NOVAVAX INC 10-Q

Item 1. Financial Statements NOVAVAX, INC. CONSOLIDATED BALANCE SHEETS (in thousands, except share and per share information) ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, ​ December 31, ​ ​ 2020 2019 ​ ​ ​ (unaudited) ​ ​ ​ ​ ASSETS ​ ​ ​ ​ Current assets: ​ ​ ​ ​ Cash and cash equivalents ​ $ 334,171 ​ $ 78,823 ​ Marketable securities ​ 169,860 ​ — ​ Restricted cash ​ 67,154 ​ 2,947 ​ Accounts receivable ​ ​ 12,355 ​ ​ 7,500 ​ Unbilled services ​ ​ 3,826 ​ ​ — ​ Prepaid expenses and other current assets ​ 83,851 ​ 7,977 ​ Total current assets ​ 671,217 ​ 97,247 ​ Restricted cash ​ 411 ​ 410 ​ Property and equipment, net ​ 131,834 ​ 11,445 ​ Intangible assets, net ​ 5,332 ​ 5,581 ​ Goodwill ​ 126,932 ​ 51,154 ​ Other non-current assets ​ 8,294 ​ 7,120 ​ Total assets ​ $ 944,020 ​ $ 172,957 ​ ​ ​ ​ ​ ​ ​ ​ ​ LIABILITIES AND STOCKHOLDERS’ DEFICIT ​ ​ ​ Current liabilities: ​ ​ ​ Accounts payable ​ $ 15,097 ​ $ 2,910 ​ Accrued expenses ​ 78,812 ​ 14,867 ​ Accrued interest ​ 2,031 ​ 5,078 ​ Deferred revenue ​ 81,814 ​ 1,678 ​ Current portion of finance lease liabilities ​ ​ 55,860 ​ ​ — ​ Other current liabilities ​ 5,604 ​ 1,262 ​ Total current liabilities ​ 239,218 ​ 25,795 ​ Deferred revenue ​ 2,500 ​ 2,500 ​ Convertible notes payable ​ 321,679 ​ 320,611 ​ Non-current finance lease liabilities ​ ​ 63,099 ​ ​ — ​ Other non-current liabilities ​ 11,262 ​ 10,068 ​ Total liabilities ​ 637,758 ​ 358,974 ​ ​ ​ ​ ​ ​ ​ ​ ​ Commitments and contingencies ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Preferred stock, $ 0.01 par value, 2,000,000 shares authorized; 438,885 shares of redeemable Series A Convertible Preferred Stock issued and outstanding at September 30, 2020 and no shares issued and outstanding at December 31, 2019 ​ 199,822 ​ — ​ ​ ​ ​ ​ ​ ​ ​ ​ Stockholders' equity (deficit): ​ ​ ​ Common stock, $ 0.01 par value, 600,000,000 shares authorized at September 30, 2020 and December 31, 2019; and 63,318,888 shares issued and 62,927,485 shares outstanding at September 30, 2020 and 32,399,352 shares issued and 32,352,416 shares outstanding at December 31, 2019 ​ 633 ​ 324 ​ Additional paid-in capital ​ 1,848,644 ​ 1,260,551 ​ Accumulated deficit ​ ( 1,696,635 ) ​ ( 1,431,801 ) ​ Treasury stock, 391,403 shares, cost basis at September 30, 2020 and 46,936 shares, cost basis at December 31, 2019 ​ ( 41,207 ) ​ ( 2,583 ) ​ Accumulated other comprehensive loss ​ ( 4,995 ) ​ ( 12,508 ) ​ Total stockholders’ equity (deficit) ​ 106,440 ​ ( 186,017 ) ​ Total liabilities and stockholders’ equity (deficit) ​ $ 944,020 ​ $ 172,957 ​ The accompanying notes are an integral part of these financial statements. 1 Table of Contents NOVAVAX, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share information) (unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Three Months Ended ​ For the Nine Months Ended ​ ​ ​ September 30, ​ September 30, ​ ​ 2020 2019 2020 2019 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Revenue: ​ ​ ​ ​ Grant and other $ 114,086 ​ $ 2,507 ​ $ 152,690 ​ $ 9,846 ​ Government contract ​ 42,938 ​ ​ — ​ ​ 43,249 ​ ​ — ​ Total revenue 157,024 ​ 2,507 ​ 195,939 ​ 9,846 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Expenses: ​ ​ ​ ​ Research and development 294,087 ​ 18,611 ​ 345,828 ​ 84,502 ​ Gain on Catalent transaction ​ — ​ ​ ( 9,016 ) ​ ​ — ​ ​ ( 9,016 ) ​ General and administrative 56,879 ​ 7,899 ​ 83,977 ​ 26,236 ​ Total expenses 350,966 ​ 17,494 ​ 429,805 ​ 101,722 ​ Loss from operations ( 193,942 ) ​ ( 14,987 ) ​ ( 233,866 ) ​ ( 91,876 ) ​ Other income (expense): ​ ​ ​ ​ Investment income 140 ​ 342 ​ 872 ​ 1,236 ​ Interest expense ( 4,460 ) ​ ( 3,403 ) ​ ( 11,266 ) ​ ( 10,209 ) ​ Other income (expense) 952 ​ 5 ​ 3,565 ​ ( 15 ) ​ Net loss $ ( 197,310 ) ​ $ ( 18,043 ) ​ $ ( 240,695 ) ​ $ ( 100,864 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic and diluted net loss per share $ ( 3.21 ) ​ $ ( 0.74 ) ​ $ ( 4.39 ) ​ $ ( 4.43 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic and diluted weighted average number of common shares outstanding 61,554 ​ 24,327 ​ 54,810 ​ 22,761 ​ ​ ​ ​ ​ ​ ​ ​ ​ CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (in thousands) (unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Three Months Ended ​ For the Nine Months Ended ​ ​ September 30, ​ September 30, ​ ​ 2020 2019 2020 2019 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net loss ​ $ ( 197,310 ) ​ $ ( 18,043 ) ​ $ ( 240,695 ) ​ $ ( 100,864 ) ​ Other comprehensive income (loss): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net unrealized gains (losses) on marketable securities available-for-sale ​ ( 26 ) ​ — ​ 18 ​ 5 ​ Foreign currency translation adjustment ​ 8,226 ​ ( 1,564 ) ​ 7,495 ​ ( 2,668 ) ​ Other comprehensive income (loss) ​ 8,200 ​ ( 1,564 ) ​ 7,513 ​ ( 2,663 ) ​ Comprehensive loss ​ $ ( 189,110 ) ​ $ ( 19,607 ) ​ $ ( 233,182 ) ​ $ ( 103,527 ) ​ ​ ​ The accompanying notes are an integral part of these financial statements. ​ 2 Table of Contents NOVAVAX, INC. CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) Three Months Ended September 30, 2020 and 2019 (unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Additional ​ ​ ​ ​ ​ ​ ​ Other ​ Stockholders' ​ ​ Common Stock ​ Paid-in ​ Accumulated ​ Treasury ​ Comprehensive ​ Equity ​ Shares Amount Capital Deficit Stock Income (Loss) (Deficit) ​ (in thousands, except share information) Balances at June 30, 2020 61,262,632 ​ $ 612 ​ $ 1,699,072 ​ $ ( 1,499,325 ) ​ $ ( 2,638 ) ​ $ ( 13,195 ) ​ $ 184,526 Preferred stock beneficial conversion feature ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — Non-cash stock-based compensation — ​ — ​ 65,705 ​ — ​ — ​ — ​ 65,705 Stock issued under incentive programs 1,534,345 ​ 16 ​ 26,682 ​ — ​ ( 38,569 ) ​ — ​ ( 11,871 ) Issuance of common stock, net of issuance costs of $ 725 521,911 ​ 5 ​ 57,185 ​ — ​ — ​ — ​ 57,190 Unrealized loss on marketable securities — ​ — ​ — ​ — ​ — ​ ( 26 ) ​ ( 26 ) Foreign currency translation adjustment — ​ — ​ — ​ — ​ — ​ 8,226 ​ 8,226 Net loss — ​ — ​ — ​ ( 197,310 ) ​ — ​ — ​ ( 197,310 ) Balance at September 30, 2020 63,318,888 ​ $ 633 ​ $ 1,848,644 ​ $ ( 1,696,635 ) ​ $ ( 41,207 ) ​ $ ( 4,995 ) ​ $ 106,440 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balances at June 30, 2019 23,495,466 ​ $ 235 ​ $ 1,210,941 ​ $ ( 1,381,928 ) ​ $ ( 2,451 ) ​ $ ( 12,290 ) ​ $ ( 185,493 ) Non-cash stock-based compensation — ​ — ​ 2,624 ​ — ​ — ​ — ​ 2,624 Stock issued under incentive programs ​ 122,485 ​ ​ 1 ​ ​ 181 ​ ​ — ​ ​ ( 132 ) ​ ​ — ​ ​ 50 Issuance of common stock, net of issuance costs of $ 161 1,957,627 ​ 20 ​ 12,568 ​ — ​ — ​ — ​ 12,588 Foreign currency translation adjustment — ​ — ​ — ​ — ​ — ​ ( 1,564 ) ​ ( 1,564 ) Net loss — ​ — ​ — ​ ( 18,043 ) ​ — ​ — ​ ( 18,043 ) Balance at September 30, 2019 25,575,578 ​ $ 256 ​ $ 1,226,314 ​ $ ( 1,399,971 ) ​ $ ( 2,583 ) ​ $ ( 13,854 ) ​ $ ( 189,838 ) ​ The accompanying notes are an integral part of these financial statements. ​ 3 Table of Contents NOVAVAX, INC. CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) Nine Months Ended September 30, 2020 and 2019 (unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Additional ​ ​ ​ ​ ​ ​ ​ Other ​ Stockholders' ​ ​ Common Stock ​ Paid-in ​ Accumulated ​ Treasury ​ Comprehensive ​ Equity ​ Shares Amount Capital Deficit Stock Income (Loss) (Deficit) ​ (in thousands, except share information) Balance at December 31, 2019 32,399,352 ​ $ 324 ​ $ 1,260,551 ​ $ ( 1,431,801 ) ​ $ ( 2,583 ) ​ $ ( 12,508 ) ​ $ ( 186,017 ) Preferred stock beneficial conversion feature ​ — ​ ​ — ​ ​ 24,139 ​ ​ ( 24,139 ) ​ ​ — ​ ​ — ​ ​ — Non-cash stock-based compensation — ​ — ​ 77,602 ​ — ​ — ​ — ​ 77,602 Stock issued under incentive programs 1,884,399 ​ 19 ​ 35,689 ​ — ​ ( 38,624 ) ​ — ​ ( 2,916 ) Issuance of common stock, net of issuance costs of $ 5,870 ​ 29,035,137 ​ ​ 290 ​ ​ 450,663 ​ ​ — ​ ​ — ​ ​ — ​ ​ 450,953 Unrealized gain on marketable securities — ​ — ​ — ​ — ​ — ​ 18 ​ 18 Foreign currency translation adjustment — ​ — ​ — ​ — ​ — ​ 7,495 ​ 7,495 Net loss — ​ — ​ — ​ ( 240,695 ) ​ — ​ — ​ ( 240,695 ) Balance at September 30, 2020 63,318,888 ​ $ 633 ​ $ 1,848,644 ​ $ ( 1,696,635 ) ​ $ ( 41,207 ) ​ $ ( 4,995 ) ​ $ 106,440 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance at December 31, 2018 19,245,302 ​ $ 192 ​ $ 1,144,621 ​ $ ( 1,299,107 ) ​ $ ( 2,450 ) ​ $ ( 11,191 ) ​ $ ( 167,935 ) Non-cash stock-based compensation — ​ — ​ 12,803 ​ — ​ — ​ — ​ 12,803 Stock issued under incentive programs 173,873 ​ 2 ​ 1,122 ​ — ​ ( 132 ) ​ — ​ 992 Fractional shares purchased in stock split — ​ — ​ — ​ — ​ ( 1 ) ​ — ​ ( 1 ) Issuance of common stock, net of issuance costs of $ 1,273 6,156,403 ​ 62 ​ 67,768 ​ — ​ — ​ — ​ 67,830 Unrealized gain on marketable securities — ​ — ​ — ​ — ​ — ​ 5 ​ 5 Foreign currency translation adjustment — ​ — ​ — ​ — ​ — ​ ( 2,668 ) ​ ( 2,668 ) Net loss — ​ — ​ — ​ ( 100,864 ) ​ — ​ — ​ ( 100,864 ) Balance at September 30, 2019 25,575,578 ​ $ 256 ​ $ 1,226,314 ​ $ ( 1,399,971 ) ​ $ ( 2,583 ) ​ $ ( 13,854 ) ​ $ ( 189,838 ) ​ The accompanying notes are an integral part of these financial statements. ​ 4 Table of Contents NOVAVAX, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nine Months Ended ​ ​ September 30, ​ 2020 2019 ​ ​ ​ ​ ​ ​ ​ ​ Operating Activities: ​ ​ ​ ​ ​ ​ ​ Net loss ​ $ ( 240,695 ) ​ $ ( 100,864 ) ​ Reconciliation of net loss to net cash used in operating activities: ​ ​ ​ ​ ​ ​ ​ Depreciation and amortization ​ 3,091 ​ 4,744 ​ Loss on disposal of property and equipment ​ — ​ 88 ​ Gain on Catalent transaction ​ ​ — ​ ​ ( 9,016 ) ​ Amortization of debt issuance costs ​ 1,068 ​ 1,068 ​ Non-cash stock-based compensation ​ 77,602 ​ 12,803 ​ Write off of right-of-use assets ​ ​ 187,193 ​ ​ — ​ Other ​ ( 4,119 ) ​ 1,269 ​ Changes in operating assets and liabilities: ​ ​ ​ ​ ​ Receivables, prepaid expenses and other assets ​ ( 78,788 ) ​ 1,326 ​ Accounts payable and accrued expenses ​ 60,540 ​ ( 16,882 ) ​ Deferred revenue ​ 80,135 ​ ( 7,416 ) ​ Net cash provided by (used in) operating activities ​ 86,027 ​ ( 112,880 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ Investing Activities: ​ ​ ​ Capital expenditures ​ ( 12,610 ) ​ ( 1,641 ) ​ Acquisition of Novavax CZ, net of cash acquired ​ ​ ( 164,204 ) ​ ​ ― ​ Proceeds from Catalent transaction ​ ​ — ​ ​ 18,333 ​ Purchases of marketable securities ​ ( 266,330 ) ​ ( 17,484 ) ​ Proceeds from maturities of marketable securities ​ 96,488 ​ ​ 39,500 ​ Net cash (used in) provided by investing activities ​ ( 346,656 ) ​ 38,708 ​ ​ ​ ​ ​ ​ ​ ​ ​ Financing Activities: ​ ​ ​ Net proceeds from sale of preferred stock ​ ​ 199,822 ​ ​ — ​ Net proceeds from sales of common stock ​ 447,070 ​ 67,220 ​ Proceeds from the exercise of stock-based awards ​ 35,708 ​ 992 ​ Treasury stock related to tax withholding on stock-based awards ​ ​ ( 37,024 ) ​ ​ — ​ Finance lease payments ​ ​ ( 65,424 ) ​ ​ — ​ Net cash provided by financing activities ​ 580,152 ​ 68,212 ​ Effect of exchange rate on cash, cash equivalents and restricted cash ​ 33 ​ ( 69 ) ​ Net increase (decrease) in cash, cash equivalents and restricted cash ​ 319,556 ​ ( 6,029 ) ​ Cash, cash equivalents and restricted cash at beginning of period ​ 82,180 ​ 81,959 ​ Cash, cash equivalents and restricted cash at end of period ​ $ 401,736 ​ $ 75,930 ​ ​ ​ ​ ​ ​ ​ ​ ​ Supplemental disclosure of non-cash activities: ​ ​ ​ Sale of common stock under the Sales Agreement not settled at quarter-end ​ $ 3,883 ​ $ 610 ​ Capital expenditures included in accounts payable and accrued expenses ​ $ 6,189 ​ $ 183 ​ Right-of-use assets from new lease agreements ​ $ 188,362 ​ $ — ​ ​ ​ ​ ​ ​ ​ ​ ​ Supplemental disclosure of cash flow information: ​ ​ ​ ​ ​ Cash interest payments ​ $ 12,188 ​ $ 12,188 ​ ​ The accompanying notes are an integral part of these financial statements. ​ 5 Table of Contents NOVAVAX, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS September 30, 2020 (unaudited) Note 1 – Organization Novavax, Inc. (“Novavax,” and together with its wholly owned subsidiaries, Novavax AB and Novavax CZ (formerly, Praha Vaccines a.s.), the “Company”) is a late-stage biotechnology company that promotes improved global health through the discovery, development and commercialization of innovative vaccines to prevent serious infectious diseases and address urgent, global health needs. The Company’s vaccine candidates, including both its coronavirus vaccine candidate, NVX-CoV2373, and its lead influenza vaccine candidate, NanoFlu TM , are genetically engineered, three-dimensional nanostructures of recombinant proteins critical to disease pathogenesis and may elicit differentiated immune responses, which may be more efficacious than naturally occurring immunity or traditional vaccines. The Company’s technology targets a variety of infectious diseases. The Company is also developing proprietary immune stimulating saponin-based adjuvants at Novavax AB, its wholly owned Swedish subsidiary. The Company’s lead adjuvant, Matrix-M™, has been shown to enhance immune responses and has been well-tolerated in multiple clinical trials. ​ 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 consolidated balance sheet as of September 30, 2020, the consolidated statements of operations and the consolidated statements of comprehensive loss for the three and nine months ended September 30, 2020 and 2019, the consolidated statements of changes in stockholders’ equity (deficit) for the three and nine months ended September 30, 2020 and 2019 and the consolidated statements of cash flows for the nine months ended September 30, 2020 and 2019 are unaudited, but include all adjustments (consisting of normal recurring adjustments) that the Company considers necessary for a fair presentation of the financial position, operating results, comprehensive loss, changes in stockholders’ equity (deficit) and cash flows, respectively, 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 unaudited consolidated financial statements include the accounts of Novavax, Inc. and its wholly owned subsidiaries, Novavax AB and Novavax CZ. All intercompany accounts and transactions have been eliminated in consolidation. The accompanying unaudited consolidated financial statements are presented in U.S. dollars. The functional currency of Novavax AB, which is located in Sweden, is the local currency (Swedish Krona), and the functional currency of Novavax CZ, which is located in the Czech Republic, is the local currency (Czech Koruna). The translation of assets and liabilities of these subsidiaries to U.S. dollars is made at the exchange rate in effect at the consolidated balance sheet date, while equity accounts are translated at historical rates. The translation of the statement of operations data is made at the average exchange rate in effect for the period. The translation of operating cash flow data is made at the average exchange rate in effect for the period, and investing and financing cash flow data is translated at the exchange rate in effect at the date of the underlying transaction. Translation gains and losses are recognized as a component of accumulated other comprehensive loss in the accompanying unaudited consolidated balance sheets. The foreign currency translation adjustment balance included in accumulated other comprehensive loss was $ 5.0 million and $ 12.5 million as of September 30, 2020 and December 31, 2019, respectively. 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, 2019. Results for this or any interim period are not necessarily indicative of results for any future interim period or for the entire year. The Company operates in one business segment. 6 Table of Contents Use of Estimates The preparation of the 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 consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ materially from those estimates. Cash and Cash Equivalents Cash and cash equivalents consist of highly liquid investments with maturities of three months or less from the date of purchase. Cash and cash equivalents consist of the following at (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, December 31, ​ 2020 2019 Cash ​ $ 126,505 ​ $ 15,863 Money market funds ​ ​ 79,950 ​ 42,960 Government-backed securities ​ ​ 43,250 ​ 20,000 Treasury securities ​ ​ 24,998 ​ ​ — Corporate debt securities ​ ​ 59,468 ​ — Cash and cash equivalents ​ $ 334,171 ​ $ 78,823 ​ Cash equivalents are recorded at cost, which approximate fair value due to their short-term nature. Marketable Securities Marketable securities consist of debt securities with maturities greater than three months from the date of purchase that include commercial paper, government-backed securities, treasury securities, corporate notes and agency securities. Classification of marketable securities between current and non-current is dependent upon the maturity date at the balance sheet date taking into consideration the Company's ability and intent to hold the investment to maturity. Interest and dividend income are recorded when earned and included in investment income in the consolidated statements of operations. Premiums and discounts, if any, on marketable securities are amortized or accreted to maturity and included in investment income in the consolidated statements of operations. The specific identification method is used in computing realized gains and losses on the sale of the Company's securities. The Company classifies its marketable securities with readily determinable fair values as “available-for-sale.” Investments in securities that are classified as available-for-sale are measured at fair market value in the consolidated balance sheets, and unrealized gains and losses on marketable securities are reported as a separate component of stockholders' deficit until realized. Marketable securities are evaluated periodically to determine whether a decline in value is “other-than-temporary.” The term “other-than-temporary” is not intended to indicate a permanent decline in value. Rather, it means that the prospects for a near term recovery of value are not necessarily favorable, or that there is a lack of evidence to support fair values equal to, or greater than, the carrying value of the security. Management reviews criteria, such as the magnitude and duration of the decline, as well as the Company's ability to hold the securities, including whether the Company will be required to sell a security prior to recovery of its amortized cost basis, the investment issuer's financial condition and business outlook to predict whether the loss in value is other-than-temporary. Realized gains and losses and declines in value determined to be other-than-temporary are recorded as other income (expense) in the consolidated statements of operations. The cost of securities sold is based on the specific identification method. Restricted Cash The Company’s current and non-current restricted cash includes payments received under the Coalition for Epidemic Preparedness Innovations (“CEPI”) funding agreements (see Note 12), payments received under the Bill & Melinda Gates Foundation (“BMGF”) grant agreements (see Note 12), escrow funds paid in connection with the acquisition of Novavax CZ (see Note 5), escrow funds received in connection with a transaction in 2019 with Catalent Maryland, Inc. (formerly Paragon Bioservices, Inc.), a unit of Catalent Biologics (“Catalent”), and cash collateral accounts under letters of credit that serve as security deposits for certain facility leases. The Company will utilize the CEPI and BMGF funds as it incurs expenses for services performed under these agreements. 7 Table of Contents As of September 30, 2020, the restricted cash balances (both current and non-current) consisted of $ 9.1 million for payments received from BMGF, $ 46.3 million of payments under the CEPI funding agreements, $ 11.7 million held in escrow that was paid by the Company in connection with the Novavax CZ acquisition and $ 0.4 million of security deposits. As of December 31, 2019, the restricted cash balances (both current and non-current) consisted of $ 1.4 million for payments received from BMGF, $ 1.5 million held in escrow received in connection with the Catalent transaction and $ 0.4 million of security deposits. The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amounts shown in the statement of cash flows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, December 31, ​ 2020 2019 Cash and cash equivalents ​ $ 334,171 ​ $ 78,823 Restricted cash current ​ 67,154 ​ 2,947 Restricted cash non-current ​ 411 ​ 410 Cash, cash equivalents and restricted cash ​ $ 401,736 ​ $ 82,180 ​ Acquisitions The Company applies the acquisition method of accounting to business combinations in accordance with Accounting Standards Codification (“ASC”) Topic 805, Business Combinations . The Company’s consolidated financial statements include the operating results of an acquired entity from the date on which it obtains control of the business acquired. The Company recognizes and measures the identifiable assets acquired and liabilities assumed, as of the acquisition date, based on their estimated fair value with the excess purchase consideration, if any, recognized as goodwill. In determining fair value, the Company uses various recognized valuation methods, including the cost and market approaches. The Company initially performs these valuations based on preliminary estimates and assumptions by management or independent valuation specialists under Company supervision, where appropriate, and makes revisions as estimates and assumptions are finalized. The final determination of fair values must be completed no later than the first anniversary of the date of acquisition. The Company expenses acquisition related costs as incurred. See Note 5 for further discussion around the Company’s recent acquisition of Novavax CZ. Lease Accounting The Company determines at the inception of a contract if an arrangement is, or contains, a lease, which exists when the contract conveys the right to control the use of identified property or equipment for a period of time in exchange for consideration. Depending on the contract, the lease commencement date, defined as the date on which the lessor makes the underlying asset available for use by the lessee, may be different than the inception date of the contract. Leases are classified as either operating or finance leases based on the economic substance of the agreement. ​ The Company enters into non-cancelable lease agreements for office space and certain equipment. Further, the Company enters into supply agreements with contract manufacturing organizations and contract development and manufacturing organizations to manufacture its vaccine candidates. Certain of these supply agreements include the use of identified manufacturing facilities and equipment that are controlled by the Company and may qualify as an embedded lease. Supply agreements that contain a lease are treated as lease arrangements in their entirety. ​ For leases that have a lease term of more than 12 months at the lease commencement date, the Company recognizes lease liabilities, which represent the Company’s obligation to make lease payments arising from the lease, and corresponding right-of-use (“ROU”) assets, which represent the right to use an underlying asset for the lease term, based on the present value of the fixed future payments over the lease term. The Company calculates the present value of future payments using the discount rate implicit in the lease, if available, or the Company’s incremental borrowing rate. For all leases that have a lease term of 12 months or less at the commencement date (referred to as “short-term” leases), the Company has elected to apply the practical expedient in ASC Topic 842, Leases (“ASC 842”), to not recognize a lease liability or ROU asset but instead, recognize lease payments as an expense on a straight-line basis over the lease term and variable lease payments that do not depend on an index or rate, as an expense in the period in which the variable lease costs are incurred based on performance or usage in accordance with contractual agreements. In determining the lease period, the Company evaluates facts and circumstances that could affect the period over which it is reasonably certain to 8 Table of Contents use the underlying asset while taking into consideration the non-cancelable period over which it has the right to use the underlying asset and any option period to extend or terminate the lease if it is reasonably certain to exercise the option. The Company reevaluates short-term leases that are modified and if they no longer meets the requirements to be treated as short-term leases, recognizes and measures the lease liability and ROU asset as if the date of the modification is the lease commencement date. ​ For operating leases, the Company recognizes lease expense related to fixed payments on a straight-line basis over the lease term and lease expense related to variable payments as incurred based on performance or usage in accordance with the contractual agreements. For finance leases, the Company recognizes the amortization of the ROU asset over the shorter of the lease term or useful life of the underlying asset. The Company expenses ROU assets acquired for research and development activities under ASC Topic 730, Research and Development , if they do not have an alternative future use, in research and development projects or otherwise. ​ The Company uses significant assumptions and judgment in evaluating its lease contracts and other agreements under ASC 842, including the determination of whether an agreement is or contains a lease, whether a lease represents an operating or finance lease, the discount rate used to determine the present value of lease obligations and the term of a lease embedded in its supply agreements. ​ Revenue Recognition The Company performs research and development under government funding, grant, license and clinical development agreements. The revenue primarily consists of funding under U.S. government contracts and other arrangements to advance the clinical development and manufacturing of NVX-CoV2373. The Company’s U.S. government contracts are with the U.S. Department of Defense (the “DoD”) and its participation in Operation Warp Speed (“OWS”) (see Note 12). Other funding arrangements primarily include a grant and forgivable loan funding from CEPI (see Note 12). ​ At contract inception, the Company analyzes the revenue arrangement to determine the appropriate accounting under U.S. GAAP. Currently, the Company’s revenue arrangements represent customer contracts within the scope of ASC Topic 606, Revenue from Contracts with Customers (Topic 606) (“ASC 606”) or are contributions under the scope of ASC Topic 958-605, Not-for-Profit Entities – Revenue Recognition (“ASC 958-605”.) The Company recognizes revenue from arrangements within the scope of ASC 606 following the five-step model: (i) identify the contract(s) with a customer; (ii) identify the performance obligation(s) in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligation(s) in the contract; and (v) recognize revenue when (or as) it satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that it will collect the consideration it is entitled to in exchange for the goods or services it transfers to its customer. The Company recognizes contribution revenue within the scope of ASC 958-605 when the funder-imposed conditions have been substantially met. Contributions are recorded as deferred revenue until the period in which research and development activities are performed that satisfy the funder-imposed conditions. ​ Under the U.S. government contracts, the Company is entitled to receive funding of up to $ 1.66 billion, on a reimbursable-cost or reimbursable-cost-plus-fixed-fee basis, to support certain activities related to the development, manufacture and delivery of NVX-CoV2373 to the U.S. government. The Company analyzed these contracts and determined that they are within the scope of ASC 606. The obligations under each of the contracts are not distinct in the context of the contract as they are highly interdependent or interrelated and, as such, they are accounted for as a single performance obligation. The transaction price under these arrangements is the consideration the Company is expecting to receive and consists of the funded contract amount and the unfunded variable amount to the extent that it is probable that a significant reversal of revenue will not occur. The Company recognizes revenue for these contracts over time as the Company transfers control over the goods and services and satisfies the performance obligation. The Company measures progress toward satisfaction of the performance obligation using an Estimate-at-Completion (“EAC”) process, which is a cost-based input method that reviews and monitors the progress towards the completion of the Company’s performance obligation. Under this process, management considers the costs that have been incurred to-date, as well as projections to completion using various inputs and assumptions, including, but not limited to, progress towards completion, labor costs and productivity, material and subcontractor costs and identified risks. Estimating the total allowable cost at completion of the performance obligation under a contract is subjective and requires the Company to make assumptions about future activity and cost drivers. Changes in these estimates can occur for a variety of reasons and, if significant, may impact the timing of revenue and fee recognition on the Company’s contracts. Allowable contract costs include direct costs incurred 9 Table of Contents on the contract and indirect costs that are applied in the form of rates to the direct costs. Billings under the contracts are initially based on provisional indirect billing rates, agreed upon between the Company and the U.S. government. These indirect rates are subject to audit on an annual basis. The Company records the impact of changes in the indirect billing rates in the period when such changes are identified. These changes reflect the difference between actual indirect costs incurred compared to the estimated amounts used to determine the provisional indirect billing rates agreed upon with the U.S. government. The Company recognizes revenue on the U.S government contracts based on reimbursable allowable contract costs incurred in the period up to the transaction price. For reimbursable-cost-plus-fixed-fee contracts, the Company recognizes the fixed-fee based on the proportion of reimbursable contract costs incurred to total estimated allowable contract costs expected to be incurred on completion of the underlying performance obligation as determined under the EAC process. The Company recognizes changes in estimates related to the EAC process in the period when such changes are made on a cumulative catch-up basis. The Company includes the transaction price comprising both funded and unfunded portions of customer contracts, in this estimate. As of September 30, 2020, $ 1.62 billion of the total transaction price of $ 1.66 billion was not yet satisfied and the Company had a contract asset of $ 3.8 million and a contract liability of $ 26.5 million. ​ The Company’s other funding agreements currently include funding from CEPI of $ 399.5 million in the form of a grant of $ 257.0 million (“CEPI Grant Funding”) and one or more forgivable no interest term loans of $ 142.5 million (“CEPI Forgivable Loan Funding”). Under the Company’s grant funding arrangements, including the CEPI Grant Funding, the Company is primarily entitled to reimbursement for costs that support development related activities of NVX- CoV2373 . The CEPI Forgivable Loan Funding is designated for the prepayment of certain manufacturing activities. The Company analyzed these other funding arrangements and determined that they are not within the scope of ASC 606 as they do not provide a direct economic benefit to the grantor. Payments received under the grant funding arrangements are considered conditional contributions under the scope of ASC 958-605 and are recorded as deferred revenue until the period in which such research and development activities are actually performed that satisfy the funder-imposed conditions. Payments received under the CEPI Forgivable Loan Funding agreements are only repayable if the proceeds of sales to one or more third parties of NVX-CoV2373 cover the Company’s costs of manufacturing such vaccine candidate, not including manufacturing costs funded by CEPI. As the financial risk remains with CEPI, the Company determined that the use of the CEPI Forgivable Loan Funding is outside the scope of ASC Topic 470, Debt. The research and development risk is considered substantive, such that it is not yet probable that the development will be successful. Therefore, the Company has concluded that ASC 730 is considered applicable and most appropriate. Given the financial risk associated with the research and development activities lies with CEPI because repayment of any funds provided by CEPI depends solely on the results of the research and development activities having future economic benefit, the Company has accounted for the obligation under the CEPI Forgivable Loan Funding as a contract to perform research and development for others. The Company has determined that payments received under these agreements should be recorded as revenue under ASC 958-605 rather than a reduction to research and development expenses. This is consistent with the Company’s policy of presenting such amounts as revenue. In reaching this determination, the Company considered a number of factors, including whether it is principal under the arrangement, and whether the arrangement is significant to, and part of, the Company’s core operations. The Company will record revenue as it performs the contractual research and development services. ​ Net Loss per Share Net loss per share is computed using the weighted average number of shares of common stock outstanding. As of September 30, 2020 and 2019, the Company had outstanding stock options, stock appreciation rights (“SARs”) and unvested restricted stock units (“RSUs”) totaling 6,623,466 and 5,041,526 , respectively. In addition, as of September 30, 2020, the Company had 438,885 shares outstanding of its newly designated Series A Convertible Preferred Stock , which are convertible into 4,388,850 shares of the Company’s common stock. As of September 30, 2020, the Company’s Notes (see Note 8) would have been convertible into approximately 2,385,800 shares of the Company’s common stock assuming a common stock price of $ 136.20 or higher. These and any shares due to the Company upon settlement of its capped call transactions are excluded from the computation, as their effect is antidilutive. 10 Table of Contents Recent Accounting Pronouncements Recently Adopted In January 2017, the FASB issued Accounting Standards Update (“ASU”) No. 2017-04, Intangibles-Goodwill and Other (Topic 350) (“ASU 2017-04”), which will simplify the goodwill impairment calculation by eliminating Step 2 from the current goodwill impairment test. The new standard does not change how a goodwill impairment is identified. The Company will continue to perform its quantitative goodwill impairment test by comparing the fair value of its reporting unit to its carrying amount, but if the Company is required to recognize a goodwill impairment charge, under the new standard, the amount of the charge will be calculated by subtracting the reporting unit's fair value from its carrying amount. Under the current standard, if the Company is required to recognize a goodwill impairment charge, Step 2 requires it to calculate the implied value of goodwill by assigning the fair value of a reporting unit to all of its assets and liabilities as if that reporting unit had been acquired in a business combination and the amount of the charge is calculated by subtracting the reporting unit's implied fair value of goodwill from the goodwill carrying amount. The standard was effective January 1, 2020 for the Company and will be applied prospectively from the date of adoption. The adoption of ASU 2017-04 did not have a material impact on the Company’s historical financial statements. ​ Not Yet Adopted ​ In August 2020, the FASB issued ASU No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”), which will simplify the accounting for certain financial instruments with characteristics of liabilities and equity, including certain convertible instruments and contracts on an entity’s own equity. Specifically, the new standard will remove the separation models required for convertible debt with cash conversion features and convertible instruments with beneficial conversion features. It will also remove certain settlement conditions that are currently required for equity contracts to qualify for the derivative scope exception and will simplify the diluted earnings per share calculation for convertible instruments. ASU 2020-06 will be effective January 1, 2022 for the Company and may be applied using a full or modified retrospective approach. Early adoption is permitted, but no earlier than January 1, 2021 for the Company. Management is evaluating the impact of adopting ASU 2020-06 and whether it will have a material impact on the Company’s consolidated financial statements. ​ Note 3 – Fair Value Measurements The following table represents the Company's fair value hierarchy for its financial assets and liabilities measured at fair value (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fair Value at September 30, 2020 Fair Value at December 31, 2019 Assets Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 Money market funds(1) ​ $ 79,950 ​ $ ― ​ $ — ​ $ 42,960 ​ $ — ​ $ — Government-backed securities(2) ​ ― ​ 43,250 ​ ― ​ ― ​ 20,000 ​ ― Treasury securities(3) ​ ​ — ​ ​ 65,093 ​ ​ — ​ ​ — ​ ​ — ​ ​ — Corporate debt securities(4) ​ ― ​ 148,583 ​ ― ​ ― ​ — ​ ― Agency securities ​ $ ― ​ ​ 40,651 ​ ​ — ​ ​ — ​ ​ — ​ ​ — Total cash equivalents and marketable securities ​ $ 79,950 ​ $ 297,577 ​ $ — ​ $ 42,960 ​ $ 20,000 ​ $ — Liabilities ​ ​ ​ ​ ​ ​ Convertible notes payable ​ $ ― ​ $ 389,217 ​ $ — ​ $ — ​ $ 125,811 ​ $ — ​ (1) Classified as cash and cash equivalents as of September 30, 2020 and December 31, 2019, respectively, on the consolidated balance sheets. (2) Includes $ 43,250 and $ 20,000 classified as cash and cash equivalents as of September 30, 2020 and December 31, 2019, respectively, on the consolidated balance sheets. (3) Includes $ 24,998 classified as cash and cash equivalents as of September 30, 2020 on the consolidated balance sheets. (4) Includes $ 59,468 classified as cash and cash equivalents as of September 30, 2020 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, e.g., interest rates and yield curves observable at 11 Table of Contents 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 Notes (see Note 8) has been estimated using other observable inputs, including the price of the Company's common stock, implied volatility, interest rates and credit spreads among others. During the nine months ended September 30, 2020 and 2019 , the Company did not have any transfers between levels . The amount recorded in the Company's unaudited consolidated balance sheets for accounts payable and accrued expenses approximates its fair value due to its short-term nature. ​ Note 4 – Marketable Securities Marketable securities classified as available-for-sale as of September 30, 2020 and December 31, 2019 were comprised of (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, 2020 December 31, 2019 ​ ​ ​ ​ ​ Gross ​ Gross ​ ​ ​ ​ ​ ​ ​ Gross ​ Gross ​ ​ ​ ​ Amortized Unrealized Unrealized ​ ​ Amortized Unrealized Unrealized ​ ​ ​ ​ Cost ​ Gains ​ Losses ​ Fair Value ​ Cost ​ Gains ​ Losses ​ Fair Value Treasury securities ​ $ 40,093 ​ $ 2 ​ $ — ​ $ 40,095 ​ $ — ​ $ — ​ $ — ​ $ — Corporate debt securities ​ 89,104 ​ 12 ​ ( 2 ) ​ 89,114 ​ — ​ — ​ — ​ — Agency securities ​ ​ 40,645 ​ ​ 6 ​ ​ — ​ ​ 40,651 ​ ​ — ​ ​ — ​ ​ — ​ ​ — Total ​ $ 169,842 ​ $ 20 ​ $ ( 2 ) ​ $ 169,860 ​ $ — ​ $ — ​ $ — ​ $ — ​ The primary objective of the Company's investment policy is the preservation of capital; thus, the Company's investment policy limits investments to certain types of instruments with high-grade credit ratings, places restrictions on maturities and concentrations in certain industries and requires the Company to maintain a certain level of liquidity. ​ Note 5 – Acquisition of Novavax CZ On May 27, 2020 (the “Acquisition Date”), the Company entered into a Share Purchase Agreement (the “Deed”) by and among Novavax AB, the Company’s wholly-owned Swedish subsidiary (the “Buyer”), and De Bilt Holdings B.V., Poonawalla Science Park B.V., and Bilthoven Biologicals B.V. (collectively, the “Sellers”) and, solely as guarantors, each of Serum International B.V. and the Company. Pursuant to the terms and conditions of the Deed, the Buyer acquired all the issued and outstanding shares of Novavax CZ (formerly, Praha Vaccines a.s.), a vaccine manufacturing company (the “Acquisition”). The assets of Novavax CZ acquired as part of the Acquisition include a biologics manufacturing facility and associated assets in Bohumil, Czech Republic and will be used by the Company to expand its manufacturing capacity. ​ The Purchase Price includes € 10.0 million (approximately $ 11.1 million at the time of the Acquisition), which was placed in an escrow account and subsequently paid to the Sellers after September 30, 2020. The Deed and ancillary agreements contain customary warranties and post-completion covenants, as well as indemnities by each of the parties thereto. Preliminary Allocation of Purchase Price to Assets Acquired and Liabilities Assumed The Company has accounted for the Acquisition as a business combination using the acquisition method of accounting, with the Company as the acquirer. The acquisition method requires the Company to record the assets acquired and liabilities assumed at fair value. The amount by which the purchase price exceeds the fair value of net assets acquired is recorded as goodwill. The Company has commenced the appraisal process necessary to assess the fair values of the assets acquired and liabilities assumed to determine the amount of goodwill to be recognized as of the Acquisition Date. These appraisals are not yet complete and therefore, the amounts recorded for certain assets and liabilities are preliminary and are subject to adjustment as additional information is obtained about the facts and circumstances that existed as of the Acquisition Date. The final determination of the fair value of certain assets and liabilities will be completed within the measurement period of up to one year from the Acquisition Date. The final values may also result in changes to depreciation and amortization expense related to certain assets such as buildings and equipment. Any potential adjustments made could be material in relation to the preliminary values presented in the table below. 12 Table of Contents The table below summarizes the preliminary allocation of the Purchase Price based upon the fair values of assets acquired and liabilities assumed at the Acquisition Date, adjusted for an increase in the Purchase Price of $ 0.2 million in the three months ended ended September 30, 2020 for a customary working capital adjustment. The preliminary allocation is based upon information that was available to management at the time the consolidated financial statements were prepared and is subject to change prior to completion of the measurement period (in thousands): ​ ​ ​ ​ ​ Prepaid expense and other current assets $ 326 Property and equipment ​ 96,739 Goodwill ​ 70,662 Accounts payable ​ ( 1,193 ) Accrued expenses ​ ( 205 ) Other non-current liabilities ​ ( 813 ) Purchase Price, net of cash acquired ​ $ 165,516 ​ The fair value of the assets acquired and liabilities assumed were preliminarily determined using market and cost valuation methodologies. The fair value measurements are based on significant unobservable inputs that were developed by the Company using publicly available information, market participant assumptions, and cost and development assumptions. Because of the use of significant unobservable inputs, the fair value measurements represent a Level 3 measurement as defined in ASC 820, Fair Value Measurement and Disclosures . The market approach is a valuation technique that uses prices and other relevant information generated by market transactions involving identical or comparable assets, liabilities, or a group of assets or liabilities. The cost approach estimates value by determining the current cost of replacing an asset with another of equivalent utility. The cost to replace a given asset reflects the estimated reproduction or replacement cost for the property, less an allowance for loss in value due to depreciation. The cost approach was the primary approach used to value fixed assets, including the real property. Fixed assets are depreciated on a straight-line basis over their expected remaining useful lives, ranging from 4 to 25 years . The carrying value and expected lives of the fixed assets may change upon finalizing the purchase price allocation as valuation and engineering reports are finalized. The Company recorded $ 70.7 million in goodwill related to the Acquisition representing the Purchase Price that was in excess of the fair value of the assets acquired and liabilities assumed. The goodwill generated from the Acquisition is not expected to be deductible for U.S. federal income tax purposes. The goodwill recognized is attributable to intangible assets that do not qualify for separate recognition, such as the assembled workforce of Novavax CZ. Current assets and current liabilities were recorded at their contractual or historical acquisition amounts, which approximate their fair value. Determining the fair value of assets acquired and liabilities assumed requires the exercise of significant professional judgment. Use of different estimates and judgments could yield different results. Impact to Financial Results for the Three and Nine Months Ended September 30, 2020 The results of operations from Novavax CZ have been included in the consolidated financial statements since the Acquisition Date. As a result, the consolidated financial results for the nine months ended September 30, 2020 does not reflect a full nine months of Novavax CZ results. From the Acquisition Date through September 30, 2020, Novavax CZ has not recognized any revenue and recorded a net loss of $ 4.3 million from Novavax CZ’ operations. The Company incurred approximately $ 0.7 million and $ 2.7 million of costs related to the Acquisition in the three months and nine months ended September 30, 2020, respectively, which are included within general and administrative expenses in the consolidated statements of operations. Supplemental Pro Forma Financial Information (Unaudited) The unaudited pro forma financial information for the periods set forth below gives effect to the Acquisition as if it had occurred as of January 1, 2019. The pro forma financial information is presented for informational purposes only and is not necessarily indicative of the results of operations that would have been achieved had the Acquisition been consummated as of that time. The unaudited pro forma financial information combines the historical results of operations 13 Table of Contents of the Company and Novavax CZ for the periods presented below and reflects the application of certain pro forma adjustments (in thousands, except per share amounts): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ Nine Months Ended ​ ​ September 30, 2020 ​ September 30, ​ 2020 2019 2020 ​ 2019 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Revenue ​ $ 157,024 ​ $ 2,507 ​ $ 195,939 ​ $ 9,846 Net loss ​ ( 196,590 ) ​ ( 19,982 ) ​ ( 242,411 ) ​ ( 107,349 ) Basic and diluted net loss per share ​ ( 3.19 ) ​ ( 0.45 ) ​ ( 4.21 ) ​ ( 2.51 ) ​ Pro forma adjustments include the recognition of depreciation expense based on the Acquisition Date fair value and remaining useful lives of Novavax CZ’ fixed assets (net of historical depreciation expense) and the elimination of costs related to the Acquisition, which are non-recurring in nature. ​ Note 6 – Goodwill and Other Intangible Assets Goodwill The change in the carrying amounts of goodwill for the nine months ended September 30, 2020 was as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ Amount ​ Balance at December 31, 2019 ​ $ 51,154 ​ Goodwill resulting from the acquisition of Novavax CZ ​ ​ 70,662 ​ Currency translation adjustments ​ 5,116 ​ Balance at September 30, 2020 ​ $ 126,932 ​ ​ Identifiable Intangible Assets Purchased intangible assets consisted of the following as of September 30, 2020 and December 31, 2019 (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, 2020 December 31, 2019 ​ Gross ​ ​ ​ ​ Gross ​ ​ ​ ​ ​ ​ Carrying ​ Accumulated ​ Intangible ​ Carrying ​ Accumulated ​ Intangible ​ ​ Amount ​ Amortization ​ Assets, Net ​ Amount ​ Amortization ​ Assets, Net Finite-lived intangible assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Proprietary adjuvant technology ​ $ 8,309 ​ $ ( 2,977 ) ​ $ 5,332 ​ $ 7,985 ​ $ ( 2,562 ) ​ $ 5,423 Collaboration agreements ​ 3,752 ​ ( 3,752 ) ​ — ​ 3,606 ​ ( 3,448 ) ​ 158 Total identifiable intangible assets ​ $ 12,061 ​ $ ( 6,729 ) ​ $ 5,332 ​ $ 11,591 ​ $ ( 6,010 ) ​ $ 5,581 ​ Amortization expense for the nine months ended September 30, 2020 and 2019 was $ 0.5 million. Estimated amortization expense for existing intangible assets for the remainder of 2020 and for each of the five succeeding years ending December 31 will be as follows (in thousands): ​ ​ ​ ​ ​ Year Amount 2020 ​ $ 104 2021 ​ 415 2022 ​ 415 2023 ​ 415 2024 ​ 415 2025 ​ 415 ​ ​ ​ 14 Table of Contents Note 7 - Leases During the three months ended September 30, 2020, there were no material new or modified real estate lease arrangements. During the three months ended September 30, 2020, the Company entered into multiple supply agreements with contract manufacturing organizations and contract development and manufacturing organizations to manufacture the Company’s COVID-19 vaccine candidate, NVX-CoV2373. The agreements include the use of identified manufacturing facilities, contain fixed or minimum commitments and include variable costs related to production and material costs in excess of the fixed or minimum commitment specified in the agreements. The Company evaluated the agreements at inception and determined that certain of these arrangements contain an embedded lease under ASC 842 as it has the exclusive use of, and control over, a portion of the manufacturing facility and equipment of the supplier during the contractual term of the arrangement. The Company recognized a financing lease liability and ROU asset of $ 187.2 million related to its supply agreements using the Company’s Incremental Borrowing Rate of 6.6 %. The Company used significant judgment and estimates, including the estimated value of the underlying leased asset and financial profile of comparable companies to analyze the credit spread as on the date of the lease inception. The Company expensed the ROU asset as it represents an asset acquired for research and development activities related to the development of NVX-CoV2373 that currently does not have an alternative future use. ​ Supplemental balance sheet information for embedded leases in supply agreements entered into by the Company during the three months ended September 30, 2020 is as follows (in thousands, except weighted-average remaining lease term and discount rate): ​ ​ ​ ​ ​ ​ ​ ​ Lease Liabilities ​ Classification ​ ​ ​ Amount Current operating lease liabilities ​ Other current liabilities ​ ​ $ 3,868 Current portion of finance lease liabilities ​ Current portion of finance lease liabilities ​ ​ ​ 55,860 Non-current finance lease liabilities ​ Non-current finance lease liabilities ​ ​ ​ 63,099 ​ ​ ​ ​ ​ ​ ​ Weighted-average remaining lease term (years): ​ ​ ​ ​ ​ ​ Operating lease ​ ​ ​ ​ ​ 1.1 Finance lease ​ ​ ​ ​ ​ 4.9 ​ ​ ​ Weighted-average discount rate: ​ ​ ​ ​ ​ ​ Operating lease ​ ​ ​ ​ ​ 6.5 % Finance lease ​ ​ ​ ​ ​ 6.6 % ​ Lease expense for the operating, finance and short-term embedded leases related to the supply agreements entered into by the Company during the three months ended September 30, 2020 was as follows (in thousands): ​ ​ ​ ​ ​ Three Months Ended September 30, 2020 Operating lease expense: ​ ​ Fixed lease expense $ 16 Finance lease expense: ​ ​ Fixed lease expense ​ 65,424 Interest expense ​ 1,041 Short-term expense ​ 19,390 Total lease expense $ 85,871 ​ 15 Table of Contents Supplemental cash flow information related to the embedded leases for three months ended September 30, 2020 was as follows (in thousands): ​ ​ ​ ​ Cash paid for amounts included in the measurement of lease liabilities: ​ Amount Financing cash flows from finance lease $ 65,424 ​ As of September 30, 2020, maturities of embedded lease liabilities were as follows (in thousands): ​ ​ ​ ​ ​ Year ​ Operating ​ Finance 2021 $ 3,900 $ 62,623 2022 ​ - ​ 65,235 Total minimum lease payments ​ 3,900 ​ 127,858 Less: Imputed interest ​ ( 32 ) ​ ( 8,899 ) Total lease liabilities $ 3,868 $ 118,959 ​ As of September 30, 2020, the Company had one agreement that contains an embedded finance lease for a manufacturing arrangement that is expected to commence in the fourth quarter of 2020 with a lease term of approximately 5 years . ​ ​ ​ ​ Note 8 – Long-Term Debt Convertible Notes The Company incurred approximately $ 10.0 million of debt issuance costs during the first quarter of 2016 relating to the issuance of $ 325 million aggregate principal amount of convertible senior unsecured notes that will mature on February 1, 2023 (the “Notes”), which were recorded as a reduction to the Notes on the consolidated balance sheet. The $ 10.0 million of debt issuance costs is being amortized and recognized as additional interest expense over the seven-year contractual term of the Notes on a straight-line basis, which approximates the effective interest rate method. Total convertible notes payable consisted of the following at (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, December 31, ​ ​ 2020 ​ 2019 Principal amount of Notes ​ $ 325,000 ​ $ 325,000 Unamortized debt issuance costs ​ ( 3,321 ) ​ ( 4,389 ) Total convertible notes payable ​ $ 321,679 ​ $ 320,611 ​ Interest expense incurred in connection with the Notes consisted of the following (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended Nine Months Ended ​ ​ September 30, ​ September 30, ​ ​ 2020 2019 2020 2019 Coupon interest at 3.75 % ​ $ 3,047 ​ $ 3,047 ​ $ 9,141 ​ $ 9,141 ​ Amortization of debt issuance costs ​ 356 ​ 356 ​ 1,068 ​ 1,068 Total interest expense on Notes ​ $ 3,403 ​ $ 3,403 ​ $ 10,209 ​ $ 10,209 ​ ​ ​ 16 Table of Contents Note 9 – Preferred Stock In June 2020, the Company entered into a redeemable Series A Convertible Preferred Stock Subscription Agreement (“Subscription Agreement”), pursuant to which the Company agreed to issue and sell in a private placement 438,885 shares of its newly designated redeemable Series A Convertible Preferred Stock, par value $ 0.01 per share (“Preferred Stock”), at a purchase price of $ 455.70 per share, for total gross proceeds of $ 200.0 million (the “Preferred Private Placement”). Under the terms of the Preferred Stock, any holder thereof has the right to redeem shares of the Preferred Stock at the original purchase price if the Company fails to meet certain SEC filing requirements and file and maintain for at least one year a registration statement for the resale of the shares of common stock underlying the Preferred Stock. Because certain of these features are outside of the Company's control, the Company has classified the Preferred Stock outside of permanent equity. Each share of Preferred Stock is convertible into ten shares of common stock. The conversion price is equal to $ 45.57 and is subject to adjustment based on standard anti-dilution provisions. Holders of Preferred Stock are not entitled to cumulative dividends, are not entitled to vote on matters submitted to common stockholders and have a liquidation preference over common stockholders equal to the greater of the original purchase price, plus declared and unpaid Preferred Stock dividends, and the amount that would be payable in respect of common stock assuming the Preferred Stock converted immediately prior to the liquidation. The Company recognized a beneficial conversion feature of approximately $ 24.1 million that was recorded within additional paid-in capital and accumulated deficit as the Preferred Stock issuance is only contingently redeemable and convertible at any time at the option of the holder. ​ Note 10 – Stockholders' Equity (Deficit) In June 2020, in advance of David M. Mott joining the Company’s Board of Directors, the Company agreed to sell 32,916 shares of common stock to him at a purchase price of $ 45.57 per share, reflecting the closing price of the Company’s common stock on the trading date prior to the date the parties’ agreement regarding the sale, for total gross proceeds of $ 1.5 million. Mr. Mott joined the Company’s Board of Directors later in the same month. In May 2020, the Company entered into an At Market Issuance Sales Agreement ("May 2020 Sales Agreement"), which allows it to issue and sell up to $ 250 million in gross proceeds of its common stock. During the nine months ended September 30, 2020, the Company sold 2.8 million shares of common stock under the May 2020 Sales Agreement resulting in $ 160.3 million in net proceeds (this amount excludes $ 3.9 million received in the fourth quarter of 2020 for shares traded in late September 2020). From October 1, 2020 through November 3, 2020, the Company sold 0.7 million shares of common stock resulting in $ 74.1 million in net proceeds, leaving $ 8.7 million remaining under the May 2020 Sales Agreement. In March 2020, the Company entered into an At Market Issuance Sales Agreement (“March 2020 Sales Agreement”), which allowed it to issue and sell up to $ 150 million in gross proceeds of its common stock. During the six months ended June 30, 2020, the Company sold 8.6 million shares of common stock under the March 2020 Sales Agreement resulting in $ 148.1 million in net proceeds. The March 2020 Sales Agreement was fully utilized at that time. In January 2020, the Company entered into an At Market Issuance Sales Agreement ("January 2020 Sales Agreement"), which allowed it to issue and sell up to $ 100 million in gross proceeds of its common stock. During the first quarter of 2020, the Company sold 10.5 million shares of common stock under the January 2020 Sales Agreement resulting in $ 98.7 million in net proceeds. The January 2020 Sales Agreement was fully utilized at that time. In December 2018, the Company entered into an At Market Issuance Sales Agreement (“December 2018 Sales Agreement”), which allowed it to issue and sell up to $ 100 million in gross proceeds of its common stock. During the nine months ended September 30, 2019, the Company sold 3.6 million shares of common stock under the December 2018 Sales Agreement, of which 1.7 million shares of common stock were sold in the first quarter of 2019, resulting in $ 29.3 million in net proceeds. In January 2020, the Company sold 7.2 million shares of common stock under the December 2018 Sales Agreement resulting in $ 38.5 million in net proceeds. The December 2018 Sales Agreement was fully utilized at that time. In December 2017, the Company entered into an At Market Issuance Sales Agreement (“December 2017 Sales Agreement”), which allowed it to issue and sell up to $ 75 million in gross proceeds of its common stock. During the three months ended March 31, 2019, the Company sold 2.5 million shares of common stock under the December 2017 Sales 17 Table of Contents Agreement resulting in $ 37.9 million in net proceeds. The December 2017 Sales Agreement was fully utilized at that time. ​ Note 11 – Stock-Based Compensation Stock Options The 2015 Stock Incentive Plan, as amended (“2015 Plan”), was approved at the Company's annual meeting of stockholders in June 2015. Under the 2015 Plan, equity awards may be granted to officers, directors, employees and consultants of and advisors to the Company and any present or future subsidiary. The 2015 Plan authorizes the issuance of up to 10,900,000 shares of common stock under equity awards granted under the 2015 Plan, which includes an increase of 7,100,000 shares approved for issuance under the 2015 Plan at the Company's 2020 annual meeting of stockholders. All such shares authorized for issuance under the 2015 Plan have been reserved. The 2015 Plan will expire on March 4, 2025. The Amended and Restated 2005 Stock Incentive Plan (“2005 Plan”) expired in February 2015 and no new awards may be made under such plan, although awards will continue to be outstanding in accordance with their terms. The 2015 Plan permits and the 2005 Plan permitted the grant of stock options (including incentive stock options), restricted stock, stock appreciation rights and restricted stock units. In addition, under the 2015 Plan, unrestricted stock, stock units and performance awards may be granted. Stock options and stock appreciation rights generally have a maximum term of 10 year s 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 stock options are generally subject to vesting over periods ranging from one to four years . Stock Options and Stock Appreciation Rights The following is a summary of stock options and stock appreciation rights activity under the 2015 Plan and 2005 Plan for the nine months ended September 30, 2020: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2015 Plan 2005 Plan ​ ​ Weighted- ​ Weighted- ​ ​ ​ ​ Average ​ ​ ​ Average ​ ​ Stock ​ Exercise ​ Stock ​ Exercise ​ ​ Options ​ Price ​ Options ​ Price Outstanding at January 1, 2020 ​ 3,388,750 ​ $ 35.64 ​ 501,780 ​ $ 64.19 Granted ​ 3,110,566 ​ $ 31.16 ​ — ​ $ — Exercised ​ ( 874,586 ) ​ $ 31.08 ​ ( 189,378 ) ​ $ 44.14 Canceled ​ ( 80,366 ) ​ $ 50.29 ​ ( 23,329 ) ​ $ 51.92 Outstanding at September 30, 2020 ​ 5,544,364 ​ $ 33.66 ​ 289,073 ​ $ 78.32 Shares exercisable at September 30, 2020 ​ 771,002 ​ $ 86.28 ​ 289,073 ​ $ 78.32 Shares available for grant at September 30, 2020 ​ 2,814,405 ​ ​ ​ ​ In 2019, the Company granted 192,400 stock appreciation rights, with a weighted-average exercise price of $ 5.95 , under the 2015 Plan. Additionally, in 2019, due to limitations on the equity awards available under the 2015 Plan, the Company granted to certain employees 1,014,200 stock options, with a weighted-average exercise price of $ 5.95 , under the 2015 Plan that were subject to approval of an increase in the number of shares under the 2015 Plan at the Company's 2020 annual meeting of stockholders. Furthermore, in April 2020, due to limitations on the equity awards available under the 2015 Plan, the Company granted to all of its employees collectively 2,501,600 stock options, with a weighted-average exercise price of $ 19.08 , and 326,050 restricted stock units under the 2015 Plan that include a performance requirement related to its NVX-CoV2373 program that were also subject to approval of an increase in the number of shares under the 2015 Plan at the Company's 2020 annual meeting of stockholders. Since the proposal to increase the number of shares under the 2015 Plan was approved at the Company’s 2020 annual meeting of stockholders, as discussed in the “ Stock Options ” section above, the Company began to record stock-based compensation expense for these awards at that time. 18 Table of Contents ​ The fair value of stock options granted under the 2015 Plan was estimated at the date of grant or the date upon which the 2015 Plan was approved by the Company’s stockholders for stock options discussed above using the Black-Scholes option-pricing model with the following assumptions: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ Nine Months Ended ​ ​ ​ September 30, ​ September 30, ​ ​ 2020 2019 ​ 2020 2019 ​ Weighted average Black-Scholes fair value of stock options and SARs granted ​ $ 102.41 ​ $ 4.91 ​ ​ $ 78.78 ​ $ 5.42 ​ Risk-free interest rate ​ 0.2 % -0.4% ​ ​ 1.5 % -1.6% ​ ​ 0.2 % -1.5% ​ ​ 1.5 % -2.6% ​ Dividend yield ​ 0 % ​ ​ 0 % ​ ​ 0 % ​ ​ 0 % ​ Volatility ​ 135.4 % -152.2% ​ ​ 128.0 % -133.8% ​ ​ 116.0 % -152.2% ​ ​ 111.6 % -133.8% ​ Expected term (in years) ​ 4.0 -5.3 ​ 4.0 -4.4 ​ ​ 4.0 -7.6 ​ 4.0 -4.5 ​ Expected forfeiture rate ​ 0 % ​ 0 % ​ ​ 0 % ​ 0 % ​ ​ The total aggregate intrinsic value and weighted-average remaining contractual term of stock options and stock appreciation rights outstanding under the 2015 Plan and 2005 Plan as of September 30, 2020 was $ 446.5 million and 8.5 years, respectively. The total aggregate intrinsic value and weighted-average remaining contractual term of stock options and stock appreciation rights exercisable under the 2015 Plan and 2005 Plan as of September 30, 2020 was $ 43.3 million and 5.3 years, respectively. 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 stock appreciation rights) that would have been received by the holders had all stock option and stock appreciation rights holders exercised their stock options and stock appreciation rights on September 30, 2020. 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 vesting of restricted stock awards for the nine months ended September 30, 2020 and 2019 was $ 164.3 million and $ 0.1 million, respectively. Employee Stock Purchase Plan The Employee Stock Purchase Plan, as amended (the “ESPP”), was approved at the Company's annual meeting of stockholders in June 2013. The ESPP currently authorizes an aggregate of 600,000 shares of common stock to be purchased. The ESPP allows employees to purchase shares of common stock of the Company at each purchase date through payroll deductions of up to a maximum of 15 % of their compensation, at 85 % of the lesser of the market price of the shares at the time of purchase or the market price on the beginning date of an option period (or, if later, the date during the option period when the employee was first eligible to participate). As of September 30, 2020, there were 255,596 shares available for issuance under the ESPP. The ESPP is considered compensatory for financial reporting purposes. As such, the fair value of ESPP shares was estimated at the date of grant using the Black-Scholes option-pricing model with the following assumptions: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ Nine Months Ended ​ ​ ​ September 30, ​ September 30, ​ ​ 2020 2019 ​ 2020 2019 ​ Range of Black-Scholes fair values of ESPP shares granted ​ ​ $ 3.08 -$ 92.67 ​ ​ $ 2.57 -$ 35.00 ​ ​ $ 2.57 -$ 92.67 ​ ​ $ 2.57 -$ 35.00 ​ Risk-free interest rate ​ 0.2 % -2.5% ​ 1.3 % -2.6% ​ 0.2 % -2.6% ​ 1.2 % -2.6% ​ Dividend yield ​ 0 % ​ 0 % ​ 0 % ​ 0 % ​ Volatility ​ 77.5 % -189.7% ​ 59.7 % -171.6% ​ 66.6 % -189.7% ​ 52.2 % -171.6% ​ Expected term (in years) ​ 0.5 -2.0 ​ 0.5 -2.0 ​ 0.5 -2.0 ​ 0.5 -2.0 ​ Expected forfeiture rate ​ 0 % ​ 0 % ​ 0 % ​ 0 % ​ ​ 19 Table of Contents Restricted Stock Units The following is a summary of restricted stock units activity for the nine months ended September 30, 2020: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Per Share ​ ​ ​ ​ Weighted- ​ ​ Number of ​ Average ​ ​ Shares ​ Fair Value Outstanding and Unvested at January 1, 2020 1,102,311 ​ $ 5.95 Restricted stock units granted 508,854 ​ $ 82.02 Restricted stock units vested ( 781,812 ) ​ $ 6.74 Restricted stock units forfeited ( 39,324 ) ​ $ 45.73 Outstanding and Unvested at September 30, 2020 790,029 ​ $ 52.17 ​ The Company recorded all stock-based compensation expense in the consolidated statements of operations as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ Nine Months Ended ​ ​ September 30, ​ September 30, ​ ​ 2020 2019 ​ 2020 2019 ​ Research and development ​ $ 28,730 ​ $ 723 ​ $ 34,735 ​ $ 6,347 ​ General and administrative ​ 36,975 ​ 1,901 ​ 42,867 ​ 6,456 ​ Total stock-based compensation expense ​ $ 65,705 ​ $ 2,624 ​ $ 77,602 ​ $ 12,803 ​ ​ As of September 30, 2020, there was approximately $ 311 million of total unrecognized compensation expense related to unvested stock options, SARs, restricted stock units and the ESPP. The increase in unrecognized compensation expense is primarily due to the awards that were subject to approval of an increase in the number of shares under the 2015 Plan at the Company's 2020 annual meeting of stockholders, as discussed in the " Stock Options " section above, and the significant increase in the Company's common stock price in 2020. This unrecognized non-cash compensation expense is expected to be recognized over a weighted-average period of 1.4 years, and will be allocated between 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 and awards that require approval by the stockholders. ​ Note 12 – U.S. Government Agreements, Grants and Licenses Operation Warp Speed In July 2020, the Company entered into a Project Agreement (the “Project Agreement”) with Advanced Technology International, Inc. (“ATI”), the Consortium Management Firm acting on behalf of the Medical CBRN Defense Consortium in connection with OWS. OWS is a partnership among components of the U.S. Department of Health and Human Services and the U.S. Department of Defense working to accelerate the development, manufacturing and distribution of COVID-19 vaccines, therapeutics and diagnostics. The Project Agreement relates to the Base Agreement the Company entered into with ATI in June 2020 (the “Base Agreement”, together with the Project Agreement, the “OWS Agreement”). Under the OWS Agreement, the Company is entitled to receive funding of up to $ 1.6 billion to support certain activities related to the development of NVX-CoV2373 and the manufacture and delivery of the vaccine candidate to the U.S. Government. Pursuant to the OWS Agreement, the Company is currently authorized to make expenditures or incur obligations of up to $ 800 million, and the parties have committed to negotiate a definitive agreement by December 2020 that provides for aggregate costs payable to the Company up to but not in excess of the approved budget of $ 1.6 billion. If the parties have not agreed on definitive pricing or other terms by December 2020, or any extension of such target date granted by the U.S. Government, the U.S. Government has the discretion to unilaterally determine a fair and reasonable price for completion of the definitive agreement. The OWS Agreement requires the Company to conduct certain clinical, regulatory and other activities, including a pivotal Phase 3 clinical trial to determine the safety and efficacy of NVX-CoV2373, and to manufacture and deliver to the U.S. Government 100 million doses of the vaccine candidate. Funding under the OWS Agreement is payable to the Company for various development, clinical trial, manufacturing, regulatory and other activities. The OWS Agreement contains terms and conditions that are customary for U.S. Government agreements of this nature, including provisions giving the U.S. Government the right to terminate the Base Agreement and/or the Project Agreement based on a 20 Table of Contents reasonable determination that the funded project will not produce beneficial results commensurate with the expenditure of resources and that termination would be in the U.S. Government’s interest. If the Project Agreement is terminated prior to completion, the Company is entitled to be paid for work performed and costs or obligations incurred prior to termination and consistent with the terms of the OWS Agreement. The performance period under the Project Agreement extends from July 2020 through December 2021, subject to early termination by the U.S. Government or extension by mutual agreement of the parties. During the three months ended September 30, 2020, the Company recognized revenue from the OWS Agreement of $ 39.4 million. U.S. Department of Defense In June 2020, the Company entered into a letter contract (the “DoD Contract”) with the DoD Joint Program Executive Office for Chemical, Biological, Radiological and Nuclear Defense (“JPEO-CRBND-EB”), under which JPEO-CRBND-EB agreed to provide funding of up to $ 60.0 million to the Company to support the manufacture of NVX-CoV2373. Under the DoD Contract, the Company is currently authorized to make expenditures or incur obligations up to $ 30.0 million, and the Company and the DoD have committed to negotiate a definitive cost-reimbursement contract by December 2020 that provides for costs payable by the DoD not to exceed $ 60.0 million. If the Company and the DoD have not agreed on pricing or terms by December 2020, or any extension of such target date granted by the DoD, the DoD has the discretion to determine a reasonable price or fee for completion of the contract. Under the DoD Contract, the Company is expected to deliver 10 million doses of NVX-CoV2373 to the DoD. The 10 million doses of NVX-CoV2373 may be used in Phase 2/3 clinical trials or under an Emergency Use Authorization, if approved by the U.S. Food and Drug Administration (“FDA”). Pursuant to the DoD Contract, if NVX-CoV2373 is approved by the FDA, the DoD is entitled to most-favored customer status for a period of five years from the award of the DoD Contract, meaning that the Company cannot give any comparable commercial client in the United States more favorable pricing than the DoD under similar transactional circumstances. During the three months and nine months ended September 30, 2020, the Company recognized revenue from the DoD Contract of $ 3.6 million and $ 3.9 million, respectively. Coalition for Epidemic Preparedness Innovations In May 2020, the Company entered into a restated funding agreement which was modified in November 2020 (the “CEPI Funding Agreement”) with CEPI, under which CEPI agreed to provide funding of up to $ 399.5 million to the Company to support the development of NVX-CoV2373, in addition to the $ 3.9 million of funding CEPI provided to the Company pursuant to an initial funding agreement entered into between the Company and CEPI in March 2020. The CEPI Funding Agreement provides up to $ 257.0 million in Grant Funding and up to $ 142.5 million in Forgivable Loan Funding, which loans are in the form of one or more forgivable no interest term loans in order to prepay certain manufacturing activities and are not subject to restrictive or financial covenants. The Company is only required to repay any CEPI Forgivable Loan Funding under certain circumstances to the extent it sells doses of NVX-CoV2373, produced with the funds provided and included in such loan(s), to a third party. Under the terms of the CEPI Funding Agreement, among other things, the Company and CEPI agreed on the importance of global equitable access to any vaccines produced pursuant to the CEPI Funding Agreement. Any such vaccines, if approved, are expected to be procured and allocated through global mechanisms under discussion as part of the Access to COVID-19 Tools (ACT) Accelerator, an international initiative launched by the World Health Organization (“WHO”), Gavi the Vaccine Alliance, CEPI and other global non-governmental organizations and governmental leaders in 2020. 21 Table of Contents The scope and continuation of the CEPI Funding Agreement may be modified depending on ongoing developments of the COVID-19 outbreak and the success of NVX-CoV2373 relative to other third-party COVID-19 vaccine candidates or treatments. If the WHO, CEPI or a regulatory authority having jurisdiction over a clinical trial of NVX-CoV2373 determines that a third-party product candidate has substantially greater potential than a Company vaccine product, the Company must cease its clinical trial in the relevant region, and will be reimbursed for any costs incurred as a result thereof. In addition, CEPI has the right to unilaterally terminate the CEPI Funding Agreement if CEPI reasonably determines that (i) there are material safety, regulatory or ethical issues with the development of NVX-CoV2373, (ii) NVX-CoV2373 development should be limited in scope or terminated, (iii) the Company becomes unable to discharge its obligations under the agreement, (iv) the Company fails to meet certain milestones, or (v) the Company commits fraud or a financial irregularity. Payments received in advance that are related to future performance are deferred and recognized as revenue when the research and development activities are performed. Cash payments received under the funding agreements are restricted as to their use until expenditures contemplated in the funding agreements are incurred. During the three and nine months ended September 30, 2020, the Company recognized revenue from the funding agreements of $ 111.3 million and $ 147.8 million, respectively. Bill & Melinda Gates Foundation In support of the Company's development of ResVax TM , in September 2015, the Company entered into the grant agreement with BMGF (the “BMGF Grant Agreement”), under which it was awarded a grant totaling up to $ 89.1 million (the “Grant”). The Grant supports ResVax development activities, including the Company's global Phase 3 clinical trial in pregnant women in their third trimester and other regulatory efforts. Unless terminated earlier by BMGF, the BMGF Grant Agreement will continue in effect until the end of 2021. The Company concurrently entered into a Global Access Commitments Agreement (“GACA”) with BMGF as a part of the BMGF Grant Agreement. Under the terms of the GACA, among other things, the Company agreed to make a certain amount of ResVax available and accessible at affordable pricing to people in certain low- and middle-income countries. Unless terminated earlier by BMGF, the GACA will continue in effect until the later of 15 years from its effective date, or 10 years after the first sale of a product under defined circumstances. The term of the GACA may be extended in certain circumstances, by a period of up to five additional years. In July 2020, the Company entered into a grant agreement with BMGF (the “BMGF SA Grant Agreement”) under which it was awarded a grant of $ 15.0 million to support a Phase 2b clinical trial in the Republic of South Africa to evaluate the safety, immunogenicity, and potential efficacy of NVX-CoV2373. Payments received in advance that are related to future performance are deferred and recognized as revenue when the research and development activities are performed. Cash payments received under the BMGF Grant Agreement and the BMGF SA Grant Agreement are restricted as to their use until expenditures contemplated in the agreements are incurred. During the nine months ended September 30, 2020, the Company recognized revenue from the BMGF Grant Agreement of less than $ 0.1 million and $ 0.4 million, respectively, and has recognized approximately $ 82 million in revenue since the inception of the agreement. During the three months ended September 30, 2020, the Company recognized revenue from the BMGF SA Grant Agreement of $ 2.4 million. Serum Institute of India Private Limited In July 2020, the Company entered into a supply and license agreement with Serum Institute of India Private Limited (“SIIPL”), as amended by the parties in September 2020, under which the Company granted exclusive and non-exclusive licenses to SIIPL for the development, co-formulation, filling and finishing, registration and commercialization by SIIPL of NVX-CoV2373. SIIPL has agreed to purchase Matrix-M adjuvant from the Company and the Company has granted SIIPL a non-exclusive license to manufacture the antigen drug substance component of NVX-CoV2373 in SIIPL’s licensed territory solely for use in the manufacture of NVX-CoV2373 under the terms of the agreement. The parties will equally split the revenue from sale of NVX-CoV2373 by SIIPL in its licensed territory, net of agreed costs. The Company granted to SIIPL (i) an exclusive license in India during the agreement, and (ii) a non-exclusive license (a) during the “Pandemic Period” (as declared by the World Health Organization), in all countries other than specified countries designated by the World Bank as upper-middle or high-income countries, with respect to which the Company retains rights, and (b) after the Pandemic Period, in only those countries designated as low or middle-income by the World Bank. Following the Pandemic Period, the Company may notify SIIPL of any bona fide opportunities for the Company 22 Table of Contents to license NVX-CoV2373 to a third party in such low and middle-income countries and SIIPL would have an opportunity to match or improve such third party terms, failing which, the Company would have the discretion to remove one or more non-exclusive countries from SIIPL’s license. Takeda Pharmaceutical Company Limited In August 2020, the Company announced a partnership with Takeda Pharmaceutical Company Limited (“Takeda”) for the exclusive development, manufacturing and commercialization of NVX-CoV2373 in Japan. Takeda will receive funding from the Government of Japan’s Ministry of Health, Labour and Welfare to support the technology transfer, establishment of infrastructure and scale-up of manufacturing. The Company will be entitled to receive payments based on the achievement of certain development and commercial milestones, as well as a portion of proceeds from the sale of the vaccine. UK SARS-CoV-2 Vaccine Supply Agreement In October 2020, the Company entered into a SARS-CoV-2 vaccine supply agreement with The Secretary of State for Business, Energy and Industrial Strategy, acting on behalf of the United Kingdom (“UK”) government (the “Authority”) under which the Authority agreed to purchase up to 60 million doses of NVX-CoV2372, plus such additional orders as the Authority may make from time to time. The Company agreed to continue to conduct its UK-based Phase 3 clinical trial of NVX-CoV2373, establish a committed supply chain for NVX-CoV2373 in the UK and seek regulatory approval for NVX-CoV2373 in the UK. Pursuant to the terms of the agreement, the Company agreed to supply the initial 60 million doses of NVX-CoV2373 to the Authority on a priority supply basis and to supply any additional orders of NVX-CoV2373 to the Authority on an equal priority basis with other third parties. The Authority has certain termination rights, or rights to reduce or cancel orders, if the Authority's supply of NVX-CoV2373 is materially interrupted, delayed or deferred. ​ Note 13 – CARES Act On March 27, 2020, Congress enacted the Coronavirus Aid, Relief and Economic Security Act ("CARES Act") to provide certain relief as a result of the COVID-19 pandemic. Amongst other items, the CARES Act lifts certain interest expense deduction limitations originally imposed by the Tax Cuts and Jobs Act of 2017. The enactment of the CARES Act did not result in any material adjustments to the Company's income tax provision or net deferred tax assets for the nine months ended September 30, 2020. ​ Note 14 – Subsequent Events ​ In October 2020, the Company entered into a lease for approximately 170,000 square feet of space for premises located at 700 Quince Orchard Road Gaithersburg, MD. The Company intends to use the premises for manufacturing, research and development and offices. The term of the lease is approximately 15 years with options to extend the lease. The lease provides for an annual base rent of $ 5.8 million that is subject to future rent increases, and obligates the Company to pay building operating costs. The Landlord will contribute an aggregate of $ 30.6 million toward tenant improvements. ​ In addition, in October 2020, the Company purchased a parcel of land at 14 Firstfield Road, Gaithersburg, MD that the Company plans to develop in the future to accommodate growth of the Company. The purchase price of the parcel of land was $ 14.5 million. ​