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~~June 30, ~~2022~~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~~700 Quince Orchard Road,	Gaithersburg,	MD	20878
(Address of principal executive offices)			(Zip code)

(240) 268-2000

(Registrant's telephone number, including area code)

21 Firstfield Road, Gaithersburg, MD 20878

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

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~~94,404,185 as of ~~October~~July 31, ~~2022.~~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 ~~Loss~~Income (Loss) for the three and ~~nine~~six months ended ~~September 30,~~June 3 0 , 2023 and 2022 ~~and 2021~~	2
	Consolidated Balance Sheets as of ~~September 30, 2022~~June 3 0 , 2023 (unaudited) and December 31, ~~2021~~2022	3
	Unaudited Consolidated Statements of Changes in Stockholders’ Equity (Deficit) for the three and ~~nine~~ six months ended ~~September 30,~~June 3 0 , 2023 and 2022 ~~and 2021~~	4
	Unaudited Consolidated Statements of Cash Flows for the ~~nine~~six months ended ~~September 30,~~June 3 0 , 2023 and 2022 ~~and 2021~~	45
	Notes to the Consolidated Financial Statements (unaudited)	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2023
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	3538
Item 4.	Controls and Procedures	3539
PART II. OTHER INFORMATION		3739
Item 1.	Legal Proceedings	3740
Item 1A.	Risk Factors	3842

Item 5.	~~Other Information~~5	38Other Information	45
Item 6.	Exhibits	3945
SIGNATURES		4047

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 June 30,				For the Six Months Ended June 30,
		2022		2021		2022		2021			2023		2022		2023		2022
Revenue:	Revenue:									Revenue:
Product sales	Product sales	$	626,091	$	—	$	1,267,174	$	—	Product sales	$	285,163	$	55,455	$	277,706	$	641,083
Grants	Grants	106,273		135,007		313,348		854,390		Grants	137,079		107,774		224,458		207,075
Royalties and other	Royalties and other	2,213		43,837		43,951		69,700		Royalties and other	2,184		22,696		3,213		41,738
Total revenue	Total revenue	734,577		178,844		1,624,473		924,090		Total revenue	424,426		185,925		505,377		889,896

Expenses:	Expenses:									Expenses:
Cost of sales	Cost of sales	434,593		—		720,874		—		Cost of sales	55,777		271,077		89,863		286,281
Research and development	Research and development	304,297		408,195		977,428		1,571,551		Research and development	219,475		289,648		466,576		673,131
Selling, general, and administrative	Selling, general, and administrative	122,876		77,793		327,028		214,144		Selling, general, and administrative	93,717		108,160		206,249		204,152
Total expenses	Total expenses	861,766		485,988		2,025,330		1,785,695		Total expenses	368,969		668,885		762,688		1,163,564
Loss from operations		(127,189)		(307,144)		(400,857)		(861,605)
Other expense:
Income (Loss) from operations										Income (Loss) from operations	55,457		(482,960)		(257,311)		(273,668)
Other income (expense):										Other income (expense):

Interest expense	Interest expense	(4,169)		(5,182)		(15,279)		(15,989)		Interest expense	(3,124)		(6,234)		(7,440)		(11,110)
Other expense		(34,783)		(4,064)		(53,002)		(7,267)
Loss before income tax expense		(166,141)		(316,390)		(469,138)		(884,861)
Income tax expense		2,472		6,041		6,552		12,606
Net loss		$	(168,613)	$	(322,431)	$	(475,690)	$	(897,467)
Other income (expense)										Other income (expense)	5,532		(19,873)		29,894		(18,219)
Income (Loss) before income tax expense (benefit)										Income (Loss) before income tax expense (benefit)	57,865		(509,067)		(234,857)		(302,997)
Income tax expense (benefit)										Income tax expense (benefit)	(143)		1,418		1,040		4,080
Net income (loss)										Net income (loss)	$	58,008	$	(510,485)	$	(235,897)	$	(307,077)

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	$	0.65	$	(6.53)	$	(2.69)	$	(3.97)
Diluted										Diluted	$	0.58	$	(6.53)	$	(2.69)	$	(3.97)
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	89,362		78,143		87,769		77,305
Diluted										Diluted	104,065		78,143		87,769		77,305

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 June 30,				For the Six Months Ended June 30,
	2023		2022		2023		2022
Net income (loss)	$	58,008	$	(510,485)	$	(235,897)	$	(307,077)
Other comprehensive income (loss):
Foreign currency translation adjustment	(5,011)		(9,558)		(1,800)		(9,517)
Other comprehensive income (loss)	(5,011)		(9,558)		(1,800)		(9,517)
Comprehensive income (loss)	$	52,997	$	(520,043)	$	(237,697)	$	(316,594)

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			June 30, 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	$	505,912	$	1,336,883

Restricted cash	Restricted cash	10,785		11,490		Restricted cash	10,361		10,303
Accounts receivable	Accounts receivable	111,645		454,993		Accounts receivable	394,890		82,375
Inventory	Inventory	82,432		8,872		Inventory	23,488		36,683
Prepaid expenses and other current assets	Prepaid expenses and other current assets	274,522		164,648		Prepaid expenses and other current assets	192,903		237,147
Total current assets	Total current assets	1,759,965		2,155,119		Total current assets	1,127,554		1,703,391
Property and equipment, net	Property and equipment, net	255,532		228,696		Property and equipment, net	299,955		294,247
Right of use asset, net	Right of use asset, net	108,543		40,123		Right of use asset, net	95,739		106,241
Intangible assets, net		8,456		4,770

Goodwill	Goodwill	117,535		131,479		Goodwill	128,366		126,331
Other non-current assets	Other non-current assets	17,406		16,566		Other non-current assets	33,434		28,469
Total assets	Total assets	$	2,267,437	$	2,576,753	Total assets	$	1,685,048	$	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	$	87,246	$	216,517
Accrued expenses	Accrued expenses	551,069		673,731		Accrued expenses	458,397		591,158
Deferred revenue	Deferred revenue	404,776		1,422,944		Deferred revenue	300,473		370,137
Current portion of finance lease liabilities	Current portion of finance lease liabilities	82,095		130,533		Current portion of finance lease liabilities	953		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	749,186		930,055
Total current liabilities	Total current liabilities	1,667,961		2,390,319		Total current liabilities	1,596,255		2,459,944
Deferred revenue	Deferred revenue	1,035,418		172,528		Deferred revenue	606,937		179,414
Convertible notes payable	Convertible notes payable	—		323,458		Convertible notes payable	167,248		166,466
Non-current finance lease liabilities	Non-current finance lease liabilities	31,474		—		Non-current finance lease liabilities	30,744		31,238
Other non-current liabilities	Other non-current liabilities	98,569		42,121		Other non-current liabilities	38,383		55,695
Total liabilities	Total liabilities	2,833,422		2,928,426		Total liabilities	2,439,567		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 June 30, 2023 and December 31, 2022; no shares issued and outstanding at June 30, 2023 and December 31, 2022.						Preferred stock, $0.01 par value, 2,000,000 shares authorized at June 30, 2023 and December 31, 2022; no shares issued and outstanding at June 30, 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 June 30, 2023 and December 31, 2022; 95,183,750 shares issued and 94,308,379 shares outstanding at June 30, 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 June 30, 2023 and December 31, 2022; 95,183,750 shares issued and 94,308,379 shares outstanding at June 30, 2023 and 86,806,554 shares issued and 86,039,923 shares outstanding at December 31, 2022	952		868
Additional paid-in capital	Additional paid-in capital	3,640,597		3,351,967		Additional paid-in capital	3,855,916		3,737,979
Accumulated deficit	Accumulated deficit	(4,093,640)		(3,617,950)		Accumulated deficit	(4,511,786)		(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, 875,371 shares at June 30, 2023 and 766,631 shares at December 31, 2022						Treasury stock, cost basis, 875,371 shares at June 30, 2023 and 766,631 shares at December 31, 2022	(91,424)		(90,659)
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(23,794)		(1,353)		Accumulated other comprehensive loss	(8,177)		(6,377)
Total stockholders’ deficit	Total stockholders’ deficit	(565,985)		(351,673)		Total stockholders’ deficit	(754,519)		(634,078)
Total liabilities and stockholders’ deficit	Total liabilities and stockholders’ deficit	$	2,267,437	$	2,576,753	Total liabilities and stockholders’ deficit	$	1,685,048	$	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~~Six Ended ~~September~~June 30, ~~2022~~2023 and ~~2021~~2022

(in thousands, except share information)

(unaudited)


	Common Stock			Additional Paid-in Capital		Accumulated Deficit		Treasury Stock		Accumulated Other Comprehensive Loss		Total Stockholders' Equity (Deficit)
	Shares	Amount
Balance at March 31, 2023	87,139,831	$	871	$	3,767,733	$	(4,569,794)	$	(91,226)	$	(3,166)	$	(895,582)
Stock-based compensation	—	—		20,292		—		—		—		20,292
Stock issued under incentive programs	95,965	1		(1)		—		(198)		—		(198)
Issuance of common stock, net of issuance costs $861	7,947,954	80		67,892		—		—		—		67,972
Foreign currency translation adjustment	—	—		—		—		—		(5,011)		(5,011)
Net income	—	—		—		58,008		—		—		58,008
Balance at June 30, 2023	95,183,750	$	952	$	3,855,916	$	(4,511,786)	$	(91,424)	$	(8,177)	$	(754,519)

Balance at March 31, 2022	78,722,337	$	787	$	3,566,292	$	(3,414,542)	$	(85,901)	$	(1,312)	$	65,324
Stock-based compensation	—	—		38,048		—		—		—		38,048
Stock issued under incentive programs	53,897	1		274		—		(554)		—		(279)


Foreign currency translation adjustment	—	—		—		—		—		(9,558)		(9,558)
Net loss	—	—		—		(510,485)		—		—		(510,485)
Balance at June 30, 2022	78,776,234	$	788	$	3,604,614	$	(3,925,027)	$	(86,455)	$	(10,870)	$	(416,950)

Common Stock Additional
Paid-in
Capital Accumulated
Deficit Treasury
Stock Accumulated Other
Comprehensive
Income (Loss) Total Stockholders'
Equity (Deficit)
Shares Amount
Balance at June 30, 2022 78,776,234 $ 788 $ 3,604,614 $ (3,925,027) $ (86,455) $ (10,870) $ (416,950)
Stock-based compensation — — 33,386 — — — 33,386
Stock issued under incentive programs 428,275 4 2,597 — (3,485) — (884)
Foreign currency translation adjustment — — — — — (12,924) (12,924)
Net loss — — — (168,613) — — (168,613)
Balance at September 30, 2022 79,204,509 $ 792 $ 3,640,597 $ (4,093,640) $ (89,940) $ (23,794) $ (565,985)
Balance at June 30, 2021 74,672,351 $ 747 $ 3,237,085 $ (2,449,235) $ (47,205) $ 4,170 $ 745,562
Stock-based compensation — — 45,274 — — — 45,274
Stock issued under incentive programs 1,301,172 13 28,154 — (31,927) — (3,760)
Foreign currency translation adjustment — — — — — (3,309) (3,309)
Net loss — — — (322,431) — — (322,431)
Balance at September 30, 2021 75,973,523 $ 760 $ 3,310,513 $ (2,771,666) $ (79,132) $ 861 $ 461,336


		Common Stock			Additional Paid-in Capital			Accumulated Deficit			Treasury Stock				Accumulated Other Comprehensive Income (Loss)				Total Stockholders' Equity (Deficit)				Common Stock							Additional Paid-in Capital				Accumulated Deficit				Treasury Stock				Accumulated Other Comprehensive Loss				Total Stockholders' Equity (Deficit)
														Shares								Amount
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	—			—				48,939				—				—				—				48,939
Stock issued under incentive programs																						Stock issued under incentive programs	429,242			4				1,106				—				(765)				—				345
Issuance of common stock, net of issuance costs of $861																						Issuance of common stock, net of issuance costs of $861	7,947,954			80				67,892				—				—				—				67,972
Foreign currency translation adjustment																						Foreign currency translation adjustment	—			—				—				—				—				(1,800)				(1,800)
Net loss																						Net loss	—			—				—				(235,897)				—				—				(235,897)
Balance at June 30, 2023																						Balance at June 30, 2023	95,183,750			$	952			$	3,855,916			$	(4,511,786)			$	(91,424)			$	(8,177)			$	(754,519)
		Shares	Amount				Additional Paid-in Capital				Accumulated Deficit						Treasury Stock				Accumulated Other Comprehensive Income (Loss)				Total Stockholders' Equity (Deficit)
Balance at December 31, 2021	Balance at December 31, 2021	76,433,151	$	764									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	—	—		104,367					—			—					—				104,367		Stock-based compensation	—			—				70,981				—				—				—				70,981
Stock issued under incentive programs	Stock issued under incentive programs	573,960	6		4,900			—			(4,839)				—				67			Stock issued under incentive programs	145,685			2				2,303				—				(1,354)				—				951
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			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	—	—		—			—			—				(22,441)				(22,441)			Foreign currency translation adjustment	—			—				—				—				—				(9,517)				(9,517)
Net loss	Net loss	—	—		—			(475,690)			—				—				(475,690)			Net loss	—			—				—				(307,077)				—				—				(307,077)
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
Balance at June 30, 2022																						Balance at June 30, 2022	78,776,234			$	788			$	3,604,614			$	(3,925,027)			$	(86,455)			$	(10,870)			$	(416,950)

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

~~NOVAVAX, INC.~~

~~Table of~~ ~~Contents~~

NOVAVAX, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)


		Nine Months Ended September 30,					Six Months Ended June 30,
		2022		2021			2023		2022
Operating Activities:	Operating Activities:					Operating Activities:
Net loss	Net loss	$	(475,690)	$	(897,467)	Net loss	$	(235,897)	$	(307,077)
Reconciliation of net loss to net cash provided by (used in) operating activities:
Reconciliation of net loss to net cash used in operating activities:						Reconciliation of net loss to net cash used in operating activities:
Depreciation and amortization	Depreciation and amortization	21,832		8,989		Depreciation and amortization	19,110		13,485

Non-cash stock-based compensation	Non-cash stock-based compensation	102,525		151,457		Non-cash stock-based compensation	48,939		70,981
Provision for excess and obsolete inventory	Provision for excess and obsolete inventory	358,075		—		Provision for excess and obsolete inventory	31,546		155,662
Impairment of long-lived assets						Impairment of long-lived assets	10,081		—
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	—		(3,291)
Other items, net	Other items, net	(25,059)		2,739		Other items, net	(89)		(642)
Changes in operating assets and liabilities:	Changes in operating assets and liabilities:					Changes in operating assets and liabilities:
Inventory	Inventory	(426,466)		—		Inventory	(19,361)		(403,725)
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	(266,482)		112,845
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	(443,238)		179,158
Deferred revenue	Deferred revenue	(155,268)		992,590		Deferred revenue	357,860		(76,809)
Net cash provided by (used in) operating activities		(298,121)		665,354
Net cash used in operating activities						Net cash used in operating activities	(497,531)		(259,413)

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	(26,774)		(41,402)
Internal-use software						Internal-use software	(4,563)		—
Net cash used in investing activities						Net cash used in investing activities	(31,337)		(41,402)

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	61,986		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	345		1,050
Finance lease payments	Finance lease payments	(45,904)		(63,876)		Finance lease payments	(26,784)		(15,911)
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	(293,044)		164,524
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	(8,992)		(4,453)
Net increase (decrease) in cash, cash equivalents, and restricted cash		(235,237)		1,298,088
Net decrease in cash, cash equivalents, and restricted cash						Net decrease in cash, cash equivalents, and restricted cash	(830,904)		(140,744)
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	$	517,941	$	1,387,515

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

Sales of common stock not settled at end of period						Sales of common stock not settled at end of period	$	5,986	$	—
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	$	—	$	69,366
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	$	6,591	$	17,890

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	$	11,294	$	8,604
Cash paid for income taxes	Cash paid for income taxes	$	17,843	$	6,041	Cash paid for income taxes	$	128	$	17,778

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

~~Table of~~ ~~Contents~~

NOVAVAX, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

~~September~~June 30, ~~2022~~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~~vaccines and 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~~Novavax currently has one commercial program, for vaccines to prevent COVID (“Novavax COVID Vaccine, Adjuvanted”), which it markets in various territories where it is allowed to do so, under the ~~Company’s other~~brand name “Nuvaxovid™”. Novavax’s prototype COVID vaccine ~~candidates incorporate the Company's proprietary 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~~was derived 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 strain of COVID and is variously referred to here and in prior financial statements without branding as “NVX-CoV2373”. Our partners, Serum Institute of India Pvt. Ltd. (“SIIPL”) markets NVX-CoV2373 as “Covovax™.” Novavax is currently developing an updated vaccine which it refers to as ~~a heterologous booster, inducing broad immune responses against contemporary Omicron variants.~~its “XBB COVID vaccine.”

~~As of September 30,~~Beginning in 2022, the Company ~~had~~ received approval, interim authorization, provisional approval, conditional marketing authorization, and emergency use authorization (“EUA”) from multiple regulatory authorities globally for NVX-CoV2373 for both adult and adolescent populations as a primary series and for both homologous and heterologous booster indications. Novavax is currently seeking similar approvals from multiple regulatory authorities globally for its XBB COVID vaccine as a single dose booster for the fall 2023 and subsequently. The Company exclusively depends on its supply agreement with SIIPL and its subsidiary, Serum Life Sciences Limited (“SLS”), for co-formulation, filling and finishing (other than in Europe) and on its service agreement with PCI Pharma Services (“PCI”) for finishing in Europe. The Company plans to rely on these arrangements to supply the XBB COVID vaccine, if authorized, during the 2023 fall vaccination campaign and subsequently (see Note 4).

~~The Company commenced commercial shipments~~Novavax is advancing development of ~~NVX-CoV2373 doses under~~other vaccine candidates, including its influenza vaccine candidate, its COVID-Influenza Combination (“CIC”) vaccine candidate and additional vaccine candidates. Novavax COVID Vaccine, Adjuvanted and its other vaccine candidates incorporate the ~~name “Novavax COVID-19 Vaccine, Adjuvanted”~~Company’s proprietary Matrix-M™ adjuvant to enhance the immune response and ~~the brand name “Nuvaxovid™” in 2022.~~stimulate higher levels of functional antibodies and induce a cellular immune response.

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~~$8.2 million and ~~$1.4~~$6.4 million ~~as of September~~at June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively. The aggregate foreign currency transaction gains and losses resulting from the conversion of the transaction currency to functional currency were a $0.2 million loss and a $16.1 million gain, and a $22.2 million and $21.0 million loss for the three months and six months ended June 30, 2023 and 2022, respectively, which are reflected in Other income (expense).

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~~

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

~~Table~~

Liquidity and Going Concern

The accompanying unaudited consolidated financial statements have been prepared assuming that the Company will continue as a going concern within one year after the date that the financial statements are issued. In addition, as of ~~Contents~~June 30, 2023, the Company had $517.9 million in cash and cash equivalents and restricted cash. Pursuant to the June 2023 Amendment to the advance purchase agreement (“APA”) between the Company and His Majesty the King in Right of Canada, as represented by the Minister of Public Works and Government Services, as successor in interest to Her Majesty the Queen in Right of Canada, as represented by the Minister of Public Works and Government Services (“Canadian government”), the Company received $174.8 million from the Canadian government in July 2023 with a second installment of $174.8 million that is contingent and payable upon the Company’s delivery of vaccine doses in the second half of 2023 (see Note 3). During the six months ended June 30, 2023, the Company incurred a net loss of $235.9 million and had net cash flows used in operating activities of $497.5 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 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 authorization, ability to timely deliver doses and commercial adoption and market acceptance. Further, 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 advance purchase agreements may require the Company to refund portions of upfront and other payments or result in reduced future payments. For example, if the Company fails to deliver XBB COVID vaccine doses to the Canadian government in the second half of 2023, the second installment payment of $174.8 million will be terminated and not be payable to the Company. Also, if the Company does not timely achieve supportive recommendations from the Joint Committee on Vaccination and Immunisation (the “JCVI”) of the government of the United Kingdom of Great Britain and Northern Ireland with respect to use of NVX-CoV2373 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, then the Company would be required to repay up to $112.5 million related to the upfront payment previously received from the Authority under the Original UK Supply Agreement. 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 $250.6 million in funding as of June 30, 2023. 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 arbitration hearing is scheduled for July 2024, with a written decision to follow. 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 $696.4 million as of June 30, 2023 (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 (the “Restructuring Plan”) which 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 workforce reduction plan included 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 has decided to progress CIC toward late-stage development and, as such, is assessing the impact on its workforce requirements. The Company expects the full annual impact of the cost savings from the Restructuring Plan 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. During the three months ended June 30, 2023, the Company recorded a charge of $4.6 million related to one-time employee severance and benefit costs and $10.1 million related to the consolidation of facilities and infrastructure (see Note 16).

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, and in particular the 2023 fall COVID vaccination campaign, which is inherently uncertain and subject to a number of risks, including regulatory authorization, ability to timely deliver doses and commercial adoption and market acceptance, the resolution of certain matters, including whether, when, and how the dispute with Gavi is resolved, and management’s plans, which includes cost reductions associated with the Restructuring 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 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~~Constraints

~~Product sales are associated with the Company’s NVX-CoV2373 supply agreements, sometimes referred to as advance purchase agreements (“APAs”), with various international governments.~~ The Company ~~recognizes revenue from product sales based on~~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. 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 decreasing the transaction price, revenue is constrained based on an estimate of the impact to the transaction price recognized until it is probable that a significant reversal in cumulative revenue recognized will not occur.

~~Cost~~Restructuring

The Company recognizes restructuring charges when such costs are incurred. The Company's restructuring charges consist of ~~Sales~~employee severance and other termination benefits related to the reduction of its workforce, the consolidation of facilities, and infrastructure and other costs. Termination benefits are expensed on the date the Company notifies the employee, unless the employee must provide future service, in which case the benefits are expensed ratably over the future service period. Ongoing benefits are expensed when restructuring activities are probable and the benefit estimable.

~~Cost~~See Note 16 for additional information on the severance and employee benefit costs for terminated employees and impairment of ~~sales includes cost of raw materials, production, and manufacturing overhead costs associated~~assets in connection 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 to the extent the cost cannot be recovered based on estimates about future demand. Cost of sales does not include certain expenses related to raw materials, production, and manufacturing overhead costs 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.Restructuring Plan.

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~~$334.4 million and ~~$419.7~~$53.8 million related to amounts that were billed to

customers and ~~$68.0~~$60.5 million and ~~$35.3~~$28.6 million related to amounts which had not yet been billed to customers as of ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively. During the ~~nine~~six months ended ~~September~~June 30, 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:
Six Months Ended June 30, 2023	$	96,210	$	793,039	$	(486,684)	$	402,565
Six Months Ended June 30, 2022	454,993		808,713		(1,069,173)		194,533
Allowance for doubtful accounts(1):
Six Months Ended June 30, 2023	$	(13,835)	$	—	$	6,160	$	(7,675)
Six Months Ended June 30, 2022	—		—		—		—
Deferred revenue:(2)
Six Months Ended June 30, 2023	$	549,551	$	414,816	$	(56,957)	$	907,410
Six Months Ended June 30, 2022	1,595,472		49,107		(128,432)		1,516,147

(1)~~Amount is comprised~~ There was no bad debt expense recorded during the three and six months ended June 30, 2023 or 2022. There was a $6.2 million reversal of ~~$404.8 million~~a bad debt allowance during the three months ended June 30, 2023 due to the collection of a previously recognized allowance for doubtful accounts. 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 receivables, and ~~$1.4 billion of current Deferred revenue and $1.0 billion and $172.5 million of non-current Deferred revenue as of September 30, 2022 and December 31, 2021, respectively.~~customer-specific risks.

(2)Deductions from Deferred revenue ~~includes $202.5 million that was realized in Revenue and $49.1 million that was reclassified~~generally related to ~~Other liabilities.~~the recognition of revenue once performance obligations on a contract with a customer are met.

~~The~~As of June 30, 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$2 billion as of ~~September 30, 2022.~~which $907.4 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 may require the Company to refund portions of upfront and other payments or result in reduced future payments, which could adversely impact the Company’s ability to realize revenue from its unsatisfied performance obligations. The timing to fulfill performance obligations related to 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 the timing of product manufacturing, receipt of marketing authorizations for additional indications, delivery of doses based on customer demand, and the ability of the customer to request variant vaccine in place of the prototype NVX-CoV2373 vaccine under certain of ~~our~~the Company’s APAs.

Under the terms of the Gavi APA and a separate purchase agreement between Gavi and SIIPL, 1.1 billion doses of NVX-CoV2373 were to be made available to countries participating in the COVAX Facility. The ~~remaining unfilled performance obligations~~Company 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 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 ~~grant agreements or APAs are expected~~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 ~~be fulfilled in less than 12 months.~~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

~~Table of~~ ~~Contents~~

~~Grants~~

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. Since December 31, 2022, the remaining Gavi Advance Payment Amount, which is $696.4 million as of June 30, 2023, pending resolution of the dispute with Gavi related to a return of the remaining Advance Payment Amount, has been classified within 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 ~~recognized grant revenue~~filed its Answer and Counterclaims on March 2, 2023. On April 5, 2023, Gavi filed its Reply to the Company’s Counterclaims. The arbitration hearing is scheduled for July 2024, with a written decision to follow. 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 June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
North America	$	—	$	—	$	—	$	64,762
Europe	1,518		—		58,785		413,745
Rest of the world	283,645		55,455		218,921		162,576
Total product sales revenue	$	285,163	$	55,455	$	277,706	$	641,083

~~U.S.~~In May 2023, the Company extended a credit for certain doses delivered in 2022 that qualified for replacement under the contract with the Australian government. 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 therefore was removed from the market. The credit will be applied against the future sale of doses to the customer and, during the six months ended June 30, 2023, the Company recorded a reduction of $64.7 million in product sales, with a corresponding increase to Deferred revenue, non-current.

In April 2023, the Company amended its APA with the Canadian government, for the purchase of doses of NVX-CoV2373 (the “Canada APA”) to forfeit certain doses originally scheduled for delivery in 2022 for a payment of $100.4 million received in the second quarter of 2023. On June 30, 2023, the Company entered into an additional amendment (the “June 2023 Amendment”) to the Canada APA. Pursuant to the June 2023 Amendment, the parties revised the Canadian government’s previous commitment by (i) forfeiting certain doses of the NVX-CoV2373 previously scheduled for delivery, (ii) reducing the amount of doses of NVX-CoV2373 due for delivery, (iii) revising the delivery schedule for the remaining doses of NVX-CoV2373 to be delivered, and (iv) requiring use of the Biologics Manufacturing Centre (“BMC”) Inc. to produce bulk antigen for doses in 2024 and 2025. In connection with the forfeiture of doses of NVX-CoV2373, the Canadian government agreed to pay a total amount of $349.6 million to the Company in two equal installments in 2023, which total amount equals the remaining balance owed by the Canadian government with respect to such forfeited vaccine doses. The first installment was payable upon execution of the June 2023 Amendment and the second installment is contingent and payable upon the Company’s delivery of vaccine doses in the second half of 2023. The first installment of $174.8 million was received from the Canadian government in July 2023. If the Company fails to deliver COVID-19 vaccine doses to the Canadian government in the second half of 2023, the second installment payment of $174.8 million will be terminated and not be payable to the Company. The Canadian Government may terminate the Canada APA, as amended, if the Company fails to achieve regulatory approval for use of BMC for NVX-CoV2373 production on or before December 31, 2024. The June 2023 Amendment maintained the total contract value of the original Canada APA. Pursuant to the June 2023 Amendment, the Company and the Canadian government will endeavor to expand the Company’s previously agreed in-country commitment to Canada and to further partner to provide health, economic, and future pandemic preparedness benefits to Canada, which value may be provided through a number of activities, including without limitation, capital investments, the performance of activities or services, or the provision of technology or intellectual property licenses. Further, the parties will endeavor to enter into a memorandum of understanding (the “MOU”) to illustrate the Company’s ability to deliver such benefits over a 15 year period with an aggregate value of not less than 100% of the amount remaining to be paid under the June 2023 Amendment and ultimately received by the Company. The Company agreed to hold $20 million in escrow for the benefit of the Canadian

government, which amount is the sole recourse available to the Canadian government in the event of non-performance under the MOU.

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, which is 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,~~June 30, 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.

six months ended June 30, 2023.

Royalties and Other

During the three and ~~nine~~six months ended ~~September~~June 30, ~~2022,~~2023, the Company ~~recognized $1.3 million and $10.5 million, respectively, in~~did not recognize revenue related to milestone payments or sales-based royalties. During the three and six months ended June 30, 2022, the Company recognized a $20.0 million milestone payment upon the first sale of NVX-CoV2373 in ~~Japan. During the three~~Japan and ~~nine months ended September 30, 2021, the Company recognized $39.9~~$1.7 million and ~~$63.4~~$9.2 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 of 2022.

Note 4 – Collaboration, License, and Supply Agreements

~~Serum Institute~~SIIPL

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~~licensing agreement.

Bill & Melinda Gates Medical Research Institute

In May 2023, we entered into a 3-year agreement with ~~SK bioscience Co., Ltd. (“SK bioscience”)~~the Bill & Melinda Gates Medical Research Institute 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-CoV2373provide our Matrix-M™ adjuvant 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-19preclinical vaccine ~~in a prefilled syringe.~~research.

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~~June 30, ~~2022,~~ ~~$102.9 million~~ of2023, the remaining payment of $68.6 million 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.

In May 2023, the Company issued a notice to SK bioscience Co., Ltd. (“SK bioscience) to cancel and wind down all drug substance and drug product manufacturing activities for supply by SK bioscience to the Company. The ~~Settlement Payment is less than amounts previously~~Company recognized ~~as embedded lease expense and reflected in Research~~$20.4 million of 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~~associated with a ~~benefit of~~ ~~$98.3 million~~take-or-pay obligation that became due 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~~a result 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.cancellation.

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.

1112

~~Table of~~ ~~Contents~~

Note 5 – Earnings (Loss) per Share

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


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Numerator:
Net income (loss), basic	$	58,008	$	(510,485)	$	(235,897)	$	(307,077)
Interest on convertible notes	2,582		—		—		—
Net income (loss), dilutive	60,590		(510,485)		(235,897)		(307,077)
Denominator:
Weighted average number of common shares outstanding, basic	89,362		78,143		87,769		77,305
Effect of dilutive securities	14,703		—		—		—
Weighted average number of common shares outstanding, dilutive	104,065		78,143		87,769		77,305
Net income (loss) per share:
Basic	$	0.65	$	(6.53)	$	(2.69)	$	(3.97)
Diluted	$	0.58	$	(6.53)	$	(2.69)	$	(3.97)

Anti-dilutive securities excluded from calculations of diluted net income (loss) per share	6,791		8,073		23,447		8,073

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			June 30, 2023		December 31, 2022
Cash and cash equivalents	Cash and cash equivalents	$	1,280,581	$	1,515,116	Cash and cash equivalents	$	505,912	$	1,336,883
Restricted cash, current	Restricted cash, current	10,785		11,490		Restricted cash, current	10,361		10,303
Restricted cash, non-current(1)	Restricted cash, non-current(1)	1,656		1,653		Restricted cash, non-current(1)	1,668		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	$	517,941	$	1,348,845

(1)Classified as Other non-current assets as of ~~September~~June 30, ~~2022~~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 June 30, 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)	$	81,268	$	—	$	—	$	398,834	$	—	$	—
Government-backed securities(1)	Government-backed securities(1)	—		261,000		—		—		266,250		—		Government-backed securities(1)	—		180,000		—		—		296,000		—

Corporate debt securities(1)	Corporate debt securities(1)	—		109,914		—		—		790,672		—		Corporate debt securities(1)	—		28,515		—		—		—		—
Agency securities(1)	Agency securities(1)	—		42,777		—		—		—		—		Agency securities(1)	—		9,971		—		—		104,536		—
Total cash equivalents	Total cash equivalents	$	365,631	$	413,691	$	—	$	361,822	$	1,056,922	$	—	Total cash equivalents	$	81,268	$	218,486	$	—	$	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	$	—	$	130,957	$	—	$	—	$	172,789	$	—
3.75% Convertible notes due 2023														3.75% Convertible notes due 2023	—		—		—		—		322,111		—
Total convertible notes payable														Total convertible notes payable	$	—	$	130,957	$	—	$	—	$	494,900	$	—

(1)All investments are classified as Cash and cash equivalents as of ~~September~~June 30, ~~2022~~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~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021,~~2022, the Company did not have any transfers between ~~levels~~.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			June 30, 2023		December 31, 2022
Raw materials	Raw materials	$	17,557	$	8,872	Raw materials	$	10,892	$	13,912
Semi-finished goods	Semi-finished goods	33,030		—		Semi-finished goods	12,596		21,410
Finished goods	Finished goods	31,845		—		Finished goods	—		1,361
Total inventory	Total inventory	$	82,432	$	8,872	Total inventory	$	23,488	$	36,683

Inventory write-downs as a result of excess, obsolescence, expiry, or other reasons, and losses on firm purchase commitments, offset by recoveries of such commitments, are recorded as a component of cost of sales in our consolidated statements of operations. For the three and ~~nine~~six months ended ~~September~~June 30, ~~2022,~~2023, inventory write-downs were ~~$202.4~~$19.1 million and ~~$358.1~~$31.5 million, ~~respectively. For the three~~respectively and ~~nine months ended September 30, 2022,~~ losses on firm purchase commitments were ~~$46.6~~$0.7 million and ~~$146.2~~$8.5 million, respectively. ~~There were no~~In addition, for the three and six months ended June 30, 2023 the Company recorded recoveries on firm purchase commitments of $17.9 million and $18.8 million, respectively, related primarily to negotiated reductions to previously recognized firm purchase commitments. For the three and six months ended June 30, 2022, inventory write-downs orand losses on firm purchase commitments ~~during 2021.~~were $155.7 million and $99.6 million, respectively.

Note 9 – Goodwill

The Company has one reporting unit, which has a negative equity as of June 30, 2023 and December 31, 2022. The

1214

~~Table of~~ ~~Contents~~

~~Note 8 – Intangible Assets and Goodwill~~

~~Identifiable Intangible Assets~~

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

September 30, 2022 December 31, 2021
Gross
Carrying
Amount Accumulated
Amortization Intangible
Assets, Net Gross
Carrying
Amount Accumulated
Amortization Intangible
Assets, Net
Finite-lived intangible assets:
Proprietary adjuvant technology $ 6,911 $ (3,069) $ 3,842 $ 8,239 $ (3,469) $ 4,770
Internal-use software(1)
4,888 (274) 4,614 — — —
Total identifiable intangible assets $ 11,799 $ (3,343) $ 8,456 $ 8,239 $ (3,469) $ 4,770

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

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

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

~~Goodwill~~

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


	Amount
Balance at December 31, ~~2021~~2022	$	~~131,479~~126,331
Currency translation adjustments	~~(13,944)~~2,035
Balance at ~~September~~June 30, ~~2022~~2023	$	~~117,535~~128,366

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 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~~six months ended June 30, 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~~six months ended ~~September~~June 30, 2023, the Company recognized a short-term lease benefit of $9.2 million and $8.5 million, respectively, related to its embedded leases, primarily as a result of a benefit of $9.5 million related to a settlement executed during the three months ended June 30, 2023. During the three and six months ended June 30, 2022, the Company recognized a short-term lease ~~benefit~~expense of ~~$46.6~~$5.8 million and ~~expense of $37.3~~$83.9 million respectively, related to its embedded leases ~~net of a benefit of $98.3 million related to the Fujifilm Settlement Agreement (see Note 4). During the three~~ and ~~nine months ended September 30, 2022, the Company~~ expensed ~~$24.2~~$9.4 million and ~~$44.0~~$19.8 million respectively, for the write off of ~~ROU~~right of use (“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.~~ lease ROU written off. There were no ROU assets written off during the three and six months ended June 30, 2023, related to embedded leases.

During the three and ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2023, the Company recognized ~~a short-term lease expense of $111.3~~$0.5 million and $325.5 million, respectively, related to its embedded leases and expensed $4.4 million and $17.1 million, respectively, of ROU assets that represented assets acquired for research and development activities that did not have an alternative future use at the commencement or modification of the lease. During the three and nine months ended September 30, 2022, the Company recognized $0.9 ~~million and $4.3~~ million of interest expense, respectively, on its finance lease liabilities. During the three and ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, the Company recognized ~~$1.6~~$2.3 million and ~~$5.6~~$3.4 million of interest expense, respectively, on its finance lease liabilities.

During ~~2020,~~the three and six months ended June 30, 2023, the Company ~~entered into a lease agreement~~recorded an impairment charge of $5.9 million related to ROU facility leases used 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, manufacturing and ~~corporate offices. The term of~~offices space that are impacted by 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.Restructuring Plan (see Note 16).

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


	June 30, 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	(8,002)		(8,784)
Total non-current convertible notes payable	$	167,248	$	166,466

~~(1)~~In February 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~~cash on hand. The effective interest rate of the ~~consolidated balance sheets as of September 30, 2022 and December 31, 2021, respectively.~~2027 Convertible notes is 6.2%.

The interest expense incurred in connection with the ~~Notes~~convertible notes payable 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 June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Coupon interest	$	2,191	$	3,047	$	5,397	$	6,094
Amortization of debt issuance costs	391		356		900		712
Total interest expense on convertible notes payable	$	2,582	$	3,403	$	6,297	$	6,806

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. During the three and six months ended June 30, 2023, the Company sold 7.9 million shares of its common stock under its June 2021 Sales Agreement resulting in net proceeds of approximately $68 million, of which $6 million was included in Prepaid expenses and other current assets as of June 30, 2022 and received in cash in July 2023. As of ~~September~~June 30, ~~2022,~~2023, the remaining balance available under the June 2021 Sales Agreement was approximately ~~$318~~$249 million.

~~Table of~~ ~~Contents~~

During the ~~nine~~six months ended ~~September~~June 30, ~~2021,~~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 grants under the 2023 Inducement Plan. As of June 30, 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~~June 30, ~~2022,~~2023, there were ~~4.6~~0.9 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 June 30,				Six Months Ended June 30,
		2022		2021		2022		2021			2023		2022		2023		2022
Cost of sales	Cost of sales	$	51	$	—	$	51	$	—	Cost of sales	$	998	$	—	$	1,516	$	—
Research and development	Research and development	16,107		21,860		52,692		70,429		Research and development	9,946		19,695		23,804		36,582
General and administrative		15,389		23,414		49,782		81,028
Selling, general, and administrative										Selling, general, and administrative	9,348		18,353		23,619		34,399
Total stock-based compensation expense	Total stock-based compensation expense	$	31,547	$	45,274	$	102,525	$	151,457	Total stock-based compensation expense	$	20,292	$	38,048	$	48,939	$	70,981

Total stock-based compensation capitalized and included in inventory as of ~~September~~June 30, 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~~June 30, ~~2022,~~2023, there was approximately ~~$189~~$122 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~~June 30, ~~2022.~~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~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021~~2022 was approximately ~~$19~~$2 million and ~~$381~~$8 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~~six months ended ~~September~~June 30, ~~2022:~~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		860,872	7.29		—	—
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	—	—		(63,839)	51.41		(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 June 30, 2023								Outstanding at June 30, 2023	358,600	$	10.96	4,845,292	$	39.15	58,475	$	119.80
Shares exercisable at June 30, 2023								Shares exercisable at June 30, 2023	—	$	—	3,295,810	$	40.62	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 June 30,		Six Months Ended June 30,
		2022	2021	2022	2021		2023	2022	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	$6.79	$43.21	$7.24	$62.52
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	3.5%-3.9%	2.7%-3.2%	3.5%-4.0%	1.4%-3.2%
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	120.4%-131.3%	120.5%-136.7%	120.4%-140.3%	120.5%-136.7%
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)	3.9-6.4	4.0-6.2	3.9-6.4	4.0-6.2

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~~June 30, ~~2022~~2023 was approximately $9$1.7 million and ~~7.4~~7.3 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~~June 30, ~~2022~~2023 was approximately $5$1.1 million and ~~7.0~~6.3 years, respectively.

Restricted Stock Units

The following is a summary of RSU activity for the ~~nine~~six months ended ~~September~~June 30, ~~2022:~~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	2,767,475	7.23
Vested	Vested	(379,802)	78.17		Vested	—	$	—	(307,653)	82.94
Forfeited	Forfeited	(114,976)	110.59		Forfeited	—	$	—	(637,727)	29.46
Outstanding and unvested at September 30, 2022		1,439,008	$	90.03
Outstanding and unvested at June 30, 2023					Outstanding and unvested at June 30, 2023	308,390	$	10.96	3,856,669	$	26.23

~~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~~authorized an aggregate of ~~1.1~~1.2 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~~June 30, ~~2022,~~2023, there were ~~0.7~~0.6 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~~June 30, ~~2022~~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~~June 30, ~~2022,~~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~~During the three months ended June 30, 2023 and 2022, the Company recognized federal, state, and ~~state~~foreign income tax benefit of $0.1 million and income tax expense of ~~$2.4~~$1.4 million, ~~and $4.3 million, in total, for~~respectively. During the ~~three and nine~~six months ended ~~September~~June 30, 2023 and 2022, ~~respectively, and did not recognize federal or state income tax expense for~~ the ~~three and nine months ended September 30, 2021. The~~ Company recognized income tax expense ~~related to~~of $1.0 million and $1.9 million, respectively. The Company recognized foreign withholding tax expense on royalties of ~~$0.1~~$2.2 million ~~and $2.3 million, respectively,~~for the six months ended June 30, 2022. The Company did not recognize any foreign withholding tax expense on royalties for the three ~~and nine~~ months ended ~~September~~June 30, 2022 and ~~$6.0 million and $12.6 million for~~ the three and ~~nine~~six months ended ~~September~~June 30, ~~2021, respectively.~~

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, the 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~~eight derivative lawsuits were filed: (i) Robert E. Meyer v. Stanley C. Erck, et al., No. 8:21-cv-02996-TDC (the “Meyer Action”), (ii) Shui Shing Yung v. Stanley C. Erck, et al., No. 8:21-cv-03248-TDC (the “Yung Action”), (iii) William Kirst, et al. v. Stanley C. Erck, et al., No. ~~8:22-cv-00024-TDC~~C-15-CV-21-000618 (the “Kirst Action”), (iv) Amy Snyder v. Stanley C. Erck, et al., No. 8:22-cv-01415-TDC (the “Snyder Action”), (v) Charles R. Blackburn, et al. v. Stanley C. Erck, et al., No. 1:22-cv-01417-TDC (the “Blackburn Action”), ~~and~~ (vi) Diego J. Mesa v. Stanley C. Erck, et al.al., No. 2022-0770-NAC (the “Mesa Action”), (vii) Sean Acosta v. Stanley C. Erck, et al., No. 2022-1133-NAC (the “Acosta Action”), and (viii) Jared Needelman v. Stanley C. Erck, et al., No. C-15-CV-23-001550 (the “Needelman Action”). The Meyer, Yung, Snyder, and Blackburn Actions were filed in the ~~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~~Needleman Action was also filed in the Circuit Court for Montgomery County, Maryland. The Mesa and Acosta Actions were filed in the Delaware Court of ~~Chancery.~~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. The plaintiffs filed their opposition to the motion to dismiss on April 11, 2023. Defendants filed their reply brief in further support of their motion to dismiss on May 11, 2023.

On 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, following the ruling on the motion to dismiss the Sinnathurai Action, the Delaware Court entered an order granting the Mesa Action parties’ request to set a briefing schedule in connection with a motion to stay by defendants. On February 28, 2023, the court granted the defendants’ motion and stayed the Mesa Action pending the entry of a final, non-appealable judgment in the Second Consolidated Derivative Action.

On December 7, 2022, the Acosta Action was filed. On February 6, 2023, defendants accepted service of the complaint and summons in the Acosta Action. On March 9, 2023, the court entered an order granting the parties’ request to stay the Acosta Action pending the entry of a final, non-appealable judgment in the Second Consolidated Derivative Action. On June 28, 2023 the Company, along with representatives from its insurance carriers, met with the plaintiffs and the plaintiffs of the Sinnathurai Action in mediation to engage in potential settlement discussions. The parties continue to discuss whether an amicable resolution is possible.

On April 17, 2023, the Needelman Action was filed. On July 12, 2023, the parties filed a stipulation and proposed order to stay the Needelman Action pending the Maryland Court’s decision on the motion to dismiss in the Second Consolidated Derivative Action. The 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. On June 8, 2023, the Supreme Court affirmed the Court of Chancery’s denial of the plaintiff’s fee application. The case was closed on June 26, 2023.

~~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 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 the arbitration was dismissed with prejudice following a ~~preliminary stage~~joint motion by Par and Novavax on August 1, 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 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~~Gavi APA. Gavi also contends that, based on its purported termination of the Gavi APA, it is ~~not reasonably estimable.~~ 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. Since December 31, 2022, the remaining Gavi Advance Payment Amount, which is $696.4 million as of June 30, 2023, pending resolution of the dispute with Gavi related to a return of the remaining Advance Payment Amount, has been classified within 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 ~~parties are engaged in discovery~~Company filed its Answer and Counterclaims on March 2, 2023. On April 5, 2023, Gavi filed its Reply to the Company’s Counterclaims. The arbitration hearing is scheduled for July ~~2023.~~ ~~While~~2024, with a written decision to follow. Arbitration is inherently uncertain, and while the Company ~~maintains~~believes that ~~no breach~~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 MSA has occurred and intends to vigorously defend the matter, if the final resolution of the matter is adverse to the Company, it could have a material impact on the Company’s financial position, results of operations, or cash flows.

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~~the Company does 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 – Restructuring

During the three and six months ended June 30, 2023, the restructuring charge recorded by the Company as a result of the Restructuring Plan includes (in thousands):


	Amount
Severance and employee benefit costs	$	4,643


Impairment of assets	10,081


Total Restructuring charge (1)	$	14,724

(1) Restructuring charges of $0.5 million, $2.7 million and $11.5 million are included in Cost of sales, Research and development and Selling, general, and administrative expenses, respectively, in the Consolidated Statements of Operations for the three and six months ended June 30, 2023. These charges reflect substantially all expected restructuring charges under the Restructuring Plan.

Severance and employee benefit costs

Employees affected by the reduction in force under the Restructuring Plan are entitled to receive severance payments and certain termination benefits. The Company recorded a severance and termination benefit cost in full for employees who were notified of their termination in the three months ended June 30, 3023 and had no requirements for future service. The Company paid a total of $3.6 million for the severance and employee benefit costs during the three months ended June 30, 2023, and the remaining liability of $1.0 million is included in Accrued expenses in the Company’s Consolidated Balance Sheet as of June 30, 2023.

Impairment of assets

In connection with the Restructuring Plan, the Company evaluated its long-lived assets for impairment including certain leased laboratory and office spaces located in Gaithersburg, Maryland. The Company performed an impairment evaluation for the applicable long-lived assets which is subject to judgment and actual results may vary from the estimates, resulting in potential future adjustments to amounts recorded. During the three and six months ended June 30, 2023, the Company recorded an impairment charge of $10.1 million related to the impairment of long-lived assets, including $5.9 million related to ROU assets for facility leases.

~~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 our unaudited financial statements for the period ended June 30, 2023; our global restructuring and cost reduction plan (“Restructuring 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 our workforce reduction; the impact of our decision to progress our COVID-19-Influenza Combination (“CIC”) vaccine candidate toward late-stage development on our workforce requirements; the amount and timing of the charges and cash expenditures resulting from our 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~~technologies, including our ~~preclinical product candidates;~~updated monovalent Omicron XBB.1.5 COVID-19 vaccine, which is referred to as our ~~expectations related to enrollment in our clinical trials;~~“XBB COVID vaccine”; the conduct, timing, and potential results from clinical ~~trials and other preclinical studies;~~trials; plans for and potential timing of regulatory ~~filings;~~filings, including our submission to the U.S. Food and Drug Administration (“FDA”) for the Biologics License Application for the full approval of the Novavax COVID-19 Vaccine, Adjuvanted; our expectation of manufacturing capacity, timing, production, distribution, and delivery for ~~our coronavirus vaccine candidate (“NVX-CoV2373”)~~NVX-CoV2373 by us and our partners; ~~our estimate of the number of individuals who may potentially be reached by NVX-CoV2373;~~ our expectations with respect to the anticipated ongoing development and commercialization or licensure of NVX-CoV2373, ongoing development of our influenza vaccine candidate, COVID-19-Influenza Combination (“CIC”) vaccine candidate, high-dose COVID-19 vaccine candidate, and COVID-19 variant strain-containing monovalent formulation, including the Phase 2b/3 Hummingbird™ trial, and the timing of anticipated results from 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;~~locations; 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, our ability to successfully develop, manufacture, distribute, or market an XBB COVID vaccine for COVID-19 for the fall 2023 COVID vaccine season, which is inherently uncertain and subject to a number of risks, including regulatory authorization, ability to timely deliver doses and commercial adoption and market acceptance; challenges in obtaining commercial adoption of NVX-CoV2373 or any COVID-19 variant strain containing formulation; challenges satisfying, alone or together with partners, various safety, efficacy, and product characterization requirements, including those related to process qualification, ~~and~~ assay validation, and stability testing, necessary to satisfy applicable regulatory authorities, such as the ~~U.S. Food and Drug Administration (“FDA”),~~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; or obtaining regulatory authorization for our product candidates, including for our monovalent XBB COVID vaccine in time for the fall 2023 vaccination season, or for future COVID variant strain changes manufacturing distribution or export delays or challenges, including the requirement to obtain approval from the drug licensing body in India for the distribution of our XBB COVID vaccine to timely deliver such vaccine candidate for the fall 2023 vaccination season; our exclusive dependence on SIIPL and SLS for co-formulation and filling, and PCI for finishing NVX-CoV2373 and the impact of any delays or disruptions in these suppliers’ operations on the delivery of customer orders; 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; and other risks and uncertainties identified in Part II, Item 1A “Risk Factors” of this Quarterly Report on Form 10-Q for the quarter ended June 30, 2023, in Part II, Item 1A “Risk Factors” of our Quarterly Report on Form 10-Q for the quarter ended March 31, 2023 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 of~~ ~~Contents~~

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 (“~~NVX-CoV2373,” “Nuvaxovid™~~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-CoV2373 that has received full marketing authorization (“MA”), 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. Additionally, in partnership with regulators and public health authorities, we have been developing and manufacturing at commercial scale our XBB COVID vaccine that is in line with the FDA, WHO, and EMA recommendations for the 2023 fall season. We intend to deliver our XBB COVID vaccine for the 2023 fall vaccination campaign pending authorization from regulatory authorities. We are also developing a stand-alone influenza vaccine candidate, high-dose COVID-19 vaccine candidate, and a CIC vaccine candidate. 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, as well as other preclinical vaccine research with our Matrix-M™ adjuvant in partnership with the Bill & Melinda Gates Medical Research Institute.

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

activities with our top priority of delivering our XBB COVID vaccine for the 2023 fall season. To maximize our opportunities and mitigate the significant risks and uncertainties of the COVID-19 market, we have progressed our cost restructuring measures to reduce spend, extend our cash runway, and operate efficiently to seek 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.~~

diseases.

Recombinant Nanoparticle Vaccine Technology

Once a ~~pathogenic threat~~pathogen of interest has been identified, the genetic sequence encoding ~~the~~an 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~~protein-based antigens that are properly folded and ~~modified –~~ modified—which can be critical for functional, protective ~~immunity – as the vaccine antigen.~~immunity. 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 promote 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. Additionally, in May 2023, we entered into a 3-year agreement with the Bill & Melinda Gates Medical Research Institute to provide our Matrix-M™ adjuvant for use in preclinical vaccine research. Our adjuvant technology is also being used by commercial partners as a key component in veterinary vaccines against equine influenza and Strangles as well as the manufacture of black-widow anti-venom.

~~NVX-CoV2373~~

COVID-19 Vaccine Regulatory and Licensure

We continue to ~~make progress in advancing NVX-CoV2373 toward~~expand the regulatory ~~approvals.~~authorizations for our COVID-19 vaccine and remain focused on the planned EUA request for our XBB COVID vaccine for the 2023 fall season. We have received ~~numerous~~ authorizations for NVX-CoV2373 in over 40 countries globally ~~within~~including 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 full MA, 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,~~heterologous booster indications within specific countries. For the territories in which our vaccine has received regulatory authorizations, NVX-CoV2373 is marketed under the brand names (i) Nuvaxovid™ (SARS-CoV-2 rS Recombinant, adjuvanted), (ii) Covovax™ (manufacturing and commercialization by SIIPL), or (iii) Novavax COVID-19 Vaccine, Adjuvanted.

Below we highlight the second quarter 2023 and subsequent regulatory progress made for NVX-CoV2373 through the date of this filing on Form 10-Q.

In July 2023, we initiated the rolling submission to the U.S. FDA for the Biologics License Application for the full approval of the Novavax COVID-19 Vaccine, Adjuvanted in individuals aged 12 years and older.

In July 2023, the European Commission in the European Union granted our first full MA for Nuvaxovid™ as primary series in individuals aged 12 and older and as a booster in adults aged 18 and older. This decision followed the positive opinion in May 2023 for full MA from the Committee for Medicinal Products for Human Use of the European Medicines Agency.

In May 2023, the Singapore Health Sciences Authority granted extended interim authorization for Nuvaxovid™ as a non-mRNA option in adolescents aged 12 through 17 years.

Additionally in May 2023, Taiwan’s Food and Drug Administration granted EUA for Nuvaxovid™ as a booster in adolescents aged 12 through 17 years.

We are working to continue to expand our label ~~worldwide.~~for heterologous boosting in adults and adolescents, for primary and re-vaccination in younger children, and to achieve supportive policy recommendations enabling broad market access. 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.

Clinical Pipeline

~~Table~~Our clinical pipeline is comprised of ~~Contents~~

~~For the territories in which~~vaccine candidates for infectious diseases, with our COVID-19 vaccine, NVX-CoV2373, as our lead product. NVX-CoV2373 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”)), or (iii) Novavax COVID-19 Vaccine, Adjuvanted.

~~Table of~~ ~~Contents~~

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

~~(1) Regulatory approval received in partnership with SIIPL.~~

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

~~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 in active discussions with regulatory authorities and remain focused on expanding our label in multiple countries for NVX-CoV2373.~~

~~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 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. Our COVID-19 vaccine candidate, NVX-CoV2373, is our leading product, having received approval, interim authorization, provisional approval, CMA, and EUA from multiple regulatory authorities globally.

We advanced NVX-CoV2373, through two pivotal Phase 3 clinical trials that demonstrated high efficacy against both the original COVID-19 strain and commonly circulating COVID-19 variants during the conduct of ~~concern,~~the trials, while ~~displaying~~maintaining a favorable safety profile. We are in the process of developing our XBB COVID vaccine, which is in line with the FDA, WHO, and EMA recommendations for the 2023 fall season. In ~~October 2022,~~June 2023, at the U.S. Vaccines and Related Biological Products Advisory Committee's meeting we ~~announced additional~~shared nonclinical data ~~from the~~demonstrating that our XBB COVID vaccine induced functional immune responses for Omicron XBB.1.5, XBB1.16, and XBB.2.3 subvariants indicating broad responses that could be applicable to forward-drift variants. We are finalizing our COVID-19 Phase 3 ~~PREVENT-19 trial~~Strain-Change interim study report and ~~new results from a Lot Consistency Study (Study 307). New PREVENT-19~~additional nonclinical and manufacturing data ~~added~~summaries to support our XBB COVID vaccine for EUA and other regulatory authorizations. This is in-line with the expectation set by the U.S. Health and Human Services letter to all COVID-19 manufacturers communicating that the FDA will take regulatory action on submissions and the Centers for Disease Control and Prevention will provide vaccination recommendations in the latter part of September 2023. Pending EUA and additional regulatory authorizations, we expect to commercialize our XBB COVID vaccine for the ~~use of prototype Novavax vaccine for homologous boosting in adults~~2023 fall season providing access and ~~adolescents aged 12 through 17. In all adults, boosted responses were long-lived and were demonstrated~~accessibility to be relevant against currently circulating variants such as Omicron. The Lot Consistency trial met its primary endpoint, showing that three lots of COVID-19 vaccine induced comparable immune responses in adults aged 18 through 49, thereby demonstrating the consistency of the commercial manufacturing process. Additional findings showed utility of the prototype vaccine as a ~~heterologous booster, inducing broad immune responses against contemporary Omicron variants.~~

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

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

~~Table of~~ ~~Contents~~

Furthermore, we remain interested in continuing the development of both our RSV Program for respiratory syncytial virus fusion (F) protein nanoparticle vaccine candidate (“RSV F Vaccine”) and Matrix-MTM ~~adjuvant collaborations for~~ malaria. ~~There is an ongoing Phase 3 trial being conducted by our partner, Jenner Institute, University of Oxford, for R21, a malaria candidate which is formulated using our Matrix-M~~™ ~~adjuvant. In September 2022, positive results from an ongoing Phase 1/2b study were published in~~ ~~The Lancet Infectious Diseases~~ ~~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~~™ adjuvant at one year following the primary three-dose regimen maintained high efficacy against first and multiple episodes of clinical malaria. The booster vaccine induced antibody concentrations that is related to vaccine efficacy. The trial is ongoing to assess long-term follow-up of the participants and the value of further booster vaccinations.

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

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

~~(2)~~ Authorized ~~for provisional approval, CMA, or EUA~~ in select geographies under trade names ~~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.

Coronavirus Vaccine Clinical Development

We continue to evaluate vaccine effectiveness through ongoing and planned booster studies to support our planned requests for authorization to the FDA, WHO, and EMA for our XBB COVID vaccine for the upcoming 2023 fall season. We expect to leverage these studies to pursue additional regulatory authorizations of our COVID-19 vaccine for primary, re-vaccination, and pediatric indications globally.

Phase 3 Strain-Change Trial

In August 2023, we announced topline results from the Phase 3 Strain-Change Trial that achieved all three co-primary

endpoints demonstrating immunologic superiority for the Omicron BA.5 variant of a bivalent prototype and Omicron BA.5 vaccine compared to our prototype vaccine (NVX-CoV2373). The study compared our prototype vaccine (NVX-CoV2373), to a monovalent Omicron BA.5 vaccine and a bivalent vaccine (prototype and Omicron BA.5) in 750 adults who had previously received three or more doses of mRNA vaccine. This study design was developed in consultation with regulatory agencies to support the upcoming strain-change EUA request to the FDA for our XBB COVID vaccine.

The data also showed that the monovalent Omicron BA.5 vaccine performed better with higher neutralization titers and seroresponse rates than the bivalent vaccine (prototype and Omicron BA.5), supporting the use of our XBB COVID vaccine for the 2023 fall vaccination season. These results show that our protein-based vaccine can be successfully adapted to new variant strains.

Phase 2b/3 Hummingbird™ Trial

In August 2023, we announced topline results from our Phase 2b/3 Hummingbird™ trial that met its primary endpoints in children aged 6 through 11 years confirming immunologic effectiveness. This ongoing trial is evaluating the safety, effectiveness (immunogenicity), and efficacy of two doses of NVX-CoV2373, followed by a booster 6 months after the primary vaccination series. The trial includes three age de-escalation cohorts of 1,200 children each. The next cohort aged 2 through 5 years is fully enrolled, with topline results expected in the fourth quarter of 2023.

COVID-Influenza Combination and Stand-alone Influenza Program

In May 2023, we announced preliminary topline data from our Phase 2 trial for CIC, stand-alone influenza and high-dose COVID-19 vaccine candidates. All three vaccine candidates contain our Matrix-M™ adjuvant, showed preliminary robust immune responses, reassuring safety profiles, and reactogenicity that was comparable to the licensed influenza vaccine comparator arms. We intend to further explore our options to progress select candidates into late-stage development.

R21/Matrix-M™ Adjuvant Malaria Vaccine

Our partner-led malaria candidates present strong opportunities for 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 and manufactured by SIIPL, which is formulated with our Matrix-M™ adjuvant. In April 2023, the R21/Matrix-M™ adjuvant malaria vaccine received multiple authorizations including in Ghana and Nigeria as well as in July 2023 received authorization in Burkina Faso. We have an agreement with SIIPL related to its manufacture of R21/Matrix-M™ adjuvant malaria vaccine under which SIIPL purchases Matrix-M™ adjuvant, as well as pays royalties based on its vaccine sales.

Business Highlights

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

During the second quarter, we continued to make progress on our three key priorities for 2023.

~~Expanded COVID-19~~Priority #1: Deliver an Updated COVID Vaccine ~~in Adult Population Aged 18 and Older~~for the Upcoming 2023 Fall Vaccination Season

During the second quarter, we continued preparations to deliver our updated XBB COVID vaccine for the 2023 fall season. In most of our key target markets, including the U.S., the Novavax vaccine, if authorized, would be the only non-mRNA protein-based XBB COVID vaccine available.

•~~Nuvaxovid™ booster authorized~~Continue to prepare to deliver our updated XBB COVID vaccine for ~~emergency use~~the fall, consistent with recommendations from the FDA, EMA and WHO

◦Initiated filing in the U.S., with submissions in the European Union (“EU”) and Canada to follow in the coming weeks

◦Manufacturing ongoing at commercial scale to supply global markets

◦Fully deployed commercial teams across the U.S., ~~Switzerland, United Arab Emirates (UAE)~~EU and ~~New Zealand,~~other select markets, with ~~submissions completed~~executed contracts to ~~WHO, as well as in Great Britain and South Korea~~support market access

◦~~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~~

•Received first Full Marketing Authorization in the EU for Nuvaxovid™ ~~granted import and use permit in Israel for~~as a primary series in individuals aged 12 and older 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~~

~~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 to add Novavax CZ as an EU manufacturing site~~

•~~Solidified manufacturing and supply network ensuring capacity to support ongoing global demand~~

~~COVID-19 Clinical Development Program~~

•Announced topline results from Phase 3 Boosting Trial for NVX-CoV2515, meeting the primary strain-change endpoint and reaffirming that prototype vaccine induces broadly cross-reactive responses, suggesting utility against current and future variants

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

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

◦Robust booster responses were consistent between younger (less than 65 years of age) and older (greater than 65 years of age) adults, and independent of whether the 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 to be related to efficacy in the PREVENT-19 Phase 3 trialand older

•Initiated ~~Phase 2b/3 Hummingbird global clinical trial~~rolling submission of U.S. Biologics License Application (BLA) for ~~NVX-CoV2373 in younger children~~full approval of the Novavax COVID-19 Vaccine, Adjuvanted for adults and adolescents aged ~~six months~~12 through ~~11 years, enrolling~~18

Priority #2: Reduce our Rate of Spend, Manage our Cash Flow and Evolve our Scale and Structure

We have made significant progress towards strengthening our financial position. We continued to deliver on our commitments to reduce our spend, address our one-time liabilities, and improve our cash flow, with the ~~sentinel cohort~~goal of building a solid financial foundation for long-term value creation.

•Reduced current liabilities by $323 million during the second quarter and by $864 million in the first ~~group aged six through 11 years in the U.S.~~half of 2023

◦•~~Based on initial supportive safety~~Reduced combined research and ~~tolerability data analyzed by an independent Safety~~development and ~~Monitoring Committee, progressed~~selling, general and administrative expenses to ~~recruiting~~$313 million in the ~~full age cohort~~second quarter of 2023, compared to $398 million in the same period in 2022

~~COVID-19-Influenza Combination (CIC) Vaccine Candidate Clinical Development~~•On track with our Restructuring Plan and reiterate target to reduce our annual combined research and development and selling, general and administrative expenses by approximately 20% to 25% in 2023 versus 2022, and by approximately 40% to 50% in 2024 versus 2022

•Executed amended Canada APA in June 2023, outlining an updated delivery schedule for Nuvaxovid™ and negotiated up to $350 million in 2023 payments

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

We continued to leverage our pipeline and technology platform with the intent of delivering long-term growth and protecting global health.

•Based on the ongoing receipt and analysis of our Phase 2 safety and immunogenicity results for CIC, decision to make strategic stage gate investments in 2023 and 2024 to advance our co-formulated CIC vaccine candidate in preparation for late-stage development

•Continued to advance partnerships with Matrix-MTM adjuvant technology

◦In partnership with Oxford University and SIIPL, secured authorizations in Ghana, Nigeria and Burkina Faso for R21/Matrix-MTM malaria vaccine leveraging our Matrix-MTM adjuvant technology

•Announced ~~positive cellular immunity results of CIC Phase 1/2 trial following initial results announced~~partnership with Bill & Melinda Gates Medical Research Institute to provide our Matrix-MTM adjuvant for use in ~~April, demonstrating ability to generate immune responses, including both antibody and polyfunctional CD4+ T-cell responses, against SARS-CoV-2 and homologous and heterologous influenza strains~~preclinical vaccine research

◦~~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

In June 2021, we entered into an At Market Issuance Sales Agreement (the "June 2021 Sales Agreement"), which allows us to issue and sell up to $500.0 million in gross proceeds of shares of its common stock. During the three and six months ended ~~March 31,~~June 30, 2023, we sold 7.9 million shares of our common stock under our June 2021 Sales Agreement resulting in net proceeds of approximately $68 million, of which $6 million was included in prepaid expenses and other current assets as of June 30, 2023 and received in cash in July 2023. As of June 30, 2023, the remaining balance available under the June 2021 Sales Agreement was approximately $249 million.

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

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

Critical Accounting Policies and Use of Estimates

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~~June 30, ~~2022~~2023 and ~~2021~~2022

Revenue


		Three Months Ended September 30,							Three Months Ended June 30,
		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	$	285,163	$	55,455	$	229,708
Grants	Grants	106,273		135,007		(28,734)		Grants	137,079		107,774		29,305
Royalties and other	Royalties and other	2,213		43,837		(41,624)		Royalties and other	2,184		22,696		(20,512)
Total revenue	Total revenue	$	734,577	$	178,844	$	555,733	Total revenue	$	424,426	$	185,925	$	238,501

~~Table of~~ ~~Contents~~

Revenue for the three months ended ~~September~~June 30, ~~2022~~2023 was ~~$734.6~~$424.4 million as compared to ~~$178.8~~$185.9 million for the same period in ~~2021,~~2022, an increase of ~~$555.7~~$238.5 million. Revenue for the three months ended ~~September~~June 30, 2023 and June 30, 2022 was primarily comprised of revenue from product sales of NVX-CoV2373 and 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. The increase in revenue is primarily due to an increased quantity of dose sales of NVX-CoV2373 during the three months ended June 30, 2023 as compared to the same period in 2022.

Product sales

Product sales for the three months ended June 30, 2023 were $285.2 million as compared to $55.5 million during the three months ended June 30, 2022. Our product sales related to sales of NVX-CoV2373 under our APA agreements. The geographic distribution of product sales was as follows:


	Three Months Ended March 31,
	2023		2022		Change
North America	$	—	$	—	$	—
Europe	1,518		—		1,518
Rest of the world	283,645		55,455		228,190
Total product sales revenue	$	285,163	$	55,455	$	229,708

Grants

Grant revenue during the three months ended June 30, 2023 was $137.1 million as compared to $107.8 million during the same period in 2022, an increase of $29.3 million. Grant revenue for 2023 and 2022, comprised revenue for services performed under our USG Agreement. The increase was primarily due to increased support activities under the ~~agreement with the U.S. government partnership formerly known as OWS (“OWS Agreement”). Revenue for~~USG Agreement during the three months ended ~~September~~June 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 our funding agreements with CEPI.2023.

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

Expenses


		Three Months Ended September 30,							Three Months Ended June 30,
		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	$	55,777	271,077		$	(215,300)
Research and development	Research and development	304,297		408,195		(103,898)		Research and development	219,475		289,648		(70,173)
Selling, general, and administrative	Selling, general, and administrative	122,876		77,793		45,083		Selling, general, and administrative	93,717		108,160		(14,443)
Total expenses	Total expenses	$	861,766	$	485,988	$	375,778	Total expenses	$	368,969	$	668,885	$	(299,916)

Cost of Sales

Cost of sales was ~~$434.6~~$55.8 million ~~or 69% of product sales,~~ for the three months ended ~~September~~June 30, 2023, including expenses of $19.8 million related to excess, obsolete, or expired inventory and losses on certain firm purchase commitments and a credit of $17.9 million related to negotiated certain reductions to previously recognized firm purchase commitments. Cost of sales was $271.1 million for the three months ended June 30, 2022, including expense of ~~$249.0~~$255.3 million related to excess, obsolete, or expired inventory and losses on firm purchase commitments. Prior to receiving regulatory approval, we expensed manufacturing costs as research and development expenses. After receiving regulatory approval, we capitalize the costs of production for a particular supply chain when we determine that we have a present right to the economic benefit associated with the product. While we tracked the quantities of our manufactured vaccine product and components, we did not track pre-approval manufacturing costs and therefore the manufacturing cost of our pre-launch inventory produced prior to approval is not reasonably determinable. However, based on our expectations for future manufacturing costs to produce our vaccine product and components inventory, we estimate at ~~September~~June 30, ~~2022~~2023, we had approximately ~~$0.1 billion~~$25.9 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~~June 30, ~~2022~~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~~$71.7 million, ~~or 71% of product sales,~~ an adjustment of ~~$9.4~~$15.9 million as compared to cost of sales recognized. ~~The~~If inventory sold for the three months ended June 30, 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 $279.5 million, an adjustment of ~~product sales based on our standard cost.~~$8.4 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~~were $219.5 million for the three months ended ~~September~~June 30, ~~2022~~2023 as compared to ~~$408.2~~$289.6 million for the three months ended ~~September~~June 30, ~~2021,~~2022, a decrease of ~~$103.9 million~~$70.2 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, bivalent formulations,~~and XBB COVID vaccine, and CIC, as summarized in the table below (in thousands):


		Three Months Ended September 30,					Three Months Ended June 30,
		2022		2021			2023		2022
Coronavirus vaccines	Coronavirus vaccines	$	208,004	$	341,600	Coronavirus vaccines	$	139,646	$	201,015
Influenza vaccine	Influenza vaccine	3,011		1,656		Influenza vaccine	—		2,274
Other vaccine development programs	Other vaccine development programs	843		126		Other vaccine development programs	285		224
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	139,931		203,513
Employee expenses	Employee expenses	45,150		36,574		Employee expenses	46,132		43,177
Stock-based compensation expense	Stock-based compensation expense	16,107		21,860		Stock-based compensation expense	9,946		19,695
Facility expenses	Facility expenses	16,770		4,983		Facility expenses	14,158		10,863
Other expenses	Other expenses	14,412		1,396		Other expenses	9,308		12,400
Total research and development expenses	Total research and development expenses	$	304,297	$	408,195	Total research and development expenses	$	219,475	$	289,648

Research and development expenses for coronavirus vaccines for the three months ended ~~September~~June 30, 2023 and 2022, decreased from $201.0 million to $139.6 million primarily as a result of a reduction in manufacturing and ~~2021, included a benefit of $80.5 million related to previously accelerated manufacturing~~support costs ~~and an expense of $35.8 million related to the acceleration of manufacturing costs, respectively, for leases that we determined were embedded in multiple~~under manufacturing supply agreements with Contract Manufacturing Organizations (“CMOs”) and contract manufacturing and development organizations (“CDMOs”)~~. Pursuant to~~, a reduction in clinical study costs and the ~~Fujifilm Settlement Agreement (see Note 4~~ ~~to our consolidated financial statements in this Quarterly Report), we are responsible for a Settlement Payment~~commercialization of ~~up to~~internal manufacturing

~~$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~~

capabilities, 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~~offset by a benefit of ~~$98.3~~$20.5 million ~~as Research~~ and ~~development expense. For 2022, we expect total research and development expenses~~$87.2 million, respectively, related to ~~decrease as compared to 2021, primarily due to capitalization of~~previously accelerated manufacturing costs ~~during 2022~~for leases that we determined were ~~previously recognized as research~~embedded in manufacturing supply agreements with CMOs 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.CDMOs.

Selling, General, and Administrative Expenses

Selling, general, and administrative expenses ~~increased to $122.9~~were $93.7 million for the three months ended ~~September~~June 30, ~~2022 from $77.8~~2023 as compared to $108.2 million for the same period in ~~2021, an increase~~2022, a decrease of ~~$45.1~~$14.4 million. The ~~increase~~decrease in selling, general, and administrative expenses is primarily due to ~~an increase~~certain cost containment measures to reduce our operating spend, partially offset by restructuring expenses of $11.5 million.

For the remainder of 2023, we expect a reduction in ~~professional fees~~our annual combined research and ~~marketing costs in support of our NVX-CoV2373 program. For 2022, we expect~~development, and selling, general, and administrative ~~expenses to increase significantly~~spend as ~~compared to 2021 due to increased activities related to supporting~~a result of our ~~NVX-CoV2373 program and increases in professional fees and marketing costs.~~Restructuring Plan announced during the three months ended June 30, 2023.

Other ~~Expense~~Income (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 June 30,
	2023		2022		Change
Other income (expense):
Interest expense	$	(3,124)	$	(6,234)	$	3,110
Other income (expense)	5,532		(19,873)		25,405
Total other income (expense), net	$	2,408	$	(26,107)	$	28,515

~~We had total~~Total other ~~expense,~~income, net ~~of $39.0~~was $2.4 million for the three months ended ~~September~~June 30, ~~2022~~2023 as compared to ~~$9.2~~a total other expense, net of $26.1 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, including an intercompany loan with Novavax CZ.

Income Tax Expense

During the three months ended ~~September~~June 30, ~~2022~~2023 and ~~2021,~~2022, we recognized ~~$2.5~~an income tax benefit of $0.1 million and ~~$6.0~~income tax expense $1.4 million, respectively, of income tax expense related to federal, ~~and~~ state, ~~income taxes~~ and foreign ~~withholding tax on royalties.~~income taxes.

Net ~~Loss~~Income (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 June 30,
	2023		2022		Change
Net Income (Loss) (in thousands, except per share information):
Net income (loss)	$	58,008	$	(510,485)	$	568,493
Net income (loss) per share, basic	$	0.65	$	(6.53)	$	7.18
Net income (loss) per share, dilutive	$	0.58	$	(6.53)	$	7.11
Weighted average shares outstanding, basic	89,362		78,143		11,219
Weighted average shares outstanding, dilutive	104,065		78,143		25,922

Net ~~loss~~income for the three months ended ~~September~~June 30, ~~2022~~2023 was ~~$168.6~~$58.0 million, or ~~$2.15~~$0.65 per share, basic, as compared to ~~$322.4~~net loss of $510.5 million, or ~~$4.31~~$6.53 per share, basic, for the same period in ~~2021.~~2022. The ~~decrease~~increase in ~~net loss~~income during the three months ended ~~September~~June 30, ~~2022,~~2023, was primarily due to the ~~commencement of~~increase in commercial sales of NVX-CoV2373 in ~~2022~~the three months ended June 30, 2023 and 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.~~commitments, research and development, and selling, general and administrative expenses as a result of the implementation of our Restructuring Plan.

The increase in weighted average shares outstanding for the three months ended ~~September~~June 30, ~~2022 is~~2023 was primarily a result of ~~sales~~the sale of ~~our~~ common ~~stock and exercises of stock-based awards in 2022 and 2021.~~stock.

~~Nine~~

Six Months Ended ~~September~~June 30, ~~2022~~2023 and ~~2021~~2022

Revenue


		Nine Months Ended September 30,							Six Months Ended June 30,
		2022		2021		Change			2023		2022		Change
Revenue (in thousands):	Revenue (in thousands):							Revenue (in thousands):
Product sales	Product sales	$	1,267,174	$	—	$	1,267,174	Product sales	$	277,706	$	641,083	$	(363,377)
Grants	Grants	313,348		854,390		(541,042)		Grants	224,458		207,075		17,383
Royalties and other	Royalties and other	43,951		69,700		(25,749)		Royalties and other	3,213		41,738		(38,525)
Total revenue	Total revenue	$	1,624,473	$	924,090	$	700,383	Total revenue	$	505,377	$	889,896	$	(384,519)

Revenue for the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 was ~~$1.6 billion~~$505.4 million as compared to ~~$924.1~~$889.9 million for the same period in ~~2021, an increase~~2022, a decrease of ~~$700.4~~$384.5 million. Revenue for the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 was primarily comprised of revenue from product sales of NVX-CoV2373 and services performed under our USG Agreement. The decrease in revenue was primarily due to a ~~lesser extent,~~decrease in quantity of doses sold of NVX-CoV2373 during the six months ended June 30, 2023 as compared to the same period in 2022.

Product sales

Product sales for the six months ended June 30, 2023 were $277.7 million as compared to $641.1 million during the six months ended June 30, 2022. Our product sales related to sales of NVX-CoV2373 under our APA agreements. The geographic distribution of product sales was as follows:


	Six Months Ended June 31,
	2023		2022		Change
North America	$	—	$	64,762	$	(64,762)
Europe	58,785		413,745		(354,960)
Rest of the world	218,921		162,576		56,345
Total product sales revenue	$	277,706	$	641,083	$	(363,377)

Grants

Grant revenue during the six months ended June 30, 2023 was $224.5 million as compared to $207.1 million during the same period in 2022, an increase of $17.4 million. Grant revenue for 2023 and 2022, comprised revenue for services performed under ~~the OWS~~our USG Agreement. ~~Revenue for the nine months ended September 30, 2021~~The increase 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~~increased clinical and development activities under the ~~OWS~~USG Agreement ~~and our funding agreements with CEPI.~~during the six months ended June 30, 2023.

Expenses


		Nine Months Ended September 30,							Six Months Ended June 30,
		2022		2021		Change			2023		2022		Change
Expenses (in thousands):	Expenses (in thousands):							Expenses (in thousands):
Cost of sales	Cost of sales	$	720,874	$	—	$	720,874	Cost of sales	$	89,863	$	286,281	$	(196,418)
Research and development	Research and development	977,428		1,571,551		(594,123)		Research and development	466,576		673,131		(206,555)
Selling, general, and administrative	Selling, general, and administrative	327,028		214,144		112,884		Selling, general, and administrative	206,249		204,152		2,097
Total expenses	Total expenses	$	2,025,330	$	1,785,695	$	239,635	Total expenses	$	762,688	$	1,163,564	$	(400,876)

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~~Table of~~ ~~Contents~~

Cost of Sales

Cost of sales was ~~$720.9~~$89.9 million ~~or 57% of product sales,~~ for the ~~nine~~six months ended ~~September~~June 30, 2023, including expense of $40.0 million related to excess, obsolete, or expired inventory and losses on certain firm purchase commitments and a credit of $18.8 million related to negotiated reductions to certain previously recognized firm purchase commitments. Cost of sales was $286.3 million for the six months ended June 30, 2022, including expense of ~~$504.3~~$255.3 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~~June 30, ~~2022~~2023 we had approximately ~~$0.1 billion~~$25.9 million 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~~six months ended ~~September~~June 30, 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 $120.8 million, an adjustment of $30.9 million as compared to cost of sales recognized. If inventory sold for the three months ended June 30, 2022 was valued at expected standard cost, adjusted cost of sales for the period would have been approximately ~~$883.5~~$439.5 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.~~$153.2 million. 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~~$466.6 million for the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 from ~~$1.6 billion~~$673.1 million for the same period in ~~2021,~~2022, a decrease of ~~$594.1 million,~~$206.6 million. The decrease was primarily due to ~~decreased~~a reduction in overall expenditures relating to development activities ~~relating to~~on coronavirus vaccines, including NVX-CoV2373 ~~NVX-CoV2515, bivalent formulations,~~and XBB COVID vaccine, and CIC, as summarized in the table below (in thousands):


		Nine Months Ended September 30,					Six Months Ended June 30,
		2022		2021			2023		2022
Coronavirus vaccines	Coronavirus vaccines	$	697,952	$	1,376,921	Coronavirus vaccines	$	279,869	$	489,948
Influenza vaccine	Influenza vaccine	6,581		5,950		Influenza vaccine	1,476		3,570
Other vaccine development programs	Other vaccine development programs	1,156		641		Other vaccine development programs	557		1,027
Total direct external research and development expense	Total direct external research and development expense	705,689		1,383,512		Total direct external research and development expense	281,902		494,545
Employee expenses	Employee expenses	132,069		86,085		Employee expenses	99,545		86,919
Stock-based compensation expense	Stock-based compensation expense	52,692		70,429		Stock-based compensation expense	23,804		36,582
Facility expenses	Facility expenses	40,842		11,387		Facility expenses	33,561		24,072
Other expenses	Other expenses	46,136		20,138		Other expenses	27,764		31,013
Total research and development expenses	Total research and development expenses	$	977,428	$	1,571,551	Total research and development expenses	$	466,576	$	673,131

Research and development expenses for coronavirus vaccines for the ~~nine~~six months ended ~~September~~June 30, 2023 and 2022, decreased from $489.9 million to $279.9 million primarily as a result of a reduction in manufacturing and ~~2021, included~~support costs under manufacturing supply agreements with CMO and CDMO, a reduction in clinical study costs and the commercialization of internal manufacturing capabilities, as offset by a benefit of ~~$147.8~~$32.2 million and $67.4 million, respectively, 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 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.~~

Selling, General, and Administrative Expenses

Selling, general, and administrative expenses increased to ~~$327.0~~$206.2 million for the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 from ~~$214.1~~$204.2 million for the same period in ~~2021,~~2022, an increase of ~~$112.9~~$2.1 million. The increase in selling, general, and administrative expenses is primarily due to ~~an increase~~restructuring expenses, partially offset by cost containment measures to reduce our operating spend including a decrease in professional fees and marketing costs in support of our NVX-CoV2373 program.

3133

~~Table of~~ ~~Contents~~

Other ~~Expense~~Income (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)


	Six Months Ended June 30,
	2023		2022		Change
Other income (expense) (in thousands):

Interest expense	$	(7,440)	$	(11,110)	$	3,670
Other income (expense)	29,894		(18,219)		48,113
Total other income (expense), net	$	22,454	$	(29,329)	$	51,783

We had total other income, net of $22.5 million for the six months ended June 30, 2023 as compared to total other expense, net of ~~$68.3 million for the nine months ended September 30, 2022 as compared to $23.3~~$29.3 million for the same period in ~~2021.~~2022. During the ~~nine~~six months ended ~~September~~June 30, 2023, other income increased due to the favorable impact of exchange rates on foreign currency denominated balances, including an intercompany loan with Novavax CZ, and an increase in investment income due to higher interest rates. During the six months ended June 30, 2022, ~~and 2021, other~~Other expense was primarily related to ~~losses due to~~the unfavorable impact of foreign exchange rate ~~activity.~~differences on the intercompany loan with Novavax CZ.

Income Tax Expense

During the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021,~~2022, we recognized ~~$6.6~~$1.0 million and ~~$12.6~~$4.1 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,							Six Months Ended June 30,
		2022		2021		Change			2023		2022		Change
Net Loss (in thousands, except per share information):	Net Loss (in thousands, except per share information):							Net Loss (in thousands, except per share information):
Net loss	Net loss	$	(475,690)	$	(897,467)	$	421,777	Net loss	$	(235,897)	$	(307,077)	$	71,180
Net loss per share, basic and diluted	Net loss per share, basic and diluted	$	(6.13)	$	(12.13)	$	6.00	Net loss per share, basic and diluted	$	(2.69)	$	(3.97)	$	1.28

Weighted average shares outstanding, basic and diluted	Weighted average shares outstanding, basic and diluted	77,631		73,972		3,659		Weighted average shares outstanding, basic and diluted	87,769		77,305		10,464

Net loss for the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 was ~~$475.7~~$235.9 million, or ~~$6.13~~$2.69 per share, as compared to ~~$897.5~~$307.1 million, or ~~$12.13~~$3.97 per share, for the same period in ~~2021.~~2022. The decrease in net loss during the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 was primarily due to the ~~commencement of commercial sales of NVX-CoV2373 in 2022 and a decrease~~decline in research and development ~~expense,~~expenses associated with NVX-CoV2373 and cost of sales, 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.~~reduced product sales revenue.

The increase in weighted average shares outstanding for the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 is primarily a result of sales of our common stock in ~~2022~~2023 and ~~2021.~~2022.

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~~June 30, ~~2022,~~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.~~$2 billion, of which $907.4 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 or other 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 and second installment during the three and six months ended June 30, 2023, respectively, and the remaining balance of $68.6 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 currently depend exclusively on SIIPL and SLS for co-formulation and filling, and PCI for finishing NVX-CoV2373 and any delays or disruptions in these suppliers’ operations could prevent or delay the ~~Fujifilm Settlement Agreement (see Note 4 to our consolidated financial statements in this Quarterly Report), we are responsible for a Settlement Payment~~delivery 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.customer orders.

~~Under~~We have an APA with the ~~terms~~Commonwealth of ~~our supply commitment with Gavi, which includes both our APA and~~Australia for 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~~have fallen below the defined specifications and the lot therefore was removed from the market. The credit will be applied against the future sale of doses to Australia. In July 2023, we amended the Australia APA to provide for replacement doses and to extend the delivery schedule through 2025.

We have an APA with His Majesty the King in Right of Canada as represented by the Minister of Public Works and Government Services, as successor in interest to Her Majesty the Queen in Right of Canada, as represented by the Minister of Public Works and Government Services (the “Canadian government”), for the purchase of doses of NVX-CoV2373 (the “Canada APA”). In April 2023, we amended the Canada APA to forfeit certain doses originally scheduled for delivery in 2022 for a payment of $100.4 million received in the second quarter of 2023. In June 2023, we entered into an additional amendment (the “June 2023 Amendment”) to the Canada APA. Pursuant to the June 2023 Amendment, the parties revised the Canadian government’s previous commitment by (i) forfeiting certain doses of the NVX-CoV2373 previously scheduled for delivery, (ii) reducing the amount of doses of NVX-CoV2373 due for delivery, (iii) revising the delivery schedule for the remaining doses of NVX-CoV2373 to be delivered, and (iv) requiring use of the Biologics Manufacturing Centre (“BMC”) Inc. to produce bulk antigen for doses in 2024 and 2025. In connection with the forfeiture of doses of NVX-CoV2373, the Canadian government agreed to pay a total payment amount of $349.6 million to the Company in two equal installments in 2023, which total amount equals the remaining balance owed by the Canadian government with respect to such forfeited vaccine doses. The first installment was payable upon execution of the June 2023 Amendment and the second installment is contingent and payable upon our delivery of vaccine doses in the second half of 2023. The first installment of $174.8 million was received from the Canadian government in July 2023. If the Company fails to ~~order~~deliver COVID-19 vaccine doses to the ~~350~~Canadian government by the second half of 2023, the second installment of $174.8 million ~~doses it committed~~will be terminated and not be payable to ~~order. To date, except~~the Company. The Canadian government may terminate the Canada APA, as amended, if we fail to achieve regulatory approval for ~~an initial order~~use of ~~approximately 2 million doses, Novavax has not received an order from Gavi~~BMC for NVX-CoV2373 production on or before December 31, 2024. The June 2023 Amendment maintained the total contract value of the original Canada APA.

Pursuant to the June 2023 Amendment, we and the ~~timing~~Canadian government will endeavor to expand our previously agreed in-country commitment to Canada and ~~quantities~~to partner to provide health, economic, and future pandemic preparedness benefits to Canada, which value may be provided through a number of ~~future orders~~activities, including without limitation, capital investments, the performance of activities or services, or the provision of technology or intellectual property licenses. Further, the parties will endeavor to enter into a memorandum of understanding (the “MOU”) to illustrate our ability to deliver ~~NVX-CoV2373~~such benefits over a 15 year period with an aggregate value of not less than 100% of the amount remaining to be paid under the June 2023 Amendment and ultimately received by us. We agreed to hold $20.0 million in escrow for the benefit of the Canadian government, which amount is the sole recourse available to the ~~COVAX facility are unclear.~~Canadian government in the event of non-performance under the MOU.

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. Since December 31, 2022, the remaining Gavi Advance Payment Amount, which is $696.4 million as of June 30, 2023, pending resolution of the dispute with Gavi related to a return of the remaining Advance Payment Amount, has been classified within 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 to a maximum aggregate of 200 million doses, in one or more tranches, through 2023. In July and August 2022, we were notified by the EC that it was cancelling 5 million doses of its prior commitment originallyour Counterclaims. The arbitration hearing is scheduled for ~~delivery in the first~~July 2024, with a written decision to follow. Arbitration is inherently uncertain, and ~~second quarters of 2022, in accordance with the APA, and reducing the order~~while we believe that we are entitled to ~~65 million doses. We are in the process of finalizing a revised delivery schedule for~~retain the remaining ~~23 million committed doses under our APA with~~Advance Payment Amount received from Gavi, it is possible that we will be required to refund all or a portion of the ~~EC that were originally scheduled for delivery during the first and second quarters of 2022.~~remaining Advance Payment Amount from Gavi.

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 $250.6 million in funding of June 30,

~~Table of~~ ~~Contents~~

~~In July 2022,~~2023 we ~~entered into a modification~~had previously anticipated pursuant to the ~~OWS Agreement~~USG Agreement. Modification 17 included provisions requiring that ~~amended~~ the ~~terms~~payment of ~~such agreement~~$60.0 million of consideration associated with manufacturing work now be contingent upon meeting certain milestones, including the delivery of up to ~~provide for (i) an initial delivery to the U.S. government of approximately 3~~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~~multiple vial presentations. As of June 30, 2023, we constrained $48.0 million ~~doses) dependent on U.S. government demand, FDA guidance on strain selection, agreement between~~of these contingent milestones related that we are eligible to recognize in the parties on the price of such doses, and available funding. Additionally, in July 2022, we entered into a modification to our existing agreement with the DoD that amended the terms of such agreement to provide 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.2023 fall vaccination campaign.

InOur funding agreements currently include funding from the ~~nine~~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 manufactured by the 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 manufacturing such vaccine, not including manufacturing costs funded by CEPI. The timing and amount of any loan repayments is currently uncertain.

As of June 30, 2023, we had $517.9 million in cash and cash equivalents and restricted cash as compared to $1.3 billion as of December 31, 2022.

We funded our operations for the six months ended ~~September~~June 30, ~~2022, we~~2023 primarily ~~funded our operations~~ 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~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021~~2022 (in thousands):


		Nine Months Ended September 30,							Six Months Ended June 30,
		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	$	(497,531)	$	(259,413)	$	(238,118)
Investing activities	Investing activities	(70,921)		116,518		(187,439)		Investing activities	(31,337)		(41,402)		10,065
Financing activities	Financing activities	133,548		522,424		(388,876)		Financing activities	(293,044)		164,524		(457,568)
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	(8,992)		(4,453)		(4,539)
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	(830,904)		(140,744)		(690,160)
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	$	517,941	$	1,387,515	$	(869,574)

Net cash used in operating activities was ~~$298.1~~$497.5 million for the ~~nine~~six months ended ~~September~~June 30, ~~2022,~~2023, as compared to $259.4 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 $31.3 million for the six months ended June 30, 2023, as compared to $41.4 million for the same period in 2022. The decrease in cash used in investing activities is primarily due to lower expenditure on equipment and leasehold improvements.

Net cash used in financing activities was $293.0 million for the six months ended June 30, 2023, as compared to net cash provided by ~~operating~~finance activities of ~~$665.4~~$164.5 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,~~June 30, 2023, we had $517.9 million in cash and ~~exercise of stock-based awards. In~~cash equivalents and restricted cash. During the ~~nine~~six months ended ~~September~~June 30, ~~2022 and 2021,~~2023, we ~~received~~incurred a net ~~proceeds~~loss of ~~approximately $179~~$235.9 million and ~~$565 million, respectively, from selling shares~~had net cash flows used in operating activities of ~~common stock through our At Market Issuance Sales Agreements.~~$497.5 million.

3437

~~Table~~

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 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 formulation of ~~Contents~~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 authorization, ability to timely deliver doses and commercial adoption and market acceptance. Further, 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 advance purchase agreements may require the Company to refund portions of upfront and other payments or result in reduced future payments. 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 $250.6 million in funding as of June 30, 2023 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 $696.4 million as of June 30, 2023. 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 our Restructuring 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 workforce reduction plan included 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. We have decided to progress CIC toward late-stage development and, as such, we are assessing the impact on our workforce requirements and ability to meet our future needs. We incurred one time restructuring expenses of $14.7 million during the three months ended June 30, 2023. See Note 16 to our unaudited consolidated financial statements in Part I for more details on restructuring. 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.

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, and in particular the 2023 Fall vaccination campaign, which is inherently uncertain and subject to a number of risks, including regulatory authorization, ability to timely deliver doses and commercial adoption and market acceptance; the resolution of certain matters, including whether, when, and how the dispute with Gavi is resolved; and management’s plans, which include completing 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 financings, 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 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 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.

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~~$20 million as of ~~September~~June 30, ~~2022.~~

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~~June 30, ~~2022.~~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~~June 30, ~~2022,~~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~~June 30, ~~2022,~~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, the 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~~eight derivative lawsuits were filed: (i) Robert E. Meyer v. Stanley C. Erck, et al., No. 8:21-cv-02996-TDC (the “Meyer Action”), (ii) Shui Shing Yung v. Stanley C. Erck, et al., No. 8:21-cv-03248-TDC (the “Yung Action”), (iii) William Kirst, et al. v. Stanley C. Erck, et al., No. ~~8:22-cv-00024-TDC~~C-15-CV-21-000618 (the “Kirst Action”), (iv) Amy Snyder v. Stanley C. Erck, et al., No. 8:22-cv-01415-TDC (the “Snyder Action”), (v) Charles R. Blackburn, et al. v. Stanley C. Erck, et al., No. 1:22-cv-01417-TDC (the “Blackburn Action”), ~~and~~ (vi) Diego J. Mesa v. Stanley C. Erck, et al.al., No. 2022-0770-NAC (the “Mesa Action”), (vii) Sean Acosta v. Stanley C. Erck, et al., No. 2022-1133-NAC (the “Acosta Action”), and (viii) Jared Needelman v. Stanley C. Erck, et al., No. C-15-CV-23-001550 (the “Needelman Action”). The Meyer, Yung, Snyder, and Blackburn Actions were filed in the ~~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~~Needleman Action was also filed in the Circuit Court for Montgomery County, Maryland. The Mesa and Acosta Actions were filed in the Delaware Court of ~~Chancery.~~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, 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.

~~Table~~On April 17, 2023, the Needelman Action was filed. On July 12, 2023, the parties filed a stipulation and proposed order to stay the Needelman Action pending the Maryland Court’s decision on the motion to dismiss in the Second Consolidated Derivative Action. The financial impact of ~~Contents~~

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. ~~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. On June 8, 2023, the Supreme Court affirmed the Court of Chancery’s denial of the plaintiff’s fee application. The case was closed on June 26, 2023.

~~Par Sterile Products, LLC Arbitration~~

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 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~~Gavi APA. Gavi also contends that, based on its purported termination of the Gavi APA, it is ~~not reasonably estimable.~~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. Since December 31, 2022, the remaining Gavi Advance Payment Amount, which is $696.4 million as of June 30, 2023, pending resolution of the dispute with Gavi related to a return of the remaining Advance Payment Amount, has been classified within 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 ~~parties are engaged in discovery~~Company filed its Answer and Counterclaims on March 2, 2023. On April 5, 2023, Gavi filed its Reply to the Company’s Counterclaims. The arbitration hearing is scheduled for July ~~2023. While~~2024, with a written decision to follow. Arbitration is inherently uncertain, and while we believe that we are entitled to retain the ~~Company maintains~~remaining Advance Payment Amount received from Gavi, it is possible that ~~no breach~~we could be required to refund all or a portion of the ~~MSA has occurred and intends to vigorously defend the matter, if the final resolution of the matter is adverse to the Company, it could have a material impact on the~~ ~~Company's financial position, results of operations, or cash flows.~~

~~General~~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,~~2022, which was filed with the SEC on ~~March 1, 2022,~~February 28, 2023, and Part II, Item 1A. “Risk Factors” of our Quarterly Report on Form 10-Q for the fiscal quarter ended ~~June 30, 2022,~~March 31, 2023, which was filed with the SEC on ~~August~~May 9, ~~2022.~~2023. There have been no material changes from the risk factors previously disclosed in the Annual Report on Form 10-K, for the fiscal year ended December 31, ~~2021~~2022 and the Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2023 other than as described below.

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 June 30, 2023, we had $517.9 million in cash and cash equivalents and restricted cash. During the six months ended June 30, 2023, we incurred a net loss of $235.9 million and had net cash flows used in operating activities of $497.5 million.

•Revenue: The Company’s revenue projections depend on its ability to successfully develop, manufacture, distribute and market an updated monovalent 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 authorization, ability to timely deliver doses and commercial adoption and market acceptance. Further, 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 advance purchase agreements may require the Company to refund portions of upfront and other payments or result in reduced future payments.

• Funding from the U.S. Government:Our USG Agreement will expire by its terms in December 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 $250.6 million in funding as of June 30, 2023 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 $696.4 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 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.

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 authorization 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 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 COVID-19 vaccine 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 our COVID-19 vaccine and our other vaccine candidates, including an influenza vaccine candidate, CIC vaccine candidate, or a COVID-19 variant strain-containing monovalent 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.

Risks Related to Regulatory and Compliance Matters

If we are unable to effectively pursue the manufacture, clinical testing, regulatory authorization, and export of our XBB COVID vaccine, or COVID vaccines against future strain changes, we may encounter delays or challenges in commercially distributing these vaccines as well as gaining market acceptance for them.

Regulatory authorities globally, including the U.S. FDA, have recommended that manufacturers update their COVID vaccines with a monovalent XBB.1.5 strain for the fall 2023 COVID vaccine season and subsequent vaccination. We continue to pursue the manufacture, clinical testing, regulatory authorization, and distribution of our XBB COVID vaccine, with a goal of making it commercially available for the fall 2023 COVID vaccine season. We intend to submit applications for authorization of the XBB COVID vaccine to several regulatory authorities. We expect that regulatory authorities will continue to monitor and assess SARS-CoV-2 evolution and recommend that manufacturers make corresponding updates to the composition of their COVID vaccines at least annually.

Inherent to this evolving approach to manufacturing new strains of COVID vaccines, including our development of our XBB COVID vaccine, we may encounter regulatory authorization, manufacturing, and distribution challenges, including export challenges. In doing so, we expect to seek alignment and acceptance by regulatory authorities that would allow us to use manufacturing and analytical testing methods employed in earlier COVID vaccine production and commercialization efforts, that support an accurate characterization profile (including purity, potency, stability and like standards) of the relevant XBB COVID vaccine. For the imminent fall 2023 COVID vaccine campaign, as well as subsequent campaigns in the future, our inability to overcome product development challenges and gaining regulatory authority alignment may adversely affect our ability to obtain licensure of our XBB COVID vaccine or future COVID vaccines at all, or in a timely manner.

Regarding future COVID vaccine development, including with our XBB COVID vaccine, we may fail to receive authorization by regulatory authorities if we are unable to generate sufficient batch analysis data to demonstrate batch-to-batch consistency at commercial scale, if the data generated from our incremental research and development program do not support continued effectiveness of the vaccine to protect individuals against the then-relevant variant of SARS-CoV-2 because the vaccine does not induce an adequate level of neutralization titers against such variant, or if the product otherwise exhibits an unacceptable safety profile, rendering the benefit/risk balance unfavorable. Moreover, the new vaccine lots may not be accepted for distribution if required batch-release testing undertaken by officially designated laboratories does not show that such vaccine is of acceptable quality.

We were unable to accomplish the timely validation of the single-dose vial presentation we had intended to use with the XBB COVID vaccine in the U.S. As a result, if we obtain EUA from the FDA for this vaccine, we expect to offer the product only in a five dose vial presentation for the fall 2023 vaccination season, which may adversely impact market acceptance, rate of product returns, or require higher price concessions in the U.S.

Because the finished product is manufactured by SIIPL in India, timely authorization is needed from the Drugs Controller General of India (“DCGI”), the drug licensing body in India, to export the XBB COVID vaccine to the respective markets where regulatory review of the product application is pending.If we are unable to receive this timely DCGI authorization, we may be unable to commercially distribute our XBB COVID vaccine in a timely manner for the fall 2023 season.

If we are unable to effectively manufacture our COVID vaccines in sufficient quantities, at sufficient yields, or are unable to obtain regulatory approvals for a manufacturing facility for our COVID vaccines, we may experience delays or an adverse impact on product development, clinical trials, regulatory approvals, and commercial distribution.

We are continuing to pursue the manufacture, distribution and clinical testing of our COVID vaccine (both our Protoype COVID vaccine and our XBB COVID vaccine) for commercialization. Completion of our clinical trials and commercialization of our COVID vaccine and our other vaccine candidates requires access to, or development of, facilities to effectively manufacture our COVID vaccine and our other vaccine candidates at sufficient yields and at commercial scale. We have limited experience manufacturing any of our vaccine candidates in the volumes necessary to support commercial sales. While we have increased our global manufacturing capacity for our COVID vaccine, our efforts to establish and maintain manufacturing capabilities may not meet expectations as to timing, scale-up, reproducibility, yields, purity, cost, potency or quality. We are highly dependent on third-party organizations to conduct a significant amount of our vaccine manufacturing activities. We do not have sufficient internal manufacturing infrastructure to support global commercialization of our COVID vaccine and we have entered into third-party agreements for the components, as well as for commercial fill-finish manufacturing, for our COVID vaccine. For the fall 2023 manufacturing campaign, the antigen component of our COVID vaccine is being manufactured at SIIPL in India, and the Matrix-M™ adjuvant component of our COVID vaccine is currently being manufactured at Novavax AB and AGC Biologics in Europe. Challenges in manufacturing either the antigen component or the adjuvant, or issues in later manufacturing stages, could compromise production of our COVID vaccine. Additionally, we currently depend exclusively on SIIPL and SLS for co-formulation, filling and finishing (other than in Europe) and PCI for finishing our COVID vaccine in Europe, and any delays or disruptions in these suppliers’ operations could prevent or delay the delivery of customer orders.

Additionally, to ensure adequate inventory supply and manage our operations, we forecast anticipated manufacturing requirements and customer demand to predict inventory needs and place orders with our third-party manufacturers based on such predictions. Our ability to accurately forecast demand for our COVID vaccine could be negatively affected by many factors, including challenges in managing our commercial strategy, unanticipated changes in general market conditions or regulatory matters, and market demand for variant-specific COVID vaccines, among others. If we underestimate our third-party manufacturing requirements, we may not be able to timely meet obligations under our customer supply agreements. Conversely, if we overestimate our third-party manufacturing requirements, we may end up with inventory levels in excess of customer demand that result in a portion of our inventory becoming obsolete or expiring, as well as inventory write-downs or write-offs, or we may need to cancel previously forecasted batches of product from our third-party manufacturers, which may result in material cancellation fees. In September 2022, for example, we entered into a Confidential Settlement Agreement and Release with FUJIFILM under which we are responsible for up to $185 million to FUJIFILM in connection with the termination of manufacturing activity. In December 2022, we agreed to approximately $95 million in fees owed to AGC Biologics in connection with the cancellation of batches in 2022. If we are unable to accurately forecast demand for our COVID vaccine and the required services from third-party manufacturers, our results of operations could be materially harmed.

Manufacturing our COVID vaccine involves a complicated process with which we have limited experience. If we and our third-party manufacturers are unable to manufacture our COVID vaccine in clinical quantities or in commercial quantities and at sufficient yields and at required specifications, then clinical trials and commercialization will be delayed, and we will need to identify and reach supply arrangements with additional third parties. Third-party manufacturers also must receive FDA or equivalent foreign regulatory body approval before they can produce clinical material or commercial product which could cause delays and alter our production schedule. Our COVID vaccines are in competition with other products for access to these third-party facilities and may be subject to delays in manufacture if third parties prioritize other products. We may not be able to enter into any necessary additional third-party manufacturing arrangements on acceptable terms, or on a timely basis. In addition, we have to enter into technical transfer agreements and share our know-how with the third-party manufacturers, which can be time-consuming and may result in delays.

Because of contractual restraints and the limited number of third-party manufacturers with the expertise, required regulatory approvals and facilities to manufacture bulk vaccines at commercial-scale, replacement of a manufacturer may be expensive and time-consuming and may cause interruptions in the production of our vaccine and negatively impact our ability to timely meet obligations under our customer supply agreements. We and our third-party manufacturers may also encounter production challenges related to:

•costs, scale up, and yields;

•shortages of raw materials and supplies;

•shipment delays or other supply chain disruptions

•quality control and assurance;

•contamination, lot consistency, potency, and purity;

•shortages of qualified personnel and other capacity constraints;

•compliance with strictly enforced and evolving federal, state and foreign regulations that vary in each country where products might be sold including nationalization or other territory restrictions placed on our owned and third-party manufacturing sites;

•and capital funding.

Delays or interruptions could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Item 5. Other Information

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

~~The description of the Amended and Restated UK Supply Agreement set forth in Part II, Item 5. “Other Information” of the Company’s Quarterly Report on Form 10-Q for the fiscal quarter~~three months ended June 30, ~~2022~~2023, no director or “officer” (as defined in Rule 16a-1(f) under the Securities Exchange Act of 1934, as amended) of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is ~~incorporated herein by reference.~~

defined in Item 408(a) of Regulation S-K.

~~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~~Company ’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~~Modification No. 18 to Undefinitized Project Agreement No. 1, dated ~~as of July 1, 2022,~~May 25, 2023, 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~~Advanced Technology International

10.2*±						~~Letter of~~ Amendment No. 1 to ~~the Amended and Restated SARS-CoV-2 Vaccine Supply~~Advanced Purchase Agreement, ~~dated~~effective as of ~~September~~January 26, 2022, between the Company and ~~The Secretary~~His Majesty the King in Right of ~~State for Business, Energy,~~Canada, as represented by the Minister of Public Works and ~~Industrial Strategy, acting on behalf~~Government Services, as successor in interest to Her Majesty the Queen in Right of Canada, as represented by the ~~government~~Minister of ~~the United Kingdom of Great Britain~~Public Works and ~~Northern Ireland~~Government Services

10.3*±						~~Modification~~Amendment No. 022 to ~~Base~~Advanced Purchase Agreement, effective as of October 18, 2022, between the Company and ~~Advanced Technology International, dated~~His Majesty the King in Right of Canada, as represented by the Minister of ~~August 2, 2022~~Public Works and Government Services, as successor in interest to Her Majesty the Queen in Right of Canada, as represented by the Minister of Public Works and Government Services

10.4*±						~~Modification~~Amendment No. 3 to Advanced Purchase Agreement, effective as of 14April 25, 2023, between the Company and His Majesty the King in Right of Canada, as represented by the Minister of Public Works and Government Services, as successor in interest to ~~Undefinitized Project Agreement No. 1, dated July~~ 1 ~~, 202~~2 ~~, between~~ Her Majesty the ~~Company~~ Queen in Right of Canada, as represented by the Minister of Public Works and ~~Advanced Technology International~~Government Services

10.5*±						~~Modification~~Amendment No. 15 4 to ~~Undefinitized Project~~Advanced Purchase Agreement, ~~No. 1, dated~~ ~~August 9, 202~~2 ,effective as of June 30, 2023, between the C o ~~mpany~~Company and ~~Advanced Technology International~~His Majesty the King in Right of Canada, as represented by the Minister of Public Works and Government Services, as successor in interest to Her Majesty the Queen in Right of Canada, as represented by the Minister of Public Works and Government Services

10.6*±						~~Modification~~Amendment No. 16 2 to ~~Undefinitized Project~~Advanced Purchase Agreement, ~~No. 1,~~ dated ~~September 9,~~as of April 6, 2022,, between the Company and ~~Advanced Technology International~~the Commonwealth of Australia as Represented by the Department of Health

10.7*±						Amendment ~~of Solicitation/Modification of Contract~~ No. 4,3 to Advanced Purchase Agreement, dated as of ~~July 29, 2022,~~April 5, 2023, between the ~~Company.~~Company and the ~~U.S.~~Commonwealth of Australia as Represented by the Department of ~~Defense Joint Program Executive Office for Chemical, Biological, Radiological and Nuclear Defense~~Health

10.8*±						~~Settlement~~Amendment No. 4 to Advanced Purchase Agreement, dated ~~September 30, 2022,~~as of July 5, 2023, between the Company and ~~FUJIFILM Diosynth Biotechnologies UK Limited, FUJIFILM Diosynth Biotechnologies Texas, LLC,~~the Commonwealth of Australia as Represented by the Department of Health


10.9*†						Form of Non-Statutory Stock Option Award Agreement (Non-Employee Director) granted under the Company’s Amended and ~~FUJIFILM Diosynth Biotechnologies USA, Inc.~~Restated 2015 Stock Incentive Plan

10.10*†						Form of Global Non-Statutory Stock Option Award Agreement granted under the Company’s Amended and Restated 2015 Stock Incentive Plan

10.11*†						Form of Restricted Stock Unit Award Agreement (Non-Employee Director) granted under the Company’s Amended and Restated 2015 Stock Incentive Plan

10.12*†						Form of Global Restricted Stock Unit Award Agreement granted under the Company’s Amended and Restated 2015 Stock Incentive Plan

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

†Management contracts, compensatory plans, or arrangements

~~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 9, 2022~~August 8, 2023	By:	/s/ ~~Stanley~~John C. ~~Erck~~Jacobs
		~~Stanley~~John C. ~~Erck~~Jacobs President and Chief Executive Officer (Principal Executive Officer)

Date: ~~November 9, 2022~~August 8, 2023	By:	/s/ James P. Kelly
		James P. Kelly Executive Vice President, Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer)

4047


	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