 1,410,159 shares at September 30, 2024 and 1,000,323 shares at December 31, 2023 ( 94,860 ) ( 92,267 ) Accumulated other comprehensive income 3,598 2,722 Total stockholders’ deficit ( 526,436 ) ( 716,927 ) Total liabilities and stockholders’ deficit $ 1,712,483 $ 1,797,490 The accompanying notes are an integral part of these financial statements. 3 NOVAVAX, INC. CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT Three and Nine Months Ended September 30, 2024 and 2023 (in thousands, except share information) (unaudited) Common Stock Additional Paid-in Capital Accumulated Deficit Treasury Stock Accumulated Other Comprehensive Income (Loss) Total Stockholders' Deficit Shares Amount Balance at June 30, 2024 161,267,120 $ 1,613 $ 4,477,748 $ ( 4,806,120 ) $ ( 94,439 ) $ ( 10,508 ) $ ( 431,706 ) Stock-based compensation — — 12,049 — — — 12,049 Stock issued under incentive programs 291,127 3 833 — ( 421 ) — 415 Unrealized gain on available-for-sale marketable securities — — — — — 393 393 Foreign currency translation adjustment — — — — 13,713 13,713 Net loss — — — ( 121,300 ) — — ( 121,300 ) Balance at September 30, 2024 161,558,247 $ 1,616 $ 4,490,630 $ ( 4,927,420 ) $ ( 94,860 ) $ 3,598 $ ( 526,436 ) Balance at June 30, 2023 95,183,750 $ 952 $ 3,855,916 $ ( 4,511,786 ) $ ( 91,424 ) $ ( 8,177 ) $ ( 754,519 ) Stock-based compensation — — 21,254 — — — 21,254 Stock issued under incentive programs 176,329 2 634 — ( 282 ) — 354 Issuance of common stock, net of issuance costs of $ 3,063 24,281,588 242 188,781 — — — 189,023 Foreign currency translation adjustment — — — — — ( 3,686 ) ( 3,686 ) Net loss — — — ( 130,776 ) — — ( 130,776 ) Balance at September 30, 2023 119,641,667 $ 1,196 $ 4,066,585 $ ( 4,642,562 ) $ ( 91,706 ) $ ( 11,863 ) $ ( 678,350 ) Common Stock Additional Paid-in Capital Accumulated Deficit Treasury Stock Accumulated Other Comprehensive Income (Loss) Total Stockholders' Deficit Shares Amount Balance at December 31, 2023 140,506,093 $ 1,405 $ 4,192,164 $ ( 4,820,951 ) $ ( 92,267 ) $ 2,722 $ ( 716,927 ) Stock-based compensation — — 37,704 — — — 37,704 Stock issued under incentive programs 1,958,757 20 4,544 — ( 2,593 ) — 1,971 Issuance of common stock, net of issuance costs of $ 3,830 19,093,397 191 256,218 — — — 256,409 Unrealized gain on available-for-sale marketable securities — — — — — 243 243 Foreign currency translation adjustment — — — — — 633 633 Net loss — — — ( 106,469 ) — — ( 106,469 ) Balance at September 30, 2024 161,558,247 $ 1,616 $ 4,490,630 $ ( 4,927,420 ) $ ( 94,860 ) $ 3,598 $ ( 526,436 ) Balance at December 31, 2022 86,806,554 $ 868 $ 3,737,979 $ ( 4,275,889 ) $ ( 90,659 ) $ ( 6,377 ) $ ( 634,078 ) Stock-based compensation — — 70,193 — — — 70,193 Stock issued under incentive programs 605,571 6 1,740 — ( 1,047 ) — 699 Issuance of common stock, net of issuance costs of $ 3,924 32,229,542 322 256,673 — — — 256,995 Foreign currency translation adjustment — — — — — ( 5,486 ) ( 5,486 ) Net loss — — — ( 366,673 ) — — ( 366,673 ) Balance at September 30, 2023 119,641,667 $ 1,196 $ 4,066,585 $ ( 4,642,562 ) $ ( 91,706 ) $ ( 11,863 ) $ ( 678,350 ) The accompanying notes are an integral part of these financial statements. 4 NOVAVAX, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands)(unaudited) Nine Months Ended September 30, 2024 2023 Operating Activities: Net loss $ ( 106,469 ) $ ( 366,673 ) Reconciliation of net loss to net cash used in operating activities: Depreciation and amortization 35,979 30,431 Non-cash stock-based compensation 37,704 69,699 Provision for excess and obsolete inventory 19,913 49,533 Impairment of long-lived assets 5,431 10,081 Other items, net ( 3,786 ) ( 3,015 ) Changes in operating assets and liabilities: Inventory 13,103 ( 82,542 ) Accounts receivable, prepaid expenses, and other assets 353,176 ( 34,418 ) Accounts payable, accrued expenses, and other liabilities ( 343,158 ) ( 349,261 ) Deferred revenue 74,007 138,979 Net cash provided by (used in) operating activities 85,900 ( 537,186 ) Investing Activities: Capital expenditures ( 11,125 ) ( 44,932 ) Purchases of available-for-sale marketable securities ( 441,265 ) — Proceeds from maturities of available-for-sale marketable securities 105,607 — Internal-use software ( 1,262 ) ( 4,796 ) Net cash used in investing activities ( 348,045 ) ( 49,728 ) Financing Activities: Net proceeds from sales of common stock 263,272 256,995 Net proceeds from the exercise of stock-based awards 1,971 699 Finance lease payments ( 1,238 ) ( 25,026 ) Repayment of 2023 Convertible notes — ( 325,000 ) Payments of costs related to issuance of 2027 Convertible notes — ( 3,591 ) Net cash provided by (used in) financing activities 264,005 ( 95,923 ) Effect of exchange rate on cash, cash equivalents, and restricted cash 2,917 355 Net increase (decrease) in cash, cash equivalents, and restricted cash 4,777 ( 682,482 ) Cash, cash equivalents, and restricted cash at beginning of period 583,810 1,348,845 Cash, cash equivalents, and restricted cash at end of period $ 588,587 $ 666,363 Supplemental disclosure of non-cash activities: Right-of-use asset leases, net of tenant improvement allowance on facility leases $ ( 4,302 ) $ 96,492 Capital expenditures included in accounts payable and accrued expenses $ 1,607 $ 2,394 Internal-use software included in accounts payable and accrued expenses $ 320 $ 167 Supplemental disclosure of cash flow information: Cash interest payments, net of amounts capitalized $ 8,500 $ 11,751 Cash paid for income taxes, net of refunds $ 641 $ 128 The accompanying notes are an integral part of these financial statements. 5 NOVAVAX, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS September 30, 2024 (unaudited) Note 1 – Organization and Business Novavax, Inc. (“Novavax,” and together with its wholly owned subsidiaries, the “Company”) is a global company focused on driving value via its proven technology platform, which includes a combination of a recombinant protein approach, innovative nanoparticle technology, and patented Matrix-M™ adjuvant, through partnerships and research and development. The Company continues to evolve its operating model to leverage four key drivers of value: a partnership with Sanofi Pasteur Inc. (“Sanofi”) announced in May 2024, a late-stage pipeline focuses on its COVID-19-Influenza Combination (“CIC”) and stand-alone influenza vaccine candidates, leveraging its proven technology platform to drive additional partnerships and deals, and its emerging early-stage pipeline. In May 2024, Novavax entered into a collaboration and licensing agreement (the “Sanofi CLA”) with Sanofi. The agreement includes a co-exclusive license to co-commercialize Novavax’s COVID-19 vaccine following the end of the 2024-2025 vaccination season, a sole license to Novavax’s COVID-19 vaccine for use in combination with Sanofi’s influenza vaccines, a non-exclusive license to develop and commercialize other vaccine products selected by Sanofi that include the Company's Matrix-M TM adjuvant in vaccine products (See Note 6). Novavax’s program includes the Company’s prototype COVID-19 vaccine (“NVX-CoV2373,” or “prototype vaccine”), the Company’s XBB COVID-19 vaccine (“NVX-CoV2601”), and the Company’s updated vaccine for the 2024-2025 vaccination season (“NVX-CoV2705” or “updated vaccine” and, collectively with NVX-CoV2373 and NVX-CoV2601, the Company’s “COVID-19 Vaccine” or “COVID-19 Program”). 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). Currently, the Company significantly depends on its supply agreement with Serum Institute of India Pvt. Ltd. (“SII”) and its subsidiary, Serum Life Sciences Limited (“SLS” and together with SII, “Serum”), for co-formulation, filling, and finishing. Note 2 – Summary of Significant Accounting Policies Basis of Presentation The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. The accompanying unaudited consolidated financial statements include all adjustments (consisting of normal recurring adjustments) that the Company considers necessary for a fair presentation of the financial position, operating results, comprehensive loss, changes in stockholders’ deficit, and cash flows for the periods presented. Although the Company believes that the disclosures in these unaudited consolidated financial statements are adequate to make the information presented not misleading, certain information and footnote information normally included in consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted as permitted under the rules and regulations of the United States Securities and Exchange Commission (“SEC”). The accompanying unaudited consolidated financial statements include the accounts of Novavax, Inc. and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. The aggregate foreign currency transaction gains and losses resulting from the conversion of the transaction currency to functional currency were a $ 1.2 million loss and a $ 7.9 million loss, and a $ 12.2 million loss and $ 3.9 million gain for the three and nine months ended September 30, 2024 and 2023, respectively, which are reflected in Other income (expense), net. The accompanying unaudited consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2023. Results for this or any interim period are not necessarily indicative of results for any future interim period or for the entire year. The Company operates in one business segment. 6 Liquidity and Going Concern The accompanying unaudited consolidated financial statements have been prepared assuming that the Company will continue as a going concern within one year after the date that the financial statements are issued and contemplates the realization of assets and satisfaction of liabilities in the ordinary course of business. The accompanying unaudited consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of the uncertainty described below. As of September 30, 2024, the Company had $ 573.6 million in cash and cash equivalents, $ 335.9 million in marketable securities, and negative working capital of $ 77.3 million. During the nine months ended September 30, 2024, the Company recognized net loss of $ 106.5 million, and had net cash flows provided by operating activities of $ 85.9 million. In accordance with Accounting Standards Codification (“ASC”) Topic 205-40, Presentation of Financial Statements - Going Concern, the Company evaluated its ability to continue as a going concern within one year after the date that the accompanying unaudited consolidated financial statements are issued. Based on the Company’s current cash, cash equivalents and marketable securities balances and the Company's current cash flow forecast for the one-year going concern look forward period, the Company has concluded that it expects to have sufficient capital available to fund its operations for the one-year period from the date that these financial statements are issued. As of December 31, 2023, the Company had concluded that there was substantial doubt about its ability to continue as a going concern primarily due to significant uncertainty related to its ability to successfully develop, manufacture, distribute, and market its updated vaccine and execute on certain cost-reduction initiatives as described in Note 15. The Sanofi CLA combined with cost reductions and the settlement of certain liabilities, has alleviated the substantial doubt. Revenue Recognition, Licensing and Transition Services The terms of the Company’s third-party licensing agreements may contain multiple performance obligations, including licenses and transition services. The Company evaluates licensing agreements under ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”) to determine the distinct performance obligations. Prior to recognizing revenue, the Company estimates the transaction price, including variable consideration that is subject to a constraint. Amounts of variable consideration are included in the transaction price to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur and when the uncertainty associated with the variable consideration is subsequently resolved. Total consideration may include nonrefundable upfront license fees, transition service fees, other payments based upon the achievement of specified milestones, and royalty payments based on product sales from licensed products. For multiple performance obligation arrangements, the Company allocates the transaction price to each distinct performance obligation based on its relative stand-alone selling price. The stand-alone 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 stand-alone selling prices determined using discounted cash flows, the Company considers discounted, probability-weighted cash flows related to the performance obligation transferred. In developing such estimates, the Company applies judgment in determining the forecasted revenue, expected margins, and the discount rate. These estimates are subjective and require the Company to make assumptions about future cash flows. Revenue related to performance obligations satisfied at a point in time is recognized when the customer obtains control of the promised asset. For performance obligations recognized over time, the Company recognizes revenue using an input method to measure progress by utilizing costs incurred to-date relative to total expected costs. Under this process, the Company considers the costs that have been incurred to-date, as well as projections to completion using various inputs and assumptions, including, but not limited to, progress towards completion, labor costs and level of effort, material and subcontractor costs, and indirect administrative costs. Estimating the total cost at completion of the Company’s performance obligation under a contract is subjective and requires the Company to make assumptions about future activity and cost drivers. Changes in these estimates can occur for a variety of reasons and may impact the timing of revenue recognition on the Company’s contracts. Changes in estimates related to the process are recognized in the period when such changes are made on a cumulative catch-up basis. The Company has not experienced any material adjustments as a result of changes in estimates arising from this process. Use of Estimates The preparation of the accompanying unaudited consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the accompanying unaudited consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ materially from those estimates. 7 Restructuring The Company recognizes restructuring charges when such costs are incurred. The Company’s restructuring charges consist of employee severance and other termination benefits related to the reduction of its workforce, the consolidation of facilities, and infrastructure and other costs. Termination benefits are expensed on the date the Company notifies the employee, unless the employee must provide future service, in which case the benefits are expensed ratably over the future service period. Ongoing benefits are expensed when restructuring activities are probable and the benefit estimable. See Note 15 for additional information on the severance and employee benefit costs for terminated employees and impairment of assets in connection with the Company’s Restructuring Plan as defined in Note 15. Recent Accounting Pronouncements Not Yet Adopted In October 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-06, Disclosure Improvements (“ASU 2023-06”), to clarify or improve disclosure and presentation requirements of a variety of topics and align the requirements in the FASB ASC with the SEC's regulations. The ASU is effective for the Company’s annual period ended December 31, 2024 and interim periods thereafter. The Company is currently evaluating ASU 2023-06 to determine its impact on the Company’s consolidated financial statements and disclosures. In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”) which expands disclosures for reportable segments made by public entities and requires more detailed information about expenses within each reportable segment. Entities with a single reportable segment are required to provide on both an interim and annual basis, all segment disclosures required in ASC 280, including the new disclosures for reportable segments under the amendments in ASU 2023-07. The amendments do not change the existing guidance on how a public entity identifies and determines its reportable segments. The ASU is effective for the Company’s annual period ended December 31, 2024 and interim periods thereafter. The Company is currently evaluating ASU 2023-07 to determine its impact on the Company's disclosures. In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures (“ASU 2023-09”). The standard enhances transparency in income tax disclosures by requiring, on an annual basis, certain disaggregated information about a reporting entity’s effective tax rate reconciliation and income taxes paid. The ASU also requires disaggregated disclosure related to pre-tax income (or loss) and income tax expense (or benefit) and eliminates certain disclosures related to the balance of an entity’s unrecognized tax benefit and the cumulative amount of certain temporary differences. The ASU is effective for the Company beginning on January 1, 2025. The Company is currently evaluating ASU 2023-09 to determine its impact on the Company's disclosures. Note 3 – Marketable Securities Marketable securities were classified as available-for-sale as of September 30, 2024 and comprised of (in thousands): September 30, 2024 December 31, 2023 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Corporate debt securities $ 335,658 $ 243 $ — $ 335,901 $ — $ — $ — $ — Total marketable securities $ 335,658 $ 243 $ — $ 335,901 $ — $ — $ — $ — As of September 30, 2024, investments in marketable securities, comprised of corporate debt securities, were due to mature within one year. Based on the Company’s policy under the expected credit loss model, including an assessment of the investment portfolio as of September 30, 2024, the Company concluded that its marketable securities were not attributable to credit and therefore an allowance for credit losses has not been recorded as of September 30, 2024. As of September 30, 2024, the Company held no securities that were in an unrealized loss position for more than 12 months. 8 Note 4– Fair Value Measurements The following table represents the Company’s fair value hierarchy for its financial assets and liabilities (in thousands): Fair Value at September 30, 2024 Fair Value at December 31, 2023 Assets Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 Money market funds (1) $ 197,911 $ — $ — $ 171,824 $ — $ — Government-backed securities (1) — 225,000 — — 200,000 — Treasury securities (1) — — — — 45,622 — Corporate debt securities (2) — 460,180 — — — — Total cash equivalents and marketable securities $ 197,911 $ 685,180 $ — $ 171,824 $ 245,622 $ — Liabilities 5.00 % Convertible notes due 2027 $ — $ 221,733 $ — $ — $ 100,909 $ — (1) Classified as cash and cash equivalents as of September 30, 2024 and December 31, 2023, respectively, on the consolidated balance sheets. (2) Includes $ 124.2 million classified as Cash and cash equivalents and $ 335.9 million classified as marketable securities as of September 30, 2024, on the consolidated balance sheets. Fixed-income investments categorized as Level 2 are valued at the custodian bank by a third-party pricing vendor’s valuation models that use verifiable observable market data, such as interest rates and yield curves observable at commonly quoted intervals and credit spreads, bids provided by brokers or dealers, or quoted prices of securities with similar characteristics. Pricing of the Company’s convertible notes has been estimated using observable inputs, including the price of the Company’s common stock, implied volatility, interest rates, and credit spreads. During the nine months ended September 30, 2024 and 2023, the Company did not have any transfers between levels. The amount in the Company’s consolidated balance sheets for accounts payable and accrued expenses approximates its fair value due to its short-term nature. 9 Note 5 – Revenue The Company's accounts receivable included $ 88.8 million and $ 286.4 million related to amounts that were billed to customers and $ 6.2 million and $ 10.8 million related to amounts which had not yet been billed to customers as of September 30, 2024 and December 31, 2023, respectively. During the nine months ended September 30, 2024 and 2023, changes in the Company’s accounts receivables, allowance for credit losses, and deferred revenue balances were as follows (in thousands): Balance, Beginning of Period Additions Deductions Balance, End of Period Accounts receivable: Nine Months Ended September 30, 2024 $ 304,916 $ 882,979 $ ( 1,085,258 ) $ 102,637 Nine Months Ended September 30, 2023 96,210 981,305 ( 946,182 ) 131,333 Allowance for credit losses (1) : Nine Months Ended September 30, 2024 $ ( 7,675 ) $ — $ — $ ( 7,675 ) Nine Months Ended September 30, 2023 ( 13,835 ) — 6,160 ( 7,675 ) Deferred revenue: (2) Nine Months Ended September 30, 2024 $ 863,520 $ 363,758 $ ( 98,490 ) $ 1,128,788 Nine Months Ended September 30, 2023 549,551 422,766 ( 171,288 ) 801,029 (1) There was no allowance for credit losses recorded during the nine months ended September 30, 2024 or 2023. During the nine months ended September 30, 2023, there was a $ 6.2 million reversal of a credit loss allowance due to the collection of a previously recognized allowance for credit losses. To estimate the allowance for credit losses, the Company evaluates the credit risk related to its customers based on historical loss experience, economic conditions, the aging of receivables, and customer-specific risks. (2) Deductions from Deferred revenue generally related to the recognition of revenue once performance obligations on a contract with a customer are met. During the nine months ended September 30, 2024, deductions included a $ 33.5 million reclassification of refundable upfront payments previously included in Deferred revenue to Other current liabilities. During the nine months ended September 30, 2024, additions included a $ 225.0 million reclassification of an upfront payment from Other current liabilities to Deferred revenue related to the settlement with Gavi as discussed below. During the nine months ended September 30, 2023, deductions included a $ 112.5 million reclassification of refundable upfront payments previously included in Deferred revenue to Other current liabilities. As of September 30, 2024, the aggregate amount of the transaction price allocated to performance obligations that were unsatisfied (or partially unsatisfied), excluding amounts related to sales-based royalties and constrained variable consideration, was $ 1.3 billion, of which $ 1.1 billion was included in Deferred revenue. Failure to meet regulatory milestones, obtain timely supportive recommendations from governmental advisory committees, or achieve product volume or delivery timing obligations under the Company’s advance purchase agreements (“APAs”) may require the Company to refund portions of upfront and other payments or result in reduced future payments, which could adversely impact the Company’s ability to realize revenue from its unsatisfied performance obligations. The timing to fulfill performance obligations related to APAs will depend on the timing of product manufacturing, receipt of marketing authorizations for additional indications, delivery of doses based on customer demand, and the ability of the customer to request the Company’s updated vaccine under certain of the Company’s APAs. The timing to fulfill performance obligations related to the Sanofi CLA will depend on the timing of delivery of Sanofi Transition Services and Sanofi Technology Transfer services and delivery of doses and other materials based on Sanofi demand. Under an APA with Gavi, the Vaccine Alliance (“Gavi”), entered into in May 2021 (the “Gavi APA”), the Company received upfront payments of $ 700 million from Gavi (the “Advance Payment Amount”) to be applied against purchases of the Company’s prototype vaccine by certain countries participating in the COVAX Facility. As of December 31, 2023, the remaining Gavi Advance Payment Amount was $ 696.4 million. In February 2024, the Company entered into a Termination and Settlement Agreement with Gavi (the “Gavi Settlement Agreement”) terminating the Gavi APA, settling the arbitration proceedings, and releasing both parties of all claims arising from, under, or otherwise in connection with the Gavi APA. In February 2024, the claims and counterclaims were dismissed with prejudice. Pursuant to the Gavi Settlement Agreement, the Company is responsible for payment to Gavi of (i) an initial settlement payment of $ 75 million, which the Company paid in February 2024, and (ii) deferred payments, in equal annual amounts of $ 80 million payable each calendar year through a 10 deferred payment term ending December 31, 2028. The deferred payments are due in variable quarterly installments and total $ 400 million during the deferred payment term. Such deferred payments may be reduced through Gavi’s use of an annual vaccine credit equivalent to the unpaid balance of such deferred payments each year, which may be applied to qualifying sales of any of the Company’s vaccines for supply to certain low-income and lower-middle income countries. The Company has the right to price the vaccines offered to such low-income and lower-middle income countries in its discretion, and, when utilized by Gavi, the Company will credit the actual price per vaccine paid against the applicable credit. The Company intends to price vaccines offered via the tender process, consistent with its shared goal with Gavi to provide equitable access to those countries. Also, pursuant to the Gavi Settlement Agreement, the Company granted Gavi an additional credit of up to $ 225 million that may be applied against qualifying sales of any of the Company’s vaccines for supply to such low-income and lower-middle income countries that exceed the $ 80 million deferred payment amount in any calendar year during the deferred payment term. In total, the Gavi settlement agreement is comprised of $ 700 million of potential consideration, consisting of the $ 75 million initial settlement payment, deferred payments of up to $ 400 million that may be reduced through annual vaccine credits, and the additional credit of up to $ 225 million that may be applied for certain qualifying sales. The Company recorded the $ 3.6 million difference between the refund liability recorded as of December 31, 2023 of $ 696.4 million and the $ 700 million of total consideration under the arrangement as a reduction to revenue during the nine months ended September 30, 2024. As of September 30, 2024, the remaining amounts included on the Company’s consolidated balance sheet were $ 225 million in non-current Deferred revenue for the additional credit that may be applied against future qualifying sales, $ 95.0 million in Other current liabilities, and $ 290.0 million in Other non-current liabilities. In addition, the Company and Gavi entered into a security agreement pursuant to which Novavax granted Gavi a security interest in accounts receivable from SII under the SII R21 Agreement (see Note 6), which will continue for the deferred payment term of the Gavi Settlement Agreement. Product Sales Product sales by the Company’s customer’s geographic location was as follows (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 North America $ 33,969 $ 2,231 $ 29,214 $ 2,231 Europe 1,167 — 91,753 59,322 Rest of the world 3,074 — 19,471 218,384 Total product sales revenue $ 38,210 $ 2,231 $ 140,438 $ 279,937 Product sales in the U.S. are primarily made through large pharmaceutical wholesale distributors at the wholesale acquisition cost (“WAC”). Product sales in the U.S. are recorded net of gross-to-net deductions. As of September 30, 2024, changes in the Company’s gross-to-net deductions balances were as follows (in thousands): Wholesale Distributor Fees, Discounts, and Chargebacks Product Returns Total Balance as of December 31, 2023 $ 21,072 $ 84,616 $ 105,688 Amounts charged against product sales (1) 60,092 80,593 140,685 Credits/deductions ( 56,583 ) ( 86,937 ) ( 143,520 ) Balance as of September 30, 2024 $ 24,581 $ 78,272 $ 102,853 (1) Amounts charged against product sales include $ 4.2 million of net adjustments made to prior period product sales, due primarily to $ 8.1 million of previously estimated product returns, which are no longer eligible for customer credits and therefore were recognized in product revenue during the nine months ended September 30, 2024, offset by increases to other gross-to-net deductions. As of September 30, 2024 and December 31, 2023, $ 3.4 million and $ 2.6 million of gross-to-net deductions were 11 included in Accounts receivable, respectively. As of September 30, 2024 and December 31, 2023, $ 99.5 million and $ 103.1 million of gross-to-net deductions were included in Accrued expenses, respectively. The Company has an APA with the Commonwealth of Australia (“Australia”) for the purchase of doses of COVID-19 Vaccine (the “Australia APA”). In March 2024, the Company and Australia agreed to cancel the COVID-19 Vaccine doses previously scheduled for delivery in the fourth quarter of 2023. As a result of the cancellation, the total contract value was reduced by $ 54.0 million, including $ 6.0 million of deferred revenue related to the cancelled doses that will be applied as a credit towards future deliveries of doses. Australia is not required to purchase updated vaccine doses until the Company receives authorization from Therapeutic Goods Administration (“TGA”). The Company does not expect approval in time for product delivery in 2024 which could result in a loss or deferral of approximately $ 240 million of contract value. The Company plans to seek an amendment to the Australia APA which may not be achievable on acceptable terms or at all. As of September 30, 2024, $ 119.1 million was classified as current Deferred revenue and $ 14.7 million was classified as non-current Deferred revenue with respect to the Australia APA in the Company’s consolidated balance sheet. If the Company is unable to satisfy its obligations under the amended Australia APA, $ 92.5 million of deferred revenue may become refundable and approximately $ 225 million of remaining funds under the contract may no longer be available. The Company has an APA with His Majesty the King in Right of Canada as represented by the Minister of Public Works and Government Services, as successor in interest to Her Majesty the Queen in Right of Canada, as represented by the Minister of Public Works and Government Services (the “Canadian government”), for the purchase of doses of COVID-19 Vaccine (the “Canada APA”). The Canadian government may terminate the Canada APA, as amended, if the Company fails to receive regulatory approval for its COVID-19 Vaccine using bulk antigen produced at Biologics Manufacturing Centre (“BMC”) Inc. on or before December 31, 2024 . The Company does not expect to receive regulatory approval of its COVID-19 Vaccine using bulk antigen produced at BMC on or before December 31, 2024 . Therefore, the Company plans to seek an amendment to the Canada APA to address possible alternatives, which may not be achievable on acceptable terms or at all. As of September 30, 2024, $ 452.1 million was classified as current Deferred revenue and $ 136.1 million was classified as non-current Deferred revenue with respect to the Canadian APA in the Company’s consolidated balance sheet. If the Canadian government terminates the Canada APA, $ 28.0 million of the deferred revenue would become refundable and approximately $ 224 million of the contract value related to future deliverables would no longer be available. In July 2024, the Pharmaceutical Management Agency (“Pharmac”), a New Zealand Crown entity, provided notice of its termination of its APA (the “New Zealand APA”). Pharmac has requested a refund of certain advanced payments, and the Company is in discussion with Pharmac regarding whether a refund of the advanced payments is appropriate under the New Zealand APA. As of September 30, 2024, $ 31.3 million was reclassified from current Deferred revenue to Other current liabilities in the Company’s consolidated balance sheet. Approximately $ 125 million of the contract value related to future deliverables may no longer be available if the New Zealand APA is terminated. The Company responded to Pharmac in September 2024 indicating it does not believe Pharmac has the right to unilaterally terminate the contract or receive a refund of any part of the remaining upfront payment. 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. During the three and nine months ended September 30, 2024, respectively, the Company recognized $ 9.9 million and $ 400.1 million in revenue related to license fees and sales-based royalties and $ 2.3 million and $ 11.9 million in revenue related to Matrix-M™ adjuvant sales, respectively. During the three and nine months ended September 30, 2024, the Company recognized $ 32.7 million and $ 39.4 million of transition services revenue and technology transfer revenue, respectively. During the three and nine months ended September 30, 2023, the Company recognized $ 13.8 million and $ 17.0 million in revenue related to Matrix-M™ adjuvant sales. During the three and nine months ended September 30, 2023, the Company recognized $ 6.0 million in revenue related related to sales-based royalties. Grants The Company’s U.S. government agreement consisted of a Project Agreement (the “Project Agreement”) and a Base Agreement with Advanced Technology International, the Consortium Management Firm acting on behalf of the Medical CBRN Defense Consortium in connection with the partnership formerly known as Operation Warp Speed (the Base Agreement together with the Project Agreement the “USG Agreement”). As of December 31, 2023, the Company recognized the full $ 1.8 billion funding in revenue. 12 Note 6 – Collaboration, License, and Supply Agreements As of September 30, 2024, the Company’s material collaborations, license and supply agreements were as follows: Serum The Company previously granted SII exclusive and non-exclusive licenses for the development, co-formulation, filling and finishing, registration, and commercialization of its prototype vaccine, NVX-CoV2601, its updated vaccine, and its CIC vaccine candidate. SII agreed to purchase the Company's Matrix-M™ adjuvant and the Company granted SII a non-exclusive license to manufacture the antigen drug substance component of the Company’s COVID-19 Vaccine in SII’s licensed territory solely for use in the manufacture of COVID-19 Vaccine. The Company and SII equally split the revenue from SII’s sale of COVID-19 Vaccine in its licensed territory, net of agreed costs. In May 2024, the Company and SLS entered into a supply agreement (the “SLS Supply Agreement”) under which SLS agreed to supply the Company with antigen drug substance and finished COVID-19 Vaccine doses. The SLS Supply Agreement includes the general terms and conditions of supply orders between the Company and SLS. The Company and SLS execute firm purchase orders, which include specific quantities to be delivered under the SLS Supply Agreement. The Company agreed to supply SLS with all Matrix-M™ adjuvant needed to manufacture finished COVID-19 Vaccine doses. In March 2020, the Company entered into an agreement with SII that granted SII a non-exclusive license for the use of Matrix-M™ adjuvant supplied by the Company to develop, manufacture, and commercialize R21/Matrix-M™ adjuvant (“SII R21 Agreement”), a malaria vaccine created by the Jenner Institute, University of Oxford (“R21/Matrix-M™”). In December 2023, R21/Matrix-M™ received prequalification by the World Health Organization (“WHO”). Under the SII R21 Agreement, SII purchases the Company's Matrix-M™ adjuvant for use in development activities at cost and for commercial purposes at a tiered commercial supply price, and pays a royalty in the single-to low- double-digit range based on vaccine sales for a period of 15 years after the first commercial sale of the vaccine in each country. Takeda Pharmaceutical Company Limited The Company has a collaboration and license agreement with Takeda Pharmaceutical Company Limited (“Takeda”) under which the Company granted Takeda an exclusive license to develop, manufacture, and commercialize the Company’s COVID-19 Vaccine in Japan. Under the agreement, Takeda purchases Matrix-M™ adjuvant from the Company to manufacture doses of COVID-19 Vaccine, and the Company is entitled to receive milestone and sales-based royalty payments from Takeda based on the achievement of certain development and commercial milestones, as well as a portion of net profits from the sale of COVID-19 Vaccine. In September 2021, Takeda finalized an agreement with the Government of Japan’s Ministry of Health, Labour and Welfare ("MHLW") for the purchase of 150 million doses of its prototype vaccine. In February 2023, MHLW canceled the remainder of doses under its agreement with Takeda. As a result, it is uncertain whether the Company will receive future sales-based royalty payments from Takeda under the terms and conditions of their current collaboration and licensing agreement. Sanofi In May 2024, the Company entered into the Sanofi CLA under which the Company granted and Sanofi received the following: i) A co-exclusive license to commercialize the Company’s current stand-alone COVID-19 Vaccine, including the Company’s prototype vaccine and updated vaccines, that address seasonal variants throughout the world (the “COVID-19 Vaccine Products”); ii) A sole license to develop and commercialize combination products containing a potential combination of the Company’s COVID-19 Vaccine and Sanofi’s seasonal influenza vaccine (“COVID-19 and influenza Combination Products” or “CIC Products”); iii) A non-exclusive license to develop and commercialize combination products containing both the Company’s COVID-19 Vaccine and one or more non-influenza vaccines (“Other Combination Products” and together with the COVID-19 Vaccine Products, CIC Products, and Other Combination Products, “Licensed COVID-19 Products”); and iv) A non-exclusive license to develop and commercialize other vaccine products selected by Sanofi that include the Company’s Matrix-M™ adjuvant (as described below, the “Adjuvant Products”). 13 The Company is also responsible for performing services related to the technology transfer of its manufacturing process for the COVID-19 Vaccine Products and Matrix-M™ components to Sanofi. Until the successful completion of such transfer, the Company will supply Sanofi with both COVID-19 Vaccine Products and Matrix-M™ intermediary components for Sanofi’s use and is eligible for reimbursement of such costs from Sanofi. In addition, the Company is responsible for certain research and development and medical affairs services related to the COVID-19 Vaccine. Under the Sanofi CLA, the Company will continue to commercialize its updated vaccine. Beginning in 2025 and continuing during the term of the Sanofi CLA, Sanofi and the Company will commercialize the COVID-19 Vaccine Products worldwide in accordance with a commercialization plan agreed by the Company and Sanofi, under which the Company will continue to supply its existing APA customers and strategic partners, including Takeda and SII. Upon completion of the existing APAs, the Company and Sanofi will jointly agree on commercialization activities of each party in each jurisdiction. Pursuant to the Sanofi CLA, the Company received a non-refundable upfront payment of $ 500 million in the second quarter of 2024. In addition, the Company is eligible to receive development, technology transfer, launch, and sales milestone payments totaling up to $ 700 million in the aggregate with respect to the COVID-19 Vaccine Products and royalty payments on Sanofi’s sales of such licensed products. Milestone payments are comprised of a payment of $ 175 million upon the approval of the marketing authorization for a COVID-19 Vaccine Product in a pre-filled syringe from the U.S. Food and Drug Administration (“U.S. FDA”), $ 25 million upon the transfer of such approval to Sanofi, $ 25 million upon the transfer of EMA approval of a COVID-19 Vaccine Product in a pre-filled syringe to Sanofi, $ 50 million upon database lock of an existing Phase 2/3 clinical trial (identifier 2019nCoV-503), $ 75 million upon the completion of the technology transfer of the Company’s manufacturing process for the COVID-19 Vaccine Products to Sanofi, and up to $ 350 million in CIC Product-related development and launch milestones. The Company is also eligible to receive development, launch, and sales milestone payments of up to $ 200 million for each of the first four Adjuvant Products and $ 210 million for each Adjuvant Product thereafter, and royalty payments on Sanofi’s sales of all such licensed products. In addition, a portion of the technology transfer costs and research and development costs incurred by the Company will be reimbursed by Sanofi in accordance with agreed upon plans and budgets. The Company assessed whether the Sanofi CLA fell within the scope of ASC 808, Collaborative Arrangements (“ASC 808”) based on whether the arrangement involved joint operating activities and whether both parties have active participation in the arrangement and are exposed to significant risks and rewards. The Company determined that the Sanofi CLA did not fall within the scope of ASC 808, as the Company does not share in the significant financial risks of Sanofi's development or commercialization activities. The Company then analyzed the arrangement pursuant to the provisions of ASC 606 and determined that the arrangement represents a contract with a customer and is therefore within the scope of ASC 606. The Company identified the following performance obligations in the Sanofi CLA and determined that they were within the scope of ASC 606: delivery of (i) the licenses described above (the COVID-19 Vaccine license, CIC Products license, Other Combination Product license, and Adjuvant Products license) (collectively the “Sanofi CLA Licenses’), (ii) research and development transition services that support further regulatory approval and development of the COVID-19 Vaccine, referred to as the “Sanofi Transition Services”, and (iii) technology transfer of the existing manufacturing process for the COVID-19 Vaccine Products and Matrix-M™ adjuvant, referred to as the “Sanofi Technology Transfer.” The Company also evaluated whether certain options outlined in the Sanofi Agreement represented material rights that would give rise to a performance obligation and concluded that none of the options convey a material right to Sanofi and therefore are not considered separate performance obligations within the Sanofi CLA. The Sanofi CLA Licenses performance obligations are considered functional intellectual property and distinct from other promises under the contract as Sanofi can benefit from the licenses on their own or together with other readily available resources. Also, the Sanofi Transition Services provide a distinct benefit to Sanofi within the context of the contract, separate from the licenses, as the services could be provided by Sanofi or another third party without the Company’s assistance. The Sanofi Technology Transfer obligation is distinct as Sanofi can benefit from the Sanofi CLA Licenses transferred by the Company at the inception of the agreement with other readily available resources. Therefore, each represents a separate performance obligation within the contract with a customer under the scope of ASC 606 at contract inception. 14 The Company determined the initial transaction price at inception of the Sanofi CLA to be $ 620.2 million, consisting of (i) fixed consideration (the $ 500 million upfront nonrefundable fee), (ii) and $ 120.2 million of variable consideration attributed to a $ 50.0 million clinical milestone and $ 70.2 million of estimated cost reimbursement related to Sanofi Transition Services and Sanofi Technology Transfer. Since the clinical milestone allocated to Sanofi Transition Services is entirely within the Company’s control, and the cost reimbursement variable consideration allocated to Sanofi Transition Services and Sanofi Technology Transfer would be recognized as revenue only as the costs are incurred, the Company determined it is not probable that a significant reversal of cumulative revenue would occur. The Company utilized the expected value method to determine the amount of these payments. The Company excluded certain regulatory and technology transfer milestones from the transaction price that were determined to be inherently uncertain of achievement and are highly susceptible to factors outside of the Company’s control. Sales-based royalties and launch milestones are related to the license of the intellectual property rights and the Company will recognize revenue for these in the period when subsequent sales are made or sale-based milestones are achieved pursuant to the sales-based royalty exception under ASC 606. The Company will re-evaluate the transaction price in each reporting period as uncertain events are resolved or other changes in circumstances occur. The Company allocated the fixed consideration (i.e., the $ 500 million nonrefundable upfront fee) to the performance obligations in the Sanofi CLA based on each performance obligation’s relative stand-alone selling price, or SSP, as follows: • $ 389.6 million for the upfront transfer of the licenses; • $ 106.9 million for Sanofi Transition Services; and • $ 3.5 million for Sanofi Technology Transfer. The SSP for the licenses were determined using an approach that considered discounted, probability-weighted cash flows related to the license transferred. In developing such estimates, the Company applied judgment in determining the forecasted revenues expected margins, and the discount rate. The SSP for the ongoing Sanofi Transition Services and Sanofi Technology Transfer were based on estimates of the associated effort and cost of these services, adjusted for a reasonable gross profit margin that would be expected to be realized under similar contracts. The Company recognized revenue related to the licenses at a point in time upon transfer of the rights and control of the license to Sanofi during the second quarter 2024. The Sanofi Transition Services and Sanofi Technology Transfer are recognized in revenue over time using an input method to measure progress by utilizing costs incurred to-date relative to total expected costs. Revenue recognized related to Sanofi Transition Services and Sanofi Technology Transfer for the three and nine month period ended September 30, 2024 was $ 32.7 million and $ 39.4 million, respectively. The Company’s consolidated balance sheet as of September 30, 2024 includes a deferred revenue balance of $ 70.0 million ($ 29.8 million included in Deferred revenue, current portion and $ 40.2 million included in Deferred revenue, non-current portion) related to Sanofi Transition Services and Sanofi Technology Transfer. The Company recognized an asset for $ 35.0 million of direct costs incurred to obtain the Sanofi CLA. These costs are amortized to expense over the expected period of the benefit in a manner that is consistent with the transfer of the related goods and services in the Sanofi CLA. The Company recognized $ 0.9 million and $ 28.0 million of amortization expense related to the asset in Selling, general, and administrative expense for the three and nine months ended September 30, 2024, respectively. In May 2024, the Company also entered into the Subscription Agreement, pursuant to which the Company sold and issued to Sanofi, in a private placement, 6.9 million shares of the Company’s common stock, at a price of $ 10.00 per share for aggregate gross proceeds to the Company of $ 68.8 million. The opening price of the Company’s common stock on the date of the sale approximated $ 10.00 per share and therefore all gross proceeds were allocated to stockholders’ deficit. 15 Bill & Melinda Gates Medical Research Institute In May 2023, the Company entered into a three-year agreement with the Bill & Melinda Gates Medical Research Institute to provide the Company’s Matrix-M™ adjuvant for use in preclinical vaccine research. Other Supply Agreements In March 2024, the Company, FUJIFILM Diosynth Biotechnologies UK Limited (“FDBK”), FUJIFILM Diosynth Biotechnologies Texas, LLC (“FDBT”) and FUJIFILM Diosynth Biotechnologies USA, Inc. (“FDBU” and together with FDBK and FDBT, “Fujifilm”) entered into a Confidential Settlement Agreement and Release (the “Settlement Agreement”) to resolve disputes regarding amounts that Fujifilm claimed were due under a prior Confidential Settlement Agreement and Release effective September 30, 2022 (the “CSAR”) by and between the Company and Fujifilm. Under the CSAR, the Company agreed to pay up to $ 185.0 million to Fujifilm in connection with the cancellation of manufacturing activity at FDBT. The final two quarterly installments due to Fujifilm in 2023 under the CSAR, totaling $ 68.6 million, were subject to Fujifilm’s obligation to use commercially reasonable efforts to mitigate losses associated with the vacant manufacturing capacity caused by the termination of manufacturing activities at FDBT. In October 2023, the Company sent Fujifilm a notice of breach and refused to pay the final two installments based on its contention that Fujifilm had not used commercially reasonable efforts to mitigate losses and should have offset some portion of the final two payments. In October 2023, Fujifilm filed a demand for arbitration with Judicial Arbitration and Mediation Services (“JAMS”) seeking payment of the full amount (the “Fujifilm Arbitration”). Pursuant to the Settlement Agreement, in March 2024, the Company paid $ 42.0 million to Fujifilm, the parties agreed to a mutual release of claims arising from, under or otherwise in connection with the CSAR, and Fujifilm agreed to dismiss the Fujifilm Arbitration. This payment is less than amounts previously accrued for and reflected in Research and development expense, and accordingly, the Company recorded a benefit of $ 26.6 million as Research and development expense during the nine months ended September 30, 2024 upon the execution of the Settlement Agreement. The Company continues to assess its manufacturing needs and intends to modify its global manufacturing footprint consistent with its contractual obligations to supply, and anticipated demand for, its COVID-19 Program, and in doing so, recognizes that significant costs may be incurred. Note 7 – Cash, Cash Equivalents, and Restricted Cash The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported in the consolidated balance sheets that sums to the total of such amounts shown in the consolidated statements of cash flows (in thousands): September 30, 2024 December 31, 2023 Cash and cash equivalents $ 573,630 $ 568,505 Restricted cash, current 10,547 10,424 Restricted cash, non-current (1) 4,410 4,881 Cash, cash equivalents, and restricted cash $ 588,587 $ 583,810 (1) Classified as Other non-current assets as of September 30, 2024 and December 31, 2023, on the consolidated balance sheets. Note 8 – Inventory Inventory consisted of the following (in thousands): September 30, 2024 December 31, 2023 Raw materials $ 1,603 $ 6,614 Semi-finished goods 5,405 7,392 Finished goods 1,630 27,690 Total inventory $ 8,638 $ 41,696 16 Inventory write-downs as a result of excess, obsolescence, expiry, or other reasons, and losses on firm purchase commitments, offset by recoveries of such commitments, are recorded as a component of cost of sales in the Company’s consolidated statements of operations. For the three and nine months ended September 30, 2024, inventory write-downs were $ 1.4 million and $ 19.9 million, respectively, and losses on firm purchase commitments were $ 4.8 million and $ 6.5 million, respectively. For the three and nine months ended September 30, 2024, the Company recorded recoveries on firm purchase commitments of $ 0.7 million related primarily to negotiated reductions to previously recognized firm purchase commitments. Also, for the three and nine months ended September 30, 2024, the Company recorded an impairment charge of $ 3.8 million in Cost of sales related to an embedded lease agreement with a CMO for production capacity in excess of production needs. For the three and nine months ended September 30, 2023, inventory write-downs were $ 18.1 million and $ 49.6 million, respectively, and losses on firm purchase commitments were $ 63.5 million and $ 71.9 million. In addition, for the three and nine months ended September 30, 2023, the Company recorded recoveries on firm purchase commitments of $ 21.5 million and $ 40.3 million, respectively, related primarily to negotiated reductions to previously recognized firm purchase commitments . Note 9 – Goodwill The Company has one reporting unit, which has a negative carrying amount as of September 30, 2024 and December 31, 2023. The change in the carrying amounts of goodwill for the nine months ended September 30, 2024 was as follows (in thousands): Amount Balance at December 31, 2023 $ 127,454 Currency translation adjustments ( 688 ) Balance at September 30, 2024 $ 126,766 Note 10 – Long-Term Debt Total convertible notes payable consisted of the following (in thousands): September 30, 2024 December 31, 2023 5.00 % Convertible notes due 2027 $ 175,250 $ 175,250 Unamortized debt issuance costs ( 5,985 ) ( 7,234 ) Total convertible notes payable $ 169,265 $ 168,016 The effective interest rate of the 2027 Convertible notes is 6.2 %. During the nine months ended September 30, 2023, the Company repaid the outstanding principal amount of $ 325.0 million on its 3.75 % Convertible notes due in 2023, together with accrued but unpaid interest on the maturity date. The interest expense incurred in connection with the convertible notes payable consisted of the following (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Coupon interest $ 2,192 $ 2,191 $ 6,576 $ 7,588 Amortization of debt issuance costs 416 395 1,248 1,295 Total interest expense on convertible notes payable $ 2,608 $ 2,586 $ 7,824 $ 8,883 17 Note 11 – Stockholders’ Deficit In August 2023, the Company entered into an At Market Issuance Sales Agreement (the “August 2023 Sales Agreement”), which allows it to issue and sell up to $ 500 million in gross proceeds of shares of its common stock, and terminated its then-existing At Market Issuance Sales agreement entered in June 2021 (the “June 2021 Sales Agreement”). During the nine months ended September 30, 2024, the Company sold 12.2 million shares of its common stock under its August 2023 Sales Agreement resulting in net proceeds of approximately $ 188 million. There were no sales recorded under the August 2023 Sales Agreement during the three months ended September 30, 2024. As of September 30, 2024, the remaining balance available under the August 2023 Sales Agreement was approximately $ 51 million. During the nine months ended September 30, 2023, the Company sold 25.7 million shares of its common stock under its June 2021 and August 2023 Sales Agreement, resulting in net proceeds of approximately $ 211 million. During the three months ended September 30, 2023, the Company sold 17.8 million shares of its common stock under its August 2023 Sales Agreement, resulting in net proceeds of approximately $ 143 million . In May 2024, the Company also entered into the Subscription Agreement, pursuant to which the Company sold and issued to Sanofi, in a private placement, 6.9 million shares of the Company’s common stock, par value $ 0.01 per share at a price of $ 10.00 per share, for aggregate gross proceeds to the Company of $ 68.8 million. In August 2023, the Company entered into a Securities Subscription Agreement with SK bioscience Co., Ltd. (“SK”), pursuant to which the Company agreed to sell and issue to SK 6.5 million shares of the Company’s common stock at a price of $ 13.00 per share (the “SK Shares”) in a private placement (the “Private Placement”) for aggregate gross proceeds to the Company of approximately $ 84.5 million . The Company recognized the SK Shares at the settlement date fair value of $ 46.5 million . The closing of the Private Placement occurred on August 10, 2023. Note 12 – Stock-Based Compensation Equity Plans In January 2023, the Company established the 2023 Inducement Plan (the “2023 Inducement Plan”), which provides for the granting of share-based awards to individuals who were not previously employees, or following a bona fide period of non-employment, as an inducement material to such individuals entering into employment with the Company. The Company reserved 1.0 million shares of common stock for grants under the 2023 Inducement Plan. As of September 30, 2024, there were 0.2 million shares available for issuance under the 2023 Inducement Plan. The 2015 Stock Incentive Plan, as amended (“2015 Plan”), was approved at the Company’s annual meeting of stockholders in June 2015. Under the 2015 Plan, equity awards may be granted to officers, directors, employees, and consultants of and advisors to the Company and any present or future subsidiary. The 2015 Plan authorizes the issuance of up to 27.5 million shares of common stock under equity awards granted under the 2015 Plan. All such shares authorized for issuance under the 2015 Plan have been reserved. The 2015 Plan will expire on April 18, 2034. As of September 30, 2024, there were 10.7 million shares available for issuance under the 2015 Plan. The Amended and Restated 2005 Stock Incentive Plan (“2005 Plan”) expired in February 2015 and no new awards may be made under such plan, although awards will continue to be outstanding in accordance with their terms. The 2023 Inducement Plan and the 2015 Plan permit, and the 2005 Plan permitted, the grant of stock options (including incentive stock options), restricted stock, stock appreciation rights (“SARs”), and restricted stock units (“RSUs”). In addition, under the 2023 Inducement Plan and the 2015 Plan, unrestricted stock, stock units, and performance awards may be granted. Stock options and SARs generally have a maximum term of ten years and may be or were granted with an exercise price that is no less than 100 % of the fair market value of the Company’s common stock at the time of grant. Grants of share-based awards are generally subject to vesting over periods ranging from one to four years . 18 The Company recorded stock-based compensation expense in the consolidated statements of operations as follows (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Cost of sales $ 942 $ 767 $ 2,640 $ 2,283 Research and development 5,166 10,022 16,848 33,826 Selling, general, and administrative 5,941 9,971 18,216 33,590 Total stock-based compensation expense $ 12,049 $ 20,760 $ 37,704 $ 69,699 During the three and nine months ended September 30, 2024 ther e was no stock-based compensation expense capitalized into inventory. During the three and nine months ended September 30, 2023, total stock-based compensation capitalized in inventory was $ 0.5 million. As of September 30, 2024, there was approximately $ 55 million of total unrecognized compensation expense related to unvested stock options, SARs, RSUs, and the Company’s Employee Stock Purchase Plan (“ESPP”). This unrecognized non-cash compensation expense is expected to be recognized over a weighted-average period of approximately one year and will be allocated between cost of sales, research and development, and general and administrative expenses accordingly. This estimate does not include the impact of other possible stock-based awards that may be made during future periods. The aggregate intrinsic value represents the total intrinsic value (the difference between the Company’s closing stock price on the last trading day of the period and the exercise price, multiplied by the number of in-the-money stock options and SARs) that would have been received by the holders had all stock option and SAR holders exercised their stock options and SARs on September 30, 2024. This amount is subject to change based on changes to the closing price of the Company's common stock. The aggregate intrinsic value of stock options and SARs exercises and vesting of RSUs for the nine months ended September 30, 2024 and 2023 was approximately $ 10 million and $ 3 million, respectively. Stock Options and Stock Appreciation Rights The following is a summary of stock options and SARs activity under the 2023 Inducement Plan, 2015 Plan, and 2005 Plan for the nine months ended September 30, 2024: 2023 Inducement Plan 2015 Plan 2005 Plan Stock Options Weighted-Average Exercise Price Stock Options Weighted-Average Exercise Price Stock Options Weighted-Average Exercise Price Outstanding at December 31, 2023 422,800 $ 10.67 4,787,042 $ 38.10 58,275 $ 119.79 Granted — — 703,777 7.02 — — Exercised — — ( 379,082 ) 7.83 — — Canceled — — ( 1,388,350 ) 45.07 ( 57,981 ) 119.80 Outstanding at September 30, 2024 422,800 $ 10.67 3,723,387 $ 32.70 294 $ 118.40 Shares exercisable at September 30, 2024 162,636 $ 10.84 2,304,516 $ 43.54 294 $ 118.40 The fair value of stock options granted under the 2023 Inducement Plan and the 2015 Plan was estimated at the date of 19 grant using the Black-Scholes option-pricing model with the following assumptions: Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Weighted average Black-Scholes fair value of stock options granted $ — $ 7.84 $ 5.86 $ 7.27 Risk-free interest rate — % 4.3 %- 4.4 % 4.3 % 3.5 %- 4.4 % Dividend yield — % — % — % — % Volatility — % 128.7 %- 130.3 % 114.3 %- 121.8 % 120.4 %- 140.3 % Expected term (in years) — 3.9 - 5.1 3.9 - 6.3 3.9 - 6.3 The total aggregate intrinsic value and weighted-average remaining contractual term of stock options and SARs outstanding under the 2023 Inducement Plan, 2015 Plan and 2005 Plan as of September 30, 2024 was $ 11.6 million and 7.1 years, respectively. The total aggregate intrinsic value and weighted-average remaining contractual term of stock options and SARs exercisable under the 2023 Inducement Plan, 2015 Plan and 2005 Plan as of September 30, 2024 was $ 3.7 million and 6.0 years, respectively. Restricted Stock Units The following is a summary of RSU activity for the nine months ended September 30, 2024: 2023 Inducement Plan 2015 Plan Number of Shares Per Share Weighted- Average Fair Value Number of Shares Per Share Weighted- Average Fair Value Outstanding and unvested at December 31, 2023 363,990 $ 10.66 3,714,870 $ 19.43 Granted — — 4,507,556 5.67 Vested ( 121,331 ) 10.66 ( 990,190 ) 27.70 Forfeited — — ( 1,146,527 ) 13.95 Outstanding and unvested at September 30, 2024 242,659 $ 10.66 6,085,709 $ 8.92 Employee Stock Purchase Plan The ESPP was approved at the Company’s annual meeting of stockholders in June 2013. The ESPP currently authorizes an aggregate of 2.2 million shares of common stock to be purchased, and the aggregate number of shares will continue to increase 5 % on January 1 of each year up to a maximum of 3.5 million shares. The ESPP allows employees to purchase shares of common stock of the Company at each purchase date through payroll deductions of up to a maximum of 15 % of their compensation, at 85 % of the lesser of the market price of the shares at the time of purchase or the market price on the beginning date of an option period (or, if later, the date during the option period when the employee was first eligible to participate). As of September 30, 2024, there were 1.0 million shares available for issuance under the ESPP. Note 13 – Income Taxes The Company evaluates the available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit use of the existing deferred tax assets. Significant pieces of objective evidence evaluated by the Company were the cumulative loss incurred over the three-year period ended September 30, 2024 and that the Company has historically generated pretax losses. Such objective evidence limits the ability to consider other subjective evidence, such as projections for future growth. On the basis of this evaluation, as of September 30, 2024, the Company continued to maintain a full valuation allowance against its deferred tax assets, except to the extent Net Operating Losses (“NOLs”) have been used to reduce taxable income. 20 During the three months ended September 30, 2024 and 2023, the Company recognized $ 1.3 million and $ 0.7 million of federal, state, and foreign income tax benefit, respectively. During the nine months ended September 30, 2024 and 2023, the Company recognized $ 3.1 million and $ 0.3 million of federal, state, and foreign income tax expense, respectively. During the three and nine months ended September 30, 2024, the company recognized $ 0.3 million of foreign withholding tax expense. During the three and nine months ended September 30, 2023, the company did no t recognize any foreign withholding tax expense. Note 14 – Commitments and Contingencies Legal Matters Stockholder Litigation On November 12, 2021, Sothinathan Sinnathurai filed a purported securities class action in the U.S. District Court for the District of Maryland (the “Maryland Court”) against the Company and certain members of senior management, captioned Sothinathan Sinnathurai v. Novavax, Inc., et al., No. 8:21-cv-02910-TDC (the “Sinnathurai Action”). The parties ultimately negotiated a settlement, which the Maryland Court approved on May 23, 2024. The Maryland Court closed the Sinnathurai Action on May 24, 2024. Upon the Maryland Court’s final approval, the Company relieved the $ 47 million estimated settlement liability within Accrued expenses and the $ 47 million estimated insurance recovery within Prepaid expenses and other current assets on the consolidated balance sheet. After the Sinnathurai Action was filed, eight derivative lawsuits were filed: (i) Robert E. Meyer v. Stanley C. Erck, et al., No. 8:21-cv-02996-TDC (the “Meyer Action”), (ii) Shui Shing Yung v. Stanley C. Erck, et al., No. 8:21-cv-03248-TDC (the “Yung Action”), (iii) William Kirst, et al. v. Stanley C. Erck, et al., No. C-15-CV-21-000618 (the “Kirst Action”), (iv) Amy Snyder v. Stanley C. Erck, et al., No. 8:22-cv-01415-TDC (the “Snyder Action”), (v) Charles R. Blackburn, et al. v. Stanley C. Erck, et al., No. 1:22-cv-01417-TDC (the “Blackburn Action”), (vi) Diego J. Mesa v. Stanley C. Erck, et al., No. 2022-0770-NAC (the “Mesa Action”), (vii) Sean Acosta v. Stanley C. Erck, et al., No. 2022-1133-NAC (the “Acosta Action”), and (viii) Jared Needelman v. Stanley C. Erck, et al., No. C-15-CV-23-001550 (the “Needelman Action”). The Meyer, Yung, Snyder, and Blackburn Actions were filed in the Maryland Court. The Kirst Action was filed in the Circuit Court for Montgomery County, Maryland, and shortly thereafter removed to the Maryland Court by the defendants. The Needleman Action was also filed in the Circuit Court for Montgomery County, Maryland. The Mesa and Acosta Actions were filed in the Delaware Court of Chancery (the “Delaware Court”). The derivative lawsuits name members of the Company’s board of directors and certain members of senior management as defendants. The Company is deemed a nominal defendant. The plaintiffs assert derivative claims arising out of substantially the same alleged facts and circumstances as the Sinnathurai Action. Collectively, the derivative complaints assert claims for breach of fiduciary duty, insider selling, unjust enrichment, violation of federal securities law, abuse of control, waste, and mismanagement. Plaintiffs seek declaratory and injunctive relief, as well as an award of monetary damages and attorneys’ fees. 21 On February 7, 2022, the Maryland Court entered an order consolidating the Meyer and Yung Actions (the “First Consolidated Derivative Action”). The plaintiffs in the First Consolidated Derivative Action filed their consolidated derivative complaint on April 25, 2022. On May 10, 2022, the Maryland Court entered an order granting the parties’ request to stay all proceedings and deadlines pending the earlier of dismissal or the filing of an answer in the Sinnathurai Action. On June 10, 2022, the Snyder and Blackburn Actions were filed. On October 5, 2022, the Maryland Court entered an order granting a request by the plaintiffs in the First Consolidated Derivative Action and the Snyder and Blackburn Actions to consolidate all three actions and appoint co-lead plaintiffs and co-lead and liaison counsel (the “Second Consolidated Derivative Action”). The co-lead plaintiffs in the Second Consolidated Derivative Action filed a consolidated amended complaint on November 21, 2022. On February 10, 2023, defendants filed a motion to dismiss the Second Consolidated Derivative Action. The plaintiffs filed their opposition to the motion to dismiss on April 11, 2023. Defendants filed their reply brief in further support of their motion to dismiss on May 11, 2023. On August 21, 2023, the court entered an order granting in part and denying in part the motion to dismiss. On September 5, 2023, the Company filed an Answer to the consolidated amended complaint. On September 6, 2023, the court entered an order granting the individual defendants an extension of time to file their answer until November 6, 2023. On October 6, 2023, the Board of Directors of the Company formed a Special Litigation Committee (“SLC”) with full and exclusive power and authority of the Board to, among other things, investigate, review, and analyze the facts and circumstances surrounding the claims asserted in the pending derivative actions, including the claims that remain following the court’s order on the motion to dismiss in the Second Consolidated Derivative Action. On November 7, 2023, the court entered an order granting the parties’ request to stay the Second Consolidated Derivative Action for up to six months from the date of entry of the order, and, on April 15, 2024, the court entered a further order extending the stay until June 6, 2024. On June 7, 2024, the court entered another order extending the stay until August 5, 2024. On August 19, 2024, the court entered another order extending the stay until November 4, 2024, to allow the SLC and the parties to continue then-ongoing mediation efforts. On November 1, 2024, the parties notified the court that a settlement in principle had been reached and requested the stay to be extended until the definitive settlement agreement is filed. On November 4, 2024, the Maryland Court ordered the parties to file the settlement agreement or a joint status report by November 18, 2024. The Kirst Action was filed on December 28, 2021, and the defendants immediately removed the case to the Maryland Court. On July 21, 2022, the Maryland Court issued a memorandum opinion and order remanding the Kirst Action to state court. The plaintiffs filed an amended complaint on December 30, 2022. On January 23, 2023, defendants filed a motion to stay the Kirst action. On February 22, 2023, the parties in the Kirst Action filed for the Court’s approval of a stipulation staying the Kirst Action pending the resolution of defendants’ motion to dismiss in the Second Consolidated Derivative Action. On March 22, 2023, the Court entered the parties’ stipulated stay of the Kirst Action pending resolution of the motion to dismiss in the Second Consolidated Derivative Action. On August 30, 2022, the Mesa Action was filed. On October 3, 2022, the Delaware Court entered an order granting the parties’ request to stay all proceedings and deadlines in the Mesa Action pending the earlier of dismissal of the Sinnathurai Action or the filing of an answer to the operative complaint in the Sinnathurai Action. On January 9, 2023, following the ruling on the motion to dismiss the Sinnathurai Action, the Delaware Court entered an order granting the Mesa Action parties’ request to set a briefing schedule in connection with a motion to stay by defendants. On February 28, 2023, the court granted the defendants’ motion and stayed the Mesa Action pending the entry of a final, non-appealable judgment in the Second Consolidated Derivative Action. On August 31, 2023, the Mesa plaintiffs filed a motion to lift the stay in the Mesa Action. On October 6, 2023, the Company filed an opposition to plaintiff’s motion to lift the stay. Plaintiff filed his reply on October 17, 2023. On December 27, 2023, the parties filed a letter informing the Court that the Second Consolidated Derivative Action had been stayed for a period of six months and asked the Court to stay further proceedings in the Mesa Action until expiration of that stay. On December 7, 2022, the Acosta Action was filed. On February 6, 2023, defendants accepted service of the complaint and summons in the Acosta Action. On March 9, 2023, the court entered an order granting the parties’ request to stay the Acosta Action pending the entry of a final, non-appealable judgment in the Second Consolidated Derivative Action. On October 13, 2023, the parties filed, and the Delaware Court entered, a stipulated order providing that (i) if the Delaware Court declines to lift the stay in the Mesa Action, the Acosta Action will also remain stayed, and (ii) if the Delaware Court lifts the stay in the Mesa Action, the stay in the Acosta Action will also be lifted. On April 17, 2023, the Needelman Action was filed. On July 12, 2023, the parties filed a stipulation and proposed order to stay the Needelman Action pending the Maryland Court’s decision on the motion to dismiss in the Second Consolidated Derivative Action. The court entered that order on July 17, 2023. 22 On November 30, 2023, the court entered an order consolidating the Kirst and Needelman Actions. On December 14, 2023, the parties filed a stipulation (i) extending the plaintiffs’ deadline to file a consolidated complaint until January 29, 2024, and (ii) otherwise staying all other proceedings in the case (including the defendants’ deadline to respond to the consolidated complaint) until February 12, 2024. On May 3, 2024, the plaintiffs filed a consolidated complaint. On May 14, 2024, the parties filed a stipulation staying the action until June 6, 2024. On July 12, 2024, the court entered an order staying the action until August 5, 2024. On September 24, 2024, the court entered another order staying the action until November 4, 2024. On November 4, 2024, the parties filed a stipulation requesting a status conference with the court and further requesting that the action remain stayed until such status conference takes place. The financial impact of the above derivative claims is not reasonably estimable. The Company is also involved in various other legal proceedings arising in the normal course of business. Although the outcomes of these other legal proceedings are inherently difficult to predict, the Company does not expect the resolution of these other legal proceedings to have a material adverse effect on its financial position, results of operations, or cash flows. Note 15 – Restructuring In May 2023, the Company announced a global restructuring and cost reduction plan (the “2023 Restructuring Plan”), which includes a more focused investment in its COVID-19 Vaccine, reduction to its pipeline spending, the continued rationalization of its manufacturing network, a reduction to the Company’s global workforce, as well as the consolidation of facilities and infrastructure. In January 2024, the Company announced further reductions to its global workforce, which supplemented the 2023 Restructuring Plan, jointly referred to as the “Restructuring Plan.” The Company recorded the following restructuring charge related to the Restructuring Plan in the consolidated statements of operations (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Severance and employee benefit costs $ 4,245 $ — $ 9,765 $ 4,503 Impairment of assets — — 1,669 10,081 Total Restructuring charge (1) $ 4,245 $ — $ 11,434 $ 14,584 (1) Restructuring charges of $ 0.4 million and $ 3.8 million are included in Research and development and Selling, general, and administrative expenses, respectively, in the Consolidated Statements of Operations for the three months ended September 30, 2024. Restructuring charges of $ 0.5 million, $ 2.3 million and $ 8.6 million are included in Cost of sales, Research and development and Selling, general, and administrative expenses, respectively, in the Consolidated Statements of Operations for the nine months ended September 30, 2024. Restructuring charges of $ 0.5 million, $ 2.3 million and $ 11.5 million are included in Cost of sales, Research and development and Selling, general, and administrative expenses, respectively, in the Consolidated Statements of Operations for the nine months ended September 30, 2023 . Severance and employee benefit costs Employees affected by the reduction in force under the Restructuring Plan are entitled to receive severance payments and certain termination benefits. The Company recorded a severance and termination benefit cost in full for employees who were notified of their termination during the reporting period and had no requirements for future service. The Company paid a total of $ 8.2 million and $ 4.3 million for the severance and employee benefit costs during the nine months ended September 30, 2024 and September 30, 2023, respectively, and had a remaining liability of $ 1.6 million as of September 30, 2024. The Company had no remaining liability as of December 31, 2023. Impairment of assets In connection with the Restructuring Plan, the Company evaluated its long-lived assets for impairment including certain leased laboratory and office spaces located in Gaithersburg, Maryland. The Company performed an impairment evaluation for the applicable long-lived assets, which is subject to judgment and actual results may vary from the estimates, resulting in potential future adjustments to amounts recorded. During the nine months ended September 30, 2024, the Company recorded an impairment charge of $ 1.7 million related to the impairment of capitalized internal-use software. During the nine months ended September 30, 2023 , the Company recorded an impairment charge of $ 10.1 million related to the impairment of 23 long-lived assets, including $ 5.9 million related to ROU assets for facility leases. The Company did not recognize any impairment of assets related restructuring charges during the three months ended September 30, 2024 and 2023. Note 16 – Subsequent Events On October 16, 2024, Novavax disclosed that the U.S. FDA had placed a clinical hold on Novavax’s Investigational New Drug Application for its COVID-19-Influenza Combination and stand-alone influenza vaccine candidates. On November 11, 2024, Novavax announced that the U.S. FDA has lifted the previously disclosed clinical hold for Novavax’s COVID-19-Influenza Combination and stand-alone influenza vaccine candidates. In November 2024, the Company and The Secretary of State for Health and Social Care, acting as part of the Crown, through the UK Health Security Agency (the “Authority”), entered into a Termination and Settlement Agreement (the “Settlement Agreement”) and a Letter of Amendment to the Settlement Agreement (the “Settlement Agreement Amendment”), relating to the Amended and Restated SARS-COV-2 Vaccine Supply Agreement effective July 1, 2022 (the “Amended and Restated Supply Agreement”) by and between the Company and the UK Secretary of State for Business, Energy and Industrial Strategy, acting on behalf of the Crown, settling the disputes regarding the Amended and Restated Supply Agreement and releasing both parties of all claims arising out of or connected with the Amended and Restated Supply Agreement. Under the terms of the Settlement Agreement, the Authority and the Company agreed to terminate the Amended and Restated Supply Agreement and to fully settle the outstanding amount under dispute related to upfront payment of $ 112.5 million, which is reflected in Other current liabilities on the consolidated balance sheet, previously received by the Company from the Authority under the Amended and Restated Supply Agreement. Pursuant to the Settlement Agreement, the Company agreed to pay a refund of $ 123.8 million (the “Settlement Payment”) to the Authority in equal quarterly installments of $ 10.3 million over a three year period, ending in June 2027. The Settlement Payment amount includes a $ 11.3 million provision for interest over the period and may be avoided if the Company chooses to accelerate payments. Under the terms of the Settlement Agreement Amendment, the Authority and the Company agreed to the date of payment for the first quarterly installment to be November 30, 2024. 24