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 ~~September 30, 2022~~March 31, 2023

☐ 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 ~~78,503,952~~86,305,085 as of ~~October 31, 2022.~~April 30, 2023.

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 ) for the three ~~and nine~~ months ended ~~September 30, 2022~~March 3 1 , 202 3 and ~~2021~~202 2	2
	Consolidated Balance Sheets as of ~~September 30, 2022~~March 3 1 , 202 3 (unaudited) and December 31, ~~2021~~202 2	3
	Unaudited Consolidated Statements of Changes in Stockholders’ Equity (Deficit) for the three ~~and nine~~ months ended ~~September 30, 2022~~March 3 1 , 202 3 and ~~2021~~202 2	4
	Unaudited Consolidated Statements of Cash Flows for the ~~nine~~three months ended ~~September 30, 2022~~March 3 1 , 202 3 and ~~2021~~202 2	45
	Notes to the Consolidated Financial Statements (unaudited)	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	3531
Item 4.	Controls and Procedures	3532
PART II. OTHER INFORMATION		3732
Item 1.	Legal Proceedings	3732
Item 1A.	Risk Factors	3834
~~Item 5.~~	~~Other Information~~	38
Item 6.	Exhibits	39
SIGNATURES		40

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 September 30,				For the Nine Months Ended September 30,					For the Three Months Ended March 31,
		2022		2021		2022		2021			2023		2022
Revenue:	Revenue:									Revenue:
Product sales	Product sales	$	626,091	$	—	$	1,267,174	$	—	Product sales	$	(7,457)	$	585,628
Grants	Grants	106,273		135,007		313,348		854,390		Grants	87,379		99,301
Royalties and other	Royalties and other	2,213		43,837		43,951		69,700		Royalties and other	1,029		19,042
Total revenue	Total revenue	734,577		178,844		1,624,473		924,090		Total revenue	80,951		703,971

Expenses:	Expenses:									Expenses:
Cost of sales	Cost of sales	434,593		—		720,874		—		Cost of sales	34,086		15,204
Research and development	Research and development	304,297		408,195		977,428		1,571,551		Research and development	247,101		383,483
Selling, general, and administrative	Selling, general, and administrative	122,876		77,793		327,028		214,144		Selling, general, and administrative	112,532		95,992
Total expenses	Total expenses	861,766		485,988		2,025,330		1,785,695		Total expenses	393,719		494,679
Loss from operations		(127,189)		(307,144)		(400,857)		(861,605)
Other expense:
Income (Loss) from operations										Income (Loss) from operations	(312,768)		209,292
Other income (expense):										Other income (expense):

Interest expense	Interest expense	(4,169)		(5,182)		(15,279)		(15,989)		Interest expense	(4,316)		(4,876)
Other expense		(34,783)		(4,064)		(53,002)		(7,267)
Loss before income tax expense		(166,141)		(316,390)		(469,138)		(884,861)
Other income										Other income	24,362		1,654
Income (Loss) before income tax expense										Income (Loss) before income tax expense	(292,722)		206,070
Income tax expense	Income tax expense	2,472		6,041		6,552		12,606		Income tax expense	1,183		2,662
Net loss		$	(168,613)	$	(322,431)	$	(475,690)	$	(897,467)
Net income (loss)										Net income (loss)	$	(293,905)	$	203,408

Net loss per share:
Basic and diluted		$	(2.15)	$	(4.31)	$	(6.13)	$	(12.13)

Net income (loss) per share:										Net income (loss) per share:
Basic										Basic	$	(3.41)	$	2.66
Diluted										Diluted	$	(3.41)	$	2.56
Weighted average number of common shares outstanding	Weighted average number of common shares outstanding									Weighted average number of common shares outstanding
Basic and diluted		78,274		74,745		77,631		73,972

Basic										Basic	86,158		76,457
Diluted										Diluted	86,158		80,711

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

(in thousands)

(unaudited)

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)


	For the Three Months Ended March 31,
	2023		2022
Net income (loss)	$	(293,905)	$	203,408
Other comprehensive income:
Foreign currency translation adjustment	3,211		41
Other comprehensive income	3,211		41
Comprehensive income (loss)	$	(290,694)	$	203,449

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

Table of Contents

NOVAVAX, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share information)


		September 30, 2022		December 31, 2021			March 31, 2023		December 31, 2022
		(unaudited)					(unaudited)
ASSETS	ASSETS					ASSETS
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	1,280,581	$	1,515,116	Cash and cash equivalents	$	624,950	$	1,336,883

Restricted cash	Restricted cash	10,785		11,490		Restricted cash	10,330		10,303
Accounts receivable	Accounts receivable	111,645		454,993		Accounts receivable	112,849		82,375
Inventory	Inventory	82,432		8,872		Inventory	34,185		36,683
Prepaid expenses and other current assets	Prepaid expenses and other current assets	274,522		164,648		Prepaid expenses and other current assets	188,714		237,147
Total current assets	Total current assets	1,759,965		2,155,119		Total current assets	971,028		1,703,391
Property and equipment, net	Property and equipment, net	255,532		228,696		Property and equipment, net	307,414		294,247
Right of use asset, net	Right of use asset, net	108,543		40,123		Right of use asset, net	103,923		106,241
Intangible assets, net		8,456		4,770

Goodwill	Goodwill	117,535		131,479		Goodwill	129,827		126,331
Other non-current assets	Other non-current assets	17,406		16,566		Other non-current assets	30,507		28,469
Total assets	Total assets	$	2,267,437	$	2,576,753	Total assets	$	1,542,699	$	2,258,679
LIABILITIES AND STOCKHOLDERS’ DEFICIT	LIABILITIES AND STOCKHOLDERS’ DEFICIT					LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:	Current liabilities:					Current liabilities:
Accounts payable	Accounts payable	$	144,997	$	127,050	Accounts payable	$	124,801	$	216,517
Accrued expenses	Accrued expenses	551,069		673,731		Accrued expenses	518,706		591,158
Deferred revenue	Deferred revenue	404,776		1,422,944		Deferred revenue	415,764		370,137
Current portion of finance lease liabilities	Current portion of finance lease liabilities	82,095		130,533		Current portion of finance lease liabilities	1,205		27,196
Convertible notes payable	Convertible notes payable	324,525		—		Convertible notes payable	—		324,881
Other current liabilities	Other current liabilities	160,499		36,061		Other current liabilities	858,382		930,055
Total current liabilities	Total current liabilities	1,667,961		2,390,319		Total current liabilities	1,918,858		2,459,944
Deferred revenue	Deferred revenue	1,035,418		172,528		Deferred revenue	274,062		179,414
Convertible notes payable	Convertible notes payable	—		323,458		Convertible notes payable	166,857		166,466
Non-current finance lease liabilities	Non-current finance lease liabilities	31,474		—		Non-current finance lease liabilities	30,993		31,238
Other non-current liabilities	Other non-current liabilities	98,569		42,121		Other non-current liabilities	47,511		55,695
Total liabilities	Total liabilities	2,833,422		2,928,426		Total liabilities	2,438,281		2,892,757

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

Preferred stock, $0.01 par value, 2,000,000 shares authorized at March 31, 2023 and December 31, 2022; no shares issued and outstanding at March 31, 2023 and December 31, 2022.						Preferred stock, $0.01 par value, 2,000,000 shares authorized at March 31, 2023 and December 31, 2022; no shares issued and outstanding at March 31, 2023 and December 31, 2022.	—		—

Stockholders' equity (deficit):
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
Stockholders' deficit:						Stockholders' deficit:
Common stock, $0.01 par value, 600,000,000 shares authorized at March 31, 2023 and December 31, 2022; 87,139,831 shares issued and 86,291,473 shares outstanding at March 31, 2023 and 86,806,554 shares issued and 86,039,923 shares outstanding at December 31, 2022						Common stock, $0.01 par value, 600,000,000 shares authorized at March 31, 2023 and December 31, 2022; 87,139,831 shares issued and 86,291,473 shares outstanding at March 31, 2023 and 86,806,554 shares issued and 86,039,923 shares outstanding at December 31, 2022	871		868
Additional paid-in capital	Additional paid-in capital	3,640,597		3,351,967		Additional paid-in capital	3,767,733		3,737,979
Accumulated deficit	Accumulated deficit	(4,093,640)		(3,617,950)		Accumulated deficit	(4,569,794)		(4,275,889)
Treasury stock, cost basis, 727,695 shares at September 30, 2022 and 591,980 shares at December 31, 2021		(89,940)		(85,101)
Treasury stock, cost basis, 848,358 shares at March 31, 2023 and 766,631 shares at December 31, 2022						Treasury stock, cost basis, 848,358 shares at March 31, 2023 and 766,631 shares at December 31, 2022	(91,226)		(90,659)
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(23,794)		(1,353)		Accumulated other comprehensive loss	(3,166)		(6,377)
Total stockholders’ deficit	Total stockholders’ deficit	(565,985)		(351,673)		Total stockholders’ deficit	(895,582)		(634,078)
Total liabilities and stockholders’ deficit	Total liabilities and stockholders’ deficit	$	2,267,437	$	2,576,753	Total liabilities and stockholders’ deficit	$	1,542,699	$	2,258,679

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

~~Table of~~ ~~Contents~~

NOVAVAX, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)

Three ~~and Nine~~ Months Ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~

(in thousands, except share information)

(unaudited)


		Common Stock			Additional Paid-in Capital				Accumulated Deficit		Treasury Stock			Accumulated Other Comprehensive Income (Loss)				Total Stockholders' Equity (Deficit)				Common Stock					Additional Paid-in Capital				Accumulated Deficit				Treasury Stock				Accumulated Other Comprehensive Loss				Total Stockholders' Equity (Deficit)
		Shares	Amount										Shares								Amount
Balance at June 30, 2022		78,776,234	$	788			$	3,604,614			$	(3,925,027)				$	(86,455)			$	(10,870)		$	(416,950)
Balance at December 31, 2022																					Balance at December 31, 2022	86,806,554			$	868			$	3,737,979			$	(4,275,889)			$	(90,659)			$	(6,377)			$	(634,078)
Stock-based compensation	Stock-based compensation	—	—		33,386				—		—			—				33,386			Stock-based compensation	—			—		28,647				—				—				—				28,647
Stock issued under incentive programs	Stock issued under incentive programs	428,275	4		2,597				—		(3,485)			—				(884)			Stock issued under incentive programs	333,277			3		1,107				—				(567)				—				543

Foreign currency translation adjustment	Foreign currency translation adjustment	—	—		—				—		—			(12,924)				(12,924)			Foreign currency translation adjustment	—			—		—				—				—				3,211				3,211
Net loss	Net loss	—	—		—				(168,613)		—			—				(168,613)			Net loss	—			—		—				(293,905)				—				—				(293,905)
Balance at September 30, 2022		79,204,509	$	792	$	3,640,597			$	(4,093,640)	$	(89,940)		$	(23,794)			$	(565,985)
Balance at March 31, 2023																					Balance at March 31, 2023	87,139,831			$	871	$	3,767,733			$	(4,569,794)			$	(91,226)			$	(3,166)			$	(895,582)

Balance at June 30, 2021		74,672,351	$	747	$	3,237,085			$	(2,449,235)	$	(47,205)		$	4,170			$	745,562
Balance at December 31, 2021																					Balance at December 31, 2021	76,433,151			$	764	$	3,351,967			$	(3,617,950)			$	(85,101)			$	(1,353)			$	(351,673)
Stock-based compensation	Stock-based compensation	—	—		45,274				—		—			—				45,274			Stock-based compensation	—			—		32,933				—				—				—				32,933
Stock issued under incentive programs	Stock issued under incentive programs	1,301,172	13		28,154				—		(31,927)			—				(3,760)			Stock issued under incentive programs	91,788			1		2,029				—				(800)				—				1,230

Issuance of common stock, net of issuance costs of $2,311																					Issuance of common stock, net of issuance costs of $2,311	2,197,398			22		179,363				—				—				—				179,385

Foreign currency translation adjustment	Foreign currency translation adjustment	—	—		—				—		—			(3,309)				(3,309)			Foreign currency translation adjustment	—			—		—				—				—				41				41
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
Net income																					Net income	—			—		—				203,408				—				—				203,408
Balance at March 31, 2022																					Balance at March 31, 2022	78,722,337			$	787	$	3,566,292			$	(3,414,542)			$	(85,901)			$	(1,312)			$	65,324

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~~

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)


		Nine Months Ended September 30,					Three Months Ended March 31,
		2022		2021			2023		2022
Operating Activities:	Operating Activities:					Operating Activities:
Net loss		$	(475,690)	$	(897,467)
Reconciliation of net loss to net cash provided by (used in) operating activities:
Net income (loss)						Net income (loss)	$	(293,905)	$	203,408
Reconciliation of net income (loss) to net cash provided by (used in) operating activities:						Reconciliation of net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization	Depreciation and amortization	21,832		8,989		Depreciation and amortization	9,043		6,765

Non-cash stock-based compensation	Non-cash stock-based compensation	102,525		151,457		Non-cash stock-based compensation	28,647		32,933
Provision for excess and obsolete inventory	Provision for excess and obsolete inventory	358,075		—		Provision for excess and obsolete inventory	12,490		—
Right-of-use assets expensed, net of credits received	Right-of-use assets expensed, net of credits received	40,187		17,117		Right-of-use assets expensed, net of credits received	—		214
Other items, net	Other items, net	(25,059)		2,739		Other items, net	(1,252)		634
Changes in operating assets and liabilities:	Changes in operating assets and liabilities:					Changes in operating assets and liabilities:
Inventory	Inventory	(426,466)		—		Inventory	(9,222)		(99,557)
Accounts receivable, prepaid expenses, and other assets	Accounts receivable, prepaid expenses, and other assets	171,325		209,221		Accounts receivable, prepaid expenses, and other assets	18,430		(56,016)
Accounts payable, accrued expenses, and other liabilities	Accounts payable, accrued expenses, and other liabilities	90,418		180,708		Accounts payable, accrued expenses, and other liabilities	(230,099)		(115,500)
Deferred revenue	Deferred revenue	(155,268)		992,590		Deferred revenue	140,275		(61,391)
Net cash provided by (used in) operating activities		(298,121)		665,354
Net cash used in operating activities						Net cash used in operating activities	(325,593)		(88,510)

Investing Activities:	Investing Activities:					Investing Activities:
Purchases of property and equipment		(66,033)		(41,122)
Internal-use software development costs		(4,888)		—
Purchases of marketable securities		—		(2,167)
Proceeds from maturities and sale of marketable securities		—		159,807
Net cash provided by (used in) investing activities		(70,921)		116,518
Capital expenditures						Capital expenditures	(19,801)		(16,826)
Internal-use software						Internal-use software	(3,757)		—
Net cash used in investing activities						Net cash used in investing activities	(23,558)		(16,826)

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
Net proceeds from the exercise of stock-based awards	Net proceeds from the exercise of stock-based awards	67		21,441		Net proceeds from the exercise of stock-based awards	543		1,318
Finance lease payments	Finance lease payments	(45,904)		(63,876)		Finance lease payments	(26,331)		(20,838)
Net cash provided by financing activities		133,548		522,424
Repayment of 2023 Convertible notes						Repayment of 2023 Convertible notes	(325,000)		—
Payments of costs related to issuance of 2027 Convertible notes						Payments of costs related to issuance of 2027 Convertible notes	(3,591)		—
Net cash provided by (used in) financing activities						Net cash provided by (used in) financing activities	(354,379)		159,865
Effect of exchange rate on cash, cash equivalents, and restricted cash	Effect of exchange rate on cash, cash equivalents, and restricted cash	257		(6,208)		Effect of exchange rate on cash, cash equivalents, and restricted cash	(8,372)		1,312
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		Net increase (decrease) in cash, cash equivalents, and restricted cash	(711,902)		55,841
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	1,348,845		1,528,259
Cash, cash equivalents, and restricted cash at end of period	Cash, cash equivalents, and restricted cash at end of period	$	1,293,022	$	1,946,826	Cash, cash equivalents, and restricted cash at end of period	$	636,943	$	1,584,100

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	$	118,262	$	34,914	Right-of-use assets from new lease agreements	$	—	$	58,352
Capital expenditures included in accounts payable and accrued expenses	Capital expenditures included in accounts payable and accrued expenses	$	11,984	$	7,884	Capital expenditures included in accounts payable and accrued expenses	$	10,847	$	15,874

Supplemental disclosure of cash flow information:	Supplemental disclosure of cash flow information:					Supplemental disclosure of cash flow information:
Cash interest payments		$	17,260	$	17,768
Cash interest payments, net of amounts capitalized						Cash interest payments, net of amounts capitalized	$	6,566	$	6,654
Cash paid for income taxes	Cash paid for income taxes	$	17,843	$	6,041	Cash paid for income taxes	$	—	$	15,451

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

~~Table of~~ ~~Contents~~

NOVAVAX, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

~~September 30, 2022~~March 31, 2023

(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 health globally through the discovery, development, and commercialization of innovative vaccines to prevent serious infectious diseases. The Company’s COVID-19 vaccine (“NVX-CoV2373,” “Nuvaxovid™,” “Covovax™,” “Novavax COVID-19 Vaccine, Adjuvanted”); influenza vaccine candidate; COVID-19-Influenza Combination (“CIC”) vaccine candidate; and additional vaccine candidates, including for Omicron subvariants and bivalent formulations with prototype vaccine (“NVX-CoV2373”), are genetically engineered 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 other vaccine approaches. NVX-CoV2373 and the Company’s other vaccine candidates incorporate the Company's proprietary ~~Matrix-M~~™Matrix-M™ 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 September 30, 2022, the~~The Company ~~had~~has received approval, interim authorization, provisional approval, conditional marketing authorization, and emergency use authorization (“EUA”) from multiple regulatory authorities globally for NVX-CoV2373 for both adult and adolescent populations as a primary series and for both homologous and heterologous booster ~~indications.~~

~~The Company~~indications, and commenced commercial shipments of NVX-CoV2373 doses under the name “Novavax COVID-19 Vaccine, Adjuvanted” and the brand name “Nuvaxovid™” induring the first quarter 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 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 loss included a foreign currency translation loss of ~~$23.8~~$3.2 million and ~~$1.4~~$6.4 million ~~as of September 30, 2022~~at March 31, 2023 and December 31, ~~2021,~~2022, respectively. The aggregate foreign currency transaction gains resulting from the conversion of the transaction currency to functional currency were $16.3 million and $2.2 million for the three months ended March 31, 2023 and 2022, respectively, which are reflected in Other income.

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.~~2022. Results for this or any interim period are not necessarily indicative of results for any future interim period or for the entire year. The Company operates in one business segment.

~~Reclassifications~~Liquidity and Going Concern

~~Certain amounts reported in prior periods~~The accompanying unaudited consolidated financial statements have been ~~reclassified~~prepared assuming that the Company will continue as a going concern within one year after the date that the financial statements are issued. At March 31, 2023, the Company had $636.9 million in cash and cash equivalents and restricted cash. In April 2023, the Company repaid $112.5 million related to ~~conform to current period financial statement presentation. These reclassifications have no material effect~~the refund due under the Amended and Restated SARS-CoV-2 Vaccine Supply Agreement, dated July 1, 2022, as further amended on ~~previously reported financial position, cash flows, or results~~September 26, 2022, (the “Amended and Restated UK Supply Agreement”) with The Secretary of ~~operations.~~

~~Table~~

State for Business, Energy and Industrial Strategy (as assigned to the UK Health Security Agency), acting on behalf of ~~Contents~~the government of the United Kingdom of Great Britain and Northern Ireland, which amended and restated in its entirety the SARS-CoV-2 Vaccine Supply Agreement, dated October 22, 2020, between the parties, and $27.0 million related to a Settlement Agreement and Release of Claims between the Company and Par Sterile Products, LLC (“Par”), as described in Note 15 below, which was fully accrued as of March 31, 2023. During the three months ended March 31, 2023, the Company incurred a net loss of $293.9 million and had net cash flows used in operating activities of $325.6 million.

In accordance with Accounting Standards Codification 205-40, Going Concern, the Company evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about its ability to continue as a going concern within one year after the date that these unaudited consolidated financial statements are issued. While the Company’s current cash flow forecast for the one-year going concern look forward period estimates that there will be sufficient capital available to fund operations, this forecast is subject to significant uncertainty, including as it relates to revenue for the next 12 months, funding from the U.S. government, and a pending matter subject to arbitration proceedings. The Company’s revenue projections depend on its ability to successfully develop, manufacture, distribute, and market an updated monovalent or bivalent formulation of a vaccine candidate for COVID-19 for the Fall 2023 COVID vaccine season, which is inherently uncertain and subject to a number of risks, including regulatory approval and commercial adoption. In February 2023, in connection with the execution of Modification 17 to the USG Agreement (as defined in Note 3), the U.S. government indicated to the Company that the award may not be extended past its current period of performance. If the USG Agreement is not amended, as the Company’s management had previously expected, then the Company may not receive all of the remaining $336.4 million in funding that was previously anticipated pursuant to the USG Agreement. On January 24, 2023, Gavi, the Vaccine Alliance (“Gavi”) filed a demand for arbitration with the International Court of Arbitration regarding an alleged material breach by the Company of the Company’s advance purchase agreement with Gavi (the “Gavi APA”). The outcome of that arbitration is inherently uncertain, and it is possible the Company could be required to refund all or a portion of the remaining advance payments of $697.4 million (see Note 3 and Note 15).

Management believes that, given the significance of these uncertainties, substantial doubt exists regarding the Company’s ability to continue as a going concern through one year from the date that these financial statements are issued.

In May 2023, the Company announced a global restructuring and cost reduction plan. This plan includes a more focused investment in its NVX-CoV2373 program, reduction to its pipeline spending, the continued rationalization of its manufacturing network, a reduction to the Company’s global workforce, as well as the consolidation of facilities and infrastructure. The planned workforce reduction includes an approximately 25% reduction in the Company’s global workforce, comprised of an approximately 20% reduction in full-time Novavax employees and the remainder comprised of contractors and consultants. The Company expects the full annual impact of the cost savings to be realized in 2024 and approximately half of the annual impact to be realized in 2023 due to timing of implementing the measures, and the applicable laws, regulations, and other factors in the jurisdictions in which the Company operates. The Company expects to record a charge of approximately $10 million to $15 million related to one-time employee severance and benefit costs, the majority of which are expected to be incurred in the second quarter of 2023 and is evaluating the anticipated costs related to the consolidation of facilities and infrastructure.

The Company’s ability to fund Company operations is dependent upon revenue related to vaccine sales for its products and product candidates, if such product candidates receive marketing approval and are successfully commercialized; the resolution of certain matters, including whether, when, and how the dispute with Gavi is resolved; and management’s plans, which include resolving the dispute with Gavi and cost reductions associated with the Company’s global restructuring and cost reduction plan. Management’s plans may also include raising additional capital through a combination of equity and debt financing, collaborations, strategic alliances, and marketing, distribution, or licensing arrangements. New financings may not be available to the Company on commercially acceptable terms, or at all. Also, any collaborations, strategic alliances, and marketing, distribution, or licensing arrangements may require the Company to give up some or all of its rights to a product or technology, which in some cases may be at less than the full potential value of such rights. In addition, the regulatory and commercial success of NVX-CoV2373 and the Company’s other vaccine candidates, including an influenza vaccine candidate, a CIC vaccine candidate, and a COVID-19 variant strain-containing monovalent or bivalent formulation, remains uncertain. If the Company is unable to obtain additional capital, the Company will assess its capital resources and may be required to delay, reduce the scope of, or eliminate some or all of its operations, or further downsize its organization, any of which may have a material adverse effect on its business, financial condition, results of operations, and ability to operate as a going concern.

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 the Company’s NVX-CoV2373 supply agreements, sometimes referred to as advance purchase agreements (“APAs”), with various international governments.~~ Revenue Recognition Constraints

The Company ~~recognizes revenue from product sales based on~~constrains 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~~for 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 pricearrangements until it is probable that a significant reversal in cumulative revenue recognized will not occur.

~~Cost~~ Specifically, if a customer arrangement includes a provision whereby the customer may request a discount, return or refund for a previously satisfied performance obligation or otherwise could have the effect of ~~Sales~~

~~Cost~~decreasing the transaction price, revenue is constrained based on an estimate 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; idle capacity; and losses on firm purchase commitments~~impact to the ~~extent the cost cannot be recovered based on estimates about future demand. Cost of sales does~~transaction price recognized until it is probable that a significant reversal in cumulative revenue recognized will not include certain expenses related to raw materials, production, and manufacturing overhead costs that were expensed prior to regulatory authorization as described under the caption “Inventory” below.

~~Inventory~~

Inventory is recorded at the lower of cost or net realizable value under the First In, First Out (“FIFO”) methodology, taking into consideration the expiration of the inventory 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 adjusted on a periodic basis to reflect the deviation in the actual cost from the standard cost estimate. Standard costs consist primarily of the cost of manufacturing goods, including direct materials, direct labor, and the services and products of third-party suppliers. Manufacturing overhead costs are applied to semi-finished and 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 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.occur.

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 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.

~~Table of~~ ~~Contents~~

~~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~~2023, using a modified retrospective approach, ~~which~~and it did not have a material impact on the Company’s consolidated financial statements.

Note 3 – Revenue

The Company's accounts receivable included ~~$43.6~~$70.2 million, $53.8 million, $425.9 million, and $419.7 million related to amounts that were billed to customers and ~~$68.0~~$42.7 million, $28.6 million, $52.3 million, and $35.3 million related to amounts which had not yet been billed to customers as of ~~September 30,~~March 31, 2023, December 31, 2022, March 31, 2022, and December 31, 2021, respectively. During the ~~nine~~three months ended ~~September 30,~~March 31, 2023 and 2022, changes in the Company's accounts receivables, allowance for doubtful accounts, and deferred revenue balances were as follows (in thousands):

December 31, 2021 Additions Deductions September 30, 2022
Contract receivables:
Accounts receivable $ 454,993 1,519,345 (1,862,693) $ 111,645
Contract liabilities:
Deferred revenue(1)
$ 1,595,472 96,298
(251,576)(2)
$ 1,440,194


	Balance, Beginning of Period		Additions		Deductions		Balance, End of Period
Accounts receivable:
Three months ended March 31, 2023	$	96,210	$	146,424	$	(115,950)	$	126,684
Three months ended March 31, 2022	454,993		625,124		(601,961)		478,156
Allowance for doubtful accounts(1):
Three months ended March 31, 2023	$	(13,835)	$	—	$	—	$	(13,835)
Three months ended March 31, 2022	—		—		—		—
Deferred revenue:
Three months ended March 31, 2023	$	549,551	$	140,324	$	(49)	$	689,826
Three months ended March 31, 2022	1,595,472		49,094		(108,586)		1,535,980

(1)~~Amount is comprised~~ There was no bad debt expense recorded during the three months ended March 31, 2023 or 2022. To estimate the allowance for doubtful accounts, the Company evaluates the credit risk related to its customers based on historical loss experience, economic conditions, the aging of ~~$404.8 million~~receivables, and ~~$1.4 billion~~customer-specific risks.

As of ~~current Deferred revenue and $1.0 billion and $172.5 million of non-current Deferred revenue as of September 30, 2022 and December~~March 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~~2023, the aggregate amount of the transaction price allocated to performance obligations that were unsatisfied (or partially unsatisfied), excluding amounts related to sales-based royalties, the Gavi APA, and the reduction in doses related to the Amended and Restated UK Supply Agreement, was approximately $4$3 billion as of ~~September 30, 2022.~~which $689.8 million was included in Deferred revenue. 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~~advance purchase agreements (“APAs”) 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, and delivery of doses. The timing to fulfill performance obligations related to APAs will depend on timing of product manufacturing, receipt of marketing authorizations for additional indications, delivery of doses based on customer demand, and the ability of the customer to request 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.

~~Table~~Under the terms of ~~Contents~~

~~Grants~~

the Gavi APA and a separate purchase agreement between Gavi and Serum Institute of India Pvt. Ltd. (“SIIPL”), 1.1 billion doses of NVX-CoV2373 were to be made available to countries participating in the COVAX Facility. The Company ~~recognized grant~~expected to manufacture and distribute 350 million doses of NVX-CoV2373 to countries participating under the COVAX Facility. Under a separate purchase agreement with Gavi, SIIPL was expected to manufacture and deliver the balance of the 1.1 billion doses of NVX-CoV2373 for low- and middle-income countries participating in the COVAX Facility. The Company expected to deliver doses with antigen and adjuvant manufactured at facilities directly funded under the Company's funding agreement with Coalition for Epidemic Preparedness Innovations (“CEPI”), with initial doses supplied by SIIPL and Serum Life Sciences Limited (“SLS”) under a supply agreement. The Company expected to supply significant doses that Gavi would allocate to low-, middle- and high-income countries, subject to certain limitations, utilizing a tiered pricing schedule and Gavi could prioritize such doses to low- and middle- income countries, at lower prices. Additionally, the Company could provide additional doses of NVX-CoV2373, to the extent available from CEPI-funded manufacturing facilities, in the event that SIIPL could not materially deliver expected vaccine doses to the COVAX Facility. Under the agreement, the Company received an upfront payment of $350.0 million from Gavi in 2021 and an additional payment of $350 million in 2022 related to the Company’s achieving an emergency use license for NVX-CoV2373 by the WHO (the “Advance Payment Amount”).

On November 18, 2022, the Company delivered written notice to Gavi to terminate the Gavi APA on the basis of Gavi’s failure to procure the purchase of 350 million doses of NVX-CoV2373 from the Company as required by the Gavi APA. As of November 18, 2022, the Company had only received orders under the Gavi APA for approximately 2 million doses. On December 2, 2022, Gavi issued a written notice purporting to terminate the Gavi APA based on Gavi’s contention that the Company repudiated the agreement and, therefore, materially breached the Gavi APA. Gavi also contends that, based on its purported termination of the Gavi APA, it is entitled to a refund of the Advance Payment Amount less any amounts that have been credited against the purchase price for binding orders placed by a buyer participating in the COVAX Facility. As of March 31, 2023, the remaining Gavi Advance Payment Amount of $697.4 million, pending resolution of the dispute with Gavi related to a return of the remaining Advance Payment Amount, was reclassified from Deferred revenue to Other current liabilities in the Company’s consolidated balance sheets. On January 24, 2023, Gavi filed a demand for arbitration with the International Court of Arbitration based on the claims described above. The Company filed its Answer and Counterclaims on March 2, 2023. On April 5, 2023, Gavi filed its Reply to the Company’s Counterclaims. Arbitration is inherently uncertain, and while the Company believes that it is entitled to retain the remaining Advance Payment Amount received from Gavi, it is possible that it could be required to refund all or a portion of the remaining Advance Payment Amount from Gavi.

Product Sales

Product sales by the Company’s customer’s geographic location was as follows (in thousands):

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


	Three Months Ended March 31,
	2023		2022
North America	$	—	$	64,762
Europe	57,267		413,745
Rest of the world	(64,724)		107,121
Total product revenue	$	(7,457)	$	585,628

~~U.S. Government~~In May 2023, the Company extended a credit for certain doses delivered in 2022 that qualified for replacement under the contract with the customer. This credit is the result of a single lot sold to the Australian government that upon pre-planned 6-month stability testing was found to have fallen below the defined specifications and the lot was therefore removed from the market. The credit will be applied against the future sale of doses to the customer and, during the three months ended March 31, 2023, the Company recorded a reduction of $64.7 million in product sales, with a corresponding increase to Deferred revenue, non-current.

Grants

The Company’s U.S. government ~~partnership~~agreement consists of ~~an agreement~~a Project Agreement (the ~~“OWS~~“Project Agreement”) and a Base Agreement with Advanced Technology International, the Consortium Management Firm acting on behalf of the Medical CBRN Defense Consortium in connection with the partnership formerly known as Operation Warp Speed ~~(“OWS”~~(the Base Agreement

together with the Project Agreement are referred to as the “USG Agreement”). In ~~July 2022,~~February 2023, in connection with the ~~Company entered into a modification~~execution of Modification 17 to the ~~OWS~~Project Agreement, ~~that amended the terms of such agreement to provide for (i) an initial delivery to~~ the U.S. government indicated to the Company that the award may not be extended past its current period of ~~approximately 3~~performance, December 31, 2023. Also, Modification 17 included provisions requiring that the payment of $60.0 million of consideration associated with manufacturing work now be contingent upon meeting certain milestones, including the delivery of up to 1.5 million doses of NVX-CoV2373 and ~~(ii) any additional manufacture~~development and ~~delivery~~regulatory milestones related to ~~the U.S. government up to an aggregate of 100 million doses of NVX-CoV2373 contemplated by the original OWS Agreement (inclusive~~commercial readiness, expansion of the ~~initial batch~~EUA and development of ~~approximately 3 million doses) dependent on U.S. government demand, FDA guidance on strain selection, agreement between the parties on the price~~multiple vial presentations. As of ~~such doses, and available funding. The 3 million initial doses were delivered in July 2022. Additionally, in July 2022,~~March 31, 2023, the Company ~~modified its existing agreement~~constrained the total transaction price by $48.0 million for consideration associated with milestones that are not fully within the ~~DoD and delivered 0.2~~Company’s control. This constraint, in addition to other contract changes included within Modification 17, resulted in an approximately $29 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~~cumulative reduction 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 soldrevenue previously recognized under the ~~Company’s APA with Gavi,~~contract for 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.

three months ended March 31, 2023.

Royalties and Other

During the three ~~and nine~~ months ended ~~September 30, 2022,~~March 31, 2023, the Company did not recognize revenue related to sales-based royalties. The Company recognized ~~$1.3~~$7.4 million ~~and $10.5 million, respectively,~~ in revenue related to sales-based ~~royalties. During~~royalties during the three months ended 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 not recognize any revenue related to milestone payments.

~~Table of~~ ~~Contents~~

~~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 ofMarch 31, 2022.

Note 4 – Collaboration, License, and Supply Agreements

Serum Institute

The Company previously granted SIIPL exclusive and non-exclusive licenses for the development, co-formulation, filling and finishing, registration, and commercialization of ~~NVX-CoV2373.~~NVX-CoV2373, its proprietary COVID-19 variant antigen candidate(s), its quadrivalent influenza vaccine candidate, and its CIC vaccine candidate. SIIPL agreed to purchase the ~~Company’s Matrix-M~~TMCompany's Matrix-M™ 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”)~~SLS under which SIIPL and SLS supply the Company with NVX-CoV2373, its proprietary COVID-19 variant antigen candidate(s), its quadrivalent influenza vaccine candidate, and its CIC vaccine candidate for commercialization and sale in certain 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.~~

~~Table~~Oxford (“R21/Malaria”). Under the agreement, SIIPL purchases the Company's Matrix-M™ adjuvant to manufacture R21/Malaria and SIIPL pays a royalty in the single to low double-digit range for a period of ~~Contents~~

15 years after the first commercial sale of product in each country.

Takeda Pharmaceutical Company Limited

The Company has a collaboration and license agreement with Takeda Pharmaceutical Company Limited (“Takeda”) under which the Company granted Takeda an exclusive license to develop, manufacture, and commercialize NVX-CoV2373 in Japan. Under the agreement, Takeda purchases ~~the Company’s~~ Matrix-M™ adjuvant from the Company to manufacture doses of 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~~NVX-CoV2373. In September 2021, Takeda finalized an agreement with the ~~low to middle double-digit range. During~~Government of Japan’s Ministry of Health, Labour and Welfare ("MHLW") for the ~~three months ended June 30, 2022,~~purchase of 150 million doses of NVX-CoV2373. In February 2023, MHLW cancelled the remainder of doses under its agreement with Takeda. As a result, it is uncertain whether the Company ~~recognized a milestone payment~~will receive future payments from Takeda under the terms and conditions of ~~$20.0 million upon the first sale in Japan.~~

~~SK bioscience Co., Ltd.~~

~~The Company has a~~their current 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.licensing agreement.

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~~which began on March 31, 2023. As of ~~September 30, 2022,~~March 31, 2023, the remaining payment of $102.9 million was ~~of the remaining payment was~~ reflected in Accrued ~~expenses and $34.3 million was reflected in Other non-current liabilities.~~expenses. 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 Fujifilm 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

11Basic and diluted net income (loss) per share were calculated as follows (in thousands, except per share data):


	Three Months Ended March 31,
	2023		2022
Numerator:
Net income (loss), basic	$	(293,905)	$	203,408
Interest on convertible notes, net	—		3,403
Net income (loss), dilutive	(293,905)		206,811
Denominator:
Weighted average number of common shares outstanding, basic	86,158		76,457
Effect of dilutive securities	—		4,254
Weighted average number of common shares outstanding, dilutive	86,158		80,711
Net income (loss) per share:
Basic	$	(3.41)	$	2.66
Diluted	$	(3.41)	$	2.56

Anti-dilutive securities excluded from calculations of diluted net income (loss) per share	23,971		1,474

~~Table of~~ ~~Contents~~

Note 56 – Cash, Cash Equivalents, and Restricted Cash

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


		September 30, 2022		December 31, 2021			March 31, 2023		December 31, 2022
Cash and cash equivalents	Cash and cash equivalents	$	1,280,581	$	1,515,116	Cash and cash equivalents	$	624,950	$	1,336,883
Restricted cash, current	Restricted cash, current	10,785		11,490		Restricted cash, current	10,330		10,303
Restricted cash, non-current(1)	Restricted cash, non-current(1)	1,656		1,653		Restricted cash, non-current(1)	1,663		1,659
Cash, cash equivalents, and restricted cash	Cash, cash equivalents, and restricted cash	$	1,293,022	$	1,528,259	Cash, cash equivalents, and restricted cash	$	636,943	$	1,348,845

(1)Classified as Other non-current assets as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, on the consolidated balance sheets.

Note 67 – Fair Value Measurements

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


		Fair Value at September 30, 2022						Fair Value at December 31, 2021							Fair Value at March 31, 2023						Fair Value at December 31, 2022
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)	$	365,631	$	—	$	—	$	361,822	$	—	$	—	Money market funds(1)	$	152,786	$	—	$	—	$	398,834	$	—	$	—
Government-backed securities(1)	Government-backed securities(1)	—		261,000		—		—		266,250		—		Government-backed securities(1)	—		296,000		—		—		296,000		—

Corporate debt securities(1)	Corporate debt securities(1)	—		109,914		—		—		790,672		—		Corporate debt securities(1)	—		4,991		—		—		—		—
Agency securities(1)	Agency securities(1)	—		42,777		—		—		—		—		Agency securities(1)	—		—		—		—		104,536		—
Total cash equivalents	Total cash equivalents	$	365,631	$	413,691	$	—	$	361,822	$	1,056,922	$	—	Total cash equivalents	$	152,786	$	300,991	$	—	$	398,834	$	400,536	$	—
Liabilities	Liabilities													Liabilities
Convertible notes payable		$	—	$	317,044	$	—	$	—	$	447,509	$	—
5.00% Convertible notes due 2027														5.00% Convertible notes due 2027	$	—	$	103,811	$	—	$	—	$	172,789	$	—
3.75% Convertible notes due 2023														3.75% Convertible notes due 2023	—		—		—		—		322,111		—
Total convertible notes payable														Total convertible notes payable	$	—	$	103,811	$	—	$	—	$	494,900	$	—

(1)All investments are classified as Cash and cash equivalents as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, on the consolidated balance sheets.

~~Cash equivalents~~Fixed-income investments categorized as Level 2 are ~~recorded~~valued at ~~cost, which approximate fair value due to their short-term nature.~~the custodian bank by a third-party pricing vendor’s valuation models that use verifiable observable market data, such as interest rates and yield curves observable at commonly quoted intervals and credit spreads, bids provided by brokers or dealers, or quoted prices of securities with similar characteristics. Pricing of the ~~Company's Notes (see Note 10)~~Company’s convertible notes has been estimated using ~~other~~ observable inputs, including the price of the ~~Company's~~Company’s common stock, implied volatility, interest rates, and credit spreads.

During the ~~nine~~three months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021,~~ the Company did not have any transfers between levels.

The amount in the Company’s consolidated balance sheets for accounts payable and accrued expenses approximates its fair value due to its short-term nature.

Note 78 – Inventory

Inventory consisted of the following (in thousands):


		September 30, 2022		December 31, 2021			March 31, 2023		December 31, 2022
Raw materials	Raw materials	$	17,557	$	8,872	Raw materials	$	12,320	$	13,912
Semi-finished goods	Semi-finished goods	33,030		—		Semi-finished goods	13,108		21,410
Finished goods	Finished goods	31,845		—		Finished goods	8,757		1,361
Total inventory	Total inventory	$	82,432	$	8,872	Total inventory	$	34,185	$	36,683

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,~~March 31, 2023, inventory write-downs were ~~$202.4 million and $358.1 million, respectively.~~$12.5 million. For the three ~~and nine~~ months ended ~~September 30, 2022,~~March 31, 2023, losses on firm purchase commitments were ~~$46.6 million and $146.2 million, respectively.~~$7.7 million. There were no inventory write-downs or losses on firm purchase commitments during ~~2021.~~the three months ended March 31, 2022.

~~Table of~~ ~~Contents~~

Note 89 – ~~Intangible Assets and~~ Goodwill

~~Identifiable Intangible Assets~~

~~Purchased intangible assets consisted~~The Company has one reporting unit, which has a negative equity value as 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~~March 31, 2023 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~~

2022. The change in the carrying amounts of goodwill for the ~~nine~~three months ended ~~September 30, 2022~~March 31, 2023 was as follows (in thousands):


	Amount
Balance at December 31, ~~2021~~2022	$	~~131,479~~126,331
Currency translation adjustments	~~(13,944)~~3,496
Balance at ~~September 30, 2022~~March 31, 2023	$	~~117,535~~129,827

Note ~~9 -~~10 – Leases

~~During the nine months ended September 30, 2022, the~~The Company ~~concluded that changes in facts and circumstances on its CMO and CDMO agreements that had previously been determined~~has embedded leases related to represent embedded lease 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 $44.0 million on the remeasurement of its long-term supply agreements ~~using an average incremental borrowing rate of 5%. The Company expensed the ROU asset since it relates~~with contract manufacturing organizations (“CMOs”) and contract manufacturing and development organizations to manufacture NVX-CoV2373, as well as operating leases for its research and development ~~activities for~~and manufacturing facilities, corporate headquarters and offices, and certain equipment. During the ~~development of NVX-CoV2373 for which~~three months ended March 31, 2023, the Company ~~does not have an alternative future use.~~

~~Table~~continued to align its global manufacturing footprint as a result of ~~Contents~~

its ongoing assessment of manufacturing needs consistent with its contractual obligations related to the supply, and anticipated demand for, NVX-CoV2373.

During the three ~~and nine~~ months ended ~~September 30, 2022,~~March 31, 2023, the Company recognized a short-term lease ~~benefit of $46.6 million and~~ expense of ~~$37.3~~$0.7 million, ~~respectively,~~ related to its embedded leases ~~net~~and no expense was recognized for the write off of ~~a benefit~~right 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 $24.2 million and $44.0 million, respectively, of ROUuse (“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, 2021,~~March 31, 2022, the Company recognized a short-term lease expense of ~~$111.3~~$78.1 million, ~~and $325.5 million, respectively,~~ related to its embedded leases and expensed ~~$4.4~~$10.4 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.~~write off. During the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022, the Company recognized ~~$0.9~~$0.5 million and ~~$4.3~~$1.1 million, respectively, 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. 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 nine months ended September 30, 2022, the Company obtained the right to direct the use of, and obtain substantially all of the benefit from, certain floors located at the premises and recognized an ROU asset and related lease obligation of $73.2 million as the lease commencement dates for accounting purposes had occurred.

Note 1011 – Long-Term Debt

~~Convertible Notes~~

The Company incurred approximately $10.0 million of debt issuance costs during the first quarter of 2016 relating to the issuance of $325 million aggregate principal amount of convertible senior unsecured notes that will mature on February 1, 2023 (the “Notes”), which were recorded as a reduction to the Notes on the consolidated balance sheet. The $10.0 million of debt issuance costs is being amortized and recognized as additional interest expense over the seven-year contractual term of the Notes on a straight-line basis, which approximates the effective interest rate method.

Total convertible notes payable consisted of the following (in thousands):

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


	March 31, 2023		December 31, 2022
Current portion:
3.75% Convertible notes due 2023	$	—	$	325,000
Unamortized debt issuance costs	—		(119)
Total current convertible notes payable	$	—	$	324,881
Non-current portion:
5.00% Convertible notes due 2027	$	175,250	$	175,250

Unamortized debt issuance costs and discount	(8,393)		(8,784)
Total non-current convertible notes payable	$	166,857	$	166,466

~~(1)~~During the three months ended March 31, 2023, the Company repaid the outstanding principal amount of $325.0 million on its 3.75% Convertible notes ~~are classified~~due in 2023, together with accrued but unpaid interest on the maturity date. The repayment was funded by the issuance of the 5.00% Convertible notes due 2027 and the concurrent common stock offering in December 2022, as ~~current liabilities and~~well as ~~non-current liabilities in the consolidated balance sheets as of September 30, 2022 and December 31, 2021, respectively.~~cash on hand.

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

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


	Three Months Ended March 31,
	2023		2022
Coupon interest	$	3,206	$	3,047
Amortization of debt issuance costs	510		356
Total interest expense on convertible notes payable	$	3,716	$	3,403

Note 1112 – Stockholders' Equity (Deficit)

~~During the three months ended March 31, 2022,~~In June 2021, the Company ~~sold 2.2 million of shares of its common stock resulting in net proceeds of approximately $179 million, under its most recent~~entered into an At Market Issuance Sales ~~agreement entered in June 2021~~Agreement (the ~~“June~~"June 2021 Sales ~~Agreement”~~Agreement"), which allows it to issue and sell up to $500 million in gross proceeds of shares of its common stock. As of ~~September 30, 2022,~~March 31, 2023, the remaining balance available under the June 2021 Sales Agreement was approximately $318 million.

~~Table of~~ ~~Contents~~

There were no sales recorded under the June 2021 Sales Agreement during the three months ended March 31, 2023.

During the ~~nine~~three months ended ~~September 30, 2021,~~March 31, 2022, the Company sold ~~2.6~~2.2 million shares of its common stock resulting in net proceeds of approximately ~~$565~~$179 million, under its ~~various At Market Issuance~~June 2021 Sales ~~agreements.~~Agreement.

Note 1213 – Stock-Based Compensation

Equity Plans

In January 2023, the Company established the 2023 Inducement Plan (the “2023 Inducement Plan”), which provides for the granting of share-based awards to individuals who were not previously employees, or following a bona fide period of non-employment, as an inducement material to such individuals entering into employment with the Company. The Company reserved 1.0 million shares of common stock for grant under the 2023 Inducement Plan. As of March 31, 2023, there were 0.3 million shares available for issuance under the 2023 Inducement Plan.

The 2015 Stock Incentive Plan, as amended (“2015 Plan”), was approved at the Company's annual meeting of stockholders in June 2015. Under the 2015 Plan, equity awards may be granted to officers, directors, employees, and consultants of and advisors to the Company and any present or future subsidiary.

The 2015 Plan authorizes the issuance of up to 14.8 million shares of common stock under equity awards granted under the 2015 ~~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.~~Plan. 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,~~March 31, 2023, there were ~~4.6~~0.5 million shares available for issuance under the 2015 Plan.

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

The 2023 Inducement Plan and the 2015 Plan ~~permits~~permit and the 2005 Plan permitted the grant of stock options (including incentive stock options), restricted stock, stock appreciation rights (“SARs”), and restricted stock units (“RSUs”). In addition, under the 2023 Inducement Plan and the 2015 Plan, unrestricted stock, stock units, and performance awards may be granted. Stock options and SARs generally have a maximum term of ten years and may be or were granted with an exercise price that is no less than 100% of the fair market value of the Company's common stock at the time of grant. Grants of ~~stock options~~share-based awards 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 September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2022		2021		2022		2021			2023		2022
Cost of sales	Cost of sales	$	51	$	—	$	51	$	—	Cost of sales	$	519	$	—
Research and development	Research and development	16,107		21,860		52,692		70,429		Research and development	13,858		16,887
General and administrative		15,389		23,414		49,782		81,028
Selling, general, and administrative										Selling, general, and administrative	14,270		16,046
Total stock-based compensation expense	Total stock-based compensation expense	$	31,547	$	45,274	$	102,525	$	151,457	Total stock-based compensation expense	$	28,647	$	32,933

Total stock-based compensation capitalized and included in inventory as of ~~September 30,~~March 31, 2023 and December 31, 2022 was ~~$1.8~~$1.7 million. ~~There was no stock-based compensation capitalized and included in inventory as of December 31, 2021.~~

As of ~~September 30, 2022,~~March 31, 2023, there was approximately ~~$189~~$174 million of total unrecognized compensation expense related to unvested stock options, SARs, RSUs, and the 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 closing stock price on the last trading day of the period and the exercise price, multiplied by the number of in-the-money stock options and SARs) that would have been received by the holders had all stock option and SAR holders exercised their stock options and SARs on ~~September 30, 2022.~~March 31, 2023. This amount is subject to change based on changes to the closing price of the Company's common stock. The aggregate intrinsic value of stock options and SARs exercises and vesting of RSUs for the ~~nine~~three months ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~ was approximately ~~$19~~$1.5 million and ~~$381~~$5.6 million, respectively.

~~Table of~~ ~~Contents~~

Stock Options and Stock Appreciation Rights

The following is a summary of stock options and SARs activity under the 2023 Inducement Plan, 2015 Plan, and 2005 Plan for the ~~nine~~three months ended ~~September 30, 2022:~~March 31, 2023:


		2015 Plan			2005 Plan				2023 Inducement Plan			2015 Plan			2005 Plan
		Stock Options	Weighted-Average Exercise Price		Stock Options	Weighted-Average Exercise Price			Stock Options	Weighted-Average Exercise Price		Stock Options	Weighted-Average Exercise Price		Stock Options	Weighted-Average Exercise Price
Outstanding at December 31, 2021		3,635,837	$	42.60	68,225	$	109.52
Outstanding at December 31, 2022								Outstanding at December 31, 2022	—	$	—	4,053,290	$	46.07	63,725	$	112.94
Granted	Granted	558,181	71.21		—	—		Granted	358,600	10.96		927,742	7.20		—	—
Exercised	Exercised	(132,420)	15.75		(3,000)	31.10		Exercised	—	—		(5,031)	6.81		—	—
Canceled	Canceled	(61,364)	88.58		(1,500)	121.00		Canceled	—	—		(15,835)	81.44		(5,250)	36.60
Outstanding at September 30, 2022		4,000,234	$	46.78	63,725	$	112.94
Shares exercisable at September 30, 2022		2,739,565	$	39.72	63,725	$	112.94
Outstanding at March 31, 2023								Outstanding at March 31, 2023	358,600	$	10.96	4,960,166	$	38.73	58,475	$	119.80
Shares exercisable at March 31, 2023								Shares exercisable at March 31, 2023	—	$	—	311,560	$	40.60	58,475	$	119.80

The fair value of stock options granted under the 2023 Inducement Plan and the 2015 Plan was estimated at the date of grant using the Black-Scholes option-pricing model with the following assumptions:


		Three Months Ended September 30,		Nine Months Ended September 30,			Three Months Ended March 31,
		2022	2021	2022	2021		2023	2022
Weighted average Black-Scholes fair value of stock options granted	Weighted average Black-Scholes fair value of stock options granted	$37.66	$203.51	$60.24	$156.86	Weighted average Black-Scholes fair value of stock options granted	$7.19	$65.78
Risk-free interest rate	Risk-free interest rate	3.0%-3.6%	0.6%-0.9%	1.4%-3.6%	0.5%-1.1%	Risk-free interest rate	3.6%-4.0%	1.4%-2.0%
Dividend yield	Dividend yield	—%	—%	—%	—%	Dividend yield	—%	—%
Volatility	Volatility	122.2%-136.4%	126.4%-140.0%	120.5%-136.7%	124.7%-142.0%	Volatility	127.7%-140.3%	120.5%-130.6%
Expected term (in years)	Expected term (in years)	4.0-5.3	4.1-6.1	4.0-6.3	4.1-6.1	Expected term (in years)	3.9-5.1	4.1-5.3

The total aggregate intrinsic value and weighted-average remaining contractual term of stock options and SARs outstanding under the 2023 Inducement Plan, 2015 Plan and 2005 Plan as of ~~September 30, 2022~~March 31, 2023 was approximately $9$0.9 million and ~~7.4~~7.5 years, respectively. The total aggregate intrinsic value and weighted-average remaining contractual term of stock options and SARs exercisable under the 2023 Inducement Plan, 2015 Plan and 2005 Plan as of ~~September 30, 2022~~March 31, 2023 was approximately $5$0.7 million and ~~7.0~~6.5 years, respectively.

Restricted Stock Units

The following is a summary of RSU activity for the ~~nine~~three months ended ~~September 30, 2022:~~March 31, 2023:


		Number of Shares	Per Share Weighted- Average Fair Value			2023 Inducement Plan			2015 Plan
Outstanding and unvested at December 31, 2021		819,828	$	116.70
						Number of Shares	Per Share Weighted- Average Fair Value		Number of Shares	Per Share Weighted- Average Fair Value
Outstanding and unvested at December 31, 2022					Outstanding and unvested at December 31, 2022	—	$	—	2,034,574	$	61.67
Granted	Granted	1,113,958	68.49		Granted	308,390	$	10.96	2,531,445	7.20
Vested	Vested	(379,802)	78.17		Vested	—	$	—	(211,688)	87.25
Forfeited	Forfeited	(114,976)	110.59		Forfeited	—	$	—	(88,570)	52.68
Outstanding and unvested at September 30, 2022		1,439,008	$	90.03
Outstanding and unvested at March 31, 2023					Outstanding and unvested at March 31, 2023	308,390	$	10.96	4,265,761	$	28.26

~~Table of~~ ~~Contents~~

Employee Stock Purchase Plan

The ESPP was approved at the Company's annual meeting of stockholders in June 2013. The ESPP currently authorizes an aggregate of 1.1 million shares of common stock to be 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 ~~September 30, 2022,~~March 31, 2023, there were ~~0.7~~0.5 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
September 30, Nine Months Ended
September 30,
2022 2021 2022 2021
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 3.2%-3.3% 0.1%-0.2% 0.6%-3.3% 0.1%-0.2%
Dividend yield —% —% —% —%
Volatility 103.0%-114.8% 114.9%-150.6% 103.0%-142.9% 114.9%-159.4%
Expected term (in years) 0.5-2.0 0.5-2.0 0.5-2.0 0.5-2.0

Note 1314 – 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 ~~September 30, 2022~~March 31, 2023 and that the Company has historically generated pretax losses. Such objective evidence limits the ability to consider other subjective evidence, such as projections for future growth. On the basis of this evaluation, as of ~~September 30, 2022,~~March 31, 2023, the Company continued to maintain a full valuation allowance against its deferred tax assets, except to the extent Net Operating Losses (“NOLs”) have been used to reduce taxable income. 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, state, and ~~state~~foreign income tax expense of ~~$2.4~~$1.2 million and ~~$4.3~~$0.6 million, in total, for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022, ~~respectively, and did not recognize federal or state income tax expense for the three and nine months ended September 30, 2021.~~respectively. The Company recognized ~~income tax expense related to~~ foreign withholding tax expense on 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~~$2.1 million for the three ~~and nine~~ months ended ~~September 30, 2021, respectively.~~

March 31, 2022. The Company did not recognize any foreign withholding tax expense on royalties for the three months ended March 31, 2023.

~~Table of~~ ~~Contents~~

Note 1415 – 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 (the “Maryland Court”) against the Company and certain members of senior management, captioned Sothinathan Sinnathurai v. Novavax, Inc., et al., No. 8:21-cv-02910-TDC (the “Sinnathurai Action”). On January 26, 2022, the ~~court~~Maryland 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~~NVX-CoV2373’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,~~December 12, 2022, the ~~co-lead plaintiffs filed an opposition~~Maryland Court issued a ruling granting in part and denying in part defendants’ motion to dismiss. The Maryland Court dismissed all claims against two individual defendants and claims based on certain public statements challenged in the consolidated amended complaint. The Maryland Court denied the motion to dismiss as to the remaining claims and ~~on July 11,~~defendants, and directed the Company and other remaining defendants to answer within fourteen days. On December 27, 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.~~its answer and affirmative defenses.

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

On ~~July 21,~~February 7, 2022, the ~~Court issued a memorandum opinion and order remanding the Kirst Action to state court. On February 4, 2022, the~~Maryland Court entered an order consolidating the Meyer and Yung Actions (the “First Consolidated Derivative Action”). The plaintiffs in the First Consolidated Derivative Action filed their consolidated derivative complaint on April 25, 2022. On May 10, 2022, the Maryland Court entered an order ~~in the First Consolidated Derivative Action~~ 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~~Maryland Court entered an order granting a request by the plaintiffs in the First Consolidated Derivative Action and the Snyder and Blackburn Actions to consolidate all three actions and appoint co-lead plaintiffs and co-lead and liaison counsel (the “Second Consolidated Derivative Action”). The co-lead plaintiffs in the Second Consolidated Derivative Action ~~will designate an operative complaint or file~~filed a consolidated amended complaint byon November 21, 2022. On February 10, 2023, defendants filed a motion to dismiss the Second Consolidated Derivative Action. Plaintiffs’ filed their opposition to the motion to dismiss on April 11, 2023. Defendant’s reply brief in further support of their motion to dismiss is due by May 11, 2023.

On July 21, 2022, the Maryland Court issued a memorandum opinion and order remanding the Kirst Action to state court. On December 6, 2022, the parties to the Kirst Action filed a stipulated schedule pursuant to which the plaintiffs were expected to file an amended complaint on December 22, 2022, and either (i) the parties would file a stipulated stay of the Kirst Action or (ii) the defendants would file a motion to stay the case by January 23, 2023. The plaintiffs filed an amended complaint on December 30, 2022. On January 23, 2023, defendants filed a motion to stay the Kirst action. On February 22, 2023, the parties in the Kirst Action filed for the Court’s approval of a stipulation staying the Kirst Action pending the resolution of defendants’ motion to dismiss in the Second Consolidated Derivative Action. On March 22, 2023, the Court entered an order staying the Kirst Action pending resolution of the Motion to Dismiss in the Second Consolidated Derivative Action.

On August 30, 2022, the Mesa Action was filed. On October 3, 2022, the ~~court~~Delaware Court entered an order granting the parties’ request to stay all proceedings and deadlines in the Mesa Action pending the earlier of dismissal of the Sinnathurai Action or the filing of an answer to the operative complaint in the Sinnathurai Action. On January 9, 2023, the court entered an order granting the parties’ request to set a briefing schedule in connection with a motion to stay that defendants intended to file. Pursuant to the order, defendants filed a motion to stay on January 18, 2023. The plaintiff filed his opposition on February 8, 2023. Defendants filed their reply on February 22, 2023. On February 28, 2023, the court granted Defendants’ motion and stayed the Mesa Action pending the entry of a final, non-appealable judgment in the Second Consolidated Derivative Action.

On December 7, 2022, the Acosta Action was filed. On February 6, 2023, defendants accepted service of the complaint and summons in the Acosta action. On March 9, 2023, the court entered an order granting the parties’ request to stay the Acosta Action pending the entry of a final, non-appealable judgment in the Second Consolidated Derivative Action. The financial impact of this claim, as well as the claims discussed above, is not estimable.

On February 26, 2021, a ~~Novavax~~Company stockholder named Thomas Golubinski filed a derivative complaint against members of the ~~Novavax~~Company’s 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~~On October 18, ~~2022. The same day,~~2022, the Delaware Court ~~issued a bench ruling denying~~denied the plaintiff’s fee application in its ~~entirety and entered an order to that effect.~~entirety. Under a prior Delaware Court order, the case was automatically dismissed with prejudice upon denial of the plaintiff’s fee application. On November 14, 2022, Golubinski filed a Notice of Appeal in the Supreme Court of the State of Delaware. The plaintiff / appellant filed his opening appellate brief on December 30, 2022. The Company filed its responsive brief on January 30, 2023 and the appellant filed his reply brief on February 14, 2023. The financial impact of this claim, as well as the claims discussed above, is not estimable.

~~Table of~~ ~~Contents~~

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 (“(the “Par MSA”) that the Company entered into with Par in September 2020 to provide fill-finish manufacturing services for NVX-CoV2373. On April 4, 2023, the parties entered into a Settlement Agreement and Release of Claims pursuant to which Novavax agreed to pay $27.0 million to Par, which was fully accrued for as of March 31, 2023. Novavax characterized the payment as a $15.0 million termination fee due under the Par MSA and a $12.0 million settlement payment. Because Par and its parent company, Endo International plc, are parties to Chapter 11 bankruptcy proceedings, the Settlement Agreement and Release of Claims and the payment due thereunder required, and subsequently received, approval from the bankruptcy court. The ~~matter is at~~Company has made the payment required by the Settlement Agreement and Release of Claims, and, subject to the non-occurrence of certain contingencies, the arbitration will be dismissed on or about July 13, 2023.

On November 18, 2022, the Company delivered written notice to Gavi to terminate the Gavi APA based on Gavi’s failure to procure the purchase of 350 million doses of NVX-CoV2373 from the Company as required by the Gavi APA. As of November 18, 2022, the Company had only received orders under the Gavi APA for approximately 2 million doses. On December 2, 2022, Gavi issued a ~~preliminary stage~~written notice purporting to terminate the Gavi APA based on Gavi’s contention that the Company repudiated the agreement and, therefore, materially breached the ~~potential loss is not reasonably estimable.~~ ~~The parties are engaged in discovery and arbitration is scheduled for July 2023.~~ ~~While the Company maintains~~Gavi APA. Gavi also contends that, ~~no breach~~based on its purported termination of the ~~MSA has occurred and intends~~Gavi APA, it is entitled to ~~vigorously defend~~a refund of the ~~matter, if~~Advance Payment Amount less any amounts that have been credited against the ~~final~~purchase price for binding orders placed by a buyer participating in the COVAX Facility. As of December 31, 2022, the remaining Gavi Advance Payment Amount of $697.4 million, pending resolution of the ~~matter is adverse~~dispute with Gavi related to a return of the remaining Advance Payment Amount, was reclassified from Deferred revenue to Other current liabilities in the Company’s consolidated balance sheet. On January 24, 2023, Gavi filed a demand for arbitration with the International Court of Arbitration based on the claims described above. The Company filed its Answer and Counterclaims on March 2, 2023. On April 5, 2023, Gavi filed its Reply to the Company’s Counterclaims. Arbitration is inherently uncertain, and while the Company believes that it ~~could have~~is entitled to retain the remaining Advance Payment Amount received from Gavi, it is possible that it will be required to refund all or a ~~material impact on~~portion of the ~~Company’s financial position, results of operations, or cash flows.~~

remaining Advance Payment Amount from Gavi.

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

Note 16 – Subsequent Events

In December 2020, the Company entered into an APA with the Commonwealth of Australia for the purchase of doses of NVX-CoV2373 (the “Australia APA”). In April 2023, the Company entered into an amendment to the Australia APA that reduced the number of doses to be delivered under the Australia APA with a commensurate increase in the per-dose price, such that the total contract value of the Australia APA was maintained, with doses to be delivered through 2024.

In January 2021, the Company entered into an APA with Her Majesty the Queen in Right of Canada as represented by the Minister of Public Works and Government Services for the purchase of doses of NVX-CoV2373 (the “Canada APA”). In April 2023, the Company entered into an amendment to the Canada APA under which it will receive a payment of $100.4 million for the forfeiture of doses originally scheduled for delivery in 2022.

In May 2023, the Company announced that its CIC, stand-alone influenza and high-dose COVID vaccine candidates all showed a reassuring preliminary safety profile as well as comparable reactogenicity to individual Novavax influenza and COVID vaccine candidates or authorized influenza vaccine comparators. Additionally, all three vaccines demonstrated preliminary robust immune responses. The primary endpoint evaluated the safety of different formulations of the CIC vaccine candidate and the quadrivalent influenza vaccine candidate compared to Fluad® and Fluzone High-Dose Quadrivalent® (Fluzone HD), as well as a high-dose COVID vaccine candidate in adults aged 50 through 80. All three vaccine candidates contained Novavax’s patented Matrix-M adjuvant and showed reassuring preliminary safety profiles and reactogenicity that was comparable to Fluad and Fluzone HD.

~~Table of~~ ~~Contents~~

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~~(“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;~~prospects, including our ability to continue as a going concern through one year from the date of Novavax’ unaudited financial statements for the period ended March 31, 2023; global restructuring and cost reduction plan, which includes a more focused investment in our NVX-CoV2373 program, reduction to our pipeline spending, the continued rationalization of our manufacturing network, a reduction to our global workforce, as well as the consolidation of facilities and infrastructure, the size and timing of the Company’s workforce reduction, the amount and timing of the charges and cash expenditures resulting from the workforce reduction, and the expected timing and impact of cost savings from our global restructuring and cost reduction plan; 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 (as defined below) 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, ongoing development of COVID-19 variant strain including the Phase 2b/3 Hummingbird™ trial, the timing of anticipated results and our efforts for the Fall 2023 vaccination season, 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”),~~under the ~~U.S. Department of Defense (“DoD”), and the Coalition for Epidemic Preparedness Innovations (“CEPI”), and payments from the Bill & Melinda Gates Foundation (“BMGF”)~~USG Agreement (as defined below); funding under our advance purchase agreements (“APAs”) and supply agreements and amendments to, or termination of, or legal disputes relating to 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”), the 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, or Japan’s Ministry of Health, Labour and 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; challenges in implementing our global restructuring and cost reduction plan; challenges in obtaining commercial adoption of NVX-CoV2373 or a COVID-19 variant strain-containing formulation; and other risks and uncertainties identified in Part II, Item 1A “Risk Factors” of this Quarterly Report and in Part I, Item 1A “Risk Factors” of ~~the Company's~~our Annual Report on Form 10-K for the ~~fiscal~~ year ended December 31, ~~2021,~~2022, which may be detailed and modified or updated in other documents filed with the ~~United States Securities and Exchange Commission (“SEC”)~~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.

~~Table~~

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 ~~Contents~~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.

Overview

~~Novavax, Inc., together with our wholly-owned subsidiaries, is~~We are a biotechnology company that promotes improved health globally through the discovery, development, and commercialization of innovative vaccines to prevent serious infectious 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 some 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™,” “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, including for Omicron subvariants (NVX-CoV2515 for Omicron BA.1 specific vaccine), and bivalent formulations with prototype vaccine (“NVX-CoV2373”). NVX-CoV2373that has received approval, interim authorization, provisional approval, conditional marketing authorization (“CMA”), and emergency use authorization (“EUA”) from multiple regulatory authorities globally for both adult and adolescent populations as a primary series and for both homologous and heterologous booster indications. We are also developing an influenza vaccine candidate, a COVID-19-Influenza Combination (“CIC”) vaccine candidate, as well as COVID-19 variant strain-containing formulation that we intend to provide in a monovalent or bivalent presentation in alignment with public health recommendations. In addition to COVID-19 and seasonal influenza, our other areas of focus include ~~respiratory syncytial virus (“RSV”)~~providing Matrix-M™ adjuvant for collaborations investigating the prevention of malaria, including R21/Matrix-M™ adjuvant malaria vaccine, which recently received authorization in several countries.

We intend to focus the organization to align our investments and ~~malaria.~~

activities with our top priority of delivering an updated COVID-19 vaccine consistent with public health recommendations for strain composition for the 2023 Fall vaccination season. To maximize our opportunities and mitigate the significant risks and uncertainties of the COVID-19 market, we have taken several cost restructuring measures to reduce spend, extend our cash runway, and operate efficiently to best position the company to deliver longer-term growth. We discuss these cost restructuring strategies in greater detail in Note 2 to our consolidated financial statements in this Quarterly Report.

Technology Overview

We believe our recombinant nanoparticle vaccine technology, together with our proprietary Matrix-M™ adjuvant, is ~~well-suited~~well suited for the development and commercialization of vaccine candidates targeting a broad scope of respiratory and other endemic and 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/~~Sf-/BV”) insect cell-expression system, which enables efficient, large-scale expression of the optimized protein. The ~~Sf9/~~Sf-/BV system produces proteins that are properly folded and ~~modified –~~ modified—which can be critical for functional, protective ~~immunity –~~ 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~~™Matrix-M™ adjuvant.

Matrix-M™ Adjuvant

Our proprietary Matrix-M™ adjuvant ~~has been~~is a key differentiator within our platform. This adjuvant has ~~demonstrated~~enabled potent, ~~well-tolerated,~~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, and plasma cells, ~~and~~which promotes the production of high affinity antibodies, ~~thereby~~an immune 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~~contributing to increased vaccine supply and manufacturing capacity. These immune-boosting and dose-sparing capabilities contribute to the adjuvant’s highly unique profile.

We continue to evaluate commercial opportunities for the use of our Matrix-M™ adjuvant alongside vaccine antigens produced by other manufacturers. Matrix-M™ adjuvant is being evaluated in combination with several partner-led malaria vaccine candidates, including for R21/Matrix-M™ adjuvant, a malaria vaccine candidate created by the Jenner Institute, University of Oxford. The R21/Matrix-M™ adjuvant vaccine has been licensed to Serum Institute of India Pvt. Ltd. (“SIIPL”) for commercialization. Our adjuvant technology is also being investigated in veterinary applications and is a key component in equine vaccine to prevent Strangles.

NVX-CoV2373 Regulatory and Licensure

We ~~continue to make progress in~~are advancing NVX-CoV2373 ~~toward~~through multiple regulatory approvals. We have received ~~numerous~~ authorizations in over 40 countries globally ~~within~~from major regulatory agencies including the ~~adult population, aged 18 and older,~~FDA, the WHO, the EMA, 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.MHRA. To date, we have received approval, interim authorization, provisional approval, CMA, and EUA for the adult population, aged 18 and older, the adolescent population, aged 12 to 17 years, and the pediatric population, aged 7 to 11 years in select territories. The regulatory authorizations for NVX-CoV2373 include primary series and both ~~adult~~homologous and adolescent populations, and we are working to 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.

~~Table of~~ ~~Contents~~

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

~~Table of~~ ~~Contents~~

~~Through~~Below we highlight the first quarter 2023 and subsequent regulatory authorizations received through the date of this filing ~~this Quarterly Report, the below is a summary of regulatory authorizations for NVX-CoV2373:~~on Form 10-Q.

~~(1) Regulatory approval~~In January 2023, our partner SK bioscience received ~~in partnership with SIIPL.~~

~~(2) Regulatory~~expanded manufacturing and marketing approval ~~received by partner Takeda Pharmaceutical Company Limited (“Takeda”).~~from Korean Ministry of Food and Drug Safety for Nuvaxovid™ for use as a booster in adults aged 18 and older.

~~During the third quarter of 2022, we completed additional regulatory submissions in major markets for both adult and adolescent populations for primary and booster indications.~~ We are working to continue to expand our label for heterologous boosting in ~~active discussions~~adults, adolescents, and younger children, and to achieve supportive policy recommendations enabling broad market access. We continue to work closely with governments, regulatory authorities, and ~~remain focused on expanding~~non-governmental organizations in our ~~label in multiple countries for NVX-CoV2373.~~commitment to facilitate global access to our COVID-19 vaccine.

~~Table of~~ ~~Contents~~

~~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”).~~

Clinical Pipeline

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

adolescent populations in over 40 countries. 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,~~ while ~~displaying~~maintaining a favorable safety profile. ~~In October 2022, we announced additional data from~~Beyond COVID-19, our clinical pipeline includes seasonal influenza and CIC vaccines, in addition to our Matrix-M™ adjuvant being used for collaborations investigating 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~~prevention 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.

malaria.

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~~We continue to evaluate ~~the safety,~~vaccine 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~~we continue to advance development of our COVID-19 variant strain ~~vaccine candidates,~~containing monovalent or bivalent formulation. In March 2023, we ~~continue to evaluate vaccine performance. We remain confident in~~initiated the ~~utility of~~Phase 3 COVID-19 Omicron BA.5 clinical trial evaluating our prototype vaccine ~~against emerging variants,~~compared to an Omicron BA.5 vaccine, as well as a bivalent containing vaccine. Topline results are expected mid-year 2023, which we ~~continue to respond to~~expect will confirm the ~~evolving COVID landscape. We are currently analyzing preliminary clinical data from our~~strain-change approach we anticipate using for future variant vaccine candidate approvals.

Further pediatric development is ongoing ~~Omicron BA.1 monovalent and bivalent strain change trial (study 311). Study 311 achieved its strain-change endpoint using BA.1 as~~in 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. WhenPhase 2b/3 Hummingbird™ Global Clinical Trial, which is evaluating the ~~response~~safety, immunogenicity, and effectiveness of NVX-CoV2373 in children. The trial includes three age de-escalation cohorts of 1,200 children each. The cohort aged six to 11 years has completed enrollment, and enrollment is ongoing in the ~~forward drifted BA.5 omicron subvariant, neither~~cohort aged two to five years. Topline results in the ~~BA.1 vaccine nor the prototype/BA.1 bivalent vaccine offered any advantage.~~ cohort aged six to 11 years are expected mid-year 2023.

We expect to leverage these clinical insights to ~~advance~~pursue additional regulatory approvals of our COVID-19 vaccine for primary, booster, and pediatric indications globally, amidst the ongoing ~~and evolving~~ COVID-19 ~~pandemic.~~landscape.

Additionally, we are developing our quadrivalent nanoparticle influenza vaccine ~~(qNIV)~~(“qNIV”) candidate, ~~previously known as NanoFlu,~~ which we ~~previously~~ advanced through a successful Phase 3 study ~~announced~~published in September 2021, demonstrating the utility ~~for~~of a stand-alone influenza vaccine or ~~used~~for use in a combination vaccine. We have subsequently updated our qNIV candidate for further development. We continue to progress a Phase 2 dose-confirming trial evaluating our stand-alone influenza vaccine candidate, qNIV and our CIC vaccine candidate, which combines NVX-CoV2373 and our updated qNIV ~~approach.~~approach in a single formulation. In ~~October 2022,~~January 2023, we ~~announced positive results from~~completed enrollment of 1,575 participants in the Phase 1/2 CIC clinical trial. The clinical trial ~~demonstrating the CIC vaccine’s ability to generate both antibody~~will evaluate safety 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 developmentimmunogenicity of different formulations of CIC and influenza stand-alone vaccine candidates in adults aged 50 to 80 years, with ~~a follow-up trial to begin in late 2022.~~topline results expected by mid-year 2023.

~~Table of~~ ~~Contents~~

~~Furthermore, we remain interested in continuing the development of both~~Although our ~~RSV Program~~COVID-19, CIC, and influenza stand-alone vaccine candidates are our near-term priorities, our partner-led malaria candidates present strong opportunities for ~~respiratory syncytial virus fusion (F) protein nanoparticle vaccine candidate (“RSV F Vaccine”) and Matrix-M~~TM ~~adjuvant collaborations for malaria. There is an~~future development. An ongoing Phase 3 clinical trial is being conducted for R21/Matrix-M™ adjuvant malaria vaccine, developed by our partner, the Jenner Institute, University of Oxford, ~~for R21, a malaria candidate which~~manufactured by SIIPL, and 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~~ ~~reporting safety, immunogenicity, and efficacy results at 12 months following administration of a booster vaccination. A booster dose of R21~~ formulated with our ~~Matrix-M~~™Matrix-M™ adjuvant. As of the filing of this Quarterly Report, the R21/Matrix-M™ adjuvant ~~at one year following the primary three-dose regimen maintained high efficacy against first~~malaria vaccine received authorizations in Ghana and ~~multiple episodes of clinical malaria. The booster vaccine induced antibody concentrations that is~~Nigeria. We have an agreement with SIIPL related to its manufacture of R21/Matrix-M™ adjuvant malaria vaccine ~~efficacy. The trial is ongoing to assess long-term follow-up of the participants and the value of further booster vaccinations.~~under which SIIPL purchases Matrix-M™ adjuvant, as well as pays royalties based on its vaccine sales.

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 ~~Nuvaxovid~~TM Novavax COVID-19 Vaccine, Adjuvanted; Covovax™; and ~~Covovax~~TMNuvaxovid™. Received EUA from the 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)~~(2) Ongoing Phase 3 strain change trial.

(3) R21/Matrix-M™ adjuvant malaria vaccine being commercialized by SIIPL.

Business Highlights

~~Third~~First Quarter ~~2022~~2023 and Recent Highlights

During the quarter, we made progress delivering on the three near-term priorities laid out during our fourth quarter 2022 earnings call.

Priority #1: Deliver an Updated, Competitive COVID Vaccine for the Upcoming 2023 Fall Vaccination Season

We remain focused on our top priority of delivering an updated, competitive COVID vaccine consistent with public health recommendations for the 2023 Fall vaccination season.

•Ongoing discussions with global regulators on strain selection guidance and advancement of commercial preparedness for Fall 2023

~~Expanded COVID-19 Vaccine~~◦Invited to join the U.S. FDA Technology Working Group to evaluate emerging variants in ~~Adult Population Aged 18~~preparation for strain selection at the June VRBPAC meeting

◦Ongoing development of variant strains “at risk” to support regulatory and ~~Older~~commercial readiness

◦Modified U.S. government agreement for up to 1.5 million additional doses of Novavax’s COVID vaccine for delivery in 2023, with initial delivery supplied in five-dose vials in the first quarter of 2023

•~~Nuvaxovid™ booster authorized for emergency use~~Continued expansion of Nuvaxovid label to enable broader uptake in the ~~U.S., European Union (“EU”), Switzerland, United Arab Emirates (UAE) and New Zealand, with submissions completed to WHO, as well as in Great Britain and South Korea~~

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

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

•~~Covovax™ granted full product registration in South Africa for primary series~~

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

•Nuvaxovid™ primary series authorized for emergency use in the 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~~long-term commercial market

2523

~~Table of~~ ~~Contents~~

•~~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~~

•Completed ~~submission~~enrollment and on track to ~~add Novavax CZ as an EU manufacturing site~~

receive topline results mid-2023 for Part 2 of Phase 3 strain change study, which is a regulatory prerequisite for updating our 2023-2024 vaccine composition

•~~Solidified manufacturing~~Expect to file U.S. Biologics License Application in second half of 2023

Priority #2: Reduce our Rate of Spend, Manage our Cash Flow and ~~supply network ensuring capacity~~Evolve our Scale & Structure

We are focused on significantly reducing our expenses while retaining the key capabilities needed to ~~support ongoing global demand~~

~~COVID-19 Clinical Development Program~~

execute our operating plans.

•Announced ~~topline results from Phase 3 Boosting Trial for NVX-CoV2515, meeting the primary strain-change endpoint~~a global restructuring and ~~reaffirming that prototype vaccine induces broadly cross-reactive responses, suggesting utility against current~~cost reduction plan, which is expected to reduce our annual combined 2024 R&D and ~~future variants~~

•~~PREVENT-19 Phase 3 NVX-CoV2373 homologous booster data support benefits against variants~~

SG&A expenses

◦~~Following a single homologous booster dose, adult participants demonstrated increased anti-spike IgG levels~~Includes consolidation of facilities and ~~increased functional antibody levels measured by hACE2 receptor inhibition against Omicron BA.1, BA.2~~infrastructure and ~~BA.5 variants, approximating levels observed~~approximately 25% reduction in ~~our Phase 3 efficacy studies~~

global workforce

◦~~Robust booster responses were consistent between younger (less than 65 years of age)~~2023 R&D and older (greater than 65 years of age) adults, and independent of whether the booster dose was administered eight or 11 months after the primary series, offering further evidence of broad utility and 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

•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 adults aged 18 through 49, demonstrating a consistent manufacturing process

◦~~When used as a heterologous boost (after either 2 or 3 doses of mRNA OR 1 or 2 doses of AD26) NVX-CoV2373 generated antibody levels previously found~~SG&A expense reduction expected to be ~~related~~based on timing of implementation, local laws and regulations and other factors

Priority #3: Leverage our Technology Platform, our Capabilities and our Portfolio of Assets to ~~efficacy in~~Drive Additional Value Beyond Nuvaxovid Alone

We continue to leverage our pipeline and technology with the ~~PREVENT-19 Phase 3 trial~~

•~~Initiated Phase 2b/3 Hummingbird~~intent of delivering long-term growth and protecting global ~~clinical trial for NVX-CoV2373 in younger children aged six months through 11 years, enrolling the sentinel cohort in the first group aged six through 11 years in the U.S.~~

◦~~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~~

health.

•Announced positive ~~cellular immunity results~~Phase 2 COVID-Influenza Combination (CIC) vaccine, standalone influenza, and high-dose COVID vaccine data, which evaluated safety and immunogenicity of ~~CIC Phase 1/2 trial following initial results announced in April, demonstrating ability~~different formulations

◦All three vaccine candidates were well-tolerated, demonstrated a reassuring preliminary safety profile, and had reactogenicity comparable to ~~generate~~authorized comparators

◦Preliminary topline immune responses ~~including both antibody~~for all three vaccine candidates were robust

•Serum Institute of India has received authorizations in Ghana and ~~polyfunctional CD4+ T-cell responses, against SARS-CoV-2~~Nigeria for R21/Matrix-M™ adjuvanted malaria vaccine

◦Vaccine was developed by Jenner Institute, University of Oxford, and ~~homologous and heterologous influenza strains~~formulated with our proprietary Matrix-M™ adjuvant

◦~~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~~

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

~~Table of~~ ~~Contents~~

Sales of Common Stock

~~During the three months ended March 31, 2022,~~In June 2021, we ~~sold 2.2 million of shares of our common stock resulting in net proceeds of approximately $179 million, under our most recent~~entered into an At Market Issuance Sales ~~agreement entered in June 2021~~Agreement (the ~~“June~~"June 2021 Sales ~~Agreement”~~Agreement"), which allows us to issue and sell up to $500 million in gross proceeds of shares of ~~our~~its common stock. As of ~~September 30, 2022,~~March 31, 2023, the remaining balance available under ~~our~~the June 2021 Sales Agreement was approximately $318 million. There were no sales recorded under the June 2021 Sales Agreement during the three months ended March 31, 2023.

During the ~~nine~~three months ended ~~September 30, 2021,~~March 31, 2022, we sold ~~2.6~~2.2 million shares of our common stock resulting in net proceeds of approximately ~~$565~~$179 million, under ~~our various At Market Issuance~~the June 2021 Sales ~~agreements then in effect.~~Agreement.

Critical Accounting Policies and Use of Estimates

The discussion and analysis of our financial condition and results of operations are 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 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 and estimates are included under Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2021,~~2022, as filed with the ~~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.SEC.

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 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 ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~

Revenue


		Three Months Ended September 30,							Three Months Ended March 31,
		2022		2021		Change			2023		2022		Change
Revenue (in thousands):	Revenue (in thousands):							Revenue (in thousands):
Product sales	Product sales	$	626,091	$	—	$	626,091	Product sales	$	(7,457)	$	585,628	$	(593,085)
Grants	Grants	106,273		135,007		(28,734)		Grants	87,379		99,301		(11,922)
Royalties and other	Royalties and other	2,213		43,837		(41,624)		Royalties and other	1,029		19,042		(18,013)
Total revenue	Total revenue	$	734,577	$	178,844	$	555,733	Total revenue	$	80,951	$	703,971	$	(623,020)

~~Table of~~ ~~Contents~~

Revenue for the three months ended ~~September 30, 2022~~March 31, 2023 was ~~$734.6~~$81.0 million as compared to ~~$178.8~~$704.0 million for the same period in ~~2021, an increase~~2022, a decrease of ~~$555.7~~$623.0 million. Revenue for the three months ended ~~September 30,~~March 31, 2023 was primarily for services performed under our U.S. government agreement with Advanced Technology International (“USG Agreement”), the Consortium Management Firm acting on behalf of the Medical CBRN Defense Consortium in connection with the partnership formerly known as Operation Warp Speed, net of a credit related to product sales of NVX-CoV2373. Revenue for the three months ended March 31, 2022 was primarily comprised of revenue from product sales of NVX-CoV2373, which commenced in 2022 and, to a lesser extent, revenue for services performed under the ~~agreement with~~USG Agreement. The reduction in revenue is primarily due to the ~~U.S. government partnership formerly known~~decrease in product sales of NVX-CoV2373 during the three months ended March 31, 2023 as ~~OWS (“OWS Agreement”). Revenue~~compared to the same period in 2022.

Product sales

Product sales for the three months ended ~~September 30, 2021~~March 31, 2023 were $(7.5) million as compared to $585.6 million during the three months ended March 31, 2022. Product sales in the three months ended March 31, 2023, included a credit of $64.7 million for certain doses delivered in 2022 that qualified for replacement. The credit is the result of a single lot sold to the Australian government that upon pre-planned 6-month stability testing was ~~primarily~~found to have fallen below the defined specifications and the lot was therefore removed from the market. The geographic distribution of product sales was as follows:


	Three Months Ended March 31,
	2023		2022		Change
North America	$	—	$	64,762	$	(64,762)
Europe	57,267		413,745		(356,478)
Rest of the world	(64,724)		107,121		(171,845)
Total product revenue	$	(7,457)	$	585,628	$	(593,085)

Grants

Grant revenue during the three months ended March 31, 2023 was $87.4 million as compared to $99.3 million during the same period in 2022, a decrease of $11.9 million. Grant revenue for 2023 and 2022, comprised of revenue for services performed under the ~~OWS Agreement and our funding agreements with CEPI.~~Project Agreement. The ~~increase in revenue~~decrease was primarily due to the ~~commencement~~net effect of ~~commercial sales of NVX-CoV2373 in 2022, partially offset by decreased development activities under our funding agreements with CEPI.~~

~~We expect~~a cumulative constraint on 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.~~the execution of Modification 17 to the Project Agreement during the three months ended March 31, 2023.

Expenses


		Three Months Ended September 30,							Three Months Ended March 31,
		2022		2021		Change			2023		2022		Change
Expenses (in thousands):	Expenses (in thousands):							Expenses (in thousands):
Cost of sales	Cost of sales	$	434,593	—		$	434,593	Cost of sales	$	34,086	15,204		$	18,882
Research and development	Research and development	304,297		408,195		(103,898)		Research and development	247,101		383,483		(136,382)
Selling, general, and administrative	Selling, general, and administrative	122,876		77,793		45,083		Selling, general, and administrative	112,532		95,992		16,540
Total expenses	Total expenses	$	861,766	$	485,988	$	375,778	Total expenses	$	393,719	$	494,679	$	(100,960)

Cost of Sales

Cost of sales was ~~$434.6~~$34.1 million ~~or 69% of product sales,~~ for the three months ended ~~September 30, 2022,~~March 31, 2023, including expense of ~~$249.0~~$20.2 million related to excess, obsolete, or expired inventory and losses on firm purchase commitments. Cost of sales was $15.2 million, or 3% of product sales, for the three months ended March 31, 2022, due to the significant write off of pre-launch inventory as research and development expenses. 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~~March 31, 2023, we had approximately ~~$0.1 billion~~$6.4 million of salable 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~~March 31, 2023 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~~$49.1 million, ~~or 71% of product sales,~~ an adjustment of ~~$9.4~~$15.0 million as compared to cost of sales recognized. ~~The~~If inventory sold for the three months ended March 31, 2022 was valued at expected standard cost, adjusted cost of sales ~~to high income countries is expected to be between 15% and 30%~~for the period would have been approximately $160.0 million, or 27% of product sales, ~~based on our standard cost.~~an adjustment of $145.0 million. The cost of sales as a percentage of product sales may fluctuate in the future as a result of changes to our customer pricing mix or standard costs.

~~Table of~~ ~~Contents~~

Research and Development Expenses

Research and development expenses decreased to ~~$304.3~~$247.1 million for the three months ended ~~September 30, 2022~~March 31, 2023 as compared to ~~$408.2~~$383.5 million for the three months ended ~~September 30, 2021,~~March 31, 2022, a decrease of ~~$103.9 million~~$136.4 million. The decrease was primarily due to ~~research and~~a reduction in overall expenditures relating to development ofactivities on coronavirus vaccines, including NVX-CoV2373 ~~NVX-CoV2515,~~and Omicron variant vaccine candidates, bivalent formulations, and CIC, as summarized in the table below (in thousands):


		Three Months Ended September 30,					Three Months Ended March 31,
		2022		2021			2023		2022
Coronavirus vaccines	Coronavirus vaccines	$	208,004	$	341,600	Coronavirus vaccines	$	140,014	$	288,933
Influenza vaccine	Influenza vaccine	3,011		1,656		Influenza vaccine	1,476		1,296
Other vaccine development programs	Other vaccine development programs	843		126		Other vaccine development programs	481		803
Total direct external research and development expense	Total direct external research and development expense	211,858		343,382		Total direct external research and development expense	141,971		291,032
Employee expenses	Employee expenses	45,150		36,574		Employee expenses	53,413		43,742
Stock-based compensation expense	Stock-based compensation expense	16,107		21,860		Stock-based compensation expense	13,858		16,887
Facility expenses	Facility expenses	16,770		4,983		Facility expenses	19,402		13,208
Other expenses	Other expenses	14,412		1,396		Other expenses	18,457		18,614
Total research and development expenses	Total research and development expenses	$	304,297	$	408,195	Total research and development expenses	$	247,101	$	383,483

Research and development expenses for coronavirus vaccines for the three months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021,~~ included a benefit of ~~$80.5~~$11.7 million related to previously accelerated manufacturing costs and an expense of ~~$35.8~~$21.0 million 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”) and contract manufacturing and development organizations (“CDMOs”). ~~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. 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~~$112.5 million for the three months ended ~~September 30, 2022~~March 31, 2023 from ~~$77.8~~$96.0 million for the same period in ~~2021,~~2022, an increase of ~~$45.1~~$16.5 million. The increase in selling, general, and administrative expenses is primarily due to an increase in ~~professional fees~~expenses related to the expansion of our commercial sales operations in Europe and ~~marketing~~other costs in support of our NVX-CoV2373 ~~program.~~ program, partially offset by certain cost containment measures to reduce our operating spend.

For ~~2022,~~the remainder of 2023, we ~~expect~~plan to restructure our global footprint to reduce our annual combined research and development, and selling, general, and administrative ~~expenses to increase significantly as compared to 2021 due to increased activities related to supporting our NVX-CoV2373 program and increases in professional fees and marketing costs.~~spend.

Other Expense

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)


	Three Months Ended March 31,
	2023		2022		Change
Other income (expense):
Interest expense	$	(4,316)	$	(4,876)	$	560
Other income	24,362		1,654		22,708
Total other income (expense), net	$	20,046	$	(3,222)	$	23,268

~~We had total~~Total other ~~expense,~~income, net ~~of $39.0~~was $20.0 million for the three months ended ~~September 30, 2022~~March 31, 2023 as compared to ~~$9.2~~a total other expense, net of $3.2 million for the same period in ~~2021. During the three months ended September 30, 2022 and 2021,~~2022. The increase in other ~~expense was primarily related to losses~~income is due to the favorable impact of exchange rates on foreign ~~exchange rate activity.~~

~~Table of~~ ~~Contents~~

currency denominated balances and an increase in investment income due to higher interest rates.

Income Tax Expense

During the three months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021,~~ we recognized ~~$2.5~~$1.2 million and ~~$6.0~~$2.7 million, respectively, of income tax expense related to federal, state, and ~~state~~foreign income taxes and foreign withholding tax expense 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


	Three Months Ended March 31,
	2023		2022		Change
Net Income (Loss) (in thousands, except per share information):
Net income (loss)	$	(293,905)	$	203,408	$	(497,313)
Net income (loss) per share, basic	$	(3.41)	$	2.66	$	(6.07)
Net income (loss) per share, dilutive	$	(3.41)	$	2.56	$	(5.97)
Weighted average shares outstanding, basic	86,158		76,457		9,701
Weighted average shares outstanding, dilutive	86,158		80,711		5,447

Net loss for the three months ended ~~September 30, 2022~~March 31, 2023 was ~~$168.6~~$293.9 million, or ~~$2.15~~$3.41 per share, basic, as compared to ~~$322.4~~net income of $203.4 million, or ~~$4.31~~$2.66 per share, basic, for the same period in ~~2021.~~2022. The decrease in ~~net loss~~income during the three months ended ~~September 30, 2022,~~March 31, 2023, was primarily due to the ~~commencement of~~decline in commercial sales of NVX-CoV2373 in ~~2022 and~~the three months ended March 31, 2023, offset by 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.~~expenses.

The increase in weighted average shares outstanding for the three months ended ~~September 30, 2022 is~~March 31, 2023 was primarily a result of ~~sales~~the sale 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

~~Table of~~ ~~Contents~~

~~Cost of Sales~~

Cost of sales was $720.9 million, or 57% of product sales, for the nine months ended 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 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 nine months ended September 30, 2022 was valued at expected standard cost, adjusted cost of sales for the period would have been approximately $883.5 million, or 70% of product sales, an adjustment of $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 $977.4 million for the nine months ended September 30, 2022 from $1.6 billion for the same period in 2021, a decrease of $594.1 million, primarily due to decreased development activities relating to coronavirus vaccines, including NVX-CoV2373, NVX-CoV2515, bivalent formulations, and CIC, as summarized in the table below (in 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

Research and development expenses for coronavirus vaccines for the nine months ended September 30, 2022 and 2021, included a benefit of $147.8 million related to previously accelerated manufacturing costs and an expense of $78.8 million related to the acceleration of manufacturing costs, respectively, for leases that we determined were embedded in multiple manufacturing supply agreements with CMOs and CDMOs. Pursuant to the Fujifilm Se~~ttlement 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.~~

~~Selling, General, and Administrative Expenses~~

Selling, general, and administrative expenses increased to $327.0 million for the nine months ended September 30, 2022 from $214.1 million for the same period in 2021, an increase of $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.

~~Table of~~ ~~Contents~~

~~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 $68.3 million for the nine months ended September 30, 2022 as compared to $23.3 million for the same period in 2021. During the nine months ended September 30, 2022 and 2021, other expense was primarily related to losses due to foreign exchange rate activity.

~~Income Tax Expense~~

During the nine months ended September 30, 2022 and 2021, we recognized $6.6 million and $12.6 million, respectively, of income tax expense related to federal and state income taxes and foreign withholding tax on royalties.

~~Net Loss~~

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 loss for the nine months ended September 30, 2022 was $475.7 million, or $6.13 per share, as compared to $897.5 million, or $12.13 per share, for the same period in 2021. The decrease in net 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 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 nine months ended September 30, 2022 is primarily a result of sales of our common stock in 2022 and 2021.~~awards.

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 and repayments 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,~~contract research organization, 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.

~~Table of~~ ~~Contents~~

We have entered into supply agreements, sometimes referred to as APAs, with Gavi, the Vaccine Alliance (“Gavi”); the European Commission (“EC”); and various countries globally. We also have grant and license agreements. As of ~~September 30, 2022,~~March 31, 2023, 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, our advance purchase agreement with Gavi (the “Gavi APA”) and the reduction in doses related to the Amended and Restated UK Supply Agreement (as defined below), was approximately ~~$4 billion.~~$3 billion, of which $689.8 million is included in Deferred revenue in our Consolidated balance sheet. 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~~APAs 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, 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 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 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.

Pursuant to the Fujifilm Settlement Agreement, we are responsible for a Settlement Payment of up to $185.0 million to Fujifilm in connection with the cancellation of manufacturing activity at FDBT under the Fujifilm 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. We paid the first installment of $34.3 million during the three months ended March 31, 2023 and the remaining balance of $102.9 million is reflected in Accrued expenses (see Note 4 to our consolidated financial statements in this Quarterly Report).

During April 2023, we made a payment of $27.0 million to Par Sterile Products, LLC (“Par”) under the Settlement Agreement and Release of Claims (see Note 15 to our consolidated financial statements in this Quarterly Report).

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~~

We have an APA with the ~~Fujifilm Settlement Agreement (see Note 4 to our consolidated financial statements in this Quarterly Report), we are responsible~~Commonwealth of Australia 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 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 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 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, we were notified by Gavi of its intent to seek to revise the number and timingpurchase of doses of NVX-CoV2373 ~~supplied by Novavax under~~(the “Australia APA”). In April 2023, we amended the Australia APA to reduce the number of doses to be delivered with a commensurate increase in the per-dose price, such ~~agreement. Furthermore, Gavi may seek partial or full recovery~~that the total contract value of the ~~prior nonrefundable payments it has made~~Australia APA is maintained with doses to ~~Novavax. Our position~~be delivered through 2024. In May 2023, we extended a credit for certain doses delivered in 2022 to Australia that qualified for replacement under the Australia APA. This credit is the result of a single lot sold to the Australian government that ~~Gavi has no contractual right~~upon pre-planned 6-month stability testing was found to ~~recover prior nonrefundable payments if it fails to order~~have fallen below 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~~defined specifications and the ~~timing~~lot was therefore removed from the market. The credit will be applied against the future sale of doses to Australia.

We have an APA with Her Majesty the Queen in Right of Canada as represented by the Minister of Public Works and ~~quantities~~Government Services for the purchase of ~~future orders~~doses of NVX-CoV2373 (the “Canada APA”). In April 2023, we amended the Canada APA to ~~deliver NVX-CoV2373~~forfeit certain doses originally scheduled for delivery in 2022 for a payment of $100.4 million expected to be received in the ~~COVAX facility are unclear.~~second quarter of 2023.

In July 2022, we entered into an Amended and Restated SARS-CoV-2 Vaccine Supply Agreement ~~(the~~(as amended on September 26, 2022, the “Amended and Restated UK Supply Agreement”) with The Secretary of State for Business, Energy and Industrial Strategy (as assigned to the UK Health Security Agency), 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~~dated October 22, 2020, between the parties (the “Original UK Supply Agreement”). ~~Pursuant to~~Under the Original UK Supply Agreement, the Authority agreed to purchase 60 million doses of ~~NVX-CoV2373.~~NVX-CoV2373 and made an upfront payment to us. Under the terms of 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 (the “Conditional Doses”) of NVX-CoV2373, with the number of ~~additional doses~~Conditional Doses contingent on, and subject to reduction based on, our timely achievement of supportive recommendations from the ~~United Kingdom’s~~ Joint Committee on Vaccination and Immunisation (the “JCVI”)~~. In~~ that is approved by the ~~event~~UK Secretary of State for Health, with respect to use of the vaccine for (a) the general adult population as part of a SARS-CoV-2 vaccine booster campaign in the United Kingdom or (b) the general adolescent population as part of a SARS-CoV-2 vaccine booster campaign in the United Kingdom or as a primary series SARS-CoV-2 vaccination, excluding where that recommendation relates only to one or more population groups comprising less than one million members in the United Kingdom. If the Authority does not purchase the Conditional Doses or the number of such Conditional Doses is reduced below 15 million doses of NVX-CoV2373, we ~~are unable to achieve the JCVI supportive recommendations, we may~~would have to repay up to $225.0 million related to the upfront payment wepreviously 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~~As of November 30, 2022, the JCVI had not yet made a supportive recommendation with respect to NVX-CoV2373, thereby triggering, under the terms of the Amended and Restated UK Supply Agreement, (i) a reduction of the number of Conditional Doses from 15 million doses to 7.5 million doses, which reduced number of Conditional Doses are contingent on, and subject to further reduction based on, our timely achievement by November 30, 2023 of a supportive recommendation from JCVI that is approved by the UK Secretary of State for Health as described in the paragraph above, and (ii) an obligation for us to repay $112.5 million related to the upfront payment previously received from the Authority under the Original UK Supply Agreement. In April 2023, we repaid the $112.5 million related to the November 30, 2022 triggering event. If we are unable to timely achieve a supportive recommendation from the JCVI by November 30, 2023, a reduction in the number of Conditional Doses from 7.5 million doses to zero will be triggered and we may be required to repay an additional $112.5 million in 2024.

Under the terms of the Gavi APA, ~~with~~we received an upfront payment of $350.0 million from Gavi in 2021 and an additional payment of $350.0 million in 2022 related to our achieving an emergency use license for NVX-CoV2373 by the ~~EC acting~~WHO (the “Advance Payment Amount”). On November 18, 2022, we delivered written notice to Gavi to terminate the Gavi APA on ~~behalf~~the basis of ~~various EU member states~~Gavi’s failure to ~~supply a minimum~~procure the purchase of 20350 million ~~and up to 100 million initial~~ doses of NVX-CoV2373 from us as required by the Gavi APA. As of November 18, 2022, we had only received orders under the Gavi APA for approximately 2 million doses. On December 2, 2022, Gavi issued a written notice purporting to terminate the Gavi APA based on Gavi’s contention that the Company repudiated the agreement and, therefore, materially breached the Gavi APA. Gavi also contends that, based on its purported termination of the Gavi APA, it is entitled to a refund of the Advance Payment Amount less any amounts that have been credited against the purchase price for binding orders placed by a buyer participating in the COVAX Facility. As of December 31, 2022, the remaining Gavi Advance Payment Amount of $697.4 million, pending resolution of the dispute with Gavi related to a return of the remaining Advance Payment Amount, was reclassified from Deferred revenue to Other current liabilities in our consolidated balance sheet. On January 24, 2023, Gavi filed a demand for arbitration with the ~~option for~~International Court of Arbitration based on the ECclaims described above. We filed our Answer and Counterclaims on March 2, 2023. On April 5, 2023, Gavi filed its Reply to ~~purchase an additional 100 million doses up~~our Counterclaims. Arbitration is inherently uncertain, and while we believe that we are entitled to retain the remaining Advance Payment Amount received from Gavi, it is possible that we will be required to refund all or a ~~maximum aggregate~~portion of ~~200 million doses,~~the remaining Advance Payment Amount from Gavi.

In February 2023, 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 accordanceconnection with the ~~APA, and reducing the order to 65 million doses. We are in the process~~execution 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.~~

~~Table of~~ ~~Contents~~

~~In July 2022, we entered into a modification~~Modification 17 to the ~~OWS~~USG Agreement, ~~that amended the terms of such agreement to provide for (i) an initial delivery to~~ the U.S. government indicated to us that the award may not be extended past its current period of ~~approximately 3~~performance. If the USG Agreement is not amended, as we had previously expected, then we may not receive all of the remaining $336.4 million in funding we had previously anticipated pursuant to the USG Agreement. Modification 17 included provisions requiring that the payment of $60.0 million of consideration associated with manufacturing work now be contingent upon meeting certain milestones, including the delivery of up to 1.5 million doses of NVX-CoV2373 and ~~(ii) any additional manufacture~~development and ~~delivery~~regulatory milestones related to commercial readiness, expansion of the ~~U.S. government up to an aggregate~~EUA and development of ~~100 million doses~~multiple vial presentations.

Our funding agreements currently include funding from the Coalition for Epidemic Preparedness Innovations (“CEPI”) in the form of one or more forgivable no interest term loans (“CEPI Forgivable Loan Funding”). Payments received under the CEPI Forgivable Loan Funding are only repayable if NVX-CoV2373 ~~contemplated~~manufactured by the ~~original OWS Agreement (inclusive~~CMO network funded by CEPI is sold to one or more third parties (which would have previously included, but is not limited to, any sales under our Gavi APA prior to its termination), and such sales cover our costs of ~~the initial batch~~manufacturing such vaccine, not including manufacturing costs funded by CEPI. The timing and amount of ~~approximately 3~~any loan repayments is currently uncertain.

As of March 31, 2023, we had $636.9 million ~~doses) dependent on U.S. government demand, FDA guidance on strain selection, agreement between the parties on the price~~in cash and cash equivalents and restricted cash as compared to $1.3 billion as of ~~such doses, and available funding. Additionally, in July 2022, we entered into a modification to~~December 31, 2022.

We funded our ~~existing agreement with the DoD that amended the terms of such agreement to provide~~operations for the initial delivery of 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.

~~In the nine~~three months ended ~~September 30, 2022, we primarily funded our operations~~March 31, 2023 with cash and cash equivalents ~~upfront payments under APAs,~~and 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~~USG Agreement that ~~supports~~support our NVX-CoV2373 vaccine development

activities. In May 2023, we announced our plan to restructure our global footprint to reduce our planned expenditures. We anticipate our future operations to be funded primarily by revenue from product sales, ~~royalties under licensing arrangements with our strategic partners,~~ revenue under our ~~OWS~~USG Agreement, our cash and cash equivalents, 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 September 30, 2022, we had $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 ~~nine~~three months ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~ (in thousands):


		Nine Months Ended September 30,							Three Months Ended March 31,
		2022		2021		Change			2023		2022		Change
Net cash provided by (used in):	Net cash provided by (used in):							Net cash provided by (used in):
Operating activities	Operating activities	$	(298,121)	$	665,354	$	(963,475)	Operating activities	$	(325,593)	$	(88,510)	$	(237,083)
Investing activities	Investing activities	(70,921)		116,518		(187,439)		Investing activities	(23,558)		(16,826)		(6,732)
Financing activities	Financing activities	133,548		522,424		(388,876)		Financing activities	(354,379)		159,865		(514,244)
Effect on exchange rate on cash, cash equivalents, and restricted cash	Effect on exchange rate on cash, cash equivalents, and restricted cash	257		(6,208)		6,465		Effect on exchange rate on cash, cash equivalents, and restricted cash	(8,372)		1,312		(9,684)
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)		Net increase (decrease) in cash, cash equivalents, and restricted cash	(711,902)		55,841		(767,743)
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	1,348,845		1,528,259		(179,414)
Cash, cash equivalents, and restricted cash at end of period	Cash, cash equivalents, and restricted cash at end of period	$	1,293,022	$	1,946,826	$	(653,804)	Cash, cash equivalents, and restricted cash at end of period	$	636,943	$	1,584,100	$	(947,157)

Net cash used in operating activities was ~~$298.1~~$325.6 million for the ~~nine~~three months ended ~~September 30, 2022,~~March 31, 2023, as compared to $88.5 million for the same period in 2022. The increase in cash used in operating activities is primarily due to a decrease in upfront payments received under our APAs, partially offset by the timing of payments to vendors.

Net cash used in investing activities was $23.6 million for the three months ended March 31, 2023, as compared to $16.8 million for the same period in 2022. The increase in cash used in investing activities is primarily due to an increase in internal use software expenditure.

Net cash used in finance activities was $354.4 million for the three months ended March 31, 2023, as compared to net cash provided by ~~operating~~finance activities of ~~$665.4~~$159.9 million for the same period in ~~2021.~~2022. The ~~decrease~~increase in cash ~~provided~~used in financing activities is primarily due to the application of upfront payments under APAs resulting from sales of NVX-CoV2373 during the nine months ended September 30, 2022 as compared to an increase in cash due to the receipt of upfront payments under APAs during the nine months ended September 30, 2021.

During the nine months ended 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 nine months ended September 30, 2022 and 2021 were $66.0$325 million and $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-outrepayment of our ~~new corporate office facility.~~

~~Our financing activities consisted primarily~~3.75% Convertible notes during 2023 and net proceeds of approximately $179 million from the sales of our common stock under our June 2021 Sales Agreement during 2022.

Going Concern

The accompanying unaudited consolidated financial statements in Part I, Item 1, “Consolidated Financial Statements” of this Quarterly Report have been prepared assuming that we will continue as a going concern within one year after the date that the financial statements are issued. At ~~Market Issuance Sales Agreements, payments of finance lease liabilities,~~March 31, 2023, we had $636.9 million in cash and ~~exercise of stock-based awards. In~~cash equivalents and restricted cash. During the ~~nine~~three months ended ~~September 30, 2022~~March 31, 2023, we incurred a net loss of $293.9 million and ~~2021,~~had net cash flows used in operating activities of $325.6 million.

While our current cash flow forecast for the one-year going concern look forward period estimates that we ~~received net proceeds~~have sufficient capital available to fund operations, this forecast is subject to significant uncertainty, including as it relates to revenue for the next twelve months, funding from the U.S. government, and a pending matter subject to arbitration proceedings. Our revenue projections depend on our ability to successfully develop, manufacture, distribute, or market an updated monovalent or bivalent formulation of a vaccine candidate for COVID-19 for the Fall 2023 COVID vaccine season, which is inherently uncertain and subject to a number of risks, including regulatory approval and commercial adoption. In February 2023, in connection with the execution of Modification 17 to the USG Agreement, the U.S. government indicated to us that the award may not be extended past its current period of performance, which may result in us not receiving all of the remaining $336.4 million in funding we had previously anticipated. On January 24, 2023, Gavi filed a demand for arbitration with the International Court of Arbitration regarding an alleged material breach by us of the Gavi APA. The outcome of that arbitration is inherently uncertain, and it is possible we could be required to refund all or a portion of the remaining Advance payment Amount of $697.4 million. See Note 3 and Note 15 to our unaudited consolidated financial statements in Part I, Item 1, “Consolidated Financial Statements” of this Quarterly Report for additional information related to the arbitration with Gavi. Management believes that, given the significance of these uncertainties, substantial doubt exists regarding our ability to continue as a going concern through one year from the date that these financial statements are issued.

In accordance with Accounting Standards Codification 205-40, Going Concern, we evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about our ability to continue as a going concern within one year after the date that these unaudited consolidated financial statements are issued. In May 2023, we announced a

global restructuring and cost reduction plan. This plan includes a more focused investment in our NVX-CoV2373 program, reduction to our pipeline spending, the continued rationalization of our manufacturing network, a reduction to our global workforce, as well as the consolidation of facilities and infrastructure. The planned workforce reduction includes an approximately 25% reduction in our global workforce, comprised of an approximately 20% reduction in full-time Novavax employees and the remainder comprised of contractors and consultants. We expect the full annual impact of the cost savings to be realized in 2024 and approximately half of the annual impact to be realized in 2023 due to timing of implementing the measures, and the applicable laws, regulations, and other factors in the jurisdictions in which we operate. We expect to record a charge of approximately ~~$179~~$10 million to $15 million related to one-time employee severance and ~~$565 million, respectively, from selling shares~~benefit costs, the majority of ~~common stock~~which is expected to be incurred in the second quarter of 2023 and are evaluating the anticipated costs related to the consolidation of facilities and infrastructure.

Our ability to fund our operations is dependent upon revenue related to vaccine sales for our products and product candidates, if such product candidates receive marketing approval and are successfully commercialized; the resolution of certain matters, including whether, when, and how the dispute with Gavi is resolved; and management’s plans, which include resolving the dispute with Gavi and cost reductions associated with our global restructuring and cost reduction plan. Our plans may include raising additional capital through a combination of equity and debt financing, collaborations, strategic alliances, and marketing, distribution, or licensing arrangements. New financings may not be available to us on commercially acceptable terms, or at all. Also, any collaborations, strategic alliances, and marketing, distribution, or licensing arrangements may require us to give up some or all of our ~~At Market Issuance Sales Agreements.~~

rights to a product or technology, which in some cases may be at less than the full potential value of such rights. In addition, the regulatory and commercial success of NVX-CoV2373 and our other vaccine candidates, including an influenza vaccine candidate, CIC vaccine candidate, or a COVID-19 variant strain-containing monovalent or bivalent formulation, remains uncertain. If we are unable to obtain additional capital, we will assess our capital resources and may be required to delay, reduce the scope of, or eliminate some or all of our operations, or further downsize our organization, any of which may have a material adverse effect on our business, financial condition, results of operations, and ability to operate as a going concern.

~~Table of~~ ~~Contents~~

Item 3. Quantitative and Qualitative Disclosures ~~About~~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 cash equivalents, cash flows, 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 offor 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 (deficit) of approximately ~~$17~~$14 million as of ~~September 30, 2022.~~

March 31, 2023.

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~~interest rate 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 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 ~~September 30, 2022.~~March 31, 2023. 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 ~~September 30, 2022,~~March 31, 2023, 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.

~~Table of~~ ~~Contents~~

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 ~~September 30, 2022,~~March 31, 2023, 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.

~~Table of~~ ~~Contents~~

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 (the “Maryland Court”) against ~~Novavax~~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~~Maryland 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~~NVX-CoV2373’s regulatory approval. The amended complaint defines the purported class as those stockholders who purchased ~~Novavax~~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,~~December 12, 2022, the ~~co-lead plaintiffs filed an opposition~~Maryland Court issued a ruling granting in part and denying in part defendants’ motion to dismiss. The Maryland Court dismissed all claims against two individual defendants and claims based on certain public statements challenged in the consolidated amended complaint. The Maryland Court denied the motion to dismiss as to the remaining claims and ~~on July 11,~~defendants, and directed the Company and other remaining defendants to answer within fourteen days. On December 27, 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.~~its answer and affirmative defenses.

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

On ~~July 21,~~February 7, 2022, the ~~Court issued a memorandum opinion and order remanding the Kirst Action to state court. On February 4, 2022, the~~Maryland Court entered an order consolidating the Meyer and Yung Actions (the “First Consolidated Derivative Action”). The plaintiffs in the First Consolidated Derivative Action filed their consolidated derivative complaint on April 25, 2022. On May 10, 2022, the Maryland Court entered an order ~~in the First Consolidated Derivative Action~~ 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~~Maryland Court entered an order granting a request by the plaintiffs in the First Consolidated Derivative Action and the Snyder and Blackburn Actions to consolidate all three actions and appoint co-lead plaintiffs and co-lead and liaison counsel (the “Second Consolidated Derivative Action”). The co-lead plaintiffs in the Second Consolidated Derivative Action ~~will designate an operative complaint or file~~filed a consolidated amended complaint byon November 21, 2022. On February 10, 2023, defendants filed a motion to dismiss the Second Consolidated Derivative Action. The plaintiffs filed their opposition to the motion to dismiss on April 11, 2023. Defendant’s reply brief in further support of their motion to dismiss is due by May 11, 2023.

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On February 26, 2021, a ~~Novavax~~Company stockholder named Thomas Golubinski filed a derivative complaint against members of the ~~Novavax~~Company’s 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~~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~~On October 18, ~~2022. The same day,~~2022, the Delaware Court ~~issued a bench ruling denying~~denied the plaintiff’s fee application in its ~~entirety and entered an order to that effect.~~entirety. Under a prior Delaware Court order, the case was automatically dismissed with prejudice upon denial of the plaintiff’s fee application. On November 14, 2022, Golubinski filed a Notice of Appeal in the Supreme Court of the State of Delaware. The plaintiff / appellant filed his opening appellate brief on December 30, 2022. The Company filed its responsive brief on January 30, 2023 and the appellant filed his reply brief on February 14, 2023. The financial impact of this claim, as well as the claims discussed above, is not estimable.

~~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 (“(the “Par MSA”) that the Company entered into with Par in September 2020 to provide fill-finish manufacturing services for NVX-CoV2373. On April 4, 2023 the parties entered into a Settlement Agreement and Release of Claims pursuant to which Novavax agreed to pay $27.0 million to Par, which was fully accrued for as of March 31, 2023. Novavax characterized the payment as a $15.0 million termination fee and a $12.0 million settlement payment. Because Par and its parent company, Endo International plc, are parties to Chapter 11 bankruptcy proceedings, the Settlement Agreement and Release of Claims and the payment due thereunder required, and subsequently received, approval from the bankruptcy court. The ~~matter is at~~Company has made the payment required by the Settlement Agreement and Release of Claims, and, subject to the non-occurrence of certain contingencies, the arbitration will be dismissed on or about July 13, 2023.

On November 18, 2022, the Company delivered written notice to Gavi to terminate the Gavi APA based on Gavi’s failure to procure the purchase of 350 million doses of NVX-CoV2373 from the Company as required by the Gavi APA. As of November 18, 2022, the Company had only received orders under the Gavi APA for approximately 2 million doses. On December 2, 2022, Gavi issued a ~~preliminary stage~~written notice purporting to terminate the Gavi APA based on Gavi’s contention that the Company repudiated the agreement and, therefore, materially breached the ~~potential loss is not reasonably estimable. The parties are engaged in discovery and arbitration is scheduled for July 2023. While the Company maintains~~Gavi APA. Gavi also contends that, ~~no breach~~based on its purported termination of the ~~MSA has occurred and intends~~Gavi APA, it is entitled to ~~vigorously defend~~a refund of the ~~matter, if~~Advance Payment Amount less any amounts that have been credited against the ~~final~~purchase price for binding orders placed by a buyer participating in the COVAX Facility. As of December 31, 2022, the remaining Gavi Advance Payment Amount of $697.4 million, pending resolution of the ~~matter is adverse~~dispute with Gavi related to a return of the remaining Advance Payment Amount, was reclassified from Deferred revenue to Other current liabilities in the Company’s consolidated balance sheet. On January 24, 2023, Gavi filed a demand for arbitration with the International Court of Arbitration based on the claims described above. The Company filed its Answer and Counterclaims on March 2, 2023. On April 5, 2023, Gavi filed its Reply to the ~~Company,~~Company’s Counterclaims. Arbitration is inherently uncertain, and while we believe that we are entitled to retain the remaining Advance Payment Amount received from Gavi, it is possible that we could ~~have~~be required to refund all or a ~~material impact on~~portion of the ~~Company's financial position, results of operations, or cash flows.~~

~~General~~remaining Advance Payment Amount from Gavi.

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.~~February 28, 2023. There have been no material changes from the risk factors previously disclosed in the Annual Report on Form 10-K, other than set forth below.

Risks Related to Regulatory and Compliance Matters

Our products might fail to meet their primary endpoints in clinical trials, meaning that we will not have the clinical data required to support regulatory approvals.

The steps generally required by the FDA before our proposed investigational products may be marketed in the U.S. include:

• performance of preclinical (animal and laboratory) tests;

• submission to the FDA of an Investigational New Drug Application, which must become effective before clinical trials may commence;

• performance of adequate and well controlled clinical trials to establish the safety and efficacy of the investigational product in the intended target population;

• performance of a consistent and reproducible manufacturing process at commercial scale capable of passing FDA inspection;

• submission to the FDA of a Biologics License Application (“BLA”) or a New Drug Application; and

• FDA approval of the BLA or NDA before any commercial sale or shipment of the product.

Clinical trials that we undertake in other countries will be subject to similar or equivalent processes and requirements. In Europe, as well as an authorization for the ~~fiscal~~clinical trial itself, it is necessary to obtain the consent of a local ethics committee for each clinical trial site and to provide for publication specific information about the clinical trial and its outcome. If endpoints are not met, this information will be made publicly available and could be damaging to the reputation of the Company.

These processes are expensive and can take many years to complete, and we may not be able to demonstrate the safety, purity, potency and efficacy of our vaccine candidates to the satisfaction of regulatory authorities. The start of clinical trials can be delayed or take longer than anticipated for many and varied reasons, many of which are out of our control. Safety concerns may emerge that could lengthen the ongoing clinical trials or require additional clinical trials to be conducted. Promising results in early clinical trials may not be replicated in subsequent clinical trials. For example, the first batch of top line results from our Phase 2 CIC clinical trial evaluating safety and immunogenicity of different formulations of CIC and influenza stand-alone vaccine candidates, may not be consistent with top line results from subsequent batches in such trial. Regulatory authorities may also require additional testing, and we may be required to demonstrate that our proposed products represent an improved form of treatment over existing therapies, which we may be unable to do without conducting further clinical trials. Moreover, if a regulatory authority grants regulatory approval of a product, the approval may be limited to specific indications or limited with respect to its distribution. Expanded or additional indications for approved products may not be approved, which could limit our revenue. Foreign regulatory authorities may apply similar limitations or may refuse to grant any approval. Consequently, even if we believe that preclinical and clinical data are sufficient to support regulatory approval for our vaccine candidates, the FDA and foreign regulatory authorities ultimately may not grant approval for commercial sale in their applicable jurisdiction, or may impose regulatory requirements that make further pursuit of approval uneconomical in one or more jurisdictions. If our vaccine candidates are not approved, our ability to generate revenue will be limited, and our business will be adversely affected.

Risks Related to our Intellectual Property

Our success depends on our ability to maintain the proprietary nature of our technology.

Our success in large part depends on our ability to maintain the proprietary nature of our technology and other trade secrets. To do so, we must prosecute and maintain existing patents, obtain new patents and pursue trade secret and other intellectual property protection. We also must operate without infringing the proprietary rights of third-parties or allowing third-parties to infringe our rights. We currently have or have rights to over 560 U.S. and foreign patents and patent applications covering our technologies. However, patent issues relating to pharmaceuticals and biologics involve complex legal, scientific and factual questions. To date, no consistent policy has emerged regarding the breadth of biotechnology patent claims that are granted by the U.S. Patent and Trademark Office or enforced by the federal courts. Therefore, we do not know whether any particular patent applications will result in the issuance of patents, or that any patents issued to us will provide us with any competitive advantage. We also cannot be sure that we will develop additional proprietary products that are patentable. Furthermore, there is a risk that others will independently develop or duplicate similar technology or products or circumvent the patents issued to us.

Although our patent filings include claims covering various features of our vaccine candidates, including composition, methods of manufacture and use, our patents do not provide us with complete protection against the development of competing products. Some of our know-how and technology is not patentable. To protect our proprietary rights in unpatentable intellectual property and trade secrets, we require employees, consultants, advisors and collaborators to enter into confidentiality agreements. These agreements may not provide meaningful protection for our trade secrets, know-how or other proprietary information, which risk has been enhanced by the departure of employees in connection with our global restructuring restructuring and cost reduction plan.

Our vaccine candidates could become subject to a product recall which could harm our reputation, business, and financial results.

The FDA and similar foreign governmental authorities have the authority to require the recall of certain vaccine candidates. Manufacturers may, under their own initiative, recall a product if any material deficiency in a product is found. A government-mandated or voluntary recall by us or our strategic collaborators could occur as a result of manufacturing errors, design or labeling defects or other deficiencies and issues. For example, we have extended a credit of $64.7 million under the Australia APA for a single lot of NVX-CoV2373 doses sold to the Australian government that upon pre-planned 6-month stability testing was found to have fallen below the defined specifications and the lot was therefore removed from the market. Recalls of any of our vaccines or vaccine candidates would divert managerial and financial resources and have an adverse effect on our financial condition and results of operations. In addition, a recall announcement could harm our reputation with customers and negatively affect our sales, if any.

Risks Related to Employee Matters, Managing Growth and Information Technology

Given our current cash position and cash flow forecast, and significant uncertainties related to 2023 revenue, funding from the U.S. government, and our pending arbitration with Gavi, substantial doubt exists regarding our ability to continue as a going concern through one year from the date that the financial statements included in this Quarterly Report were issued.

Our management must evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about our ability to continue as a going concern within one year after the date the financial statements are issued. At March 31, 2023, we had $636.9 million in cash and cash equivalents and restricted cash. During the three months ended March 31, 2023, we incurred a net loss of $293.9 million and had net cash flows used in operating activities of $325.6 million.

While our current cash flow forecast for the one-year going concern look forward period estimates that we have sufficient capital available to fund operations, this forecast is subject to significant uncertainty, including as it relates to the following:

•Revenue: Our near-term revenue depends on our ability to successfully develop, manufacture, distribute, or market an updated monovalent or bivalent formulation of a vaccine candidate for COVID-19 for the Fall 2023 COVID vaccine season, which is inherently uncertain and subject to a number of risks, including regulatory approvals and commercial adoption. We experienced delays in early 2023 in manufacturing our BA.5 clinical trial materials, which has the potential to delay regulatory approval from the FDA for our vaccine candidate for the Fall 2023 COVID vaccine season. In addition, in January 2023, the U.S. Vaccines and Related Biologics Products Advisory Committee announced its intent to provide the industry with its strain protocol guidance in the second quarter of 2023 for the Fall 2023 COVID vaccine season. To meet potential demand for Fall 2023, we have begun manufacturing an updated COVID-19 variant strain-containing formulation prior to the availability of strain protocol guidance. If such formulation is not consistent with the strain protocol guidance, we will not be able to deliver the appropriate vaccine to our customers in sufficient quantities for the Fall 2023 COVID vaccine season and we will have incurred significant costs for a formulation that we will be unable to sell.

• Funding from the U.S. Government: Our USG Agreement will expire by its terms in December ~~31, 2021~~2023. We had anticipated that the U.S. government would extend the USG Agreement until the full $1.8 billion authorized amount had been realized. In February 2023, in connection with the execution of Modification 17 to the USG Agreement, the U.S. government indicated to us that the award may not be extended past its current period of performance. If the USG Agreement is not amended, as we had previously expected, then we may not receive all of the remaining $336.4 million in funding we had previously anticipated pursuant to the USG Agreement.

• Pending Arbitration: On January 24, 2023, Gavi filed a demand for arbitration with the International Court of Arbitration regarding an alleged material breach by us of the Gavi APA. The outcome of that arbitration is inherently uncertain, and it is possible we could be required to refund all or a portion of the remaining advance payments of $697.4 million. See Note 3 and Note 15 to our consolidated financial statements in Part I, Item 1, “Financial Information” of this Quarterly Report on Form 10-Q for additional information related to the ~~fiscal quarter ended June 30, 2022.~~arbitration with Gavi.

~~Item 5. Other Information~~Management believes that, given the significance of these uncertainties, substantial doubt exists regarding our ability to continue as a going concern through one year from the date that these financial statements are issued.

~~On July 1, 2022,~~

Our ability to fund Company operations is dependent upon revenue related to vaccine sales for our products and product candidates, if such product candidates receive marketing approval and are successfully commercialized; the resolution of certain matters, including whether, when, and how the dispute with Gavi is resolved; and management’s plans, which include resolving the dispute with Gavi and cost reductions associated with the restructuring of our global footprint. Management’s plans may also include raising additional capital through a combination of equity and debt financing, collaborations, strategic alliances, and marketing, distribution, or licensing arrangements. In May 2023, we announced a global restructuring and cost reduction plan. This plan includes a more focused investment in our NVX-CoV2373 program, reduction to our pipeline spending, the continued rationalization of our manufacturing network, a reduction to our global workforce, as well as the consolidation of facilities and infrastructure. New financings may not be available to us on commercially acceptable terms, or at all. Also, any collaborations, strategic alliances, and marketing, distribution, or licensing arrangements may require us to give up some or all of our rights to a product or technology, which in some cases may be at less than the full potential value of such rights. In addition, the regulatory and commercial success of NVX-CoV2373 and our other vaccine candidates, including an influenza vaccine candidate, CIC vaccine candidate, or a COVID-19 variant strain-containing monovalent or bivalent formulation, remains uncertain. If we are unable to obtain additional capital, we will assess our capital resources and may be required to delay, reduce the scope of, or eliminate some or all of our operations, or downsize our organization, any of which may have a material adverse effect on our business, financial condition, results of operations, and ability to operate as a going concern.

Our announced global restructuring and cost reduction plan may not result in anticipated reductions in combined research and development and selling, general, and administrative expenses and may disrupt our business.

In May 2023, we announced a global restructuring and cost reduction plan. This plan includes a more focused investment in our NVX-CoV2373 program, reduction to our pipeline spending, the continued rationalization of our manufacturing network, a reduction to our global workforce, as well as the consolidation of facilities and infrastructure. The planned workforce reduction includes an approximately 25% reduction in our global workforce, comprised of an approximately 20% reduction in full-time Novavax ~~Inc. (the “Company”) entered into an Amended~~employees and ~~Restated SARS-CoV-2 Vaccine Supply Agreement (the “Amended~~the remainder comprised of contractors and ~~Restated UK Supply Agreement”) with The Secretary of State for Business, Energy and Industrial Strategy, acting on behalf~~consultants. We expect the full annual impact of the ~~government~~cost savings to be realized in 2024 and approximately half of the ~~United Kingdom~~annual impact to be realized in 2023 due to timing of ~~Great Britain~~implementing the measures, and ~~Northern Ireland (the “Authority”),~~the applicable laws, regulations, and other factors in the jurisdictions in which ~~amended~~we operate. We expect to record a charge of approximately $10 million to $15 million related to one-time employee severance and ~~restated~~benefit costs, the majority of which is expected to be incurred in ~~its entirety~~ the ~~SARS-CoV-2 Vaccine Supply Agreement, dated October 22, 2020, between~~second quarter of 2023 and are evaluating the ~~parties.~~anticipated costs related to the consolidation of facilities and infrastructure.We may not realize, in full or in part, the anticipated benefits, savings and improvements in our cost structure from these efforts due to unforeseen difficulties, delays or unexpected costs. If we are unable to realize the potential development progress and cost savings from the global restructuring and cost reduction plan, including the reduction to our global workforce, our business strategy, operating results and financial condition would be adversely affected. Our workforce reductions could yield unanticipated consequences, such as attrition beyond planned workforce reductions or disruptions in our day-to-day operations. Our global restructuring and cost reduction plan, including the reduction to our global workforce, could also harm our ability to attract and retain qualified management and development personnel who are critical to our business. If we are unable to realize the expected benefits from the restructuring and cost reduction plan, we may decide to undertake additional workforce reductions.

If we are unable to attract or retain key management or other personnel, our business, operating results and financial condition could be materially adversely affected.

We depend on our senior executive officers, as well as key scientific and other personnel. The ~~description~~loss of these individuals or our failure to implement an appropriate succession plan could harm our business and significantly delay or prevent the ~~Amended~~achievement of research, development or business objectives. Turnover in key executive positions resulting in lack of management continuity and ~~Restated UK Supply Agreement set forth~~long-term history with our Company could result in ~~Part II, Item 5. “Other Information”~~operational and administrative inefficiencies and added costs. These risks have increased since our global restructuring and cost reduction plan and related workforce reduction implemented in May 2023, which increased the risk that we will lose technical know-how or other trade secrets as experienced personnel depart.

We may not be able to attract qualified individuals for key positions on terms acceptable to us. Competition for qualified employees is intense among pharmaceutical and biotechnology companies, and the loss of ~~the Company’s Quarterly Report~~qualified employees, or an inability to attract, retain and motivate additional highly skilled employees could hinder our ability to complete clinical trials successfully and otherwise develop marketable products.

We also rely from time to time on ~~Form 10-Q for the fiscal quarter ended June 30, 2022 is incorporated herein by reference.~~outside advisors who assist us in formulating our research and development and clinical strategy. We may not be able to attract and retain these individuals on acceptable terms, which could delay our development efforts.

~~Table of~~ ~~Contents~~

Item 6. Exhibits


3.1						Second Amended and Restated Certificate of Incorporation of the ~~Registrant~~Company (Incorporated by reference to Exhibit 3.1 to the ~~Registrant’s~~Company’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~~Company (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~~Company (Incorporated by reference to Exhibit 3.1 to the ~~Registrant’s~~Company’s Current Report on Form 8-K filed on ~~June 24, 2021~~April 4, 2023 (File No. 000-26770))

3.4						Certificate of Designation of Series A Convertible Preferred Stock of the ~~Registrant~~Company (Incorporated by reference to Exhibit 3.1 to the ~~Registrant’s~~Company’s Current Report on Form 8-K filed June 19, 2020 (File No. ~~000-26770)~~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. ~~02 to Base Agreement between the Company and Advanced Technology International, dated as of August 2, 2022~~

~~10.4*±~~						~~Modification No.~~ 14 17 to Undefinitized Project Agreement No. 1, dated ~~July~~ 1 ~~, 202~~2 ,February 6, 2023, between the ~~Company~~ ~~and Advanced Technology International~~

~~10.5*±~~						~~Modification No.~~ 15 ~~to Undefinitized Project Agreement No. 1, dated~~ ~~August 9, 202~~2 ~~, between~~ ~~the C~~o ~~mpany~~Company and Advanced Technology International

~~10.6*±~~10.2						~~Modification~~Employment Agreement between the Company and John C. Jacobs, dated as of January 5, 2023 (Incorporated by reference to Exhibit 10.18 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, filed on February 28, 2023 (File No. 16 ~~to Undefinitized Project Agreement No. 1, dated~~ ~~September 9, 2022, between~~ ~~the Company~~ ~~and Advanced Technology International~~000-26770))

~~10.7*±~~10.3						~~Amendment of Solicitation/Modification of Contract No. 4,~~Consulting and Advisory Agreement between the Company and Stanley C. Erck, dated as of ~~July 29,~~January 5, 2023 (Incorporated by reference to Exhibit 10.20 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, ~~between the Company. and the U.S. Department of Defense Joint Program Executive Office for Chemical, Biological, Radiological and Nuclear Defense~~filed on February 28, 2023 (File No. 000-26770))

~~10.8±~~10.4						~~Settlement~~Consulting and Advisory Agreement ~~dated September 30, 2022,~~ between the Company and ~~FUJIFILM Diosynth Biotechnologies UK Limited, FUJIFILM Diosynth Biotechnologies Texas, LLC, and FUJIFILM Diosynth Biotechnologies USA,~~Dr. Gregory M. Glenn, dated as of March 20, 2023

10.5						Novavax, Inc. 2023 Inducement Plan (Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed on January 9, 2023 (File No. 000-26770))

10.6						Form of Non-Statutory Stock Option Agreement under the Novavax, Inc. 2023 Inducement Plan (Incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K, filed on January 9, 2023 (File No. 000-26770))

10.7						Form of Restricted Stock Unit Award Agreement under the Novavax, Inc. 2023 Inducement Plan (Incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K, filed on January 9, 2023 (File No. 000-26770))

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 ~~September 30, 2022,~~March 31, 2023, formatted in Inline Extensible Business Reporting Language (Inline XBRL): (i) the Consolidated Statements of Operations for the ~~three- and nine-month~~three-month periods ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021,~~ (ii) ~~the Consolidated Balance Sheets as of September 30, 2022 and December 31, 2021, (iii)~~ the Consolidated Statements of Comprehensive Income (Loss) for the ~~three- and nine-month~~three-month periods ended ~~September 30,~~March 31, 2023 and 2022, (iii) the Consolidated Balance Sheets as of March 31, 2023 and ~~2021,~~December 31, 2022, (iv) the Consolidated Statements of Changes in Stockholders’ Equity (Deficit) for the ~~three- and nine-month~~three-month periods ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021,~~ (v) the Consolidated Statements of Cash Flows for the ~~three- and nine-month~~three-month periods ended ~~September 30,~~March 31, 2023 and 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.

~~Table of~~ ~~Contents~~

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: ~~November~~May 9, ~~2022~~2023	By:	/s/ ~~Stanley~~John C. ~~Erck~~Jacobs
		~~Stanley~~John C. ~~Erck~~Jacobs President and Chief Executive Officer (Principal Executive Officer)

Date: ~~November~~May 9, ~~2022~~2023	By:	/s/ James P. Kelly
		James P. Kelly Executive Vice President, Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer)


	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


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


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