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 March 31, 2025 2024 Revenue: Product sales $ 621,678 $ 89,836 Licensing, royalties, and other 44,977 4,019 Total revenue 666,655 93,855 Expenses: Cost of sales 14,115 59,209 Research and development 88,937 92,679 Selling, general, and administrative 48,090 86,798 Total expenses 151,142 238,686 Income (loss) from operations 515,513 ( 144,831 ) Other income (expense): Interest expense ( 5,723 ) ( 4,111 ) Other income, net 10,056 3,654 Income (loss) before income tax expense 519,846 ( 145,288 ) Income tax expense 1,200 2,262 Net income (loss) $ 518,646 $ ( 147,550 ) Net income (loss) per share: Basic $ 3.22 $ ( 1.05 ) Diluted $ 2.93 $ ( 1.05 ) Weighted average number of common shares outstanding: Basic 161,049 139,916 Diluted 177,625 139,916 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (in thousands) (unaudited) For the Three Months Ended March 31, 2025 2024 Net income (loss) $ 518,646 $ ( 147,550 ) Other comprehensive income (loss): Net unrealized gain on available-for-sale marketable securities 589 — Foreign currency translation adjustment 23,578 ( 13,547 ) Other comprehensive income (loss) 24,167 ( 13,547 ) Comprehensive income (loss) $ 542,813 $ ( 161,097 ) 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) March 31, 2025 December 31, 2024 (unaudited) ASSETS Current assets: Cash and cash equivalents $ 263,338 $ 530,230 Marketable securities 468,141 392,888 Restricted cash 10,681 10,626 Accounts receivable 44,510 108,285 Inventory 10,263 8,749 Prepaid expenses and other current assets 71,095 78,164 Total current assets 868,028 1,128,942 Property and equipment, net 133,538 138,413 Right of use asset, net 157,495 161,585 Goodwill 112,027 107,478 Other non-current assets 21,904 24,000 Total assets $ 1,292,992 $ 1,560,418 LIABILITIES AND STOCKHOLDERS’ DEFICIT Current liabilities: Accounts payable $ 34,162 $ 41,579 Accrued expenses 132,165 211,165 Deferred revenue 108,334 675,067 Current portion of finance lease liabilities 5,478 7,009 Other current liabilities 142,031 219,596 Total current liabilities 422,170 1,154,416 Deferred revenue 409,557 446,819 Convertible notes payable 170,126 169,684 Non-current finance lease liabilities 53,055 53,726 Other non-current liabilities 313,727 359,614 Total liabilities 1,368,635 2,184,259 Commitments and contingencies (Note 15) Preferred stock, $ 0.01 par value, 2,000,000 shares authorized at March 31, 2025 and December 31, 2024; no shares issued and outstanding at March 31, 2025 and December 31, 2024 — — Stockholders' deficit: Common stock, $ 0.01 par value, 600,000,000 shares authorized at March 31, 2025 and December 31, 2024; 164,206,386 shares issued and 161,957,868 shares outstanding at March 31, 2025 and 161,942,677 shares issued and 160,421,136 shares outstanding at December 31, 2024 1,642 1,619 Additional paid-in capital 4,512,849 4,501,403 Accumulated deficit ( 4,489,804 ) ( 5,008,450 ) Treasury stock, cost basis, 2,248,518 shares at March 31, 2025 and 1,521,541 shares at December 31, 2024 ( 101,938 ) ( 95,854 ) Accumulated other comprehensive income 1,608 ( 22,559 ) Total stockholders’ deficit ( 75,643 ) ( 623,841 ) Total liabilities and stockholders’ deficit $ 1,292,992 $ 1,560,418 The accompanying notes are an integral part of these financial statements. 3 NOVAVAX, INC. CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT Three Months Ended March 31, 2025 and 2024 (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 December 31, 2024 161,942,677 $ 1,619 $ 4,501,403 $ ( 5,008,450 ) $ ( 95,854 ) $ ( 22,559 ) $ ( 623,841 ) Stock-based compensation — — 10,285 — — — 10,285 Stock issued under incentive programs 2,263,709 23 1,161 — ( 6,084 ) — ( 4,900 ) Unrealized gain on available-for-sale marketable securities — — — — — 589 589 Foreign currency translation adjustment — — — — — 23,578 23,578 Net income — — — 518,646 — — 518,646 Balance at March 31, 2025 164,206,386 $ 1,642 $ 4,512,849 $ ( 4,489,804 ) $ ( 101,938 ) $ 1,608 $ ( 75,643 ) 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 — — 11,556 — — — 11,556 Stock issued under incentive programs 1,194,879 12 1,055 — ( 1,683 ) — ( 616 ) Foreign currency translation adjustment — — — — — ( 13,547 ) ( 13,547 ) Net loss — — — ( 147,550 ) — — ( 147,550 ) Balance at March 31, 2024 141,700,972 $ 1,417 $ 4,204,775 $ ( 4,968,501 ) $ ( 93,950 ) $ ( 10,825 ) $ ( 867,084 ) The accompanying notes are an integral part of these financial statements. 4 NOVAVAX, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited) Three Months Ended March 31, 2025 2024 Operating Activities: Net income (loss) $ 518,646 $ ( 147,550 ) Reconciliation of net loss to net cash used in operating activities: Depreciation and amortization 8,340 12,147 Non-cash stock-based compensation 10,285 11,556 Provision for excess and obsolete inventory 276 8,807 Impairment of long-lived assets — 1,669 Other items, net 16,550 ( 4,449 ) Changes in operating assets and liabilities: Inventory 2,375 16,819 Accounts receivable, prepaid expenses, and other assets 73,867 296,054 Accounts payable, accrued expenses, and other liabilities ( 211,846 ) ( 272,461 ) Deferred revenue ( 603,995 ) ( 6,147 ) Net cash used in operating activities ( 185,502 ) ( 83,555 ) Investing Activities: Capital expenditures ( 1,220 ) ( 6,878 ) Purchases of available-for-sale marketable securities ( 114,724 ) — Proceeds from maturities of available-for-sale marketable securities 43,000 — Internal-use software ( 375 ) ( 372 ) Net cash used in investing activities ( 73,319 ) ( 7,250 ) Financing Activities: Net proceeds from sales of common stock — 6,862 Net proceeds from the exercise of stock-based awards ( 4,860 ) ( 616 ) Finance lease payments ( 2,201 ) ( 360 ) Net cash provided by (used in) financing activities ( 7,061 ) 5,886 Effect of exchange rate on cash, cash equivalents, and restricted cash ( 930 ) ( 2,955 ) Net decrease in cash, cash equivalents, and restricted cash ( 266,812 ) ( 87,874 ) Cash, cash equivalents, and restricted cash at beginning of period 545,292 583,810 Cash, cash equivalents, and restricted cash at end of period $ 278,480 $ 495,936 Supplemental disclosure of non-cash activities: Capital expenditures included in accounts payable and accrued expenses $ — $ 1,208 Internal-use software included in accounts payable and accrued expenses $ — $ 250 Supplemental disclosure of cash flow information: Cash interest payments, net of amounts capitalized $ 2,799 $ 1,206 Cash paid for income taxes, net of refunds $ 1,499 $ ( 71 ) The accompanying notes are an integral part of these financial statements. 5 NOVAVAX, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS March 31, 2025 (unaudited) Note 1 – Organization and Business Novavax, Inc. (“Novavax,” and together with its wholly owned subsidiaries, the “Company”) is tackling global health challenges through scientific innovation that seeks to maximize its deep scientific expertise in vaccines and cutting-edge technology platform. The differentiated platform features the Company’s recombinant protein-based nanoparticle technology and its unique Matrix-M ® adjuvant. The Company’s corporate growth strategy seeks to optimize its existing partnerships and expand access to its proven technology platform via research and development (“R&D”) innovation, organic portfolio expansion in infectious disease and beyond, and forging new partnerships and collaborations . The Company’s three strategic priorities are: focusing on its partnership with Sanofi Pasteur Inc. ("Sanofi”) announced in May 2024, leveraging its technology platform and pipeline to forge additional partnerships, and advancing its proven technology platform and early-stage pipeline. The Company’s corporate growth strategy is supported by a lean and focused operating model. Novavax’s prototype COVID-19 vaccine (“NVX-CoV2373,” or “prototype vaccine”), the Company’s XBB COVID-19 vaccine (“NVX-CoV2601”), and the Company’s Nuvaxovid™ JN.1 COVID-19 vaccine (“NVX-CoV2705” or “updated vaccine”) are collectively referred to as the Company’s “COVID-19 vaccine.” Local regulatory authorities have also specified nomenclature for the labeling of NVX-CoV2373, NVX-CoV2601 and NVX-CoV2705 within their territories (e.g., “Novavax COVID-19 Vaccine, Adjuvanted”, “Novavax COVID-19, Adjuvanted (2023-2024 or 2024-2025 Formula),” respectively, for the U.S., and “Nuvaxovid™” for ex-U.S. territories). The Company’s partner, Serum Institute of India Pvt. Ltd. (“SII”), markets Novavax’s COVID-19 vaccine as “Covovax™.” Currently, the Company significantly depends on its supply agreement with 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 income (loss), changes in stockholders’ deficit, and cash flows for the periods presented. Although the Company believes that the disclosures in these unaudited consolidated financial statements are adequate to make the information presented not misleading, certain information and footnote information normally included in consolidated financial statements prepared in accordance with U.S. 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 losses resulting from the conversion of the transaction currency to functional currency were $ 12.6 million and $ 5.1 million for the three months ended March 31, 2025 and 2024, 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, 2024. 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. Reclassifications Certain amounts reported in prior periods have been reclassified to conform to current period financial statement presentation. These reclassifications have no material effect on previously reported financial position and cash flows. 6 The Company reclassified $ 7.5 million of revenue previously reported as License, royalties, and other revenue to Product sales revenue for the three months ended March 31, 2024 related to adjuvant supply sales and other supply sales. This presentation aligns with the Company’s enhanced focus on supply sales to partners. 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 March 31, 2025, the Company had $ 263.3 million in cash and cash equivalents, $ 468.1 million in marketable securities, and working capital of $ 445.9 million. During the three months ended March 31, 2025, the Company recognized net income of $ 518.6 million, and had net cash flows used in operating activities of $ 185.5 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. 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. 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 is estimable. See Note 16 for additional information on the severance and employee benefit costs for terminated employees and impairment of assets in connection with the Company’s Restructuring Plan as defined in Note 16. Recent Accounting Pronouncements Not Yet Adopted In November 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40) (“ASU 2024-03”). The ASU includes enhanced disclosure requirements, which mandate transparency in financial statements by requiring detailed disclosures of specific expenses like inventory purchases, employee compensation, depreciation, and intangible asset amortization. In January 2025, the FASB issued ASU 2025-01, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40) An Amendment of the FASB Accounting Standards Codification, Clarifying the Effective Date, which clarifies that public business entities are required to adopt the ASU 2024-03 guidance in annual reporting periods beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact of adopting this pronouncement on the Company’s consolidated financial statements and disclosures. In October 2023, the FASB issued 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 7 regulations. The effective date for each amendment in the ASU is the effective date that the SEC removes the disclosure requirement from its regulations. The Company is currently evaluating ASU 2023-06, however, as the ASU codifies SEC regulations, the Company does not anticipate that its implementation will have a material effect on the Company's consolidated financial statements and 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. ASU 2023-09 is effective for annual reporting periods beginning after December 15, 2024. The Company is completing its evaluation of the impact of ASU 2023-09 on its disclosures. Note 3 – Marketable Securities Marketable securities were classified as available-for-sale as of March 31, 2025 and December 31, 2024, comprised of (in thousands): March 31, 2025 December 31, 2024 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Treasury securities $ 184,544 $ 581 $ — $ 185,125 $ 184,438 $ 116 $ — $ 184,554 Corporate debt securities 282,968 48 — 283,016 208,410 — ( 76 ) 208,334 Total marketable securities $ 467,512 $ 629 $ — $ 468,141 $ 392,848 $ 116 $ ( 76 ) $ 392,888 As of March 31, 2025, investments in marketable securities were comprised of $ 185.1 million of treasury securities, of which $ 64.0 million mature in 2025 and $ 121.1 million mature in 2026, and $ 283.0 million of corporate debt securities, of which $ 273.6 million mature in 2025 and $ 9.4 million mature in 2026. As of December 31, 2024, investments in marketable securities comprised of $ 184.6 million of treasury securities, of which $ 23.0 million mature in 2025 and $ 161.5 million mature in 2026, and $ 208.3 million of corporate debt securities, of which $ 195.2 million mature in 2025 and $ 13.1 million mature in 2026. Marketable securities are classified as Current assets in the Consolidated balance sheet of the Company as of March 31, 2025, and December 31, 2024. Based on the Company’s policy under the expected credit loss model, including an assessment of the investment portfolio as of March 31, 2025 and December 31, 2024, the Company concluded that any unrealized losses for its marketable securities were not attributable to credit and therefore an allowance for credit losses has not been recorded. As of March 31, 2025 and December 31, 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 March 31, 2025 Fair Value at December 31, 2024 Assets Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 Money market funds (1) $ 80,373 $ — $ — $ 287,393 $ — $ — Government-backed securities (1) — 130,000 — — 130,000 — Treasury securities — 185,125 — — 184,554 — Corporate debt securities (2) — 283,017 — — 243,158 — Total cash equivalents and marketable securities $ 80,373 $ 598,142 $ — $ 287,393 $ 557,712 $ — Liabilities 5.00 % Convertible notes due 2027 $ — $ 163,918 $ — $ — $ 174,386 $ — (1) Classified as cash and cash equivalents as of March 31, 2025 and December 31, 2024, respectively, on the consolidated balance sheets. (2) Includes $ 34.8 million classified as Cash and cash equivalents as of December 31, 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 three months ended March 31, 2025 and 2024, the Company did not have any transfers between levels. The amount in the Company’s consolidated balance sheets for accounts payable and accrued expenses approximates its fair value due to its short-term nature. Note 5 – Revenue The Company's accounts receivable included $ 38.4 million and $ 102.9 million related to amounts that were billed to customers and $ 6.1 million and $ 5.4 million related to amounts which had not yet been billed to customers as of March 31, 2025 and December 31, 2024, respectively. During the three months ended March 31, 2025 and 2024, changes in the Company’s accounts receivables, allowance for credit losses, and deferred revenue balances were as follows (in thousands): Balance, Beginning of Period Additions Deductions Balance, End of Period Accounts receivable: Three Months Ended March 31, 2025 $ 115,960 $ 123,785 $ ( 187,560 ) $ 52,185 Three Months Ended March 31, 2024 304,916 136,510 ( 412,370 ) 29,056 Allowance for credit losses (1) : Three Months Ended March 31, 2025 ( 7,675 ) — — ( 7,675 ) Three Months Ended March 31, 2024 ( 7,675 ) — — ( 7,675 ) Deferred revenue: (2) Three Months Ended March 31, 2025 1,121,886 — ( 603,995 ) 517,891 Three Months Ended March 31, 2024 863,521 225,000 ( 6,148 ) 1,082,373 (1) There was no allowance for credit losses recorded during the three months ended March 31, 2025 or 2024. 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. 9 (2) Deductions from Deferred revenue generally related to the recognition of revenue once performance obligations on a contract with a customer are met. During the three months ended March 31, 2025, deductions include $ 555.7 million related to the Canada APA termination, discussed below. During the three months ended March 31, 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. As of March 31, 2025, 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 $ 0.6 billion, of which $ 0.5 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. In the first quarter of 2025, the Company received written notice of a $ 23.0 million claim related to certain performance obligations under an APA agreement with a customer. The Company believes it has fulfilled the requirements related to this matter and is evaluating the merits of the claim. 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”), and a Termination and Settlement Agreement with Gavi, entered into in February 2024, (the “Gavi Settlement Agreement”) terminating the Gavi APA, the Company is responsible for deferred payments, in equal annual amounts of $ 80 million payable each calendar year through a deferred payment term ending December 31, 2028. The deferred payments are due in variable quarterly installments 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. As of March 31, 2025, 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, $ 80.0 million in Other current liabilities, and $ 240.0 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. 10 Product Sales During the three months ended March 31, 2025 and 2024, the categories of product sales were as follows (in thousands): Three Months Ended March 31, 2025 2024 Product sales Nuvaxovid™ sales (1) $ 608,025 $ 82,324 Supply sales (2) 13,653 7,512 Total product sales $ 621,678 $ 89,836 (1) Nuvaxovid™ sales are sales of our COVID-19 vaccine associated with APAs with governments and commercial markets, where we are the commercial lead for sales and distribution, made through pharmaceutical wholesale distributors. (2) Supply sales include commercial sales of COVID-19 Vaccine, adjuvant sales, and other material sales to the Company’s partners. As of March 31, 2025 and 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, 2024 $ 21,136 $ 116,697 $ 137,833 Amounts charged against product sales (1) 16,572 38,999 55,571 Credits/deductions ( 30,131 ) ( 84,783 ) ( 114,914 ) Balance as of March 31, 2025 $ 7,577 $ 70,913 $ 78,490 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) 16,076 19,296 35,372 Credits/deductions ( 26,979 ) ( 10,999 ) ( 37,978 ) Balance as of March 31, 2024 $ 10,169 $ 92,913 $ 103,082 (1) For the three months ended March 31, 2025 and 2024, amounts charged against product sales include $ 1.5 million and $ 3.4 million of adjustments made to prior period product sales due primarily to changes in the estimate of product returns. As of March 31, 2025, $ 50.4 million of gross-to-net deductions were included in Accrued expenses, $ 4.9 million were included in Accounts payable, and $ 23.2 million were included in and reduced Accounts receivable on the consolidated balance sheet. As of December 31, 2024, $ 77.1 million of gross-to-net deductions were included in Accrued expenses, $ 10.1 million were included Accounts payable, and $ 50.6 million were included in and reduced Accounts receivable on the consolidated balance sheet. The Company has an APA with the Commonwealth of Australia (“Australia”) for the purchase of doses of COVID-19 Vaccine (the “Australia APA”). As of March 31, 2025, $ 31.2 million was classified as current Deferred revenue and $ 102.6 million was classified as non-current Deferred revenue with respect to the Australia APA in the Company’s consolidated 11 balance sheet, which will be recognized in product revenue as doses are delivered to Australia. In the event that the Company does not, on or before the relevant contractual deadlines, receive regulatory approval for, and deliver, the seasonally updated COVID-19 vaccine, up to $ 92.5 million of deferred revenue may become refundable. Specifically, Australia may cancel doses that are due to be delivered in 2025 if the Company does not receive regulatory approval for, and deliver, the updated COVID-19 vaccine on or before December 31, 2025, and may terminate the Australian APA, as amended, if the Company does not receive regulatory approval for, and deliver, the updated COVID-19 vaccine on or before March 31, 2026. The Company had 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”). In March 2025, the Company received a communication (the “Notice”) terminating, with immediate effect, the Canada APA on the basis of the Company not receiving regulatory approval for its COVID-19 Vaccine using bulk antigen produced at Biologics Manufacturing Centre Inc. on or before December 31, 2024, pursuant to the terms of the Canada APA. As a result of the Notice, the Company has no remaining obligations to the Canadian government under the Canada APA. Therefore, during the three months ended March 31, 2025, t he Company recognized $ 575.7 million , previously recorded in deferred revenue and other current liabilities, as product sales. As of December 31, 2024 , the Company had $ 555.7 million of current deferred revenue and $ 48.0 million of other current liabilities related to advanced payments, and other commitments previously made under the Canada APA. Under the terms of the Canada APA, $ 28.0 million in advanced purchase payments previously received by the Company were refundable to the Canadian government within 30 days of receipt of the Notice. The Company repaid the $ 28.0 million in March 2025. The APA, as amended in 2023, also contemplated the Company and the Canadian government would endeavor to enter into a memorandum of understanding (the “MOU”) related to certain in-country commitments, including a $ 20.0 million escrow funding. The Notice also acknowledged that such MOU is no longer feasible and that the related funds may be released to the Company. In March 2025, the Pharmaceutical Management Agency (“Pharmac”), a New Zealand Crown entity, and the Company executed a Deed of Settlement and Release (“New Zealand Settlement Agreement”) of its APA (the “New Zealand APA”). As part of the New Zealand Settlement Agreement, the Company agreed to pay Pharmac a refund of previously received upfront payments of $ 4.0 million . Under the New Zealand Settlement Agreement, the Company has no remaining obligation to Pharmac under the New Zealand APA. Therefore, in the three months ended March 31, 2025, t he Company recognized $ 27.3 million , previously in other current liabilities, as product sales. As of December 31, 2024 , the Company had $ 31.3 million included in Other current liabilities in the Company’s consolidated balance sheet related to the New Zealand APA. 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; and sales-based royalties. Licensing, royalties, and other by license partner for the three months ended March 31, 2025 and 2024 were as follows (in thousands): Three Months Ended March 31, 2025 2024 Licensing, royalties, and other Sanofi $ 40,321 $ — Other partners (1) 4,656 4,019 Total licensing, royalties, and other revenue $ 44,977 $ 4,019 (1) Other partners revenue includes royalties and license fees associated with agreements with other partners such as Serum, Takeda Pharmaceutical Company Limited (“Takeda”), and SK bioscience, Co., Ltd. Sanofi licensing, royalties, and other revenue were comprised of the following (in thousands): 12 Three Months Ended March 31, 2025 2024 Sanofi licensing, royalties, and other revenue Transition services and technology transfer: Upfront fee amortization (1) $ 19,912 $ — Milestones amortization (1) 9,143 — Cost reimbursements 11,266 — Total Sanofi licensing, royalties, and other revenue $ 40,321 $ — (1) Upfront fee amortization and Milestones amortization represent revenue recognized during the period related to the $ 500 million upfront payment and the $ 50 million milestone for database lock of an existing Phase 2/3 clinical trial in 2024 that were deferred upon achievement and are recognized in revenue over time. Note 6 – Collaboration, License, and Supply Agreements As of March 31, 2025, 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 COVID-19-Influenza (“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 August 2022, the Company and SII entered into an influenza license agreement under which the Company granted SII licenses to develop, manufacture, and commercialize certain vaccine products including influenza vaccine products and influenza and coronavirus combination vaccine products (“Flu/CIC”) and is obligated for the purchase of certain raw materials under related agreements with SII. As of March 31, 2025, the Company is conducting a clinical study for its Flu/CIC vaccine candidates with the intent of partnering these programs. 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 The Company has a collaboration and license agreement with 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. Sanofi In May 2024, Novavax entered into a Collaboration and License Agreement with Sanofi (the “Sanofi CLA”), to co-commercialize the Company’s COVID-19 vaccine, including future updated versions that address seasonal COVID-19 variants. Under the terms of the agreement, the Company will continue to commercialize its updated COVID-19 vaccine through the end 13 of the 2024-2025 vaccination season. Beginning in 2025 and continuing during the term of the Sanofi CLA, the Company and Sanofi will commercialize the COVID-19 vaccine worldwide in accordance with a commercialization plan agreed by the parties, under which Novavax will continue to supply certain of 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. Additionally, Sanofi has the right to develop novel influenza-COVID-19 combination vaccines utilizing Novavax’s COVID-19 vaccine and Sanofi’s seasonal influenza vaccine, combination products containing Novavax’s COVID-19 vaccine and one or more non-influenza vaccines, and multiple new vaccines utilizing Novavax’s Matrix-M ® adjuvant. 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. Pursuant to the Sanofi CLA, 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, of which $ 650 million remains outstanding, and royalty payments on Sanofi’s sales of such licensed products. The remaining milestone payments are comprised 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 European Medicines Agency (“EMA”), approval of a COVID-19 Vaccine Product in a pre-filled syringe to Sanofi, $ 75 million upon the completion of the technology transfer of the Company’s manufacturing process for the COVID-19 Vaccine Products to Sanofi, $ 125.0 million upon achievement of certain CIC Product-related development milestones, and $ 225.0 million in CIC Product-related launch milestones. The Company achieved the $ 50.0 million milestone for database lock of an existing Phase 2/3 clinical trial in 2024, which was received from Sanofi during the three months ended March 31, 2025. 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 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 three month period ended March 31, 2025 was $ 40.3 million. The Company’s consolidated balance sheet as of March 31, 2025 includes a deferred revenue balance of $ 49.4 million ($ 28.4 million included in Deferred revenue, current portion and $ 21.0 million included in Deferred revenue, non-current portion) related to Sanofi Transition Services and Sanofi Technology Transfer. During three months ended March 31, 2025, the Company recognized a cumulative catch-up adjustment, which resulted in an increase of $ 9.5 million during the period. This adjustment resulted from a change in total expected costs, partially offset by changes to estimates of variable consideration for Sanofi Transition Services and Sanofi Technology Transfer. Lower expected costs and therefore lower estimates of reimbursements for costs included in estimates of variable consideration were driven by cost reduction efforts described in Note 16. 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 of amortization expense related to the asset in Selling, general, and administrative expense for the three ended March 31, 2025, respectively. 14 Note 7 – Earnings (Loss) per Share Basic and diluted net loss per share were calculated as follows (in thousands, except per share data): Three Months Ended March 31, 2025 2024 Numerator: Net income (loss), basic $ 518,646 $ ( 147,550 ) Interest on convertible notes 2,634 — Net income (loss), dilutive 521,280 ( 147,550 ) Denominator: Weighted average number of common shares outstanding, basic 161,049 139,916 Effect of dilutive securities 16,576 — Weighted average number of common shares outstanding, dilutive 177,625 139,916 Net income (loss) per share: Basic $ 3.22 $ ( 1.05 ) Diluted $ 2.93 $ ( 1.05 ) Anti-dilutive securities excluded from calculations of diluted net income (loss) per share 5,349 24,269 Note 8 – Cash, Cash Equivalents, and Restricted Cash The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported in the consolidated balance sheets that sums to the total of such amounts shown in the consolidated statements of cash flows (in thousands): March 31, 2025 December 31, 2024 Cash and cash equivalents $ 263,338 $ 530,230 Restricted cash, current 10,681 10,626 Restricted cash, non-current (1) 4,461 4,436 Cash, cash equivalents, and restricted cash $ 278,480 $ 545,292 (1) Classified as Other non-current assets as of March 31, 2025 and December 31, 2024, on the consolidated balance sheets. Note 9 – Inventory Inventory consisted of the following (in thousands): March 31, 2025 December 31, 2024 Raw materials $ 2,600 $ 2,087 Semi-finished goods 7,558 4,899 Finished goods 105 1,763 Total inventory $ 10,263 $ 8,749 Inventory write-downs as a result of excess, obsolescence, expiry, or other reasons, and losses on firm purchase commitments, offset by recoveries of such commitments, are recorded as a component of cost of sales in the Company’s consolidated statements of operations. For the three months ended March 31, 2025, inventory write-downs were $ 0.3 million 15 and there were no losses or recoveries on firm purchase commitments. For the three months ended March 31, 2024, inventory write-downs were $ 8.8 million and there were no losses or recoveries on firm purchase commitments. Note 10 – Goodwill The Company has one reporting unit, which has a negative carrying amount as of March 31, 2025 and December 31, 2024. The change in the carrying amounts of goodwill for the three months ended March 31, 2025 was as follows (in thousands): Amount Balance at December 31, 2024 $ 107,478 Currency translation adjustments 4,549 Balance at March 31, 2025 $ 112,027 Note 11 – Long-Term Debt Total convertible notes payable consisted of the following (in thousands): March 31, 2025 December 31, 2024 5.00 % Convertible notes due 2027 $ 175,250 $ 175,250 Unamortized debt issuance costs ( 5,124 ) ( 5,566 ) Total convertible notes payable $ 170,126 $ 169,684 The effective interest rate of the 2027 Convertible notes is 6.2 %. The interest expense incurred in connection with the convertible notes payable consisted of the following (in thousands): Three Months Ended March 31, 2025 2024 Coupon interest $ 2,192 $ 2,192 Amortization of debt issuance costs 442 416 Total interest expense on convertible notes payable $ 2,634 $ 2,608 Note 12 – 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. During the three months ended March 31, 2025, and 2024, no sales were recorded under the August 2023 Sales Agreement. As of March 31, 2025, the remaining balance available under the August 2023 Sales Agreement was approximately $ 51 million. Note 13 – Stock-Based Compensation Equity Plans In January 2023, the Company established the 2023 Inducement Plan (the “2023 Inducement Plan”), which provides for the grant 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 March 31, 2025, there were 0.1 million shares available for issuance under the 2023 Inducement Plan. 16 The Amended and Restated 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 19, 2034. As of March 31, 2025, there were 0.4 million shares available for issuance under the 2015 Plan. The 2023 Inducement Plan and the 2015 Plan permit, 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 . The Company recorded stock-based compensation expense in the consolidated statements of operations as follows (in thousands): Three Months Ended March 31, 2025 2024 Cost of sales $ 525 $ 594 Research and development 4,289 5,505 Selling, general, and administrative 5,471 5,457 Total stock-based compensation expense $ 10,285 $ 11,556 During the three months ended March 31, 2025 and 2024 ther e were no stock-based compensation expense capitalized into inventory. As of March 31, 2025, there was approximately $ 73 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 March 31, 2025. This amount is subject to change based on changes to the closing price of the Company's common stock. The aggregate intrinsic value of stock options and SARs exercises and vesting of RSUs for the three months ended March 31, 2025 and 2024 was $ 16.2 million and $ 4.5 million, respectively. 17 Stock Options and Stock Appreciation Rights The following is a summary of stock options and SARs activity under the 2023 Inducement Plan and 2015 Plan for the three months ended March 31, 2025: 2023 Inducement Plan 2015 Plan Stock Options Weighted-Average Exercise Price Stock Options Weighted-Average Exercise Price Outstanding at December 31, 2024 486,950 $ 10.45 3,496,052 $ 32.75 Granted — — 2,224,293 7.88 Exercised — — ( 5,386 ) 6.02 Canceled — — ( 419,113 ) 58.31 Outstanding at March 31, 2025 486,950 $ 10.45 5,295,846 $ 20.31 Shares exercisable at March 31, 2025 215,485 $ 10.80 2,055,818 $ 37.53 The fair value of stock options granted under the 2023 Inducement Plan and the 2015 Plan was estimated at the date of grant using the Black-Scholes option-pricing model with the following assumptions: Three Months Ended March 31, 2025 2024 Weighted average Black-Scholes fair value of stock options granted $ 5.59 $ 4.34 Risk-free interest rate 4.0 %- 4.1 % 4.3 % Dividend yield — % — % Volatility 99.7 %- 121.6 % 114.3 %- 121.1 % Expected term (in years) 3.9 - 6.5 3.9 - 4.4 The total aggregate intrinsic value and weighted-average remaining contractual term of stock options and SARs outstanding under the 2023 Inducement Plan and 2015 Plan as of March 31, 2025 was $ 0.9 million and 8.1 years , respectively. The total aggregate intrinsic value and weighted-average remaining contractual term of stock options and SARs exercisable under the 2023 Inducement Plan and 2015 Plan as of March 31, 2025 was $ 0.4 million and 6.2 years , respectively. Restricted Stock Units The following is a summary of RSU activity for the three months ended March 31, 2025: 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, 2024 285,429 $ 10.42 5,558,642 $ 8.27 Granted — — 3,531,690 7.87 Vested ( 102,796 ) 10.96 ( 1,832,799 ) 10.21 Forfeited — — ( 187,046 ) 9.00 Outstanding and unvested at March 31, 2025 182,633 $ 10.11 7,070,487 $ 8.27 18 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 March 31, 2025, there were 0.7 million shares available for issuance under the ESPP. Note 14 – Income Taxes The Company evaluates the available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit use of the existing deferred tax assets. Significant pieces of objective evidence evaluated by the Company were the cumulative loss incurred over the three-year period ended March 31, 2025 and that the Company has historically generated pretax losses. Such objective evidence limits the ability to consider other subjective evidence, such as projections for future growth. On the basis of this evaluation, as of March 31, 2025, 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. During the three months ended March 31, 2025 and 2024, the Company recognized $ 0.7 million and $ 2.3 million of federal, state, and foreign income tax expense, respectively. During the three months ended March 31, 2025, the company recognized $ 0.5 million of foreign withholding tax expense. During the three months ended March 31, 2024, the company did no t recognize any foreign withholding tax expense. Note 15 – 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. 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 Needelman 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. 19 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 was filed. On November 22, 2024, the SLC filed its Unopposed Motion for Preliminary Approval of Derivative Settlement, Approval of Form and Manner of Notice, and Setting Hearing Date on Final Approval of Settlement and supporting documents. Under the terms of the proposed settlement, individual defendants Erck and Herrmann agreed to pay or cause their insurers to pay $ 6.8 million to Novavax in exchange for a release of claims. In addition, Novavax and its Board of Directors agreed to adopt and implement certain governance provisions identified in the settlement stipulation. On December 12, 2024, the court entered an order granting preliminary approval of the derivative settlement and setting a date for a hearing on the final approval of the settlement. On March 7, 2025, the court held a hearing and entered a Final Judgment and Order Approving Derivative Settlement (the “Final Judgment and Order”). As part of the Final Judgment and Order, the court granted the motion for attorneys’ fees and awarded plaintiffs’ counsel fees and expenses in the amount of $ 2.0 million to be paid by the Company following its receipt of the $ 6.8 million settlement funds. During the three months ended, March 31, 2025, the Company recorded a net gain on the settlement of $ 4.8 million in Other income (expense), net. 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. 20 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 28, 2025, the parties filed a joint status report with the Delaware Court in which they indicated that plaintiffs intend to dismiss the Mesa Action and Acosta Action in light of the Derivative Settlement. On May 2, 2025, the Delaware Court granted the stipulated order of voluntary dismissal, and the Mesa Action was dismissed with prejudice. 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. 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. On April 15, 2025, the parties filed a Stipulated Notice of Dismissal dismissing the Kirst and Needelman Actions in light of the Derivative Action. 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 16 – Restructuring During the three months ended March 31, 2025, the Company continued its global restructuring and cost reduction efforts that were initially announced in May 2023 (the 2023 plan combined with subsequent period efforts is referred to as the “Restructuring Plan.”). As of March 31, 2025, the Company is in the process of reviewing its real estate portfolio, including its leased headquarters in Gaithersburg, Maryland, to optimize its footprint, reduce costs, and align its physical spaces with business needs as part of an effort to improve operational efficiency and enhance long-term financial performance. Changes in the planned usage of the Company’s facilities could potentially impact the recoverability of the underlying right of use assets and leasehold improvements. While no triggering events have occurred as of March 31, 2025, the Company continues to evaluate options and will perform impairment tests if such indicators arise in future periods. As of March 31, 2025, the Company’s net investment in assets related to its corporate headquarter leased laboratory and office space located in Gaithersburg, Maryland was approximately $ 119 million, comprised of approximately $ 134 million of right of use assets, approximately $ 37 million of leasehold improvements net of a finance lease obligation of approximately $ 52 million. The restructuring charge recorded by the Company consisted of the following (in thousands): Three Months Ended March 31, 2025 2024 Severance and employee benefit costs $ 505 $ 4,401 Impairment of assets — 1,669 Total Restructuring charge (1) $ 505 $ 6,070 (1) Restructuring charges of $ 0.5 million is included in Selling, general, and administrative expenses in the Consolidated Statements of Operations for the three months ended March 31, 2025. Restructuring charges of $ 1.6 million and $ 4.5 million are included in Research and development and Selling, general, and administrative expenses, respectively, in the Consolidated Statements of Operations for the three months ended March 31, 2024 . Severance and employee benefit costs 21 Employees affected by reductions 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 $ 2.7 million for the severance and employee benefit costs during the three months ended March 31, 2025 and the remaining liability of $ 0.9 million is included in Accrued expenses in the Company’s consolidated balance sheet as of March 31, 2025. The Company had $ 3.1 million of remaining liability for the severance and employee benefit costs included in Accrued expenses in its consolidated balance sheet as of December 31, 2024. 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 three months ended March 31, 2024, the Company recorded an impairment charge of $ 1.7 million related to the impairment of capitalized internal-use software. The Company did not recognize any impairment charge during the three months ended March 31, 2025. Note 17 – Segment Reporting The Company manages its business as one reportable operating segment, in-house early-stage R&D to build a pipeline of high-value assets using its proven technology along with seeking to enter into partnerships to drive value creation for its assets. The Company has determined its reportable operating segment based on the management approach, which considers the internal organization and reporting used by the Company’s chief operating decision-maker (“CODM”) to make decisions about allocating resources and assessing the Company’s performance. The Company’s CODM uses consolidated single-segment net income (loss) as reported in the Consolidated Statements of Operations to evaluate performance, forecast future period financial results, allocate resources, and set incentive targets. The table below summarizes the significant expense categories regularly reviewed by the CODM (in thousands): Three Months Ended March 31, 2025 2024 Revenue $ 666,655 $ 93,855 Cost of sales 14,115 59,209 Research and development expenses: Direct coronavirus vaccines (1) 18,059 26,061 Direct other vaccine development programs (1) 1,879 336 Employee and benefit expenses 39,910 43,458 Facility and other research and development expenses (2) 29,089 22,824 Selling, general, and administrative expense 48,090 86,798 Other segment income (expense) (3) 3,133 ( 2,719 ) Net income (loss) $ 518,646 $ ( 147,550 ) 22 (1) Direct research and development expenses are comprised primarily of costs paid to third parties for clinical and product development activities. Direct coronavirus vaccines expenses include costs associated with the Phase 3 trial for our CIC and influenza vaccine candidates. (2) Facility and other research and development expenses consist of indirect costs incurred in support of overall research and development activities and non-specific programs, such as overhead costs, information technology and facility-based expenses not allocated to a specific program. (3) Other segment income (expense) includes interest expense, income tax expense, and other income. Total revenue by the Company’s customer’s or collaboration partner’s geographic location was as follows (in thousands): Three Months Ended March 31, 2025 2024 United States $ 39,410 $ ( 6,431 ) Canada 575,670 — Europe 8,086 90,416 Rest of the world 43,289 9,870 Total revenue $ 666,455 $ 93,855 Total long-lived assets of the Company by geographic location were as follows (in thousands): March 31, 2025 December 31, 2024 United States $ 287,059 $ 295,879 Europe 3,974 4,119 Total long-lived assets $ 291,033 $ 299,998 Note 18 – Subsequent Events In April 2025, the Company received a formal communication from the U.S. FDA in the form of an information request for a post marketing commitment (“PMC”) to generate additional clinical data. The Company has responded to the U.S. FDA’s information request with a proposed study design and continues to engage with the U.S. FDA to address the PMC request and move to approval as soon as possible. On April 29, 2025, the Company entered into a collaboration and exclusive license agreement, as amended (“Amended Takeda APA”), with Takeda which amends and supersedes its collaboration and exclusive license agreement with Takeda, dated February 24, 2021. The Amended Takeda APA improves financial terms for the Company. 23