What changed in this filing

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Item 1A. Risk Factors

2020-11-10 compared with 2020-08-10 · 109 added, 27 removed, 83 unchanged (62% of the section changed)

Other than the additional risk factors disclosed below, there are no material changes to the Company’s risk factors as described in Item 1A of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019.

Although there has been rapid progress, pursuit of our COVID-19 vaccine candidate, NVX-CoV2373, remains at an early stage.

Although there has been rapid progress, the regulatory and commercial success of our COVID-19 vaccine candidate, NVX-CoV2373, remains uncertain.

We may be unable to produce a successful vaccine in a timely manner, if at all.

In response to the outbreak of COVID-19, we are pursuing the development and manufacture of our vaccine candidate, NVX-CoV2373, which is currently in clinical testing.

In response to the outbreak of COVID-19, we are pursuing the development and manufacture of our vaccine candidate, NVX-CoV2373, which is currently in Phase 3 of clinical testing.

Even though we observed positive results in pre-clinical and early clinical trials, such results may not be predictive of future clinical trial results and whether they will be sufficient to support regulatory approval, accelerated or otherwise.

Our development of NVX-CoV2373 is in an early stage, and we may be unable to produce a vaccine that successfully treats COVID-19 in a timely manner, if at all.

We may be unable to produce a vaccine that successfully prevents COVID-19 in a timely manner, if at all.

Additionally, our ability to develop an effective vaccine to respond to COVID-19 depends on our ability to effectively scale up manufacturing capabilities at our own locations and those of our manufacturing partners and contractors.

We recently acquired Praha Vaccines, including its vaccine manufacturing facility in Bohumil, Czech Republic and approximately 150 Praha Vaccines employees.

Strategic transactions, such as our acquisition of Praha Vaccines, involve many risks, including, among others, those related to diversion of management’s attention from other business concerns, unanticipated expenses and liabilities, and increased complexity of our operations, which could prevent us from effectively exploiting acquired facilities, successfully integrating the acquired business and personnel, or fully realizing expected synergies.

We are also actively entering into agreements with third-party manufacturers and distributors to manufacture both bulk drug substance and our proprietary Matrix-M adjuvant for NVX-CoV2373 and to distribute NVX-CoV2373.

We recently acquired Novavax CZ (formerly Praha Vaccines, a.s.) including its vaccine manufacturing facility in Bohumil, Czech Republic and approximately 150 of its employees.

Strategic transactions, such as our acquisition of Novavax CZ, involve many risks, including, among others, those related to diversion of management’s attention from other business concerns, unanticipated expenses and liabilities, and increased complexity of our operations, which could prevent us from effectively exploiting acquired facilities, successfully integrating the acquired business and personnel, or fully realizing expected synergies.

We are also actively entering into agreements with third parties to manufacture the antigen component of NVAX-CoV2373 and our proprietary Matrix-M adjuvant, as well as to distribute NVX-CoV2373.

Reliance on third parties involves many risks, including risks that such third parties may not complete manufacturing or distribution activities on schedule, in compliance with regulatory requirements, within budget or in accordance with our quality standards.

Our reliance on third-party manufacturers and distributors may adversely affect our operations or result in unforeseen delays or other problems beyond our control.

Because of contractual restraints and the limited number of third-party manufacturers with the expertise, required regulatory approvals and facilities to manufacture NVX-CoV2373 on a potentially commercial scale, replacement of a manufacturer may be expensive and time-consuming and may cause interruptions in production.

Manufacturing of NVX-CoV2373 involves a complicated process that will require significant investments of time and financial resources to implement.

In addition, we may have to enter into technical transfer agreements and share our know-how with the third-party manufacturers, which can be time-consuming and may result in further delays.

We cannot guarantee that we will be able to timely and effectively produce NVX-CoV2373 in adequate quantities to meet global demand.

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In addition to scaling up our manufacturing capabilities, we will need to develop global distribution channels and form partnerships with third parties worldwide.

Rapid and significant growth may strain our administrative and operational infrastructure and our efforts to establish these capabilities may not meet initial expectations as to timing, scale-up, yield, cost or quality.

Rapid and significant growth may strain our administrative and operational infrastructure and our efforts to establish these

capabilities may not meet initial expectations as to timing, scale-up, yield, cost or quality.

If we are unable to successfully manage our growth and the increased complexity of our operations, our business, financial position, results of operations and prospects may be materially and adversely affected.

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Government under the Defense Production Act of 1950, as amended, which could directly or indirectly have the effect of diminishing some of our rights or opportunities with respect to NVX-CoV2373 and the economic value of a COVID-19 vaccine to us could be limited.

In addition, during a global health crisis, such as the COVID-19 pandemic, where the spread of a disease needs to be controlled, closed or heavily regulated national borders will create challenges and potential delays in our development and production activities and may necessitate that we pursue strategies to develop and produce our vaccine candidates within self-contained national or international borders, at potentially much greater expense and with longer timeframes for public distribution.

necessitate that we pursue strategies to develop and produce our vaccine candidates within self-contained national or international borders, at potentially much greater expense and with longer timeframes for public distribution.

The regulatory pathway for NVX-CoV2373 is continually evolving, and may result in unexpected or unforeseen challenges.

The regulatory pathway for NVX-CoV2373 is evolving and failure by us to comply with any laws, rules and regulations, some of which may not exist yet or are subject to interpretation and may be subject to change, could result in a variety of adverse consequences, including penalties, fines and delays in vaccine licensure.

Efforts to comply with evolving laws, regulations and standards have resulted in, and are likely to continue to result in, increased general and administrative expenses and a diversion of management time and attention to compliance activities.

The regulatory pathway for NVX-CoV2373 is evolving and failure by us to comply with any laws, rules and standards, some of which may not exist yet or are subject to interpretation and may be subject to change, could result in a variety of adverse consequences, including penalties, fines and delays in vaccine licensure.

For example, the rules, regulations and standards governing OWS are uncertain and may evolve as the program progresses.

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Study procedures (particularly any procedures that may be deemed non-essential), site initiation, participant recruitment and enrollment, participant dosing, shipment of our product candidates, distribution of clinical trial materials, study monitoring, site inspections and data analysis may be paused or delayed due to changes in hospital or research institution policies, federal, state or local regulations, prioritization of hospital and other medical resources toward efforts to treat or prevent COVID-19, or other reasons related to the pandemic.

In addition, there could be a potential effect of COVID-19 to the operations of the FDA or other health authorities, which could result in delays of reviews and approvals, including with respect to our product candidates.

In addition, there could be a potential effect of COVID-19 to the operations of the FDA or other health authorities, which could result in delays of reviews and approvals, including with respect to

our product candidates.

Any prolongation or de-prioritization of our clinical trials or delay in regulatory review resulting from such disruptions could materially affect the development and study of our product candidates.

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We or the third parties upon whom we depend may be adversely affected by natural or man-made disasters or public health emergencies, such as the COVID-19 pandemic.

Our operations, and those of our clinical research organizations, contract manufacturing organizations, vendors of materials needed in manufacturing, and other third parties upon whom we depend, could be subject to fires, extreme weather conditions, earthquakes, power shortages, telecommunications failures, water shortages, floods, hurricanes, typhoons, war or terrorism and other natural or man-made disasters, as well as public health emergencies, such as the COVID-19 pandemic.

Our operations, and those of our clinical research organizations, contract manufacturing organizations, vendors of materials needed in manufacturing, collaboration partners, distributors and other third parties upon whom we depend, could be subject to fires, extreme weather conditions, earthquakes, power shortages, telecommunications failures, water shortages, floods, hurricanes, typhoons, war or terrorism and other natural or man-made disasters, as well as public health emergencies, such as the COVID-19 pandemic.

The occurrence of any of these business disruptions could prevent us from using all or a significant portion of our facilities and it may be difficult or impossible for us to continue certain activities for a substantial period of time.

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Our ability to manufacture our product candidates and obtain necessary clinical supplies for our product candidates could be disrupted if the operations of our contract manufacturing organizations or suppliers are affected by a natural or man-made disaster, or a public health emergency.

We have a history of losses and our future profitability is uncertain.

Our expenses have exceeded our revenue since our formation in 1987, and our accumulated deficit as of December 31, 2019 was $1.4 billion.

Our revenue for the last three fiscal years was $18.7 million in 2019, $34.3 million in 2018, and $31.2 million in 2017.

Though we have received or anticipate receiving a significant amount of funding from OWS, the DoD and CEPI in connection with the development and potential commercialization of NVX-CoV2373, we may be unable to produce a successful vaccine in a timely manner, if at all.

Our net losses for the last three fiscal years were $132.7 million in 2019, $184.7 million in 2018, and $183.8 million in 2017.

Historically, our losses have resulted predominantly from research and development expenses for our vaccine candidates, manufacturing-related expenses, costs related to protection of our intellectual property and other general and administrative operating expenses, a significant portion of which have been noncash.

Our expenses have exceeded our revenue since inception, and we believe our expenses will fluctuate over time, and may substantially increase in some years, as a result of continuing research and development efforts to support our vaccine development efforts, and, if our product candidates are approved, future commercialization efforts.

By the end of fiscal year 2020, we expect our total investment in the development and manufacture of NVX-CoV2373 to be significant and to continue through 2021 and beyond, although the precise magnitude of our investment will be subject to clinical trial data results, the duration of the COVID-19 pandemic and other factors, including our competitive landscape and regulatory outcomes.

If we are unable to timely commercialize a vaccine against COVID-19, we may never recoup this investment.

Although certain specified costs associated with the development of NVX-CoV2373 are expected to be reimbursed under the OWS Agreement, the DoD Contract and the CEPI Funding Agreement, we expect to continue to incur significant operating expenses and anticipate significant losses over time as we seek to:

● conduct clinical trials and seek regulatory approval for NVX-CoV2373 and other potential vaccine candidates;

● conduct preclinical studies for other potential vaccine candidates;

● expand our global manufacturing and distribution capacity;

● maintain, expand and protect our intellectual property portfolio.

As a result, we expect our cumulative operating losses to increase until such time, if ever, that product sales, licensing fees, royalties, milestones, contract research and other sources generate sufficient revenue to fund our operations.

We may never achieve profitability and may not sustain profitability, if achieved.

Our existing funding agreements with the U.S.

government and CEPI do not assure success of NVX-CoV2373 or that we will be able to fully fund NVX-CoV2373

The OWS Agreement, the DoD Agreement and the CEPI Funding Agreement each reimburse a portion of the expenses associated with the development and potential commercialization of NVX-CoV2373.

However, we remain fully responsible for conducting these development and commercialization activities, not all of which may be reimbursed.

Furthermore, none of the OWS Agreement, the DoD Agreement, or the CEPI Funding Agreement guarantees that any of these activities will be successful.

Our inability to succeed with key clinical or development activities could jeopardize our ability to obtain licensure from the FDA or other regulatory authorities to sell NVX-CoV2373.

Collaborations and contracts of our wholly owned subsidiaries Novavax AB and Novavax CZ, with regional partners, as well as with international providers, expose us to additional risks associated with doing business outside the U.S.

Swedish-based Novavax AB and its wholly-owned subsidiary Novavax CZ are wholly-owned subsidiaries of Novavax, Inc.

We also have formed a joint venture with Cadila Pharmaceuticals Limited in India, established clinical development agreements with CEPI and BMGF and entered into other agreements and arrangements with international companies, including SIIPL in India, among others.

We plan to continue to enter into collaborations or partnerships with companies, non-profit organizations and national and local governments in various parts of the world, particularly to expand our global manufacturing and distribution capacity with respect to NVX-CoV2373.

Risks of conducting business outside the U.S.

include negative consequences of:

● The complexity and costs associated with seeking to comply with separate regulatory requirements that govern our ability to develop, manufacture, license and commercialize our vaccine candidates in local markets;

● the impacts of the COVID-19 pandemic on specific countries or regions;

● failure to comply with anti-bribery laws such as the U.S.

Foreign Corrupt Practices Act, the U.K.

Bribery Act and similar anti-bribery laws in other jurisdictions;

● new or changes in interpretations of existing trade protections measures, including tariffs, embargoes and import and export licensing requirements;

● increased legal and compliance burden associated with establishing, maintaining and operating legal entities in foreign countries;

● difficulties in and costs of staffing, managing and operating our international operations;

● changes in environmental, health and safety laws;

● fluctuations in foreign currency exchange rates;

● new or changes in interpretations of existing tax laws;

● political instability and actual or anticipated military or potential conflicts;

● economic instability, inflation, recession and interest rate fluctuations;

● minimal or diminished protection of intellectual property in many jurisdictions;

● possible nationalization and expropriation.

These risks, individually or in the aggregate, could have a material adverse effect on our business, financial conditions, results of operations and cash flows.

We may have product liability exposure.

The administration of drugs or vaccines to humans, whether in clinical trials or after marketing approval, can result in product liability claims.

We maintain product liability insurance coverage for our current clinical programs, including our NVX-CoV2373 trials;

however, we may not be able to maintain insurance coverage at a reasonable cost or in sufficient amounts to protect us against losses due to liability.

Furthermore, coverage is relatively expensive, and the market pricing fluctuates significantly.

We may not be able to maintain our existing insurance coverage or obtain coverage for the use of our other products in the future.

This insurance coverage and our resources may not be sufficient to satisfy all liabilities that result from product liability claims.

A successful claim may prevent us from obtaining adequate product liability insurance in the future on commercially desirable terms, if at all.

Even if a claim is not successful, defending such a claim would be time-consuming and expensive, may damage our reputation in the marketplace and would likely divert management’s attention.

In addition, because we are developing NVX-CoV2373 in response to the outbreak of COVID-19, a global pandemic, we may have a widely used vaccine in the U.S.

and other countries as an investigational vaccine or a product authorized for temporary or emergency use prior to our receipt of marketing approval.

Unexpected safety issues in these circumstances could lead to product liability claims and our existing insurance may not be adequate for such claims.

Regardless of merit or eventual outcome, liability claims may result in:

● decreased demand for our products;

● impairment of our business reputation;

● withdrawal of clinical trial participants;

● costs of related litigation;

● substantial monetary awards to participants or other claimants;

● loss of revenue;

● inability to commercialize our vaccine candidates.

We are increasingly a target for public scrutiny, and our business may be impacted by unfavorable publicity.

Given that COVID-19 represents an unprecedented urgent public health crisis, that we are developing NVX-CoV2373 as a COVID-19 vaccine candidate, and that we have received significant funding from the U.S.

government and other sources to support the development and potential commercialization of NVX-CoV2373, we have observed and are likely to continue to face significant public attention and scrutiny over the complex decisions we have made and will be making regarding the development, testing, and manufacturing and potential allocation and pricing of NVX-CoV2373.

If we are unable to successfully manage these risks, we could face significant reputational harm, which could negatively affect our stock price.

The intense public interest, including speculation by the media, in the development of NVX-CoV2373 has caused significant volatility in our stock price, which we expect to continue as data and other information from our ongoing clinical trials become publicly available.

If concerns should arise about the actual or anticipated clinical outcomes regarding the efficacy or safety of any of our product candidates, such concerns could adversely affect the market’s perception of these candidates, which could lead to a decline in investors’ expectations and a decline in the price of our common stock.

The increasing use of social media platforms presents new risks and challenges to our business.

Social media is increasingly being used to communicate about pharmaceutical companies’ research, product candidates, and the diseases such product candidates are being developed to prevent.

Social media practices in the pharmaceutical industry continue to evolve and regulations relating to such use are not always clear.

This evolution creates uncertainty and risk of noncompliance with regulations applicable to our business, resulting in potential regulatory actions against us.

For example, subjects may use social media channels to comment on their experience in an ongoing blinded clinical trial or to report an alleged adverse event.

When such disclosures occur, there is a risk that we fail to monitor and comply with applicable adverse event reporting obligations or we may not be able to defend our business or the public’s legitimate interests in the face of the political and market pressures generated by social media due to restrictions on what we may say about our product candidates.

There is also a risk of inappropriate disclosure of sensitive information or negative or inaccurate posts or comments about us on any social media or networking website.

If any of these events were to occur or we otherwise fail to comply with applicable regulations, we could incur liability, face regulatory actions, or incur reputational or other harm to our business.

Second Amended and Restated Certificate of Incorporation of the Registrant (Incorporated by reference to Exhibit 3.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2015, filed on August 10, 2015 (File No.

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Amended and Restated By-Laws of the Company (Incorporated by reference to Exhibit 3.2 to the Company's Annual Report on Form 10-K for the year ended December 31, 2012, filed on March 12, 2013 (File No.

Form of Series A Convertible Preferred Stock Certificate (Incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed on June 19, 2020 (File No.

Restated Funding Agreement, entered into on May 11, 2020, by and between the Company and the Coalition for Epidemic Preparedness Innovations

Amended and Restated Novavax, Inc.

2015 Stock Incentive Plan (Incorporated by reference to Appendix A of the Registrant’s Definitive Proxy Statement filed on May 13, 2020 in connection with the Annual Meeting held on June 25, 2020 (File No.

Share Purchase Agreement, dated May 27, 2020, by and among the Company (solely as guarantor), Novavax AB, De Bilt Holdings B.V., Poonawalla Science Park B.V., Bilthoven Biologicals B.V.

and Serum International B.V.

(solely as guarantor)

Letter Contract, entered into on June 8, 2020, by and between the Company and the U.S.

Base Agreement, entered into June 25, 2020, between the Company and Advanced Technology International

Undefinitized Project Agreement No.

1, entered into July 6, 2020, between the Company and Advanced Technology International

Modification No.

01 to Undefinitized Project Agreement No.

01, entered into July 9, 2020, between the Company and Advanced Technology International

Supply and License Agreement, entered into July 30, 2020, between the Company and Serum Institute of India Private Limited

Amendment to Supply and License Agreement, entered into September 11, 2020, between the Company and Serum Institute of India Private Limited

Amendment of Solicitation/Modification of Contract, entered into September 16, 2020, between the Company and the U.S.

Department of Defense Joint Program Executive Office for Chemical, Biological, Radiological and Nuclear Defense

Series A Convertible Preferred Subscription Agreement, dated as of June 15, 2020, by and between the Company and RA Capital Healthcare Fund, L.P.

(Incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on June 19, 2020 (File No.

Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or 15d-14(e) of the Securities Exchange Act

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Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

The following financial information from our Quarterly Report on Form 10-Q for the quarter ended June 30, 2020, formatted in Inline Extensible Business Reporting Language (Inline XBRL):

(i) the Consolidated Balance Sheets as of June 30, 2020 and December 31, 2019, (ii) the Consolidated Statements of Operations for the three and six-month periods ended June 30, 2020 and 2019, (iii) the Consolidated Statements of Comprehensive Loss for the three and six-month periods ended June 30, 2020 and 2019, (iv) the Consolidated Statements of Changes in Stockholders’ Equity (Deficit) for the three and six-month periods ended June 30, 2020 and 2019, (v) the Consolidated Statements of Cash Flows for the six-month periods ended June 30, 2020 and 2019, and (vi) the Notes to Consolidated Financial Statements.

The following financial information from our Quarterly Report on Form 10-Q for the quarter ended September 30, 2020, formatted in Inline Extensible Business Reporting Language (Inline XBRL):

(i) the Consolidated Balance Sheets as of September 30, 2020 and December 31, 2019, (ii) the Consolidated Statements of Operations for the three and nine-month periods ended September 30, 2020 and 2019, (iii) the Consolidated Statements of Comprehensive Loss for the three and nine-month periods ended September 30, 2020 and 2019, (iv) the Consolidated Statements of Changes in Stockholders’ Equity (Deficit) for the three and nine-month periods ended September 30, 2020 and 2019, (v) the Consolidated Statements of Cash Flows for the nine-month periods ended September 30, 2020 and 2019, and (vi) the Notes to Consolidated Financial Statements.

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

†† Management contracts, compensatory plans or arrangements.

Filed herewith or furnished.

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NOVAVAX, INC.

August 10, 2020

November 10, 2020

/s/ Stanley C.

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(Principal Executive Officer)

August 10, 2020

November 10, 2020

Executive Vice President, Chief Business Officer, Chief Financial Officer and Treasurer

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

What changed 10-Q

Item 1A. Risk Factors