UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~March 31,~~September 30, 2022

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to .

Commission File No. 000-26770

NOVAVAX, INC.

(Exact name of registrant as specified in its charter)


Delaware			22-2816046
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

21 Firstfield Road	Gaithersburg	MD	20878
(Address of principal executive offices)			(Zip code)

(240) 268-2000

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, Par Value $0.01 per share	NVAX	The Nasdaq Global Select Market

Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	x	Accelerated Filer	o

Non-accelerated filer	o	Smaller reporting company	o

Emerging growth company	o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No x

The number of shares outstanding of the Registrant's Common Stock, $0.01 par value, was ~~78,134,595~~78,503,952 as of ~~April 30,~~October 31, 2022.

Table of Contents

NOVAVAX, INC.

TABLE OF CONTENTS


		Page No.
PART I. FINANCIAL INFORMATION		1
Item 1.	Consolidated Financial Statements	1
	Unaudited Consolidated Statements of Operations and Unaudited Consolidated Statements of Comprehensive ~~Income (Loss)~~Loss for the three and nine months ended ~~March 31,~~September 30, 2022 and 2021	2
	Consolidated Balance Sheets as of ~~March 31,~~September 30, 2022 (unaudited) and December 31, 2021	3
	Unaudited Consolidated Statements of Changes in Stockholders’ Equity (Deficit) for the three and nine months ended ~~March 31,~~September 30, 2022 and 2021	4
	Unaudited Consolidated Statements of Cash Flows for the ~~three~~nine months ended ~~March 31,~~September 30, 2022 and 2021	54
	Notes to the Consolidated Financial Statements (unaudited)	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1820
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	3035
Item 4.	Controls and Procedures	3035
PART II. OTHER INFORMATION		3137
Item 1.	Legal Proceedings	3137
Item 1A.	Risk Factors	3138
Item 5.	Other Information	38
Item 6.	Exhibits	3239
SIGNATURES		3340

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Table of Contents

NOVAVAX, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share information)

(unaudited)


		For the Three Months Ended March 31,				For the Three Months Ended September 30,				For the Nine Months Ended September 30,
		2022		2021				2022		2021		2022		2021
Revenue:	Revenue:						Revenue:
Product sales	Product sales	$	585,628	$	—		Product sales	$	626,091	$	—	$	1,267,174	$	—
Grants	Grants	99,301		446,893			Grants	106,273		135,007		313,348		854,390
Royalties and other	Royalties and other	19,042		336			Royalties and other	2,213		43,837		43,951		69,700
Total revenue	Total revenue	703,971		447,229			Total revenue	734,577		178,844		1,624,473		924,090

Expenses:	Expenses:						Expenses:
Cost of sales	Cost of sales	15,204		—			Cost of sales	434,593		—		720,874		—
Research and development	Research and development	383,483		592,671			Research and development	304,297		408,195		977,428		1,571,551
Selling, general, and administrative	Selling, general, and administrative	95,992		63,190			Selling, general, and administrative	122,876		77,793		327,028		214,144
Total expenses	Total expenses	494,679		655,861			Total expenses	861,766		485,988		2,025,330		1,785,695
Income (loss) from operations		209,292		(208,632)
Other income (expense):
Loss from operations							Loss from operations	(127,189)		(307,144)		(400,857)		(861,605)
Other expense:							Other expense:

Interest expense	Interest expense	(4,876)		(4,839)			Interest expense	(4,169)		(5,182)		(15,279)		(15,989)
Other income (expense)		1,654		(6,231)
Income (loss) before income tax expense		206,070		(219,702)
Other expense							Other expense	(34,783)		(4,064)		(53,002)		(7,267)
Loss before income tax expense							Loss before income tax expense	(166,141)		(316,390)		(469,138)		(884,861)
Income tax expense	Income tax expense	2,662		3,017			Income tax expense	2,472		6,041		6,552		12,606
Net income (loss)		$	203,408	$	(222,719)
Net loss							Net loss	$	(168,613)	$	(322,431)	$	(475,690)	$	(897,467)

Net income (loss) per share:
Basic		$	2.66	$	(3.05)
Diluted		$	2.56	$	(3.05)
Net loss per share:							Net loss per share:
Basic and diluted							Basic and diluted	$	(2.15)	$	(4.31)	$	(6.13)	$	(12.13)

Weighted average number of common shares outstanding	Weighted average number of common shares outstanding						Weighted average number of common shares outstanding
Basic		76,457		73,035
Diluted		80,711		73,035
Basic and diluted							Basic and diluted	78,274		74,745		77,631		73,972

CONSOLIDATED STATEMENTS OF COMPREHENSIVE ~~INCOME (LOSS)~~LOSS

(in thousands)

(unaudited)

For the Three Months Ended
March 31,
2022 2021
Net income (loss) $ 203,408 $ (222,719)
Other comprehensive income (loss):
Net unrealized losses on marketable securities available-for-sale, net of reclassifications — (9)
Foreign currency translation adjustment 41 (7,372)
Other comprehensive income (loss) 41 (7,381)
Comprehensive income (loss) $ 203,449 $ (230,100)


	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2022		2021		2022		2021
Net loss	$	(168,613)	$	(322,431)	$	(475,690)	$	(897,467)
Other comprehensive loss:
Net unrealized losses on marketable securities available-for-sale, net of reclassifications	—		—		—		(9)
Foreign currency translation adjustment	(12,924)		(3,309)		(22,441)		(6,154)
Other comprehensive loss	(12,924)		(3,309)		(22,441)		(6,163)
Comprehensive loss	$	(181,537)	$	(325,740)	$	(498,131)	$	(903,630)

The accompanying notes are an integral part of these financial statements.

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NOVAVAX, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share information)


		March 31, 2022		December 31, 2021			September 30, 2022		December 31, 2021
		(unaudited)					(unaudited)
ASSETS	ASSETS					ASSETS
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	1,570,954	$	1,515,116	Cash and cash equivalents	$	1,280,581	$	1,515,116

Restricted cash	Restricted cash	11,492		11,490		Restricted cash	10,785		11,490
Accounts receivable	Accounts receivable	478,156		454,993		Accounts receivable	111,645		454,993
Inventory	Inventory	106,648		8,872		Inventory	82,432		8,872
Prepaid expenses and other current assets	Prepaid expenses and other current assets	180,155		164,648		Prepaid expenses and other current assets	274,522		164,648
Total current assets	Total current assets	2,347,405		2,155,119		Total current assets	1,759,965		2,155,119
Property and equipment, net	Property and equipment, net	247,213		228,696		Property and equipment, net	255,532		228,696
Right of use asset, net	Right of use asset, net	86,352		40,123		Right of use asset, net	108,543		40,123
Intangible assets, net	Intangible assets, net	4,535		4,770		Intangible assets, net	8,456		4,770
Goodwill	Goodwill	130,756		131,479		Goodwill	117,535		131,479
Other non-current assets	Other non-current assets	18,614		16,566		Other non-current assets	17,406		16,566
Total assets	Total assets	$	2,834,875	$	2,576,753	Total assets	$	2,267,437	$	2,576,753
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
LIABILITIES AND STOCKHOLDERS’ DEFICIT						LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:	Current liabilities:					Current liabilities:
Accounts payable	Accounts payable	$	135,128	$	127,050	Accounts payable	$	144,997	$	127,050
Accrued expenses	Accrued expenses	559,876		673,731		Accrued expenses	551,069		673,731
Deferred revenue	Deferred revenue	1,094,232		1,422,944		Deferred revenue	404,776		1,422,944
Current portion of finance lease liabilities	Current portion of finance lease liabilities	116,684		130,533		Current portion of finance lease liabilities	82,095		130,533
Convertible notes payable	Convertible notes payable	323,814		—		Convertible notes payable	324,525		—
Other current liabilities	Other current liabilities	31,271		36,061		Other current liabilities	160,499		36,061
Total current liabilities	Total current liabilities	2,261,005		2,390,319		Total current liabilities	1,667,961		2,390,319
Deferred revenue	Deferred revenue	441,748		172,528		Deferred revenue	1,035,418		172,528
Convertible notes payable	Convertible notes payable	—		323,458		Convertible notes payable	—		323,458

Non-current finance lease liabilities						Non-current finance lease liabilities	31,474		—
Other non-current liabilities	Other non-current liabilities	66,798		42,121		Other non-current liabilities	98,569		42,121
Total liabilities	Total liabilities	2,769,551		2,928,426		Total liabilities	2,833,422		2,928,426

Commitments and contingencies (Note 15)		0		0
Commitments and contingencies (Note 14)						Commitments and contingencies (Note 14)

Stockholders' equity (deficit):	Stockholders' equity (deficit):					Stockholders' equity (deficit):
Common stock, $0.01 par value, 600,000,000 shares authorized at March 31, 2022 and December 31, 2021; and 78,722,337 shares issued and 78,122,978 shares outstanding at March 31, 2022 and 76,433,151 shares issued and 75,841,171 shares outstanding at December 31, 2021		787		764
Common stock, $0.01 par value, 600,000,000 shares authorized at September 30, 2022 and December 31, 2021; and 79,204,509 shares issued and 78,476,814 shares outstanding at September 30, 2022 and 76,433,151 shares issued and 75,841,171 shares outstanding at December 31, 2021						Common stock, $0.01 par value, 600,000,000 shares authorized at September 30, 2022 and December 31, 2021; and 79,204,509 shares issued and 78,476,814 shares outstanding at September 30, 2022 and 76,433,151 shares issued and 75,841,171 shares outstanding at December 31, 2021	792		764
Additional paid-in capital	Additional paid-in capital	3,566,292		3,351,967		Additional paid-in capital	3,640,597		3,351,967
Accumulated deficit	Accumulated deficit	(3,414,542)		(3,617,950)		Accumulated deficit	(4,093,640)		(3,617,950)
Treasury stock, cost basis, 599,359 shares at March 31, 2022 and 591,980 shares at December 31, 2021		(85,901)		(85,101)
Treasury stock, cost basis, 727,695 shares at September 30, 2022 and 591,980 shares at December 31, 2021						Treasury stock, cost basis, 727,695 shares at September 30, 2022 and 591,980 shares at December 31, 2021	(89,940)		(85,101)
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(1,312)		(1,353)		Accumulated other comprehensive loss	(23,794)		(1,353)
Total stockholders’ equity (deficit)		65,324		(351,673)
Total liabilities and stockholders’ equity (deficit)		$	2,834,875	$	2,576,753
Total stockholders’ deficit						Total stockholders’ deficit	(565,985)		(351,673)
Total liabilities and stockholders’ deficit						Total liabilities and stockholders’ deficit	$	2,267,437	$	2,576,753

The accompanying notes are an integral part of these financial statements.

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NOVAVAX, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)

Three and Nine Months Ended ~~March 31,~~September 30, 2022 and 2021

(in thousands, except share information)

(unaudited)

~~(unaudited)~~

Common Stock Additional
Paid-in
Capital Accumulated
Deficit Treasury
Stock Accumulated Other
Comprehensive
Income (Loss) Total Stockholders'
Equity (Deficit)
Shares Amount
Balance at December 31, 2021 76,433,151 $ 764 $ 3,351,967 $ (3,617,950) $ (85,101) $ (1,353) $ (351,673)
Stock-based compensation — — 32,933 — — — 32,933
Stock issued under incentive programs 91,788 1 2,029 — (800) — 1,230
Issuance of common stock, net of issuance costs of $2,311 2,197,398 22 179,363 — — — 179,385
Foreign currency translation adjustment — — — — — 41 41
Net income — — — 203,408 — 203,408
Balance at March 31, 2022 78,722,337 $ 787 $ 3,566,292 $ (3,414,542) $ (85,901) $ (1,312) $ 65,324
Balance at December 31, 2020 71,350,365 $ 714 $ 2,535,476 $ (1,874,199) $ (41,806) $ 7,024 $ 627,209
Stock-based compensation — — 53,060 — — — 53,060
Stock issued under incentive programs 541,251 5 26,745 — (2,651) — 24,099
Issuance of common stock, net of issuance costs of $7,292 2,578,967 26 564,833 — — — 564,859
Unrealized loss on marketable securities — — — — — (9) (9)
Foreign currency translation adjustment — — — — — (7,372) (7,372)
Net loss — — — (222,719) — — (222,719)
Balance at March 31, 2021 74,470,583 $ 745 $ 3,180,114 $ (2,096,918) $ (44,457) $ (357) $ 1,039,127


	Common Stock			Additional Paid-in Capital		Accumulated Deficit		Treasury Stock		Accumulated Other Comprehensive Income (Loss)		Total Stockholders' Equity (Deficit)
	Shares	Amount
Balance at June 30, 2022	78,776,234	$	788	$	3,604,614	$	(3,925,027)	$	(86,455)	$	(10,870)	$	(416,950)
Stock-based compensation	—	—		33,386		—		—		—		33,386
Stock issued under incentive programs	428,275	4		2,597		—		(3,485)		—		(884)

Foreign currency translation adjustment	—	—		—		—		—		(12,924)		(12,924)
Net loss	—	—		—		(168,613)		—		—		(168,613)
Balance at September 30, 2022	79,204,509	$	792	$	3,640,597	$	(4,093,640)	$	(89,940)	$	(23,794)	$	(565,985)

Balance at June 30, 2021	74,672,351	$	747	$	3,237,085	$	(2,449,235)	$	(47,205)	$	4,170	$	745,562
Stock-based compensation	—	—		45,274		—		—		—		45,274
Stock issued under incentive programs	1,301,172	13		28,154		—		(31,927)		—		(3,760)


Foreign currency translation adjustment	—	—		—		—		—		(3,309)		(3,309)
Net loss	—	—		—		(322,431)		—		—		(322,431)
Balance at September 30, 2021	75,973,523	$	760	$	3,310,513	$	(2,771,666)	$	(79,132)	$	861	$	461,336


	Common Stock			Additional Paid-in Capital		Accumulated Deficit		Treasury Stock		Accumulated Other Comprehensive Income (Loss)		Total Stockholders' Equity (Deficit)
	Shares	Amount
Balance at December 31, 2021	76,433,151	$	764	$	3,351,967	$	(3,617,950)	$	(85,101)	$	(1,353)	$	(351,673)
Stock-based compensation	—	—		104,367		—		—		—		104,367
Stock issued under incentive programs	573,960	6		4,900		—		(4,839)		—		67
Issuance of common stock, net of issuance costs of $2,311	2,197,398	22		179,363		—		—		—		179,385

Foreign currency translation adjustment	—	—		—		—		—		(22,441)		(22,441)
Net loss	—	—		—		(475,690)		—		—		(475,690)
Balance at September 30, 2022	79,204,509	$	792	$	3,640,597	$	(4,093,640)	$	(89,940)	$	(23,794)	$	(565,985)

Balance at December 31, 2020	71,350,365	$	714	$	2,535,476	$	(1,874,199)	$	(41,806)	$	7,024	$	627,209

Stock-based compensation	—	—		151,457		—		—		—		151,457
Stock issued under incentive programs	2,044,191	20		58,747		—		(37,326)		—		21,441
Issuance of common stock, net of issuance costs of $7,292	2,578,967	26		564,833		—		—		—		564,859
Unrealized loss on marketable securities	—	—		—		—		—		(9)		(9)
Foreign currency translation adjustment	—	—		—		—		—		(6,154)		(6,154)
Net loss	—	—		—		(897,467)		—		—		(897,467)
Balance at September 30, 2021	75,973,523	$	760	$	3,310,513	$	(2,771,666)	$	(79,132)	$	861	$	461,336

The accompanying notes are an integral part of these financial statements.

NOVAVAX, INC.

Table of Contents

~~NOVAVAX, INC.~~

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)


		Three Months Ended March 31,					Nine Months Ended September 30,
		2022		2021			2022		2021
Operating Activities:	Operating Activities:					Operating Activities:
Net income (loss)		$	203,408	$	(222,719)
Reconciliation of net income (loss) to net cash provided by (used in) operating activities:
Net loss						Net loss	$	(475,690)	$	(897,467)
Reconciliation of net loss to net cash provided by (used in) operating activities:						Reconciliation of net loss to net cash provided by (used in) operating activities:
Depreciation and amortization	Depreciation and amortization	6,765		2,317		Depreciation and amortization	21,832		8,989

Non-cash stock-based compensation	Non-cash stock-based compensation	32,933		53,060		Non-cash stock-based compensation	102,525		151,457
Right-of-use assets expensed		214		951
Provision for excess and obsolete inventory						Provision for excess and obsolete inventory	358,075		—
Right-of-use assets expensed, net of credits received						Right-of-use assets expensed, net of credits received	40,187		17,117
Other items, net	Other items, net	634		6,362		Other items, net	(25,059)		2,739
Changes in operating assets and liabilities:	Changes in operating assets and liabilities:					Changes in operating assets and liabilities:
Inventory	Inventory	(99,557)		—		Inventory	(426,466)		—
Receivables, prepaid expenses, and other assets		(56,016)		220,205
Accounts payable and accrued expenses		(115,500)		53,325
Accounts receivable, prepaid expenses, and other assets						Accounts receivable, prepaid expenses, and other assets	171,325		209,221
Accounts payable, accrued expenses, and other liabilities						Accounts payable, accrued expenses, and other liabilities	90,418		180,708
Deferred revenue	Deferred revenue	(61,391)		549,584		Deferred revenue	(155,268)		992,590
Net cash provided by (used in) operating activities	Net cash provided by (used in) operating activities	(88,510)		663,085		Net cash provided by (used in) operating activities	(298,121)		665,354

Investing Activities:	Investing Activities:					Investing Activities:
Capital expenditures		(16,826)		(13,781)
Purchases of property and equipment						Purchases of property and equipment	(66,033)		(41,122)
Internal-use software development costs						Internal-use software development costs	(4,888)		—
Purchases of marketable securities	Purchases of marketable securities	—		(2,167)		Purchases of marketable securities	—		(2,167)
Proceeds from maturities and sale of marketable securities	Proceeds from maturities and sale of marketable securities	—		157,557		Proceeds from maturities and sale of marketable securities	—		159,807
Net cash provided by (used in) investing activities	Net cash provided by (used in) investing activities	(16,826)		141,609		Net cash provided by (used in) investing activities	(70,921)		116,518

Financing Activities:	Financing Activities:					Financing Activities:
Net proceeds from sales of common stock	Net proceeds from sales of common stock	179,385		564,859		Net proceeds from sales of common stock	179,385		564,859
Net proceeds from the exercise of stock-based awards	Net proceeds from the exercise of stock-based awards	1,318		24,099		Net proceeds from the exercise of stock-based awards	67		21,441
Finance lease payments	Finance lease payments	(20,838)		(11,971)		Finance lease payments	(45,904)		(63,876)
Net cash provided by financing activities	Net cash provided by financing activities	159,865		576,987		Net cash provided by financing activities	133,548		522,424
Effect of exchange rate on cash, cash equivalents, and restricted cash	Effect of exchange rate on cash, cash equivalents, and restricted cash	1,312		(1,349)		Effect of exchange rate on cash, cash equivalents, and restricted cash	257		(6,208)
Net increase in cash, cash equivalents, and restricted cash		55,841		1,380,332
Net increase (decrease) in cash, cash equivalents, and restricted cash						Net increase (decrease) in cash, cash equivalents, and restricted cash	(235,237)		1,298,088
Cash, cash equivalents, and restricted cash at beginning of period	Cash, cash equivalents, and restricted cash at beginning of period	1,528,259		648,738		Cash, cash equivalents, and restricted cash at beginning of period	1,528,259		648,738
Cash, cash equivalents, and restricted cash at end of period	Cash, cash equivalents, and restricted cash at end of period	$	1,584,100	$	2,029,070	Cash, cash equivalents, and restricted cash at end of period	$	1,293,022	$	1,946,826

Supplemental disclosure of non-cash activities:	Supplemental disclosure of non-cash activities:					Supplemental disclosure of non-cash activities:

Right-of-use assets from new lease agreements	Right-of-use assets from new lease agreements	$	58,352	$	9,770	Right-of-use assets from new lease agreements	$	118,262	$	34,914
Capital expenditures included in accounts payable and accrued expenses	Capital expenditures included in accounts payable and accrued expenses	$	15,874	$	9,076	Capital expenditures included in accounts payable and accrued expenses	$	11,984	$	7,884

Supplemental disclosure of cash flow information:	Supplemental disclosure of cash flow information:					Supplemental disclosure of cash flow information:
Cash interest payments	Cash interest payments	$	6,654	$	7,530	Cash interest payments	$	17,260	$	17,768
Cash paid for income taxes	Cash paid for income taxes	$	15,451	$	3,017	Cash paid for income taxes	$	17,843	$	6,041

The accompanying notes are an integral part of these financial statements.

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NOVAVAX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~March 31,~~September 30, 2022

(unaudited)

Note 1 – Organization and Business

Novavax, Inc. (“Novavax,” and together with its wholly owned subsidiaries, the “Company”) is a biotechnology company that promotes improved ~~global~~ health globally through the discovery, development, and commercialization of innovative vaccines to prevent serious infectious diseases. The Company’s ~~coronavirus~~COVID-19 vaccine (“NVX-CoV2373, ~~and its lead~~” “Nuvaxovid™,” “Covovax™,” “Novavax COVID-19 Vaccine, Adjuvanted”); influenza vaccine ~~candidate, a quadrivalent influenza~~candidate; COVID-19-Influenza Combination (“CIC”) vaccine ~~previously known as NanoFlu,~~candidate; and additional vaccine candidates, including for Omicron subvariants and bivalent formulations with prototype vaccine (“NVX-CoV2373”), are genetically engineered ~~three-dimensional~~ nanostructures of conformationally correct recombinant proteins critical to disease pathogenesis and may elicit differentiated immune responses, which may be more efficacious than naturally occurring immunity or ~~traditional vaccines.~~other vaccine approaches. NVX-CoV2373 and the Company’s ~~influenza~~other vaccine ~~include the use of~~candidates incorporate the Company's proprietary Matrix-M™ ~~adjuvant.~~adjuvant to enhance the immune response and stimulate higher levels of functional antibodies and induce a cellular immune response. The Company has announced data from its ongoing PREVENT-19 study supporting the use of NVX-CoV2373 for homologous boosting in adults and adolescents aged 12 through 17. Additional findings in Phase 3 COVID-19 Omicron (study 311) trial showed utility of the prototype vaccine as a heterologous booster, inducing broad immune responses against contemporary Omicron variants.

As of ~~March 31,~~September 30, 2022, the Company had received approval, interim authorization, provisional approval, conditional marketing authorization, and emergency use authorization (“EUA”) from multiple regulatory authorities globally for NVX-CoV2373 ~~including by the World Health Organization (“WHO”),~~for both adult and adolescent populations as ~~well as the European Medicines Agency's (“EMA”)~~a primary series and ~~the United Kingdom's Medicines~~for both homologous and Healthcare products Regulatory Agency (“MHRA”), both of which are considered regulatory authorities that apply stringent standards and meet the WHO standards for quality, safety, and efficacy in their regulatory review process.heterologous booster indications.

~~During the three months ended March 31, 2022, the~~The Company commenced commercial shipments of NVX-CoV2373 doses under the name “Novavax COVID-19 Vaccine, Adjuvanted” and the brand name ~~Nuvaxovid™.~~“Nuvaxovid™” in 2022.

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 financial statements 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. All intercompany accounts and transactions have been eliminated in consolidation. Accumulated other comprehensive ~~income~~loss included a foreign currency translation loss of ~~$1.3~~$23.8 million and $1.4 million as of ~~March 31,~~September 30, 2022 and December 31, 2021, 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, 2021. 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 1one business segment.

Reclassifications

Certain amounts reported in prior periods have been reclassified to conform to current period financial statement presentation. These reclassifications have no material effect on previously reported financial position, cash flows, or results of operations.

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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.

Revenue Recognition - Product Sales

Product sales are associated with ~~our~~the Company’s NVX-CoV2373 supply agreements, sometimes referred to as advance purchase agreements (“APAs”), with various international governments. The Company recognizes revenue from product sales based on the transaction price per dose calculated in accordance with Accounting Standards Codification Topic 606, Revenue from Contracts with Customers (Topic 606) when control of the product transfers to the customer and customer acceptance has occurred, unless such acceptance provisions are deemed perfunctory. If an APA includes a term that may have the effect of decreasing the price per dose of previously delivered shipments, the Company constrains the price until it is probable that a significant reversal in revenue recognized will not occur.

Cost of Sales

Cost of sales includes cost of raw materials, production, and manufacturing overhead costs associated with the Company’s product sales during the period. Cost of sales also includes adjustments for excess, obsolete, or expired ~~inventory~~inventory; idle capacity; and losses on firm purchase commitments to the extent ~~management determines that~~ the cost cannot be recovered based on estimates about future demand. Cost of sales does not include certain expenses related to raw materials, production, and manufacturing overhead costs ~~which~~that were expensed prior to regulatory authorization as described under the caption “Inventory” below.

Inventory

Inventory is recorded at the lower of ~~lease-adjusted standard~~ cost or net realizable value under the First In, First Out (“FIFO”) methodology, taking into consideration the expiration of the inventory ~~item.~~item (see Note 7). The Company determines the cost of raw materials using moving average costs and the cost of semi-finished and finished goods using a standard cost method ~~which approximates average cost. Average~~adjusted on a periodic basis to reflect the deviation in the actual cost ~~consists~~from the standard cost estimate. Standard costs consist primarily of ~~costs associated with the purchase of raw materials,~~ the cost of manufacturing goods, including direct materials, direct labor, and the services and products of third-party ~~suppliers,~~suppliers. Manufacturing overhead costs are applied to semi-finished and ~~the application of manufacturing overhead.~~finished goods based on expected production levels. The Company utilizes third-party contract manufacturing organizations (“CMOs”), contract development and manufacturing organizations (“CDMOs”), and other suppliers and service organizations to support the procurement and processing of raw materials, management of inventory, packaging, and the delivery process. Adjustments to reduce the cost of inventory to its net realizable value, if required, are made for estimated excess, obsolete, or expired inventory through cost of ~~goods sold.~~sales.

Prior to initial regulatory authorization for its product candidates, the Company expenses costs relating to raw materials, production, and manufacturing overhead costs as research and development expenses in the consolidated statements of operations, in the period incurred. Subsequent to initial regulatory authorization for a product candidate, the Company capitalizes the costs of production for a particular supply chain as inventory when the Company determines that it has a present right to the economic benefit associated with the product.

Recent Accounting Pronouncements

Not Yet Adopted

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), with amendments in 2018, 2019, 2020, and ~~2020.~~2022. The ASU sets forth a “current expected credit loss” (“CECL”) model that requires companies to measure all expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions, and reasonable supportable forecasts. ASU 2016-13 applies to financial instruments that are not measured at fair value, including receivables that result from revenue transactions. The ASU is effective for the Company beginning on January 1, 2023. Management is currently evaluating the effect of the guidance and does not expect it to have a material impact on the Company’s consolidated financial statements.

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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 simplified the accounting for certain financial instruments with characteristics of liabilities and equity, including certain convertible instruments and contracts in an entity’s own equity. Specifically, the new standard removed the separation models required for convertible debt with cash conversion features and convertible instruments with beneficial conversion features. It also removed certain settlement conditions that are currently required for equity contracts to qualify for the derivative scope exception and simplified the diluted earnings per share calculation for convertible instruments. The Company adopted ASU 2020-06 on January 1, 2022 using a modified retrospective approach, which did not have a material impact on the Company’s consolidated financial statements.

Note 3 – Revenue

The Company's accounts receivable included ~~$425.9~~$43.6 million and $419.7 million related to amounts that were billed to customers and ~~$52.3~~$68.0 million and $35.3 million related to amounts which had not yet been billed to customers as of ~~March 31,~~September 30, 2022 and December 31, 2021, respectively. During the ~~three~~nine months ended ~~March 31,~~September 30, 2022, changes in the Company's accounts receivables and deferred revenue balances were as follows (in thousands):


		December 31, 2021		Additions	Deductions	March 31, 2022			December 31, 2021		Additions	Deductions	September 30, 2022
Contract receivables:	Contract receivables:							Contract receivables:
Accounts receivable	Accounts receivable	$	454,993	625,124	(601,961)	$	478,156	Accounts receivable	$	454,993	1,519,345	(1,862,693)	$	111,645
Contract liabilities:	Contract liabilities:							Contract liabilities:
Deferred revenue(1)	Deferred revenue(1)	$	1,595,472	49,094	(108,586)	$	1,535,980	Deferred revenue(1)	$	1,595,472	96,298	(251,576)(2)	$	1,440,194

(1) Amount is comprised of ~~$1.1 billion~~$404.8 million and $1.4 billion of current Deferred revenue and ~~$441.7 million~~$1.0 billion and $172.5 million of non-current Deferred revenue as of ~~March 31,~~September 30, 2022 and December 31, 2021, respectively.

(2)Deductions from Deferred revenue includes $202.5 million that was realized in Revenue and $49.1 million that was reclassified to Other liabilities.

The aggregate amount of the transaction price allocated to performance obligations that were unsatisfied (or partially unsatisfied), excluding amounts related to sales-based royalties, was approximately $7$4 billion as of ~~March 31,~~September 30, 2022. Failure to meet regulatory milestones, timely obtain supportive recommendations from governmental advisory committees, or achieve product volume or delivery timing obligations under the Company’s APA agreements may require the Company to refund portions of upfront payments or result in reduced future payments, which could adversely impact the Company’s ability to realize revenue from its unsatisfied performance obligations. The timing to fulfill performance obligations related to grant agreements will depend on the results of the Company's research and development activities, including clinical ~~trials.~~trials, and delivery of doses. The timing to fulfill performance obligations related to APAs will depend on timing of product manufacturing, ~~delivery, and~~ receipt of marketing ~~authorizations.~~authorizations for additional indications, delivery of doses based on customer demand, and the ability of the customer to request variant vaccine in place of the prototype NVX-CoV2373 vaccine under certain of our APAs. The remaining unfilled performance obligations not related to grant agreements or APAs are expected to be fulfilled in less than 12 months.

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Grants

The Company recognized grant revenue as follows (in thousands):


		Three Months Ended March 31,					Three Months Ended September 30,				Nine Months Ended September 30,
		2022		2021			2022		2021		2022		2021
U.S. government partnership (“OWS”)	U.S. government partnership (“OWS”)	$	99,301	$	363,560	U.S. government partnership (“OWS”)	$	104,348	$	96,215	$	311,423	$	699,268
U.S. Department of Defense (“DoD”)	U.S. Department of Defense (“DoD”)	—		19,144		U.S. Department of Defense (“DoD”)	1,925		1,287		1,925		21,472
Coalition for Epidemic Preparedness Innovations (“CEPI”)	Coalition for Epidemic Preparedness Innovations (“CEPI”)	—		61,561		Coalition for Epidemic Preparedness Innovations (“CEPI”)	—		37,505		—		131,022
Bill & Melinda Gates Foundation (“BMGF”)	Bill & Melinda Gates Foundation (“BMGF”)	—		2,628		Bill & Melinda Gates Foundation (“BMGF”)	—		—		—		2,628
Total		$	99,301	$	446,893
Total grant revenue						Total grant revenue	$	106,273	$	135,007	$	313,348	$	854,390

U.S. Government

The Company’s U.S. government partnership consists of an agreement (the “OWS Agreement”) with Advanced Technology International, the Consortium Management Firm acting on behalf of the Medical CBRN Defense Consortium in connection with the partnership formerly known as Operation Warp Speed (“OWS”). In July 2022, the Company entered into a modification to the OWS Agreement that amended the terms of such agreement to provide for (i) an initial delivery to the U.S. government of approximately 3 million doses of NVX-CoV2373 and (ii) any additional manufacture and delivery to the U.S. government up to an aggregate of 100 million doses of NVX-CoV2373 contemplated by the original OWS Agreement (inclusive of the initial batch of approximately 3 million doses) dependent on U.S. government demand, FDA guidance on strain selection, agreement between the parties on the price of such doses, and available funding. The 3 million initial doses were delivered in July 2022. Additionally, in July 2022, the Company modified its existing agreement with the DoD and delivered 0.2 million doses of NVX-CoV2373 after receipt of EUA approval from the FDA, with delivery of the remaining 9.8 million doses of NVX-CoV2373 contemplated by the original agreement subject to DoD demand and available funding.

CEPI

The Company’s funding agreement with CEPI, under which CEPI has agreed to provide funding of up to $399.5 million to the Company to support the development of NVX-CoV2373, provides up to $257.0 million in grant funding and up to $142.5 million in forgivable no-interest term loans. These loans are only repayable if NVX-CoV2373 manufactured by the CMO network funded by CEPI is sold under the Company’s APA with Gavi, the Vaccine Alliance (“Gavi”), and such sales cover the Company’s costs of manufacturing the vaccine, not including manufacturing costs funded by CEPI. The timing of any loan repayments is currently uncertain given the timing and quantities of future orders under the Company’s APA with Gavi are unclear, as discussed below.

Royalties and Other

~~For~~During the three and nine months ended ~~March 31,~~September 30, 2022, the Company recognized ~~$7.4~~$1.3 million and $10.5 million, respectively, in revenue related to sales-based royalties. ~~For~~During the three months ended ~~March 31,~~June 30, 2022, the Company recognized a $20.0 million milestone payment upon the sale of NVX-CoV2373 in Japan. During the three and nine months ended September 30, 2021, the Company recognized $39.9 million and $63.4 million, respectively, in revenue related to sales-based royalties. During the three and nine months ended September 30, 2021, the Company did 0tnot recognize any revenue related to ~~sales-based royalties.~~milestone payments.

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Advance Purchase Agreements (APAs)

Under the terms of the Company’s supply commitment with Gavi, which includes both Novavax’ APA with Gavi and the supply obligation of its licensed partner, Serum Institute of India Private Limited (“SIIPL”), 1.1 billion doses of NVX-CoV2373 are to be made available to countries participating in the COVAX Facility, which was established to allocate and distribute vaccines equitably to participating countries and economies. The Novavax APA contemplates that the Company will manufacture and distribute 350 million doses. Under that agreement with Gavi, the Company received an upfront payment of $350 million from Gavi in 2021 and an additional payment of $350 million in the first quarter of 2022 related to the Company’s achieving WHO Emergency Use Listing. Although Novavax continues to be prepared to deliver the quantities of NVX-CoV2373 doses to Gavi under the terms of the APA, the Company was notified by Gavi of its intent to seek to revise the number and timing of doses of NVX-CoV2373 supplied by Novavax under such agreement. Furthermore, Gavi may seek partial or full recovery of the prior nonrefundable payments it has made to Novavax. The Company’s position is that Gavi has no contractual right to recover prior nonrefundable payments if it fails to order the 350 million doses it committed to order. To date, except for an initial order of approximately 2 million doses, Novavax has not received an order from Gavi and the timing and quantities of future orders to deliver NVX-CoV2373 to the COVAX Facility are unclear.

Under the terms of the Company’s SARS-CoV-2 Vaccine Supply Agreement, originally entered into in October 2020 (the “Original UK Supply Agreement”) with The Secretary of State for Business, Energy and Industrial Strategy, acting on behalf of the government of the United Kingdom of Great Britain and Northern Ireland (the “Authority”), the Authority agreed to purchase 60 million doses of NVX-CoV2373. In July 2022, the Company entered into an Amended and Restated SARS-CoV-2 Vaccine Supply Agreement (the “Amended and Restated UK Supply Agreement”) with the Authority, under which the Authority agreed to purchase a minimum of 1 million doses and up to an additional 15 million doses of NVX-CoV2373, with the number of additional doses contingent on the Company’s timely achievement of supportive recommendations from the Joint Committee on Vaccination and Immunisation (the “JCVI”). In the event that the Company is unable to achieve the JCVI supportive recommendations, it may have to repay up to $225.0 million related to the upfront payment previously received from the Authority under the Original UK Supply Agreement. As of September 30, 2022, the Company will be required to repay a minimum of $40.0 million related to the upfront payment, which is reflected in Other current liabilities, with the remaining balance of $185.0 million reflected in Deferred revenue. Under the Amended and Restated UK Supply Agreement, the Authority also has the option to purchase up to an additional 44 million doses, in one or more tranches, through 2024.

The Company has an APA with the European Commission (“EC”) acting on behalf of various European Union member states to supply a minimum of 20 million and up to 100 million initial doses of NVX-CoV2373, with the option for the EC to purchase an additional 100 million doses up to a maximum aggregate of 200 million doses in one or more tranches, through 2023. In July and August 2022, the Company was notified by the EC that it was cancelling 5 million doses of its prior commitment originally scheduled for delivery in the first and second quarters of 2022, in accordance with the APA, and reducing the order to 65 million doses. The Company is in the process of finalizing a revised delivery schedule for the remaining 23 million committed doses under the APA that were originally scheduled for delivery during the first and second quarters of 2022.

Note 4 – Collaboration, License, and ~~License~~Supply Agreements

Serum Institute

The Company previously granted ~~Serum Institute of India Private Limited (“SIIPL”)~~SIIPL exclusive and non-exclusive licenses for the development, co-formulation, filling and finishing, registration, and commercialization of NVX-CoV2373. SIIPL agreed to purchase the ~~Company's~~Company’s Matrix-MTM adjuvant and the Company 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. The Company and SIIPL equally split the revenue from SIIPL’s sale of NVX-CoV2373 in its licensed territory, net of agreed costs. The Company also has a supply agreement with SIIPL and Serum Life Sciences Limited (“SLS”) under which SIIPL and SLS supply the Company with NVX-CoV2373 for commercialization and sale in certain ~~territories.~~territories, as well as a contract development manufacture agreement with SLS, under which SLS manufactures and supplies finished vaccine product to the Company using antigen drug substance and Matrix-M™ adjuvant supplied by the Company. In May and August 2022, the Company expanded its license and supply arrangements with SIIPL to include its proprietary COVID-19 variant antigen candidate(s), its quadrivalent influenza vaccine candidate, and its CIC vaccine candidate, so that SIIPL can manufacture and commercialize a vaccine targeting COVID-19 variants, including the Omicron subvariants, a quadrivalent influenza vaccine, and CIC vaccine, and supply such vaccines to the Company. In March 2020, the Company granted SIIPL a non-exclusive license for the use of Matrix-M™ adjuvant supplied by the Company to develop, manufacture, and commercialize R21, a malaria candidate developed by the Jenner Institute, University of Oxford.

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Takeda Pharmaceutical Company Limited

The Company has a collaboration and license agreement with Takeda Pharmaceutical Company Limited (“Takeda”) under which the Company granted Takeda an exclusive license to develop, manufacture, and commercialize NVX-CoV2373 in Japan. Under the agreement, Takeda purchases the ~~Company's~~Company’s Matrix-M™ adjuvant to manufacture NVX-CoV2373 and the Company is entitled to receive payments from Takeda based on the achievement of certain development and commercial milestones, as well as a portion of net profits from the sale of NVX-CoV2373 in the low to middle double-digit range. ~~The~~During the three months ended June 30, 2022, the Company ~~is eligible for~~recognized a ~~future~~ milestone payment of $20.0 million upon the first sale in Japan. ~~Regulatory approval in Japan was received in April 2022 (see Note 16).~~

SK bioscience Co., Ltd.

The Company has a collaboration and license agreement with SK bioscience Co., Ltd. (“SK bioscience”) to manufacture and commercialize NVX-CoV2373 for sale to the governments of South Korea, Thailand, and Vietnam. SK bioscience pays a royalty in the low to middle double-digit range. Additionally, the Company has a manufacturing supply arrangement with SK bioscience under which SK bioscience supplies the Company with the antigen component of NVX-CoV2373 for use in the final drug product globally, including product to be distributed by the COVAX Facility, which was established to allocate and distribute vaccines equitably to participating countries and economies. In July 2022, the Company signed an additional agreement with SK bioscience for the technology transfer of the Company’s proprietary COVID-19 variant antigen materials so that SK bioscience can manufacture the drug substance targeting COVID-19 variants, including the Omicron subvariants. The companies also signed an agreement to manufacture and supply the Novavax COVID-19 vaccine in a prefilled syringe.

Other Supply Agreements

On September 30, 2022, the Company, FUJIFILM Diosynth Biotechnologies UK Limited (“FDBK”), FUJIFILM Diosynth Biotechnologies Texas, LLC (“FDBT”), and FUJIFILM Diosynth Biotechnologies USA, Inc. (“FDBU” and together with FDBK and FDBT, “Fujifilm”) entered into a Confidential Settlement Agreement and Release (the “Fujifilm Settlement Agreement”) regarding amounts due to Fujifilm in connection with the termination of manufacturing activity at FDBT under the Commercial Supply Agreement (the “CSA”) dated August 20, 2021 and Master Services Agreement dated June 30, 2020 and associated statements of work (the “MSA”) by and between the Company and Fujifilm. The MSA and CSA established the general terms and conditions applicable to Fujifilm’s manufacturing and supply activities related to NVX-CoV2373 under the associated statements of work.

Pursuant to the Fujifilm Settlement Agreement, the Company is responsible for payment of up to $185.0 million (the “Settlement Payment”) to Fujifilm in connection with cancellation of manufacturing activity at FDBT under the CSA, of which (i) $47.8 million, constituting the initial reservation fee under the CSA, was credited against the Settlement Payment on September 30, 2022 and (ii) the remaining balance is to be paid in four equal quarterly installments of $34.3 million each beginning March 31, 2023. As of September 30, 2022, $102.9 million of the remaining payment was reflected in Accrued expenses and $34.3 million was reflected in Other non-current liabilities. Under the Fujifilm Settlement Agreement, Fujifilm is required to use commercially reasonable efforts to mitigate the losses associated with the vacant manufacturing capacity caused by the termination of manufacturing activities at FDBT under the CSA, and the final two quarterly installments will be mitigated by any replacement revenue achieved by Fujifilm between July 1, 2023 and December 31, 2023. The Settlement Payment is less than amounts previously recognized as embedded lease expense and reflected in Research and development expense from FDBT manufacturing activity under the CSA prior to the Fujifilm Settlement Agreement and accordingly, during the three and nine months ended September 30, 2022, the Company recorded a benefit of $98.3 million as Research and development expense (see Note 9).

Except with respect to certain limited activities agreed upon by the parties, the MSA terminated with respect to all activities in FDBU and FDBT on October 21, 2022 and the impact of the termination was determined in accordance with the provisions of the MSA. The terms and conditions of the MSA and CSA will remain in full force and effect with respect to the ongoing activities at FDBK. In addition, the Company and Fujifilm mutually released all claims relating to (i) the cancellation of batches to be manufactured at FDBT under the MSA or CSA, (ii) FDBT facility idle time in 2022, (iii) failure to complete product performance qualification testing of batches manufactured by Fujifilm by December 2021, and (iv) any obligation by Fujifilm to reserve capacity or manufacture batches at FDBT for the benefit of the Company under the MSA or CSA.

The Company continues to assess its manufacturing needs and intends to modify its global manufacturing footprint consistent with its contractual obligations to supply, and anticipated demand for, NVX-CoV2373, and in doing so, recognizes that significant costs may be incurred.

~~Note 5~~ – ~~Earnings (Loss) per Share~~Table of Contents

~~Basic and diluted net income (loss) per share were calculated as follows (in thousands, except per share data):~~

Three Months Ended
March 31,
2022 2021
Numerator:
Net income (loss), basic $ 203,408 $ (222,719)
Interest on convertible notes, net 3,403 —
Net income (loss), dilutive 206,811 (222,719)
Denominator:
Weighted average number of common shares outstanding, basic 76,457 73,035
Effect of dilutive securities 4,254 —
Weighted average number of common shares outstanding, dilutive 80,711 73,035
Net income (loss) per share:
Basic $ 2.66 $ (3.05)
Diluted $ 2.56 $ (3.05)
Anti-dilutive securities excluded from calculations of diluted net income (loss) per share 1,474 8,659

Note 65 – Cash, Cash Equivalents, and Restricted Cash

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported in the consolidated balance sheets that sums to the total of ~~the same~~ such amounts shown in the ~~statement~~statements of cash flows (in thousands):


		March 31, 2022		December 31, 2021			September 30, 2022		December 31, 2021
Cash and cash equivalents	Cash and cash equivalents	$	1,570,954	$	1,515,116	Cash and cash equivalents	$	1,280,581	$	1,515,116
Restricted cash, current	Restricted cash, current	11,492		11,490		Restricted cash, current	10,785		11,490
Restricted cash, non-current(1)	Restricted cash, non-current(1)	1,654		1,653		Restricted cash, non-current(1)	1,656		1,653
Cash, cash equivalents, and restricted cash	Cash, cash equivalents, and restricted cash	$	1,584,100	$	1,528,259	Cash, cash equivalents, and restricted cash	$	1,293,022	$	1,528,259

(1)Classified as Other non-current assets as of ~~March 31,~~September 30, 2022 and December 31, 2021, on the consolidated balance sheets.

Note 76 – Fair Value Measurements

The following table represents the ~~Company's~~Company’s fair value hierarchy for its financial assets and liabilities (in thousands):


		Fair Value at March 31, 2022						Fair Value at December 31, 2021							Fair Value at September 30, 2022						Fair Value at December 31, 2021
Assets	Assets	Level 1		Level 2		Level 3		Level 1		Level 2		Level 3		Assets	Level 1		Level 2		Level 3		Level 1		Level 2		Level 3
Money market funds(1)	Money market funds(1)	$	500,411	$	—	$	—	$	361,822	$	—	$	—	Money market funds(1)	$	365,631	$	—	$	—	$	361,822	$	—	$	—
Government-backed securities(1)	Government-backed securities(1)	—		179,500		—		—		266,250		—		Government-backed securities(1)	—		261,000		—		—		266,250		—
Treasury securities(1)		—		54,009		—		—		—		—

Corporate debt securities(1)	Corporate debt securities(1)	—		672,208		—		—		790,672		—		Corporate debt securities(1)	—		109,914		—		—		790,672		—
Agency securities(1)	Agency securities(1)	—		62,739		—		—		—		—		Agency securities(1)	—		42,777		—		—		—		—
Total cash equivalents	Total cash equivalents	$	500,411	$	968,456	$	—	$	361,822	$	1,056,922	$	—	Total cash equivalents	$	365,631	$	413,691	$	—	$	361,822	$	1,056,922	$	—
Liabilities	Liabilities													Liabilities
Convertible notes payable	Convertible notes payable	$	—	$	348,098	$	—	$	—	$	447,509	$	—	Convertible notes payable	$	—	$	317,044	$	—	$	—	$	447,509	$	—

(1)All investments are classified as ~~cash~~Cash and cash equivalents as of ~~March 31,~~September 30, 2022 and December 31, 2021, on the consolidated balance sheets.

Cash equivalents are recorded at cost, which approximate fair value due to their short-term nature. Pricing of the Company's Notes (see Note ~~11)~~10) 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.~~spreads.

During the ~~three~~nine months ended ~~March 31,~~September 30, 2022 and 2021, the Company did not have any transfers between levels.

Note 87 – Inventory

Inventory consisted of the following (in thousands):


		March 31, 2022		December 31, 2021			September 30, 2022		December 31, 2021
Raw materials	Raw materials	$	34,664	$	8,872	Raw materials	$	17,557	$	8,872
Semi-finished goods	Semi-finished goods	66,101		—		Semi-finished goods	33,030		—
Finished goods	Finished goods	5,883		—		Finished goods	31,845		—
Total inventory	Total inventory	$	106,648	$	8,872	Total inventory	$	82,432	$	8,872

Inventory write-downs as a result of excess, obsolescence, expiry, or other reasons, and losses on firm purchase commitments are recorded as a component of cost of sales in our consolidated statements of operations. For the three and nine months ended September 30, 2022, inventory write-downs were $202.4 million and $358.1 million, respectively. For the three and nine months ended September 30, 2022, losses on firm purchase commitments were $46.6 million and $146.2 million, respectively. There were no inventory write-downs or losses on firm purchase commitments during 2021.

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Note 98 – ~~Goodwill~~Intangible Assets and ~~Other~~Goodwill

Identifiable Intangible Assets

Purchased intangible assets consisted of the following (in thousands):


	September 30, 2022						December 31, 2021
	Gross Carrying Amount		Accumulated Amortization		Intangible Assets, Net		Gross Carrying Amount		Accumulated Amortization		Intangible Assets, Net
Finite-lived intangible assets:
Proprietary adjuvant technology	$	6,911	$	(3,069)	$	3,842	$	8,239	$	(3,469)	$	4,770

Internal-use software(1)	4,888		(274)		4,614		—		—		—
Total identifiable intangible assets	$	11,799	$	(3,343)	$	8,456	$	8,239	$	(3,469)	$	4,770

(1)As of September 30, 2022, internal-use software included $3.6 million for assets under development.

Amortization expense for the nine months ended September 30, 2022 and 2021 was $0.6 million and $0.3 million, respectively. Estimated amortization expense for existing in-use intangible assets for the remainder of 2022 and for each of the five succeeding years ending December 31 is estimated to be as follows (in thousands):


Year	Amount
2022 (remainder)	$	189
2023	756
2024	740
2025	392
2026	335
2027	335

Goodwill

The change in the carrying amounts of goodwill for the ~~three~~nine months ended ~~March 31,~~September 30, 2022 was as follows (in thousands):


	Amount
Balance at December 31, 2021	$	131,479
Currency translation adjustments	~~(723)~~(13,944)
Balance at ~~March 31,~~September 30, 2022	$	~~130,756~~117,535

~~Identifiable Intangible Assets~~

~~Purchased intangible assets consisted of the following (in thousands):~~

March 31, 2022 December 31, 2021
Gross
Carrying
Amount Accumulated
Amortization Intangible
Assets, Net Gross
Carrying
Amount Accumulated
Amortization Intangible
Assets, Net
Finite-lived intangible assets:
Proprietary adjuvant technology $ 8,004 $ (3,469) $ 4,535 $ 8,239 $ (3,469) $ 4,770
Collaboration agreements 3,614 (3,614) — 3,722 (3,722) —
Total identifiable intangible assets $ 11,618 $ (7,083) $ 4,535 $ 11,961 $ (7,191) $ 4,770

~~Amortization expense was $0.1 million for each of the three months ended March 31, 2022 and 2021.~~

~~Estimated amortization expense for existing intangible assets for the remainder of 2022 and for each of the five succeeding years ending December 31 will be as follows (in thousands):~~

Year Amount
2022 (remainder) $ 300
2023 400
2024 400
2025 400
2026 400
2027 400

Note 109 - Leases

During the ~~first quarter of~~nine months ended September 30, 2022, the Company ~~evaluated the impact of~~concluded that changes in facts and circumstances on its ~~CMOs~~CMO and ~~CDMOs~~CDMO agreements that had previously been determined to represent embedded lease ~~arrangements. The Company concluded that the impact~~arrangements resulted in the modification of existing leases and, in accordance with its policy, the Company remeasured and reallocated the remaining consideration in the contracts and reassessed the lease classification as of the effective date of the modification. As a result, during the nine months ended September 30, 2022, the Company recognized a Right-Of-Use (“ROU”) asset and a corresponding long-term operating lease liability of ~~$10.4~~$44.0 million on the remeasurement ~~of one~~ of its long-term supply agreements using an average incremental borrowing rate of ~~2.4%~~5%. The Company expensed the ROU asset since it relates to research and development activities for the development of NVX-CoV2373 for which the Company does not have an alternative future use. ~~Modifications to leases with a lease term~~

Table of 12 months or less at the commencement date did not result in a change in lease classification and in accordance with the Company's election, it applied the practical expedient in ASC 842 to recognize lease payments as an expense on a straight-line basis over the modified lease term.Contents

During the three and nine months ended ~~March 31,~~September 30, 2022, ~~and 2021,~~ the Company recognized a short-term lease benefit of $46.6 million and expense of ~~$78.1 million and $127.6~~$37.3 million, respectively, related to its embedded leases, net of a benefit of $98.3 million related to the Fujifilm Settlement Agreement (see Note 4). During the three and nine months ended September 30, 2022, the Company expensed ~~$10.4~~$24.2 million and ~~$1.0~~$44.0 million, respectively, of ROU assets that represented assets acquired for research and development activities that did not have an alternative future use at the commencement or modification of the lease. During the three and nine months ended ~~March 31, 2022 and~~September 30, 2021, the Company recognized ~~$1.1~~a short-term lease expense of $111.3 million and ~~$2.1~~$325.5 million, respectively, related to its embedded leases and expensed $4.4 million and $17.1 million, respectively, of ROU assets that represented assets acquired for research and development activities that did not have an alternative future use at the commencement or modification of the lease. During the three and nine months ended September 30, 2022, the Company recognized $0.9 million and $4.3 million of interest expense, respectively, on its finance lease liabilities. During the three and nine months ended September 30, 2021, the Company recognized $1.6 million and $5.6 million of interest expense, respectively, on its finance lease liabilities.

During 2020, the Company entered into a lease agreement for the premises located at 700 Quince Orchard Road, Gaithersburg, ~~Maryland (“700QO”).~~Maryland. The lease is for approximately 170,000 square feet of space that the Company intends to use for manufacturing, research and development, and corporate offices. The term of the lease is 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. During the ~~three~~nine months ended ~~March 31,~~September 30, 2022, the Company obtained the right to direct the use of, and obtain substantially all of the benefit from, ~~the third floor of~~certain floors located at the premises and recognized aan ROU asset ~~of $47.8 million~~ and related lease obligation ~~for the combined third floor and land lease~~of $73.2 million as the lease commencement ~~date~~dates for accounting purposes had occurred.

Note 1110 – 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):


		March 31, 2022		December 31, 2021			September 30, 2022		December 31, 2021
Principal amount of Notes	Principal amount of Notes	$	325,000	$	325,000	Principal amount of Notes	$	325,000	$	325,000
Unamortized debt issuance costs	Unamortized debt issuance costs	(1,186)		(1,542)		Unamortized debt issuance costs	(475)		(1,542)
Total convertible notes payable(1)	Total convertible notes payable(1)	$	323,814	$	323,458	Total convertible notes payable(1)	$	324,525	$	323,458

(1) Convertible notes are classified as current liabilities and as non-current liabilities in the ~~Consolidated Balance Sheet~~consolidated balance sheets as of ~~March 31,~~September 30, 2022 and December 31, 2021, respectively.

The interest expense incurred in connection with the Notes consisted of the following (in thousands):

Three Months Ended March 31,
2022 2021
Coupon interest at 3.75% $ 3,047 $ 3,047
Amortization of debt issuance costs 356 356
Total interest expense on Notes $ 3,403 $ 3,403


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
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

Note 1211 – Stockholders' Equity (Deficit)

During the three months ended March 31, 2022, the Company sold 2.2 million of shares of its common stock resulting in net proceeds of approximately $179 million, under its most recent At Market Issuance Sales agreement entered in June 2021 (the “June 2021 Sales Agreement”), which allows it to issue and sell up to $500 million in gross proceeds of shares of its common stock. As of ~~March 31,~~September 30, 2022, the remaining balance under the June 2021 Sales Agreement was approximately $318 million.

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During the ~~three~~nine months ended ~~March 31,~~September 30, 2021, the Company sold 2.6 million shares of its common stock resulting in net proceeds of approximately $565 million, under its various At Market Issuance Sales agreements.

Note 1312 – Stock-Based Compensation

Equity Plans

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 ~~12.4~~14.8 million shares of common stock under equity awards granted under the 2015 ~~Plan.~~Plan, which includes an increase of 2.4 million shares approved for issuance under the 2015 Plan at the Company's 2022 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. As of September 30, 2022, there were 4.6 million shares available for issuance under the 2015 Plan.

The Amended and Restated 2005 Stock Incentive Plan (“2005 Plan”) expired in February 2015 and no new awards may be made under such plan, although awards will continue to be outstanding in accordance with their terms.

The 2015 Plan permits and the 2005 Plan permitted the grant of stock options (including incentive stock options), restricted stock, stock appreciation rights (“SARs”), and restricted stock ~~units.~~units (“RSUs”). In addition, under the 2015 Plan, unrestricted stock, stock units, and performance awards may be granted. Stock options and ~~stock appreciation rights~~SARs generally have a maximum term of ten years and may be or were granted with an exercise price that is no less than 100% of the fair market value of the Company's common stock at the time of grant. Grants of stock options are generally subject to vesting over periods ranging from one to four years.

The Company recorded all stock-based compensation expense in the consolidated statements of operations as follows (in thousands):


		Three Months Ended March 31,					Three Months Ended September 30,				Nine Months Ended September 30,
		2022		2021			2022		2021		2022		2021
Cost of sales						Cost of sales	$	51	$	—	$	51	$	—
Research and development	Research and development	$	16,887	$	23,790	Research and development	16,107		21,860		52,692		70,429
General and administrative	General and administrative	16,046		29,270		General and administrative	15,389		23,414		49,782		81,028
Total stock-based compensation expense	Total stock-based compensation expense	$	32,933	$	53,060	Total stock-based compensation expense	$	31,547	$	45,274	$	102,525	$	151,457

Total stock-based compensation capitalized and included in inventory as of September 30, 2022 was $1.8 million. There was no stock-based compensation capitalized and included in inventory as of December 31, 2021.

As of ~~March 31,~~September 30, 2022, there was approximately ~~$239~~$189 million of total unrecognized compensation expense related to unvested stock options, SARs, RSUs, and the ~~ESPP.~~Company’s Employee Stock Purchase Plan, as amended (“ESPP”). This unrecognized non-cash compensation expense is expected to be recognized over a weighted-average period of approximately one year. This estimate does not include the impact of other possible stock-based awards that may be made during future periods.

The aggregate intrinsic value represents the total intrinsic value (the difference between the ~~Company's~~Company’s closing stock price on the last trading day of the period and the exercise price, multiplied by the number of in-the-money stock options and SARs) that would have been received by the holders had all stock option and SAR holders exercised their stock options and SARs on ~~March 31,~~September 30, 2022. This amount is subject to change based on changes to the closing price of the Company's common stock. The aggregate intrinsic value of stock options and SARs exercises and vesting of RSUs for the ~~three~~nine months ended ~~March 31,~~September 30, 2022 and 2021 was approximately ~~$5.6~~$19 million and ~~$81.5~~$381 million, respectively.

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Stock Options and Stock Appreciation Rights

The following is a summary of stock options and SARs activity under the 2015 Plan and 2005 Plan for the ~~three~~nine months ended ~~March 31,~~September 30, 2022:


		2015 Plan			2005 Plan				2015 Plan			2005 Plan
		Stock Options	Weighted-Average Exercise Price		Stock Options	Weighted-Average Exercise Price			Stock Options	Weighted-Average Exercise Price		Stock Options	Weighted-Average Exercise Price
Outstanding at December 31, 2021	Outstanding at December 31, 2021	3,635,837	$	42.60	68,225	$	109.52	Outstanding at December 31, 2021	3,635,837	$	42.60	68,225	$	109.52
Granted	Granted	433,774	77.98		—	—		Granted	558,181	71.21		—	—
Exercised	Exercised	(40,869)	16.11		(3,000)	31.10		Exercised	(132,420)	15.75		(3,000)	31.10
Canceled	Canceled	(11,368)	66.71		(1,500)	121.00		Canceled	(61,364)	88.58		(1,500)	121.00
Outstanding at March 31, 2022		4,017,374	$	46.62	63,725	$	112.94
Shares exercisable at March 31, 2022		1,296,368	$	55.96	63,725	$	112.94
Shares available for grant at March 31, 2022		2,666,535
Outstanding at September 30, 2022								Outstanding at September 30, 2022	4,000,234	$	46.78	63,725	$	112.94
Shares exercisable at September 30, 2022								Shares exercisable at September 30, 2022	2,739,565	$	39.72	63,725	$	112.94

The fair value of stock options granted under the 2015 Plan was estimated at the date of grant using the Black-Scholes option-pricing model with the following assumptions:


		Three Months Ended March 31,		Three Months Ended September 30,			Nine Months Ended September 30,
		2022	2021			2022	2021	2022	2021
Weighted average Black-Scholes fair value of stock options granted	Weighted average Black-Scholes fair value of stock options granted	$65.78	$116.26		Weighted average Black-Scholes fair value of stock options granted	$37.66	$203.51	$60.24	$156.86
Risk-free interest rate	Risk-free interest rate	1.4%-2.0%	0.5%-0.9%		Risk-free interest rate	3.0%-3.6%	0.6%-0.9%	1.4%-3.6%	0.5%-1.1%
Dividend yield	Dividend yield	—%	—%		Dividend yield	—%	—%	—%	—%
Volatility	Volatility	120.5%-130.6%	124.7%-140.3%		Volatility	122.2%-136.4%	126.4%-140.0%	120.5%-136.7%	124.7%-142.0%
Expected term (in years)	Expected term (in years)	4.1-5.3	4.1-5.3		Expected term (in years)	4.0-5.3	4.1-6.1	4.0-6.3	4.1-6.1

The total aggregate intrinsic value and weighted-average remaining contractual term of stock options and SARs outstanding under the 2015 Plan and 2005 Plan as of ~~March 31,~~September 30, 2022 was approximately ~~$154~~$9 million and ~~7.7~~7.4 years, respectively. The total aggregate intrinsic value and weighted-average remaining contractual term of stock options and SARs exercisable under the 2015 Plan and 2005 Plan as of ~~March 31,~~September 30, 2022 was approximately ~~$47~~$5 million and ~~6.6~~7.0 years, respectively.

Restricted Stock Units

The following is a summary of RSU activity for the ~~three~~nine months ended ~~March 31,~~September 30, 2022:

Number of
Shares Per Share
Weighted-
Average
Fair Value
Outstanding and unvested at December 31, 2021 819,828 $ 116.70
Restricted stock units granted 659,189 79.97
Restricted stock units vested (20,386) 174.64
Restricted stock units forfeited (31,444) 97.85
Outstanding and unvested at March 31, 2022 1,427,187 $ 99.32


	Number of Shares	Per Share Weighted- Average Fair Value
Outstanding and unvested at December 31, 2021	819,828	$	116.70
Granted	1,113,958	68.49
Vested	(379,802)	78.17
Forfeited	(114,976)	110.59
Outstanding and unvested at September 30, 2022	1,439,008	$	90.03

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Employee Stock Purchase Plan

The ~~Employee Stock Purchase Plan, as amended (the “ESPP”),~~ESPP was approved at the Company's annual meeting of stockholders in June 2013. The ESPP currently authorizes an aggregate of ~~600,000~~1.1 million shares of common stock to be ~~purchased.~~purchased, and the aggregate amount of shares will continue to increase 5% on each anniversary of its adoption up to a maximum of 1.65 million shares. The ESPP allows employees to purchase shares of common stock of the Company at each purchase date through payroll deductions of up to a maximum of 15% of their compensation, at 85% of the lesser of the market price of the shares at the time of purchase or the market price on the beginning date of an option period (or, if later, the date during the option period when the employee was first eligible to participate). As of ~~March 31,~~September 30, 2022, there were ~~137,139~~0.7 million 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 March 31,		Three Months Ended September 30,			Nine Months Ended September 30,
		2022	2021			2022	2021	2022	2021
Range of Black-Scholes fair values of ESPP shares granted	Range of Black-Scholes fair values of ESPP shares granted	$44.67-$79.74	$128.70-$238.85		Range of Black-Scholes fair values of ESPP shares granted	$23.59-$39.73	$83.47-$152.11	$23.59-$79.74	$83.47-$238.85
Risk-free interest rate	Risk-free interest rate	0.6%-1.4%	0.1%		Risk-free interest rate	3.2%-3.3%	0.1%-0.2%	0.6%-3.3%	0.1%-0.2%
Dividend yield	Dividend yield	—%	—%		Dividend yield	—%	—%	—%	—%
Volatility	Volatility	116.2%-142.9%	120.4%-159.4%		Volatility	103.0%-114.8%	114.9%-150.6%	103.0%-142.9%	114.9%-159.4%
Expected term (in years)	Expected term (in years)	0.5-2.0	0.5-2.0		Expected term (in years)	0.5-2.0	0.5-2.0	0.5-2.0	0.5-2.0

Note 1413 – Income Taxes

The Company evaluates the available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit use of the existing deferred tax assets. A significant piece of objective evidence evaluated was the cumulative loss incurred over the three-year period ended ~~March 31,~~September 30, 2022 and that the Company has historically generated pretax losses. Such objective evidence limits the ability to consider other subjective evidence, such as projections for future growth. On the basis of this evaluation, as of ~~March 31,~~September 30, 2022, the Company continued to maintain a full valuation allowance against its deferred tax assets, except to the extent Net Operating Losses (“NOLs”) ~~were~~have been used to reduce taxable ~~income during the quarter.~~income. The Company’s remaining U.S. Federal NOLs are subject to limitation in accordance with the 2017 Tax Cuts and Jobs Act (“TCJA”), which limits allowable NOL deductions to 80% of federal taxable income.

Effective January 1, 2022, a provision of the TCJA has taken effect creating a significant change to the treatment of research and experimental expenditures under Section 174 of the IRC (“Sec. 174 expenses”). Historically, businesses have had the option of deducting Sec. 174 expenses in the year incurred or capitalizing and amortizing the costs over five years. The new TCJA provision, however, eliminates this option and will require Sec. 174 expenses associated with research conducted in the U.S. to be capitalized and amortized over a five-year period. For expenses associated with research outside of the U.S., Sec. 174 expenses will be capitalized and amortized over a 15-year period.

The Company recognized federal and state income tax expense of ~~$0.6~~$2.4 million and $4.3 million, in total, for the three and nine months ended ~~March 31,~~September 30, 2022, respectively, and did 0tnot recognize federal or state income tax expense for the three and nine months ended ~~March 31,~~September 30, 2021. ~~During the three months ended March 31, 2022 and 2021, the~~The Company recognized ~~$2.1 million and $3.0 million, respectively, of~~ income tax expense related to foreign withholding tax on ~~royalties.~~royalties of $0.1 million and $2.3 million, respectively, for the three and nine months ended September 30, 2022 and $6.0 million and $12.6 million for the three and nine months ended September 30, 2021, respectively.

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Note 1514 – Commitments and Contingencies

Legal Matters

On November 12, 2021, Sothinathan Sinnathurai filed a purported securities class action in the U.S. District Court for the District of Maryland against the Company and certain members of senior management, captioned Sothinathan Sinnathurai v. Novavax, Inc., et al., No. 8:21-cv-02910-TDC (the “Sinnathurai Action”). On January 26, 2022, the court entered an order designating David Truong, Nuggehalli Balmukund Nandkumar, and Jeffrey Gabbert as co-lead plaintiffs in the Sinnathurai Action. The co-lead plaintiffs filed a consolidated amended complaint on March 11, 2022, alleging that the defendants made certain purportedly false and misleading statements concerning the Company’s ability to manufacture NVX-CoV2373 on a commercial scale and to secure the vaccine’s regulatory approval. The amended complaint defines the purported class as those stockholders who purchased the Company’s securities between February 24, 2021 and October 19, 2021. On April 25, 2022, defendants filed a motion to dismiss the consolidated amended complaint. On June 9, 2022, the co-lead plaintiffs filed an opposition to the motion to dismiss and on July 11, 2022, the Company filed a reply brief. The matter is now fully briefed.The Court has not indicated whether it intends to schedule any hearing on the motion before issuing a ruling.

After the Sinnathurai Action was filed, 3six derivative lawsuits were ~~filed~~filed: (i) Robert E. Meyer v. Stanley C. Erck, et al., No. 8:21-cv-02996-TDC (the “Meyer Action”), (ii) Shui Shing Yung v. Stanley C. Erck, et al., No. 8:21-cv-03248-TDC (the “Yung Action”), (iii) William Kirst, et al. v. Stanley C. Erck, et al., No. 8:22-cv-00024-TDC (the “Kirst Action”), (iv) Amy Snyder v. Stanley C. Erck, et al., No. 8:22-cv-01415-TDC (the “Snyder Action”), (v) Charles R. Blackburn, et al. v. Stanley C. Erck, et al., No. 1:22-cv-01417-TDC (the “Blackburn Action”), and ~~are currently pending~~(vi) Diego J. Mesa v. Stanley C. Erck, et al. (the “Mesa Action”). The Meyer, Yung, Snyder, and Blackburn Actions were filed in the U.S. District Court for the District of ~~Maryland: Robert E. Meyer v. Stanley C. Erck, et al., No. 8:21-cv-02996-TDC (the “Meyer Action”), Shui Shing Yung v. Stanley C. Erck, et al., No. 8:21-cv-03248-TDC (the “Yung Action”),~~Maryland. The Kirst Action was filed in the Circuit Court for Montgomery County, Maryland, and ~~William Kirst, et al. v. Stanley C. Erck, et al., No. 8:22-cv-00024-TDC (the “Kirst Action”).~~shortly thereafter removed to the U.S. District Court for the District of Maryland by the defendants. The Mesa Action was filed in the Delaware Court of Chancery. The derivative lawsuits name members of the board of directors and certain members of senior management as defendants. The ~~company~~Company is deemed a nominal defendant. The plaintiffs assert derivative claims arising out of substantially the same alleged facts and circumstances as the Sinnathurai Action. Collectively, the derivative complaints assert claims for breach of fiduciary duty, insider selling, unjust enrichment, violation of federal securities law, abuse of control, waste, and mismanagement. Plaintiffs seek declaratory and injunctive relief, as well as an award of monetary damages and attorneys’ fees. ~~The Company removed~~

On July 21, 2022, the Court issued a memorandum opinion and order remanding the Kirst Action ~~from the Circuit Court for Montgomery County, Maryland, shortly after the case was filed. On February 7, 2022, the plaintiffs in the Kirst Action filed a motion to remand the case~~ to state court. ~~The Company has opposed the remand motion. The parties finished briefing the remand motion on March 8, 2022, and await the Court’s decision.~~ On February 4, 2022, the Court entered an order consolidating the Meyer and Yung Actions (the ~~“Consolidated~~“First Consolidated Derivative Action”). The plaintiffs in the First Consolidated Derivative Action filed their consolidated derivative complaint on April 25, 2022. ~~The parties to~~On May 10, 2022, the Court entered an order in the First Consolidated Derivative Action ~~intend~~granting the parties’ request to stay all proceedings and deadlines pending the earlier of dismissal or the filing of an answer in the Sinnathurai Action. On June 10, 2022, the Snyder and Blackburn Actions were filed. On October 5, 2022, the court entered an order granting a request by the plaintiffs in the First Consolidated Derivative Action and the Snyder and Blackburn Actions to consolidate all three actions and appoint co-lead plaintiffs and co-lead and liaison counsel (the “Second Consolidated Derivative Action”). The co-lead plaintiffs in the Second Consolidated Derivative Action will designate an operative complaint or file a ~~stipulation and proposed~~consolidated amended complaint by November 21, 2022. On August 30, 2022, the Mesa Action was filed. On October 3, 2022, the court entered an order granting the parties’ request to ~~temporarily~~ stay all proceedings and deadlines in the ~~Consolidated Derivative~~Mesa Action pending the earlier of dismissal of the Sinnathurai Action or the filing of an answer to the operative complaint in the Sinnathurai Action. The financial impact of the claims is not estimable.

On February 26, 2021, a Novavax stockholder named Thomas Golubinski filed a derivative complaint against members of the Novavax board of directors and members of senior management in the Delaware Court of Chancery (the “Court”), captioned Thomas Golubinski v. Richard H. Douglas, et al., No. 2021-0172-JRS. The Company is deemed a nominal defendant. Golubinski challenged equity awards made in April 2020 and in June 2020 on the ground that they were “spring-loaded,” that is, made at a time when such board members or members of senior management allegedly possessed undisclosed positive material information concerning the Company. The complaint asserted claims for breach of fiduciary duty, waste, and unjust enrichment. The plaintiff sought an award of damages to the Company, an order rescinding both awards or requiring disgorgement, and an award of attorneys’ fees incurred in connection with the litigation. On May 10, 2021, the defendants moved to dismiss the complaint in its entirety. On June 17, 2021, the Company’s stockholders voted FOR ratification of the April 2020 awards and ratification of the June 2020 awards. Details of the ratification proposals are set forth in the Company’s Definitive Proxy Statement filed with the SEC on May 3, 2021. The results of the vote were disclosed in the Company’s Current Report on Form 8-K filed with the SEC on June 24, 2021. Thereafter, the plaintiff stipulated that, as a result of the outcome of the June 17, 2021 vote, the plaintiff no longer intends to pursue the lawsuit or any claim arising from the April 2020 and June 2020 awards. On August 23, 2021, the plaintiff filed a motion seeking an award of attorneys’ fees and expenses, to which the defendants filed an opposition. The motion was argued before the Court on October 18, 2022. The same day, the Court issued a bench ruling denying the plaintiff’s fee application in its entirety and entered an order to that effect. Under a prior Court order, the case was automatically dismissed with prejudice upon denial of the plaintiff’s fee application.

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On March 29, 2022, Par Sterile Products, LLC (“Par”) submitted a demand for arbitration against the Company with the American Arbitration Association, alleging that the Company breached certain provisions of the Manufacturing and Services Agreement (“MSA”) that the Company entered into with Par in September 2020 to provide fill-finish manufacturing services for NVX-CoV2373. The matter is at a preliminary stage and therefore the potential loss is not reasonably estimable. The parties are engaged in discovery and arbitration is scheduled for July 2023. While the Company maintains that no breach of the MSA has occurred and intends to vigorously defend the matter, if the final resolution of the matter is adverse to the Company, it could have a material impact on the ~~Company's~~Company’s financial position, results of operations, or cash flows.

The Company is also involved in various legal proceedings arising in the normal course of business. Although the outcomes of these legal proceedings are inherently difficult to predict, management does not expect the resolution of these legal proceedings to have a material adverse effect on the ~~Company's~~Company’s financial position, results of operations, or cash flows.

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~~Note 16~~ – ~~Subsequent Events~~

~~In April 2022, the Company was granted conditional marketing authorization for NVX-CoV2373 by Swissmedic, the regulatory authority in Switzerland.~~

~~In April 2022, Takeda received marketing and manufacturing approval for NVX-CoV2373 from the Japan Ministry of Health, Labour and Welfare.~~

In April 2022, SIIPL was granted EUA by the Thailand Food and Drug Administration for NVX-CoV2373, to be manufactured and marketed by SIIPL under the brand name Covovax™, and EUA by the Drugs Controller General of India for the use of NVX-CoV2373 in adolescents aged 12 to 17 years, to be manufactured and marketed in India as Covovax™.

In April 2022, the U.S. government extended the prescribed time to meet its July 2021 instructions related to the Company’s agreement under the U.S. government partnership formerly known as Operation Warp Speed (“OWS”) requiring that the Company align with the U.S. Food and Drug Administration (“FDA”) on analytic methods before conducting additional U.S. manufacturing, to July 2022.

In April 2022, the Company announced initial results from the Phase 1/2 clinical trial of its COVID-Influenza Combination Vaccine (“CIC”). The CIC combines NVX-CoV2373 and its quadrivalent influenza vaccine candidate. The CIC trial demonstrated that formulating the combination vaccine is feasible, well-tolerated, and immunogenic.

In April 2022, the Company announced that the FDA’s Vaccines and Related Biological Products Advisory Committee (“VRBPAC”) will review NVX-CoV2373 at a meeting scheduled for June 7, 2022. VRBPAC reviews and evaluates data regarding the safety and efficacy of vaccines and related biological products that are intended for use in the prevention, treatment, or diagnosis of human diseases.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Any statements in the discussion below and elsewhere in this Quarterly Report on Form 10-Q (this ~~"Quarterly Report"~~“Quarterly Report”) about expectations, beliefs, plans, objectives, assumptions, or future events or performance of Novavax, Inc. (“Novavax,” and together with its wholly owned subsidiaries, the “Company,” “we,” or “us”) are not historical facts and are forward-looking statements. Such forward-looking statements include, without limitation, statements about our capabilities, goals, expectations regarding future revenue and expense levels, and capital raising activities; our operating plans and prospects; potential market sizes and demand for our product candidates; the efficacy, safety, and intended utilization of our product candidates; the development of our clinical-stage product candidates and our recombinant vaccine and adjuvant technologies; the development of our preclinical product candidates; our expectations related to enrollment in our clinical trials; the conduct, timing, and potential results from clinical trials and other preclinical studies; plans for and potential timing of regulatory filings; our expectation of manufacturing capacity, timing, production, distribution, and delivery for our coronavirus vaccine candidate (“~~NVX-CoV2373"~~NVX-CoV2373”) by us and our partners; our estimate of the number of individuals who may potentially be reached by NVX-CoV2373; our expectations with respect to the anticipated ongoing development and commercialization or licensure of NVX-CoV2373, including efforts to expand the NVX-CoV2373 label worldwide as a booster, and to various age groups and geographic locations, and our seasonal quadrivalent influenza vaccine, previously known as NanoFlu; the expected timing, content, and outcomes of regulatory actions; funding from the U.S. government partnership formerly known as Operation Warp Speed (“OWS”), the U.S. Department of Defense (“DoD”), and the Coalition for Epidemic Preparedness Innovations (“CEPI”), and payments from the Bill & Melinda Gates Foundation (“BMGF”); funding under our advance purchase agreements and supply agreements and amendments to, or termination of, any such agreement; our available cash resources and usage and the availability of financing generally; plans regarding partnering activities and business development initiatives; and other matters referenced herein. Generally, forward-looking statements can be identified through the use of words or phrases such as “believe,” “may,” “could,” “will,” “would,” “possible,” “can,” “estimate,” “continue,” “ongoing,” “consider,” “anticipate,” “intend,” “seek,” “plan,” “project,” “expect,” “should,” “would,” “aim,” or “assume,” the negative of these terms, or other comparable terminology, although not all forward-looking statements contain these words.

Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs and expectations about the future of our business, future plans and strategies, projections, anticipated events and trends, the economy, and other future conditions. Forward-looking statements involve estimates, assumptions, risks, and uncertainties that could cause actual results or outcomes to differ materially from those expressed or implied in any forward-looking statements, and, therefore, you should not place considerable reliance on any such forward-looking statements. Such risks and uncertainties include, without limitation, challenges satisfying, alone or together with partners, various safety, efficacy, and product characterization requirements, including those related to process qualification and assay validation, necessary to satisfy applicable regulatory authorities, such as the U.S. Food and Drug Administration (“FDA”), World Health Organization (“WHO”), United Kingdom (“UK”) Medicines and Healthcare Products Regulatory Agency, ~~(“MHRA”),~~ the European Medicines Agency, ~~(“EMA”),~~ the Republic of Korea’s Ministry of Food and Drug Safety, ~~(“MFDS”),~~ or Japan’s Ministry of Health, Labour and ~~Welfare (“MHLW”);~~Welfare; unanticipated challenges or delays in conducting clinical trials; difficulty obtaining scarce raw materials and supplies; resource constraints, including human capital and manufacturing capacity, constraints on the ability of Novavax to pursue planned regulatory pathways, alone or with partners, in multiple jurisdictions simultaneously, leading to staggering of regulatory filings, and potential regulatory actions; challenges meeting contractual requirements under agreements with multiple commercial, governmental, and other entities; and other risks and uncertainties identified in Part I, Item 1A “Risk Factors” of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2021, which may be detailed and modified or updated in other documents filed with the United States Securities and Exchange Commission (“SEC”) from time to time, and are available at www.sec.gov and at www.novavax.com. You are encouraged to read these filings as they are made.

Information in this Quarterly Report includes a financial measure that was not prepared in accordance with U.S. generally accepted accounting principles (“GAAP”), which we refer to as adjusted cost of sales. We are presenting this non-GAAP financial measure to assist an understanding of our business and its performance. Adjusted cost of sales includes an estimate of standard manufacturing costs that were previously expensed to research and development prior to regulatory approvals for NVX-CoV2373 that would otherwise have been capitalized to inventory. Any non-GAAP financial measures presented are not, and should not be viewed as, substitutes for financial measures required by GAAP, have no standardized meaning prescribed by GAAP, and may not be comparable to the calculation of similar measures of other companies.

We cannot guarantee future results, events, level of activity, performance, or achievement. Any or all of our forward-looking statements in this Quarterly Report may turn out to be inaccurate or materially different from actual results. Further, any forward-looking statement speaks only as of the date when it is made, and we undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, unless required by law. New factors emerge from time to time, and it is not possible for us to predict which factors will arise. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

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Overview

Novavax, Inc., together with our wholly-owned subsidiaries, is a biotechnology company that promotes improved health globally through the discovery, development, and commercialization of innovative vaccines to prevent serious infectious ~~diseases around the world.~~diseases. Our proprietary recombinant technology platform harnesses the power and speed of genetic engineering to efficiently produce highly immunogenic nanoparticle vaccines designed to address urgent global health needs.

Our vaccine candidates are genetically engineered nanostructures of conformationally correct recombinant proteins that mimic those found on natural pathogens. This technology enables the immune system to recognize the right target proteins from different angles and develop protective antibodies. We believe that our vaccine technology may lead to the induction of a differentiated immune response that may be more efficacious than naturally occurring immunity or other vaccine approaches. Our vaccine candidates also incorporate our proprietary saponin-based Matrix-M™ adjuvant to enhance the immune response and stimulate higher levels of functional antibodies and induce a cellular immune response.

We have developed a COVID-19 vaccine (“NVX-CoV2373,” “Nuvaxovid™,” ~~“Covavax”~~“Covovax™,” “Novavax COVID-19 Vaccine, Adjuvanted”), and are developing an influenza vaccine candidate, a COVID-19-Influenza Combination (“CIC”) vaccine candidate, and additional vaccine ~~candidates.~~candidates, including for Omicron subvariants (NVX-CoV2515 for Omicron BA.1 specific vaccine), and bivalent formulations with prototype vaccine (“NVX-CoV2373”). NVX-CoV2373 has received approval, interim authorization, provisional approval, conditional marketing authorization (“CMA”), and emergency use authorization (“EUA”) from multiple regulatory authorities ~~globally.~~globally for both adult and adolescent populations as a primary series and for both homologous and heterologous booster indications. In addition to COVID-19 and seasonal influenza, our other areas of focus include respiratory syncytial virus (“RSV”) and malaria.

Technology Overview

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

Recombinant Nanoparticle Vaccine Technology

Once a pathogenic threat has been identified, the genetic sequence encoding the antigen is selected for subsequent use in developing the vaccine construct. The genetic sequence may be optimized to enhance protein stability or confer resistance to degradation. This genetic construct is inserted into the baculovirus Spodoptera frugiperda (“Sf9/BV”) insect cell-expression system, which enables efficient, large-scale expression of the optimized protein. The Sf9/BV system produces proteins that are properly folded and modified – which can be critical for functional, protective immunity – as the vaccine antigen. Protein antigens are purified and organized around a polysorbate-based nanoparticle core, in a configuration that resembles their native presentation. This results in a highly immunogenic nanoparticle that is ready to be formulated with Matrix-M™ adjuvant.

Matrix-M™ Adjuvant

Our proprietary Matrix-M™ adjuvant has been a key differentiator within our platform. This adjuvant has demonstrated potent, well-tolerated, and durable efficacy by stimulating the entry of antigen presenting cells (“APCs”) into the injection site and enhancing antigen presentation in local lymph nodes. This in turn activates APCs, T-cell and B-cell populations, plasma cells, and high affinity antibodies, thereby boosting immune response. This potent mechanism of action enables a lower dose of antigen required to achieve the desired immune response and we believe thereby contributes to increased vaccine supply and manufacturing capacity. These immune-boosting and dose-sparing capabilities contribute to the adjuvant’s highly unique profile.

NVX-CoV2373 Regulatory and Licensure

We continue to make progress in advancing NVX-CoV2373 toward regulatory approvals. We have received numerous authorizations globally ~~which collectively~~within the adult population, aged 18 and older, and the adolescent population, aged 12 through 17, for primary series and both homologous and heterologous booster indications. Collectively, these indications have the potential to reach over six billion individuals. To date, we have received approval, interim authorization, provisional approval, CMA, and EUA for both adult and adolescent populations, and we ~~expect~~are working to ~~initiate additional rolling submissions~~expand our label worldwide. We continue to work closely with governments, regulatory authorities, and non-governmental organizations in our commitment to facilitate equitable global access to our COVID-19 vaccine.

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For the territories in which our vaccine has gained authorization, NVX-CoV2373 is marketed under the brand ~~name of~~names (i) Nuvaxovid™ COVID-19 Vaccine (SARS-CoV-2 rS ~~[Recombinant, adjuvanted]) or as~~Recombinant, adjuvanted), (ii) Covovax™ (manufacturing and commercialization by the Serum Institute of India Pvt. Ltd. (“SIIPL”))., or (iii) Novavax COVID-19 Vaccine, Adjuvanted.

2022

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Through the date of filing this Quarterly Report, the below is a summary of regulatory authorizations for NVX-CoV2373:

(1) Regulatory approval received in partnership with SIIPL.

~~(1)~~(2) Regulatory manufacturing and marketing approval received by partner Takeda Pharmaceutical Company Limited (“Takeda”).

~~(2) Regulatory approval received in partnership with SIIPL.~~

InDuring the ~~first~~third quarter of 2022, we ~~have~~ completed additional regulatory submissions in major markets for both adult and adolescent ~~populations.~~populations for primary and booster indications. We are in active discussions with regulatory authorities and remain focused on ~~seeking additional authorizations~~expanding our label in multiple countries for NVX-CoV2373.

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Below is a summary and status of our regulatory submissions completed and awaiting authorization decisions, through the date of filing this Quarterly Report.

(1) Regulatory filing submitted by our partner, SK bioscience, Co., Ltd. (“SK bioscience”).

~~(2) Regulatory filing submitted in partnership with SIIPL.~~

Clinical Pipeline

Our clinical pipeline encompasses vaccine candidates spanning multiple therapeutic areas including coronavirus, seasonal influenza, and RSV, ~~and~~in addition to providing Matrix-MTM adjuvant for collaborations ~~for~~investigating the prevention of malaria. Our COVID-19 vaccine candidate, NVX-CoV2373, is our leading product, having received approval, interim authorization, provisional approval, CMA, and EUA from multiple regulatory authorities globally.

We advanced NVX-CoV2373 through two pivotal Phase 3 clinical trials that demonstrated high efficacy against both the original COVID-19 strain and commonly circulating COVID-19 variants of concern, ~~(“VoC”),~~ while ~~maintaining~~displaying a favorable safety profile. We also advanced our influenza vaccine through a Phase 3 clinical trial, which demonstrated positive top-line results and achieved statistical significance in key secondary endpoints. We initiated a trial of a COVID-19-Influenza Combination vaccine (“CIC”) consisting of our influenza vaccine and NVX-CoV2373. In ~~April~~October 2022, we announced ~~initial~~additional data from the Phase 3 PREVENT-19 trial and new results from a Lot Consistency Study (Study 307). New PREVENT-19 data added support for the use of prototype Novavax vaccine for homologous boosting in adults and adolescents aged 12 through 17. In all adults, boosted responses were long-lived and were demonstrated to be relevant against currently circulating variants such as Omicron. The Lot Consistency trial met its primary endpoint, showing that three lots of COVID-19 vaccine induced comparable immune responses in adults aged 18 through 49, thereby demonstrating the consistency of the commercial manufacturing process. Additional findings showed utility of the prototype vaccine as a heterologous booster, inducing broad immune responses against contemporary Omicron variants.

We remain focused on expanding our NVX-CoV2373 vaccine label within the booster and adolescent market following global regulatory authorizations. In August 2022, we initiated the Phase 2b/3 Hummingbird global clinical trial. The trial will evaluate the safety, effectiveness (immunogenicity), and efficacy of two primary doses of NVX-CoV2373 given 21 days apart in younger children (aged six to 11 years), followed by a booster dose at six months after the primary vaccination series. We enrolled the sentinel cohort in the first age group (aged six to 11 years) in the United States. Based on initial supportive safety and tolerability data analyzed by an independent Safety Monitoring Committee, we have progressed to recruiting the full age cohort. Furthermore, through ongoing booster studies in our clinical trials and continued development of our COVID-19 variant strain vaccine candidates, we continue to evaluate vaccine performance. We remain confident in the utility of our prototype vaccine against emerging variants, as we continue to respond to the evolving COVID landscape. We are currently analyzing preliminary clinical data from our ongoing Omicron BA.1 monovalent and bivalent strain change trial (study 311). Study 311 achieved its strain-change endpoint using BA.1 as the model omicron subvariant vaccine. However, the magnitude and breadth of the immune responses following boosting with the prototype vaccine reinforces our belief that a strain change may not be required for our technology. No significant benefit was observed for the bivalent formatted vaccine. When evaluating the response to the forward drifted BA.5 omicron subvariant, neither the BA.1 vaccine nor the prototype/BA.1 bivalent vaccine offered any advantage. We expect to leverage these clinical insights to advance additional regulatory approvals of our COVID-19 vaccine for primary, booster, and pediatric indications globally, amidst the ongoing and evolving COVID-19 pandemic.

Additionally, we are developing our quadrivalent nanoparticle influenza vaccine (qNIV) candidate, previously known as NanoFlu, which we previously advanced through a successful Phase 3 study announced in September 2021, demonstrating the utility for a stand-alone influenza vaccine or used in a combination vaccine. We continue to progress our CIC vaccine candidate, which combines NVX-CoV2373 and our qNIV approach. In October 2022, we announced positive results from the Phase 1/2 CIC clinical trial demonstrating the CIC vaccine’s ability to generate both antibody and polyfunctional CD4+ T-cell (lymphocytes that help coordinate the immune response) responses against severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2) and homologous and heterologous influenza strains. We intend to continue the clinical development of CIC ~~demonstrating that formulating the combination vaccine is well-tolerated and immunogenic. Modeling results showed that combined formulation has the potential~~with a follow-up trial to ~~reduce total antigen amount by up to 50% overall, optimizing production and delivery. Additionally,~~begin in late 2022.

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Furthermore, we remain interested in ~~further~~continuing the development of both our RSV Program for respiratory syncytial virus fusion (F) protein nanoparticle vaccine candidate (“RSV F Vaccine”)~~. Ongoing~~ and Matrix-MTM adjuvant collaborations for malaria. There is an ongoing Phase 3 ~~trials are~~trial being conducted by our partner, Jenner Institute, University of Oxford, for R21, a malaria candidate ~~currently under development by the University of Oxford in partnership with SIIPL,~~ which is formulated using our Matrix-M™ adjuvant. In September 2022, positive results from an ongoing Phase 1/2b study were published in

The Lancet Infectious Diseases

~~We remain focused on bringing our NVX-CoV2373 vaccine candidate to market~~ reporting safety, immunogenicity, and efficacy results at 12 months following ~~global regulatory authorizations. Through ongoing booster studies in our clinical trials, as well as the development~~administration of COVID-19 variant strain vaccine candidates, we continue to collect data to characterize and improve vaccine performance. We expect to leverage these clinical insights to advance the use and additional regulatory approvals of our COVID-19 vaccine for both primary vaccination around the globe, to use within a booster ~~setting,~~vaccination. A booster dose of R21 formulated with our Matrix-M™ adjuvant at one year following the primary three-dose regimen maintained high efficacy against first and ~~for~~multiple episodes of clinical malaria. The booster vaccine induced antibody concentrations that is related to vaccine efficacy. The trial is ongoing to assess long-term follow-up of the ~~pediatric population amidst~~participants and the ~~ongoing and evolving COVID-19 pandemic.~~value of further booster vaccinations.

The pipeline chart below summarizes the core clinical and preclinical development programs that we are focusing on in the near-term.

(1) Supported by OWS, DoD, CEPI, and BMGF.

(2) Authorized for provisional approval, CMA, or EUA in select geographies under trade names NuvaxovidTM and CovovaxTM. ~~Request submitted to~~Received EUA from the ~~FDA for EUA.~~U.S. FDA. PREVENT-19, a Phase 3 clinical trial in the U.S. and Mexico; Ongoing PREVENT-19 pediatric expansion in the U.S.; Phase 3 clinical trial in the UK; Ongoing Phase 2b clinical trial in South Africa. We, along with our partners, will have commercial rights in authorized geographies to sell and distribute NVX-CoV2373.

(3) Ongoing Phase 3 strain change trial.

Business Highlights

~~First~~Third Quarter 2022 and Recent Highlights

Expanded ~~Worldwide Authorizations for~~ COVID-19 ~~Primary and Booster Vaccination~~Vaccine in Adult Population Aged ~~18+~~18 and Older

•~~Received manufacturing~~Nuvaxovid™ booster authorized for emergency use in the U.S., European Union (“EU”), Switzerland, United Arab Emirates (UAE) and ~~marketing approval~~New Zealand, with ~~our partner Takeda,~~submissions completed to WHO, as well as in ~~Japan~~Great Britain and South Korea

◦Recommendations provided by U.S. Centers for ~~Nuvaxovid™~~Disease Control and Prevention (“CDC”), E.U.’s Committee for ~~primary, heterologous~~Medicinal Products for Human Use and ~~homologous boosting indications~~Switzerland’s Federal Office of Public Health

•~~Granted authorization (emergency~~Nuvaxovid™ granted import and use ~~provisional, interim or conditional)~~permit in Israel for ~~Nuvaxovid™ in Great Britain, Canada, Australia, Switzerland, Singapore~~primary series and ~~New Zealand~~as a booster

•~~Received~~Covovax™ granted full ~~regulatory approval for Nuvaxovid™~~product registration in South ~~Korea with our partner SK bioscience, becoming~~Africa for primary series

Expanded COVID-19 Vaccine in Adolescent Population Aged 12 Through 17

•Nuvaxovid™ primary series authorized for emergency use in the ~~first protein-based vaccine approved in~~U.S., EU, Japan, Great Britain, Australia, South Korea, Taiwan, Switzerland, Thailand, UAE and New Zealand, with submissions completed to WHO and in Singapore

◦Recommendation provided by U.S. CDC

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•Nuvaxovid™ granted import and use permit in Israel for primary series and as a booster

COVID-19 Vaccine Manufacturing and Supply

•Delivered over 94 million doses of NVX-CoV2373 globally to date

•~~Granted EUA for Covovax™ with our partner SIIPL in Thailand and Bangladesh~~Completed submission to add Novavax CZ as an EU manufacturing site

•~~Submitted request for EUA~~Solidified manufacturing and supply network ensuring capacity to ~~the U.S. FDA and, with SIIPL, filed for EUA in South Africa~~

◦~~FDA scheduled Vaccines and Related Biological Products Advisory Committee (“VRBPAC”) meeting for June 7th, 2022~~support ongoing global demand

~~Progressed~~ COVID-19 ~~Vaccine Regulatory Pathway for Children Aged 12-17 Years~~Clinical Development Program

•~~Granted EUA~~Announced topline results from Phase 3 Boosting Trial for ~~adolescents in India with SIIPL for Covovax™~~NVX-CoV2515, meeting the primary strain-change endpoint and reaffirming that prototype vaccine induces broadly cross-reactive responses, suggesting utility against current and future variants

•~~Submitted requests for authorization for Nuvaxovid™~~PREVENT-19 Phase 3 NVX-CoV2373 homologous booster data support benefits against variants

◦Following a single homologous booster dose, adult participants demonstrated increased anti-spike IgG levels and increased functional antibody levels measured by hACE2 receptor inhibition against Omicron BA.1, BA.2 and BA.5 variants, approximating levels observed in ~~adolescents to~~our Phase 3 efficacy studies

◦Robust booster responses were consistent between younger (less than 65 years of age) and older (greater than 65 years of age) adults, and independent of whether the ~~European Union, Great Britain, Australia~~booster dose was administered eight or 11 months after the primary series, offering further evidence of broad utility and ~~New Zealand~~duration of response with NVX-CoV2373

◦Adolescent participants following a single booster dose demonstrated neutralizing titers were 2.7-fold higher than those seen with primary vaccination and a broad antibody response against Omicron BA.1, BA.2 and BA.5 variants

•~~Filed~~Demonstrated NVX-CoV2373 induced consistent immune responses when boosted on top of mRNA or AD26 vaccines, and achieved primary endpoint of Lot Consistency study for ~~approval~~adults aged 18 through 49, demonstrating a consistent manufacturing process

◦When used as a heterologous boost (after either 2 or 3 doses of ~~Nuvaxovid™ with SK bioscience, for adolescents~~mRNA OR 1 or 2 doses of AD26) NVX-CoV2373 generated antibody levels previously found to be related to efficacy in ~~South Korea~~the PREVENT-19 Phase 3 trial

•~~Additional~~Initiated Phase 2b/3 Hummingbird global ~~submissions planned throughout~~clinical trial for NVX-CoV2373 in younger children aged six months through 11 years, enrolling the ~~second quarter of 2022~~sentinel cohort in the first group aged six through 11 years in the U.S.

~~CIC~~◦Based on initial supportive safety and tolerability data analyzed by an independent Safety and Monitoring Committee, progressed to recruiting the full age cohort

COVID-19-Influenza Combination (CIC) Vaccine Candidate Clinical Development

•Announced ~~initial~~positive cellular immunity results of CIC Phase 1/2 trial ~~combining~~following initial results announced in April, demonstrating ability to generate immune responses, including both antibody and polyfunctional CD4+ T-cell responses, against SARS-CoV-2 and homologous and heterologous influenza strains

◦Generated robust antibody responses against both prototype and Omicron BA.1 strains of SARS-CoV-2 and influenza antigens

◦Safety and tolerability profile was consistent with standalone NVX-CoV2373 prototype vaccine and quadrivalent influenza vaccine candidate

◦~~Immune response confirmed in stand-alone influenza vaccine candidate and CIC vaccine candidate with potential path forward for both~~

◦~~Demonstrated combined formulation has potential to reduce total antigen amount by up to 50% overall~~

◦~~Expect to begin CIC~~ Phase 2 trial expected to begin by the end of 2022

~~COVID-19 Vaccine Supply and Distribution~~

•~~Delivered Nuvaxovid™ globally to European Union, Canada, Australia, Thailand, Singapore and New Zealand and with SK bioscience to South Korea~~

~~COVID-19 Vaccine Clinical Development~~

•~~UK Phase 3 study demonstrated ongoing durability of protection against infection and disease in long term follow-up (median of 101 days)~~

◦~~82.5% efficacy in protection against all COVID-19 infection, as measured by PCR+ or anti-N seroconversion~~

◦~~82.7% overall efficacy against disease~~

◦~~100% efficacy against severe disease~~

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•~~Continued rapid development and assessment of strain change, including Omicron-specific clinical studies with topline readout expected in third quarter of 2022~~

◦~~Evaluating benefit of Omicron-specific (BA.1 and BA.2) or bivalent vaccine compared to current prototype, with first doses expected this month~~

•Progressed South Africa Phase 2 study with ongoing administration in participants to evaluate a three-dose regimen and different dosing schedules in -immunocompromised participants, providing flexibility to national delivery programs

◦~~Topline results expected in fourth quarter of 2022~~

•~~Progressed PREVENT-19 Phase 3 study in adolescents aged 12-17 years~~

◦~~Achieved primary effectiveness endpoint and demonstrated comparability to adult population~~

◦~~Demonstrated 80% overall clinical efficacy and 82% efficacy against Delta variant~~

◦~~Vaccine was generally well-tolerated and safety profile was consistent with previous studies~~

◦~~Initiated booster study to evaluate safety and immunogenicity of a third dose~~

•~~Continued clinical trials in younger age groups to build on positive pediatric data~~

◦~~Expect to initiate PREVENT-19 Phase 3 trial in younger age groups (5-11 years) by third quarter of 2022~~

◦~~SIIPL generated positive data from Phase 2/3 India study in children ages 2-17 years showing robust immune responses with favorable reactogenicity profiles~~

•~~Announced participation in Phase 1/2 heterologous booster study sponsored by National Institute of Allergy and Infectious Diseases~~

◦~~Evaluating safety, reactogenicity and immunogenicity of heterologous boosters in approximately 180 individuals aged 18 years or older~~

◦~~Topline results expected later this year and full results in 2023~~

•Announced participation in Phase 3 study in the United Arab Emirates evaluating boost with NVX-CoV2373 in participants who were immunized with an inactive COVID-19 vaccine in individuals aged 18 years or older

Sales of Common Stock

During the three months ended March 31, 2022, we sold 2.2 million of shares of our common stock resulting in net proceeds of approximately $179 million, under our most recent At Market Issuance Sales agreement entered in June 2021 (the “June 2021 Sales Agreement”), which allows us to issue and sell up to $500 million in gross proceeds of shares of our common stock. As of ~~March 31,~~September 30, 2022, the remaining balance under our June 2021 Sales Agreement was approximately $318 million.

During the ~~three~~nine months ended ~~March 31,~~September 30, 2021, we sold 2.6 million shares of our common stock resulting in net proceeds of approximately $565 million, under our various At Market Issuance Sales agreements then in effect.

Critical Accounting Policies and Use of Estimates

~~There~~

The discussion and analysis of our financial condition and results of operations are ~~no material changes~~based upon our consolidated financial statements (unaudited) and the accompanying notes, which have been prepared in accordance with generally accepted accounting principles in the United States.

The preparation of our consolidated financial statements requires us to ~~our~~make estimates, assumptions, and judgments that affect the reported amounts of assets, liabilities, and equity and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Our critical accounting policies ~~as described in~~and estimates are included under Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, as filed with the ~~SEC.~~SEC, and are updated for inventory valuation below.

Inventory Valuation

We periodically analyze our inventories for excess amounts or obsolescence and write down obsolete or otherwise unmarketable inventory to its estimated net realizable value based on assumptions about expected future demand and market conditions. Our assumptions about expected future demand are inherently uncertain and if we were to change any of these judgments or estimates, it could cause a material increase or decrease in the amount of inventory write down that we report in a particular period. Expense incurred related to excess inventory and obsolete inventory is recorded as a component of cost of sales in the consolidated statement of operations.

Recent Accounting Pronouncements Not Yet Adopted

See “Note 2―Summary of Significant Accounting Policies” included in our Notes to Consolidated Financial Statements (under the caption “Recent Accounting Pronouncements”).

Results of Operations

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

Three Months Ended ~~March 31,~~September 30, 2022 and 2021

Revenue


		Three Months Ended March 31,							Three Months Ended September 30,
		2022		2021		Change			2022		2021		Change
Revenue (in thousands):	Revenue (in thousands):							Revenue (in thousands):
Product sales	Product sales	$	585,628	$	—	$	585,628	Product sales	$	626,091	$	—	$	626,091
Grants	Grants	99,301		446,893		(347,592)		Grants	106,273		135,007		(28,734)
Royalties and other	Royalties and other	19,042		336		18,706		Royalties and other	2,213		43,837		(41,624)
Total revenue	Total revenue	$	703,971	$	447,229	$	256,742	Total revenue	$	734,577	$	178,844	$	555,733

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Revenue for the three months ended ~~March 31,~~September 30, 2022 was ~~$704.0~~$734.6 million as compared to ~~$447.2~~$178.8 million for the same period in 2021, an increase of ~~$256.7~~$555.7 million. Revenue for the three months ended ~~March 31,~~September 30, 2022 was primarily comprised of revenue from product sales of NVX-CoV2373 and ~~to a lesser extent,~~ revenue for services performed under the agreement with the U.S. government partnership formerly known as OWS (“OWS Agreement”). Revenue for the three months ended ~~March 31,~~September 30, 2021 was primarily comprised of revenue for services performed under the OWS Agreement and our funding agreements with CEPI. The increase in revenue was due to the commencement of ~~product~~commercial sales of NVX-CoV2373 in 2022, partially offset by decreased development activities under ~~the OWS Agreement as we approach anticipated commercialization of NVX-CoV2373.~~our funding agreements with CEPI.

We expect revenue in 2022 to significantly increase as compared to 2021 due to product sales of NVX-CoV2373 under various supply agreements, sometimes referred to as advance purchase agreements (“APAs”), as a result of multiple global regulatory ~~approvals, royalties from~~approvals.

Expenses


	Three Months Ended September 30,
	2022		2021		Change
Expenses (in thousands):
Cost of sales	$	434,593	—		$	434,593
Research and development	304,297		408,195		(103,898)
Selling, general, and administrative	122,876		77,793		45,083
Total expenses	$	861,766	$	485,988	$	375,778

Cost of Sales

Cost of sales was $434.6 million, or 69% of product sales, for the ~~sale~~three months ended September 30, 2022, including expense of $249.0 million related to excess, obsolete, or expired inventory and losses on firm purchase commitments. Prior to receiving regulatory approval, we expensed manufacturing costs as research and development expenses. After receiving regulatory approval, we capitalize the costs of production for a particular supply chain when we determine that we have a present right to the economic benefit associated with the product. While we tracked the quantities of our manufactured vaccine product and components, we did not track pre-approval manufacturing costs and therefore the manufacturing cost of our pre-launch inventory produced prior to approval is not reasonably determinable. However, based on our expectations for future manufacturing costs to produce our vaccine product and components inventory, we estimate at September 30, 2022 we had approximately $0.1 billion of commercial inventory that was expensed prior to approval. We expect to utilize the majority of our reduced-cost inventory through 2023. If inventory sold for the three months ended September 30, 2022 was valued at expected standard cost, including expenses related to excess and obsolete inventory, adjusted cost of sales for the period would have been approximately $444.0 million, or 71% of product sales, an adjustment of $9.4 million as compared to cost of sales recognized. The cost of sales to high income countries is expected to be between 15% and 30% of product sales based on our standard cost. The cost of sales as a percentage of product sales may fluctuate in the future as a result of changes to our customer mix or standard costs.

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Research and Development Expenses

Research and development expenses decreased to $304.3 million for the three months ended September 30, 2022 as compared to $408.2 million for the three months ended September 30, 2021, a decrease of $103.9 million primarily due to research and development of coronavirus vaccines, including NVX-CoV2373, ~~under our~~NVX-CoV2515, bivalent formulations, and CIC, as summarized in the table below (in thousands):


	Three Months Ended September 30,
	2022		2021
Coronavirus vaccines	$	208,004	$	341,600
Influenza vaccine	3,011		1,656
Other vaccine development programs	843		126
Total direct external research and development expense	211,858		343,382
Employee expenses	45,150		36,574
Stock-based compensation expense	16,107		21,860
Facility expenses	16,770		4,983
Other expenses	14,412		1,396
Total research and development expenses	$	304,297	$	408,195

Research and development expenses for coronavirus vaccines for the three months ended September 30, 2022 and 2021, included a benefit of $80.5 million related to previously accelerated manufacturing costs and an expense of $35.8 million related to the acceleration of manufacturing costs, respectively, for leases that we determined were embedded in multiple manufacturing supply ~~and license~~ agreements with ~~strategic partners~~Contract Manufacturing Organizations (“CMOs”) and contract manufacturing and development organizations (“CDMOs”). Pursuant to ~~supply NVX-CoV2373~~the Fujifilm Settlement Agreement (see Note 4 to our consolidated financial statements in ~~their specified territories where~~this Quarterly Report), we are ~~entitled~~responsible for a Settlement Payment of up to ~~receive royalties~~ $185.0 million to Fujifilm in connection with cancellation of manufacturing activity at FDBT under the CSA, of which $47.8 million, constituting the initial reservation fee under the CSA, was credited against the Settlement Payment on September 30, 2022. The Settlement Payment is less than amounts previously recognized as embedded lease expense and reflected in Research and development expense from ~~such sales,~~ FDBT manufacturing activity under the CSA prior to the Fujifilm Settlement Agreement and accordingly, during the three months ended September 30, 2022, we recorded a benefit of $98.3 million as Research and development expense. For 2022, we expect total research and development expenses to decrease as compared to 2021, primarily due to capitalization of manufacturing costs during 2022 that were previously recognized as research and development expenses in prior periods, partially offset by research and development expenses related to increased clinical activities as we continue to develop our coronavirus vaccines and other programs.

Selling, General, and Administrative Expenses

Selling, general, and administrative expenses increased to $122.9 million for the three months ended September 30, 2022 from $77.8 million for the same period in 2021, an increase of $45.1 million. The increase in selling, general, and administrative expenses is primarily due to an increase in professional fees and marketing costs in support of our NVX-CoV2373 program. For 2022, we expect selling, general, and administrative expenses to increase significantly as compared to 2021 due to increased activities related to supporting our NVX-CoV2373 program ~~which we anticipate will continue to be funded by OWS~~ and ~~other revenue sources.~~increases in professional fees and marketing costs.

~~Expenses~~Other Expense

Three Months Ended March 31,
2022 2021 Change
Expenses (in thousands):
Cost of sales $ 15,204 $ — $ 15,204
Research and development 383,483 592,671 (209,188)
Selling, general, and administrative 95,992 63,190 32,802
Total expenses $ 494,679 $ 655,861 $ (161,182)


	Three Months Ended September 30,
	2022		2021		Change
Other Expense (in thousands):
Interest expense	$	(4,169)	$	(5,182)	$	1,013
Other expense	(34,783)		(4,064)		(30,719)
Total other expense, net	$	(38,952)	$	(9,246)	$	(29,706)

We had total other expense, net, of $39.0 million for the three months ended September 30, 2022 as compared to $9.2 million for the same period in 2021. During the three months ended September 30, 2022 and 2021, other expense was primarily related to losses due to foreign exchange rate activity.

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Income Tax Expense

During the three months ended September 30, 2022 and 2021, we recognized $2.5 million and $6.0 million, respectively, of income tax expense related to federal and state income taxes and foreign withholding tax on royalties.

Net Loss


	Three Months Ended September 30,
	2022		2021		Change
Net Loss (in thousands, except per share information):
Net loss	$	(168,613)	$	(322,431)	$	153,818
Net loss per share, basic and diluted	$	(2.15)	$	(4.31)	$	2.16

Weighted average shares outstanding, basic and diluted	78,274		74,745		3,529

Net loss for the three months ended September 30, 2022 was $168.6 million, or $2.15 per share, basic, as compared to $322.4 million, or $4.31 per share, basic, for the same period in 2021. The decrease in net loss during the three months ended September 30, 2022, was primarily due to the commencement of commercial sales of NVX-CoV2373 in 2022 and a decrease in research and development expense, partially offset by the write-down of excess, obsolete, or expired inventory and losses on firm purchase commitments.

The increase in weighted average shares outstanding for the three months ended September 30, 2022 is primarily a result of sales of our common stock and exercises of stock-based awards in 2022 and 2021.

Nine Months Ended September 30, 2022 and 2021

Revenue


	Nine Months Ended September 30,
	2022		2021		Change
Revenue (in thousands):
Product sales	$	1,267,174	$	—	$	1,267,174
Grants	313,348		854,390		(541,042)
Royalties and other	43,951		69,700		(25,749)
Total revenue	$	1,624,473	$	924,090	$	700,383

Revenue for the nine months ended September 30, 2022 was $1.6 billion as compared to $924.1 million for the same period in 2021, an increase of $700.4 million. Revenue for the nine months ended September 30, 2022 was primarily comprised of revenue from product sales of NVX-CoV2373 and, to a lesser extent, revenue for services performed under the OWS Agreement. Revenue for the nine months ended September 30, 2021 was primarily comprised of revenue for services performed under the OWS Agreement and our funding agreements with CEPI. The increase in revenue was due to the commencement of commercial sales of NVX-CoV2373 in 2022, partially offset by decreased development activities under the OWS Agreement and our funding agreements with CEPI.

Expenses


	Nine Months Ended September 30,
	2022		2021		Change
Expenses (in thousands):
Cost of sales	$	720,874	$	—	$	720,874
Research and development	977,428		1,571,551		(594,123)
Selling, general, and administrative	327,028		214,144		112,884
Total expenses	$	2,025,330	$	1,785,695	$	239,635

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Cost of Sales

Cost of sales was ~~$15.2~~$720.9 million, or 3%57% of product sales, for the ~~three~~nine months ended ~~March 31, 2022.~~September 30, 2022, including expense of $504.3 million related to excess, obsolete, or expired inventory and losses on firm purchase commitments. Prior to receiving approval, we expensed manufacturing costs as research and development expenses. After receiving approval, we capitalize the costs of production for a particular supply chain when we determine that we have a present right to the economic benefit associated with the product. While we tracked the quantities of our manufactured vaccine product and components, we did not track pre-approval manufacturing costs and therefore the manufacturing cost of our pre-launch inventory produced prior to approval is not reasonably determinable. However, based on our expectations for future manufacturing costs to produce our vaccine product and components inventory, we estimate ~~that~~at September 30, 2022 we had approximately ~~$0.7~~$0.1 billion of commercial inventory that was expensed prior to approval. We expect to utilize the majority of our reduced-cost inventory ~~during 2022.~~through 2023. If inventory sold for the ~~three~~nine months ended ~~March 31,~~September 30, 2022 was valued at expected standard cost, adjusted cost of sales for the period would have been approximately ~~$160~~$883.5 million, or ~~27%~~70% of product sales, an adjustment of ~~$145 million.~~$162.6 million as compared to cost of sales recognized. The cost of sales to high income countries is expected to be between 15% and 30% of product sales based on our standard cost. The cost of sales as a percentage of product sales may fluctuate in the future as a result of changes to our customer mix or standard costs.

Research and Development Expenses

Research and development expenses decreased to ~~$383.5~~$977.4 million for the ~~three~~nine months ended ~~March 31,~~September 30, 2022 ~~as compared to $592.7 million~~from $1.6 billion for the ~~three months ended March 31,~~same period in 2021, a decrease of ~~$209.2~~$594.1 million, primarily due to ~~research~~decreased development activities relating to coronavirus vaccines, including NVX-CoV2373, NVX-CoV2515, bivalent formulations, and ~~development of NVX-CoV2373,~~CIC, as summarized in the table below (in ~~millions)~~thousands):


	Nine Months Ended September 30,
	2022		2021
Coronavirus vaccines	$	697,952	$	1,376,921
Influenza vaccine	6,581		5,950
Other vaccine development programs	1,156		641
Total direct external research and development expense	705,689		1,383,512
Employee expenses	132,069		86,085
Stock-based compensation expense	52,692		70,429
Facility expenses	40,842		11,387
Other expenses	46,136		20,138
Total research and development expenses	$	977,428	$	1,571,551

Three Months Ended March 31,
2022 2021
NVX-CoV2373 $ 288,933 $ 538,125
Influenza vaccine 1,296 1,126
Other vaccine development programs 803 304
Total direct external research and development expense 291,032 539,555
Employee expenses 43,742 24,955
Stock-based compensation expense 16,887 23,790
Facility expenses 13,208 2,995
Other expenses 18,614 1,376
Total research and development expenses $ 383,483 $ 592,671

Research and development expenses for ~~NVX-CoV2373~~coronavirus vaccines for the ~~three~~nine months ended ~~March 31,~~September 30, 2022 and ~~March 31,~~ 2021, included ~~approximately $21.0~~a benefit of $147.8 million related to previously accelerated manufacturing costs and ~~$22.8~~an expense of $78.8 million ~~respectively,~~ related to the acceleration of manufacturing costs, respectively, for leases that we determined were embedded in multiple manufacturing supply agreements with ~~Contract Manufacturing Organizations (“CMOs”)~~CMOs and ~~contract manufacturing and development organizations (“CDMOs”~~CDMOs. Pursuant to the Fujifilm Settlement Agreement (see Note 4 to our consolidated financial statements in this Quarterly Report)~~. For 2022,~~, we ~~expect total research and development expenses~~are responsible for a Settlement Payment of up to ~~decrease as compared~~ $185.0 million to ~~2021. The decline~~Fujifilm in ~~2022 is anticipated to result from expected capitalization~~connection with cancellation of manufacturing ~~costs during 2022 that were~~activity at FDBT under the CSA, of which $47.8 million, constituting the initial reservation fee under the CSA, was credited against the Settlement Payment on September 30, 2022. The Settlement Payment is less than amounts previously recognized as ~~research~~embedded lease expense and reflected in Research and development ~~expenses in~~ expense from FDBT manufacturing activity under the CSA prior ~~periods, partially offset by research~~to the Fujifilm Settlement Agreement and accordingly, during the three months ended September 30, 2022, we recorded a benefit of $98.3 million as Research and development ~~expenses related to increased clinical activities as we continue to develop our NVX-CoV2373 and other programs.~~expense.

Selling, General, and Administrative Expenses

Selling, general, and administrative expenses increased to ~~$96.0~~$327.0 million for the ~~three~~nine months ended ~~March 31,~~September 30, 2022 from ~~$63.2~~$214.1 million for the same period in 2021, an increase of ~~$32.8~~$112.9 million. The increase in selling, general, and administrative expenses is primarily due to an increase in professional fees and marketing costs in support of our NVX-CoV2373 program. For 2022, we expect selling, general, and administrative expenses to increase significantly due to increased activities related to supporting our NVX-CoV2373 program and increases in employee-related costs and professional fees.

~~Other Income (Expense)~~

Three Months Ended March 31,
2022 2021 Change
Other Income (Expense) (in thousands):
Interest expense $ (4,876) $ (4,839) $ (37)
Other income (expense) 1,654 (6,231) 7,885
Total other expense, net $ (3,222) $ (11,070) $ 7,848

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Other Expense


	Nine Months Ended September 30,
	2022		2021		Change
Other Expense (in thousands):

Interest expense	$	(15,279)	$	(15,989)	$	710
Other expense	(53,002)		(7,267)		(45,735)
Total other expense, net	$	(68,281)	$	(23,256)	$	(45,025)

We had total other expense, net of ~~$3.2~~$68.3 million for the ~~three~~nine months ended ~~March 31,~~September 30, 2022 as compared to ~~$11.1~~$23.3 million for the same period in 2021. InDuring the ~~three~~nine months ended ~~March 31,~~September 30, 2022 and 2021, ~~we recorded a $5.9 million loss on the intercompany loan with Novavax CZ~~other expense was primarily related to losses due to ~~changes in the~~ foreign exchange ~~rates.~~rate activity.

Income Tax Expense

~~We recognized federal and state income tax expense of $0.6 million, in total, for~~During the ~~three~~nine months ended ~~March 31, 2022 and did not recognize federal or state income tax expense for the three months ended March 31, 2021. During the three months ended March 31,~~September 30, 2022 and 2021, we recognized ~~$2.1~~$6.6 million and ~~$3.0~~$12.6 million, respectively, of income tax expense related to federal and state income taxes and foreign withholding tax on royalties.

Net ~~Income (Loss)~~Loss

Three Months Ended March 31,
2022 2021 Change
Net Income (Loss) (in thousands, except per share information):
Net income (loss) $ 203,408 $ (222,719) $ 426,127
Net income (loss) per share, basic $ 2.66 $ (3.05) $ 5.71
Net income (loss) per share, dilutive $ 2.56 $ (3.05) $ 5.61
Weighted average shares outstanding, basic 76,457 73,035 3,422
Weighted average shares outstanding, dilutive 80,711 73,035 7,676


	Nine Months Ended September 30,
	2022		2021		Change
Net Loss (in thousands, except per share information):
Net loss	$	(475,690)	$	(897,467)	$	421,777
Net loss per share, basic and diluted	$	(6.13)	$	(12.13)	$	6.00

Weighted average shares outstanding, basic and diluted	77,631		73,972		3,659

Net ~~income~~loss for the ~~three~~nine months ended ~~March 31, 2021~~September 30, 2022 was ~~$203.4~~$475.7 million, or ~~$2.66~~$6.13 per share, ~~basic,~~ as compared to ~~a net loss of $222.7~~$897.5 million, or ~~$3.05~~$12.13 per share, ~~basic,~~ for the same period in 2021. The ~~change~~decrease in net ~~income (loss)~~loss during the nine months ended September 30, 2022 was primarily due to the commencement of commercial sales of NVX-CoV2373 in 2022 and a decrease in research and development expense, partially offset by decreased revenue under the OWS ~~Agreement.~~Agreement and the write-down of excess, obsolete, or expired inventory and losses on firm purchase commitments.

The increase in weighted average shares outstanding for the ~~three~~nine months ended ~~March 31,~~September 30, 2022 is primarily a result of sales of our common stock ~~and exercises of stock-based awards~~ in 2022 and 2021.

Liquidity Matters and Capital Resources

Our future capital requirements depend on numerous factors including, but not limited to, revenue from our product sales and royalties under licensing arrangements with our strategic partners; funding under our grant agreements; our projected activities related to the development and commercial support of NVX-CoV2373 and variant candidates, including significant commitments under various CRO, CMO, and CDMO agreements; the progress of preclinical studies and clinical trials; the time and costs involved in obtaining regulatory approvals; the costs of filing, prosecuting, defending, and enforcing patent claims and other intellectual property rights; and other manufacturing, sales, and distribution costs. We plan to continue developing other vaccines and product candidates, such as our influenza vaccine candidate and potential combination vaccines candidates, which are in various stages of development.

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We have entered into supply agreements, sometimes referred to as APAs, with Gavi, the Vaccine Alliance (“Gavi”); the European ~~Commission;~~Commission (“EC”); and various countries globally. We also have grant and license agreements. As of ~~March 31,~~September 30, 2022, the aggregate amount of the transaction price allocated to performance obligations that were unsatisfied (or partially unsatisfied), excluding amounts related to sales-based royalties under the license agreements, was approximately $7$4 billion. Failure to meet regulatory milestones, timely obtain supportive recommendations from governmental advisory committees, or achieve product volume or delivery timing obligations under our APA agreements may require us to refund portions of upfront payments or result in reduced future payments, which could adversely impact our ability to realize revenue from our unsatisfied performance obligations. The timing to fulfill performance obligations related to grant agreements will depend on the results of our research and development activities, including clinical trials, ~~receipt of US marketing authorization,~~ and delivery of doses. The timing to fulfill performance obligations related to supply agreements will depend on timing of product manufacturing, receipt of marketing authorizations ~~and~~for additional indications, delivery of ~~doses.~~doses based on customer demand, and the ability of the customer to request variant vaccine in place of the prototype NVX-CoV2373 vaccine under certain of our APAs. The supply agreements typically contain terms that include upfront payments intended to assist us in funding investments related to building out and operating our manufacturing and distribution network, among other expenses, in support of our global supply commitment, and are applied to billings upon delivery of NVX-CoV2373. Such upfront payments under our supply agreements generally become non-refundable upon our achievement of certain development, regulatory, and commercial milestones. Certain of the supply agreements may be terminated by the counterparty in the event we fail to achieve requisite regulatory approval for NVX-CoV2373 in relevant jurisdictions within established time periods. Failure to successfully develop and commercialize NVX-CoV2373 and failure to meet regulatory milestones or product volume or delivery timing obligations under our supply agreements may require us to refund significant portions of the prepayments or reduce payments, which could have a material and adverse effect on our financial condition.

In addition, we continue to assess our manufacturing needs and intend to modify our global manufacturing footprint consistent with our contractual obligations to supply, and anticipated demand for, NVX-CoV2373, and in doing so recognize that significant costs may be incurred.

Pursuant to the Fujifilm Settlement Agreement (see Note 4 to our consolidated financial statements in this Quarterly Report), we are responsible for a Settlement Payment of up to $185.0 million to Fujifilm in connection with cancellation of manufacturing activity at FDBT under the CSA, of which $47.8 million, constituting the initial reservation fee under the CSA, was credited against the Settlement Payment on September 30, 2022. The Settlement Payment is less than amounts
previously recognized as embedded lease expense and reflected

in Research and development expense from FDBT manufacturing activity under the CSA prior to the Fujifilm Settlement Agreement and accordingly, during the three months ended September 30, 2022, we recorded a benefit of $98.3 million as Research and development expense.

Under the terms of our ~~contracted~~ supply commitment with Gavi, which includes both our APA and the supply obligation of our licensed partner, SIIPL, 1.1 billion doses of NVX-CoV2373 are to be made available to countries participating in the COVAX Facility, which was established to allocate and distribute vaccines equitably to participating countries and economies. The Novavax ~~portion is a supply agreement that~~APA contemplates that we will manufacture and distribute 350 million doses. Under that agreement with Gavi, we received an upfront payment of $350 million from Gavi in 2021 and an additional payment of $350 million in the first quarter of 2022 related to our achieving WHO ~~EUL.~~Emergency Use Listing. Although Novavax iscontinues to be prepared to deliver the quantities of NVX-CoV2373 doses to Gavi under the terms of ~~our supply agreement,~~the APA, we were ~~recently~~ notified by Gavi of ~~their~~its intent to seek to revise the number and timing of doses of NVX-CoV2373 supplied by Novavax under such agreement. Furthermore, Gavi may seek partial or full recovery of the prior nonrefundable payments it has made to Novavax. Our position is that Gavi has no contractual right to recover prior nonrefundable payments if it fails to order the 350 million doses it committed to order. To date, except for an initial order of approximately 2 million doses, Novavax has not received an order from Gavi and the timing and quantities of future orders to deliver ~~NVX-COV2373~~NVX-CoV2373 to the COVAX facility are unclear.

In July 2022, we entered into an Amended and Restated SARS-CoV-2 Vaccine Supply Agreement (the “Amended and Restated UK Supply Agreement”) with The Secretary of State for Business, Energy and Industrial Strategy, acting on behalf of the government of the United Kingdom of Great Britain and Northern Ireland (the “Authority”), which amended and restated in its entirety the SARS-CoV-2 Vaccine Supply Agreement originally entered into in October 2020 (the “Original UK Supply Agreement”). Pursuant to the Original UK Supply Agreement, the Authority agreed to purchase 60 million doses of NVX-CoV2373. Under the Amended and Restated UK Supply Agreement, the Authority agreed to purchase a minimum of 1 million doses and up to an additional 15 million doses of NVX-CoV2373, with the number of additional doses contingent on our timely achievement of supportive recommendations from the United Kingdom’s Joint Committee on Vaccination and Immunisation (the “JCVI”). In the event that we are unable to achieve the JCVI supportive recommendations, we may have to repay up to $225.0 million related to the upfront payment we received from the Authority under the Original UK Supply Agreement. As of September 30, 2022, we will be required to repay a minimum of $40.0 million related to the upfront payment. Under the Amended and Restated UK Supply Agreement, the Authority also has the option to purchase up to an additional 44 million doses, in one or more tranches, through 2024.

We have ~~also~~an APA with the EC acting on behalf of various EU member states to supply a minimum of 20 million and up to 100 million initial doses of NVX-CoV2373, with the option for the EC to purchase an additional 100 million doses up to a maximum aggregate of 200 million doses, in one or more tranches, through 2023. In July and August 2022, we were notified by the EC that it was cancelling 5 million doses of its prior commitment originally scheduled for delivery in the first and second quarters of 2022, in accordance with the APA, and reducing the order to 65 million doses. We are in the process of finalizing a revised delivery schedule for the remaining 23 million committed doses under our APA with the EC that were originally scheduled for delivery during the first and second quarters of 2022.

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In July 2022, we entered into ~~supply~~a modification to the OWS Agreement that amended the terms of such agreement to provide for (i) an initial delivery to the U.S. government of approximately 3 million doses of NVX-CoV2373 and ~~license agreements with strategic partners,~~(ii) any additional manufacture and delivery to the U.S. government up to an aggregate of 100 million doses of NVX-CoV2373 contemplated by the original OWS Agreement (inclusive of the initial batch of approximately 3 million doses) dependent on U.S. government demand, FDA guidance on strain selection, agreement between the parties on the price of such ~~as SIIPL~~doses, and available funding. Additionally, in India, Takeda in Japan, and SK bioscience in the Republic of Korea, that allow them to supply NVX-CoV2373 in their specified territories and under which we are entitled to receive royalties primarily from their sales of NVX-CoV2373. During the three months ended March 31,July 2022, we ~~recognized royalties~~entered into a modification to our existing agreement with the DoD that amended the terms of ~~$7.4~~such agreement to provide for the initial delivery of 0.2 million ~~under these licensing arrangements.~~doses of NVX-CoV2373 after receipt of EUA approval from the FDA, with delivery of the remaining 9.8 million doses of NVX-CoV2373 contemplated by the original agreement subject to DoD demand and available funding.

In the ~~three~~nine months ended ~~March 31,~~September 30, 2022, we primarily funded our operations with cash and cash equivalents, upfront payments under APAs, revenue from product sales, royalties under licensing arrangements with our strategic partners, and proceeds from the sale of common stock, together with revenue under the OWS Agreement that supports our NVX-CoV2373 vaccine development activities. We anticipate our future operations to be funded by revenue from product sales, royalties under licensing arrangements with our strategic partners, revenue under our OWS Agreement, our cash and cash equivalents, ~~upfront payments under our APAs, revenue under our OWS Agreement,~~ and other potential funding sources.

We may from time to time seek to retire or purchase, directly or indirectly, our outstanding debt through cash purchases and/or exchanges for equity or debt, in open market purchases, privately negotiated transactions, or otherwise. Such purchases and/or exchanges, if any, will be on such terms and at such prices as we may determine, and will depend on prevailing market conditions, our liquidity requirements, contractual restrictions, and other factors. The amounts involved may be material, which could impact our capital structure, the market for our debt securities, and the price of the indebtedness being purchased and/or exchanged, and affect our liquidity.

As of ~~March 31,~~September 30, 2022, we had ~~$1.6~~$1.3 billion in cash and cash equivalents and restricted cash as compared to $1.5 billion as of December 31, 2021.

The following table summarizes cash flows for the ~~three~~nine months ended ~~March 31,~~September 30, 2022 and 2021 (in thousands):


									Nine Months Ended September 30,
		2022		2021		Change			2022		2021		Change
Net cash provided by (used in):	Net cash provided by (used in):							Net cash provided by (used in):
Operating activities	Operating activities	$	(88,510)	$	663,085	$	(751,595)	Operating activities	$	(298,121)	$	665,354	$	(963,475)
Investing activities	Investing activities	(16,826)		141,609		(158,435)		Investing activities	(70,921)		116,518		(187,439)
Financing activities	Financing activities	159,865		576,987		(417,122)		Financing activities	133,548		522,424		(388,876)
Effect on exchange rate on cash, cash equivalents, and restricted cash	Effect on exchange rate on cash, cash equivalents, and restricted cash	1,312		(1,349)		2,661		Effect on exchange rate on cash, cash equivalents, and restricted cash	257		(6,208)		6,465
Net increase in cash, cash equivalents, and restricted cash		55,841		1,380,332		(1,324,491)
Net increase (decrease) in cash, cash equivalents, and restricted cash								Net increase (decrease) in cash, cash equivalents, and restricted cash	(235,237)		1,298,088		(1,533,325)
Cash, cash equivalents, and restricted cash at beginning of period	Cash, cash equivalents, and restricted cash at beginning of period	1,528,259		648,738		879,521		Cash, cash equivalents, and restricted cash at beginning of period	1,528,259		648,738		879,521
Cash, cash equivalents, and restricted cash at end of period	Cash, cash equivalents, and restricted cash at end of period	$	1,584,100	$	2,029,070	$	(444,970)	Cash, cash equivalents, and restricted cash at end of period	$	1,293,022	$	1,946,826	$	(653,804)

Net cash used in operating activities was ~~$88.5~~$298.1 million for the ~~three~~nine months ended ~~March 31,~~September 30, 2022, as compared to net cash provided by operating activities of ~~$663.1~~$665.4 million for the same period in 2021. The decrease in cash provided is primarily due to the application of upfront payments under APAs resulting from sales of NVX-CoV2373 during the ~~three~~nine months ended ~~March 31,~~September 30, 2022 as compared to an increase in cash due to the receipt of upfront payments under APAs during the ~~three~~nine months ended ~~March 31,~~September 30, 2021.

During the ~~three~~nine months ended ~~March 31,~~September 30, 2022 and 2021, our investing activities consisted primarily of capital expenditures and maturities and sale of marketable securities, net of purchases. Capital expenditures for the ~~three~~nine months ended ~~March 31,~~September 30, 2022 and 2021 were ~~$16.8~~$66.0 million and ~~$13.8~~$41.1 million, respectively. For 2022, we expect our capital expenditures to continue to increase due to further development activities for our NVX-CoV2373 program, including the additional build-out of research and development and manufacturing facilities and related equipment, and the build-out of our new corporate office facility.

Our financing activities consisted primarily of sales of our common stock under our At Market Issuance Sales Agreements, payments of finance lease liabilities, and exercise of stock-based awards. In the ~~three~~nine months ended ~~March 31,~~September 30, 2022 and 2021, we received net proceeds of approximately $179 million and $565 million, respectively, from selling shares of common stock through our At Market Issuance Sales Agreements.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

We are subject to certain risks that may affect our results of operations, cash flows, and fair values of assets and liabilities, including volatility in foreign currency exchange rates and interest rate movements.

Foreign Currency Exchange Risk

Although we are headquartered in the U.S., our results of operations, including our foreign subsidiaries’ operations, are subject to foreign currency exchange rate fluctuations, primarily the U.S. dollar against the Euro, Pound Sterling, Swedish Krona, and Czech Koruna. This exchange exposure may have a material effect on our cash flow and results of operations, particularly in cases of revenue generated under APAs that include provisions that impact our and our counterparty’s currency exchange exposure. To date, we have not entered into any foreign currency hedging contracts, although we may do so in the future.

We also face foreign currency exchange exposure that arises from translating the results of our global operations to the U.S. dollar at exchange rates that have fluctuated from the beginning of the period. While the financial results of our global activities are reported in U.S. dollars, the functional currency of our foreign subsidiaries is generally their respective local currency. Fluctuations in the foreign currency exchange rates of the countries in which we do business will affect our operating results, often in ways that are difficult to predict. A 10% decline in the foreign exchange rates (primarily against the U.S. dollar) relating to our foreign consolidated subsidiaries would result in a decline of stockholders’ equity of approximately ~~$38~~$17 million as of ~~March 31,~~September 30, 2022.

Market and Interest Rate Risk

The primary objective of our investment activities is preservation of capital, with the secondary objective of maximizing income.

Our exposure to market risk is primarily confined to our investment portfolio, which historically has been classified as available-for-sale. We do not believe that a change in the market rates of interest would have any significant impact on the realizable value of our investment portfolio. Changes in interest rates may affect the investment income we earn on our marketable securities when they mature and the proceeds are reinvested into new marketable securities and, therefore, could impact our cash flows and results of operations.

Interest and dividend income is recorded when earned and included in investment income. Premiums and discounts, if any, on marketable securities are amortized or accreted to maturity and included in investment income. The specific identification method is used in computing realized gains and losses on the sale of our securities.

Our ~~Notes~~convertible senior unsecured notes have a fixed interest rate, and we have no additional material debt. As such, we do not believe that we are exposed to any material interest rate risk as a result of our borrowing activities.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management, with the assistance of our chief executive officer and chief financial officer, has reviewed and evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of ~~March 31,~~September 30, 2022. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Our disclosure controls and procedures are designed to provide reasonable assurance of achieving such control objectives. Based on the evaluation of our disclosure controls and procedures as of ~~March 31,~~September 30, 2022, our chief executive officer and chief financial officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.

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Changes in Internal Control over Financial Reporting

Our management, including our chief executive officer and chief financial officer, have evaluated changes in our internal control over financial reporting that occurred during the quarter ended ~~March 31,~~September 30, 2022, and have concluded that there have been no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial ~~reporting~~reporting.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

Stockholder Litigation

On November 12, 2021, Sothinathan Sinnathurai filed a purported securities class action in the U.S. District Court for the District of Maryland against Novavax and certain members of senior management, captioned Sothinathan Sinnathurai v. Novavax, Inc., et al., No. 8:21-cv-02910-TDC (the “Sinnathurai Action”). On January 26, 2022, the court entered an order designating David Truong, Nuggehalli Balmukund Nandkumar, and Jeffrey Gabbert as co-lead plaintiffs in the Sinnathurai Action. The co-lead plaintiffs filed a consolidated amended complaint on March 11, 2022, alleging that the defendants made certain purportedly false and misleading statements concerning the Company’s ability to manufacture NVX-CoV2373 on a commercial scale and to secure the vaccine’s regulatory approval. The amended complaint defines the purported class as those stockholders who purchased Novavax securities between February 24, 2021 and October 19, 2021. On April 25, 2022, defendants filed a motion to dismiss the consolidated amended complaint. On June 9, 2022, the co-lead plaintiffs filed an opposition to the motion to dismiss and on July 11, 2022, the Company filed a reply brief. The matter is now fully briefed. The Court has not indicated whether it intends to schedule any hearing on the motion before issuing a ruling.

After the Sinnathurai Action was filed, ~~three~~six derivative lawsuits were ~~filed and are currently pending in the U.S. District Court for the District of Maryland:~~filed: (i) Robert E. Meyer v. Stanley C. Erck, et al., No. 8:21-cv-02996-TDC (the “Meyer Action”), (ii) Shui Shing Yung v. Stanley C. Erck, et al., No. 8:21-cv-03248-TDC (the “Yung Action”), ~~and~~(iii) William Kirst, et al. v. Stanley C. Erck, et al., No. 8:22-cv-00024-TDC (the “Kirst Action”), (iv) Amy Snyder v. Stanley C. Erck, et al., No. 8:22-cv-01415-TDC (the “Snyder Action”), (v) Charles R. Blackburn, et al. v. Stanley C. Erck, et al., No. 1:22-cv-01417-TDC (the “Blackburn Action”), and (vi) Diego J. Mesa v. Stanley C. Erck, et al. (the “Mesa Action”). The Meyer, Yung, Snyder, and Blackburn Actions were filed in the U.S. District Court for the District of Maryland. The Kirst Action was filed in the Circuit Court for Montgomery County, Maryland, and shortly thereafter removed to the U.S. District Court for the District of Maryland by the defendants. The Mesa Action was filed in the Delaware Court of Chancery. The derivative lawsuits name members of the board of directors and certain members of senior management as defendants. Novavax is deemed a nominal defendant. The plaintiffs assert derivative claims arising out of substantially the same alleged facts and circumstances as the Sinnathurai Action. Collectively, the derivative complaints assert claims for breach of fiduciary duty, insider selling, unjust enrichment, violation of federal securities law, abuse of control, waste, and mismanagement. Plaintiffs seek declaratory and injunctive relief, as well as an award of monetary damages and attorneys’ fees. ~~Novavax removed~~

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On February 26, 2021, a Novavax stockholder named Thomas Golubinski filed a derivative complaint against members of the Novavax board of directors and members of senior management in the Delaware Court of Chancery (the “Court”), captioned Thomas Golubinski v. Richard H. Douglas, et al., No. 2021-0172-JRS. Novavax is deemed a nominal defendant. Golubinski challenged equity awards made in April 2020 and in June 2020 on the ground that they were “spring-loaded,” that is, made at a time when such board members or members of senior management allegedly possessed undisclosed positive material information concerning the Company. The complaint asserted claims for breach of fiduciary duty, waste, and unjust enrichment. The plaintiff sought an award of damages to the Company, an order rescinding both awards or requiring disgorgement, and an award of attorneys’ fees incurred in connection with the litigation. On May 10, 2021, the defendants moved to dismiss the complaint in its entirety. On June 17, 2021, the Company’s stockholders voted FOR ratification of the April 2020 awards and ratification of the June 2020 awards. Details of the ratification proposals are set forth in the Company’s Definitive Proxy Statement filed with the SEC on May 3, 2021. The results of the vote were disclosed in the Company’s Current Report on Form 8-K filed with the SEC on June 24, 2021. Thereafter, the plaintiff stipulated that, as a result of the outcome of the June 17, 2021 vote, the plaintiff no longer intends to pursue the lawsuit or any claim arising from the April 2020 and June 2020 awards. On August 23, 2021, the plaintiff filed a motion seeking an award of attorneys’ fees and expenses, to which the defendants filed an opposition. The motion was argued before the Court on October 18, 2022. The same day, the Court issued a bench ruling denying the plaintiff’s fee application in its entirety and entered an order to that effect. Under a prior Court order, the case was automatically dismissed with prejudice upon denial of the plaintiff’s fee application.

Par Sterile Products, LLC Arbitration

On March 29, 2022, Par Sterile Products, LLC (“Par”) submitted a demand for arbitration against the Company with the American Arbitration Association, alleging that the Company breached certain provisions of the Manufacturing and Services Agreement (“MSA”) that the Company entered into with Par in September 2020 to provide fill-finish manufacturing services for NVX-CoV2373. The matter is at a preliminary stage and therefore the potential loss is not reasonably estimable. The parties are engaged in discovery and arbitration is scheduled for July 2023. While the Company maintains that no breach of the MSA has occurred and intends to vigorously defend the matter, if the final resolution of the matter is adverse to the Company, it could have a material impact on the Company's financial position, results of operations, or cash flows.

General

We are also involved in various other legal proceedings arising in the normal course of business. Although the outcomes of these other legal proceedings are inherently difficult to predict, we do not expect the resolution of these other legal proceedings to have a material adverse effect on our financial position, results of operations, or cash flows.

Item 1A. Risk Factors

Information regarding risk and uncertainties related to our business appears in Part I, Item 1A. “Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, which was filed with the SEC on March 1, 2022, and Part II, Item 1A. “Risk Factors” of our Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2022, which was filed with the SEC on August 9, 2022. There have been no material changes from the risk factors previously disclosed in the Annual Report on Form ~~10-K.~~10-K for the fiscal year ended December 31, 2021 and the Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2022.

Item 5. Other Information

On July 1, 2022, Novavax, Inc. (the “Company”) entered into an Amended and Restated SARS-CoV-2 Vaccine Supply Agreement (the “Amended and Restated UK Supply Agreement”) with The Secretary of State for Business, Energy and Industrial Strategy, acting on behalf of the government of the United Kingdom of Great Britain and Northern Ireland (the “Authority”), which amended and restated in its entirety the SARS-CoV-2 Vaccine Supply Agreement, dated October 22, 2020, between the parties.

The description of the Amended and Restated UK Supply Agreement set forth in Part II, Item 5. “Other Information” of the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2022 is incorporated herein by reference.

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Item 6. Exhibits


3.1						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. 000-26770))

3.2						Certificate of Amendment to the Second Amended and Restated Certificate of Incorporation of the Registrant (Incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on May 9, 2019 (File No. 000-26770))

3.3						Amended and Restated By-Laws of the Registrant (Incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on June 24, 2021 (File No. 000-26770))

3.4						Certificate of Designation of Series A Convertible Preferred Stock of the Registrant (Incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed June 19, 2020 (File No. 000-26770))

10.1*±						Amended and Restated SARS-CoV-2 Vaccine Supply Agreement, dated as of July 1, 2022, between the Company and The Secretary of State for Business, Energy, and Industrial Strategy, acting on behalf of the government of the United Kingdom of Great Britain and Northern Ireland

10.2*±						Letter of Amendment to the Amended and Restated SARS-CoV-2 Vaccine Supply Agreement, dated as of September 26, 2022, between the Company and The Secretary of State for Business, Energy, and Industrial Strategy, acting on behalf of the government of the United Kingdom of Great Britain and Northern Ireland

10.3*±						Modification No. 0102 to Base Agreement between ~~Novavax, Inc.~~the Company and Advanced Technology International, dated as of ~~March 23,~~August 2, 2022

10.4*±						Modification No. 14 to Undefinitized Project Agreement No. 1, dated July 1 , 202 2 , between the Comp any and Advanced Technology International

10.210.5±						~~Change Order~~Modification No. 15 to Undefinitized Project Agreement No. 1, dated August 9 , 202 2 , between the C o mpany and Advanced Technology International

10.6*±						Modification No. 16 to Undefinitized Project Agreement No. 1, dated September 9, 2022 , between the ~~Collaboration~~Company and ~~Exclusive License Agreement between Novavax, Inc. and SK Bioscience Company Limited,~~Advanced Technology International

10.7*±						Amendment of Solicitation/Modification of Contract No. 4, dated as of ~~March 31,~~July 29, 2022, between the Company. and the U.S. Department of Defense Joint Program Executive Office for Chemical, Biological, Radiological and Nuclear Defense

10.8*±						Settlement Agreement, dated September 30, 2022, between the Company and FUJIFILM Diosynth Biotechnologies UK Limited, FUJIFILM Diosynth Biotechnologies Texas, LLC, and FUJIFILM Diosynth Biotechnologies USA, Inc.

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

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

32.1*						Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2*						Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101						The following financial information from our Quarterly Report on Form 10-Q for the quarter ended ~~March 31,~~September 30, 2022, formatted in Inline Extensible Business Reporting Language (Inline XBRL): (i) the Consolidated Statements of Operations for the ~~three-month~~three- and nine-month periods ended ~~March 31,~~September 30, 2022 and 2021, (ii) the Consolidated Balance Sheets as of ~~March 31,~~September 30, 2022 and December 31, 2021, (iii) the Consolidated Statements of Comprehensive Income (Loss) for the ~~three-month~~three- and nine-month periods ended ~~March 31,~~September 30, 2022 and 2021, (iv) the Consolidated Statements of Changes in Stockholders’ Equity (Deficit) for the ~~three-month~~three- and nine-month periods ended ~~March 31,~~September 30, 2022 and 2021, (v) the Consolidated Statements of Cash Flows for the ~~three-month~~three- and nine-month periods ended ~~March 31,~~September 30, 2022 and 2021, and (vi) the Notes to Consolidated Financial Statements.

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

*Filed or furnished herewith.

± Certain portions of this exhibit have been omitted pursuant to Item 601(b)(10)(iv) of Regulation S-K.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


	NOVAVAX, INC.

Date: ~~May~~November 9, 2022	By:	/s/ Stanley C. Erck
		Stanley C. Erck President and Chief Executive Officer (Principal Executive Officer)

Date: ~~May~~November 9, 2022	By:	/s/ James P. Kelly
		James P. Kelly Executive Vice President, Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer)

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