UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

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

For the quarterly period ended March 31, ~~2023~~2024

☐ 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)

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 ~~86,305,085~~140,403,554 as of April 30, ~~2023.~~2024.

Table of Contents

NOVAVAX, INC.

TABLE OF CONTENTS


		Page No.
PART I. FINANCIAL INFORMATION		1
Item 1.	Consolidated Financial Statements	1
	Unaudited Consolidated Statements of Operations and Unaudited Consolidated Statements of Comprehensive ~~Income (~~Loss ) for the three months ended March 3 1 ~~, 202~~3 31, 2024 and ~~202~~22023	2
	Consolidated Balance Sheets as of March 3 1 ~~, 202~~3 31, 2024 (unaudited) and December 31, ~~202~~22023	3
	Unaudited Consolidated Statements of Changes in Stockholders’ ~~Equity (Deficit)~~Deficit for the three months ended March 3 1 ~~, 202~~3 31, 2024 and ~~202~~22023	4
	Unaudited Consolidated Statements of Cash Flows for the three months ended March 3 1 ~~, 202~~3 31, 2024 and ~~202~~22023	54
	Notes to the Consolidated Financial Statements (unaudited)	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2024
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	3137
Item 4.	Controls and Procedures	3238
PART II. OTHER INFORMATION		3238
Item 1.	Legal Proceedings	3238
Item 1A.	Risk Factors	3441
Item 5	Other Information	43
Item 6.	Exhibits	3944
SIGNATURES		4045

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Table of Contents

NOVAVAX, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share information)

(unaudited)

For the Three Months Ended
March 31,

2023

2022

For the Three Months Ended
March 31,

2024

Revenue:

Product sales

(7,457)

585,628

Product sales

Grants

87,379

99,301

Royalties and other

1,029

19,042

Royalties and other

Total revenue

80,951

703,971

Expenses:

Cost of sales

34,086

15,204

Research and development

247,101

383,483

Research and development

Selling, general, and administrative

112,532

95,992

Total expenses

393,719

494,679

Income (Loss) from operations

(312,768)

209,292

Total expenses

Loss from operations

Other income (expense):

Interest expense

(4,316)

(4,876)

Interest expense

Other income

24,362

1,654

Income (Loss) before income tax expense

(292,722)

206,070

Other income

Loss before income taxes

Income tax expense

1,183

2,662

Net income (loss)

(293,905)

203,408

Income tax expense

Net loss

Net income (loss) per share:

Basic

(3.41)

2.66

Diluted

(3.41)

2.56

Weighted average number of common shares outstanding

Basic

86,158

76,457

Diluted

86,158

80,711

Net loss per share:

Basic and diluted

Weighted average number of common shares outstanding:

Basic and diluted

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

(in thousands)

(unaudited)

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


	For the Three Months Ended March 31,
	2024		2023
Net loss	$	(147,550)	$	(293,905)
Other comprehensive loss:
Foreign currency translation adjustment	(13,547)		3,211
Other comprehensive income (loss)	(13,547)		3,211
Comprehensive loss	$	(161,097)	$	(290,694)

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)


		March 31, 2023		December 31, 2022
		(unaudited)
	March 31, 2024					March 31, 2024	December 31, 2023
	(unaudited)
ASSETS
ASSETS
ASSETS	ASSETS
Current assets:	Current assets:
Current assets:
Current assets:
Cash and cash equivalents
Cash and cash equivalents
Cash and cash equivalents	Cash and cash equivalents	$	624,950	$	1,336,883

Restricted cash
Restricted cash
Restricted cash	Restricted cash	10,330		10,303
Accounts receivable	Accounts receivable	112,849		82,375
Inventory	Inventory	34,185		36,683
Prepaid expenses and other current assets	Prepaid expenses and other current assets	188,714		237,147
Total current assets	Total current assets	971,028		1,703,391
Property and equipment, net	Property and equipment, net	307,414		294,247
Right of use asset, net	Right of use asset, net	103,923		106,241

Goodwill	Goodwill	129,827		126,331
Goodwill
Goodwill
Other non-current assets	Other non-current assets	30,507		28,469
Total assets	Total assets	$	1,542,699	$	2,258,679
LIABILITIES AND STOCKHOLDERS’ DEFICIT	LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:	Current liabilities:
Current liabilities:
Current liabilities:
Accounts payable
Accounts payable
Accounts payable	Accounts payable	$	124,801	$	216,517
Accrued expenses	Accrued expenses	518,706		591,158
Deferred revenue	Deferred revenue	415,764		370,137
Current portion of finance lease liabilities	Current portion of finance lease liabilities	1,205		27,196
Convertible notes payable		—		324,881
Other current liabilities	Other current liabilities	858,382		930,055
Total current liabilities	Total current liabilities	1,918,858		2,459,944
Deferred revenue	Deferred revenue	274,062		179,414
Convertible notes payable	Convertible notes payable	166,857		166,466
Non-current finance lease liabilities	Non-current finance lease liabilities	30,993		31,238
Other non-current liabilities	Other non-current liabilities	47,511		55,695
Total liabilities	Total liabilities	2,438,281		2,892,757

Commitments and contingencies (Note 15)
Commitments and contingencies (Note 13)
Commitments and contingencies (Note 13)
Commitments and contingencies (Note 13)

Preferred stock, $0.01 par value, 2,000,000 shares authorized at March 31, 2023 and December 31, 2022; no shares issued and outstanding at March 31, 2023 and December 31, 2022.		—		—
Preferred stock, $0.01 par value, 2,000,000 shares authorized at March 31, 2024 and December 31, 2023; no shares issued and outstanding at March 31, 2024 and December 31, 2023
Preferred stock, $0.01 par value, 2,000,000 shares authorized at March 31, 2024 and December 31, 2023; no shares issued and outstanding at March 31, 2024 and December 31, 2023
Preferred stock, $0.01 par value, 2,000,000 shares authorized at March 31, 2024 and December 31, 2023; no shares issued and outstanding at March 31, 2024 and December 31, 2023

Stockholders' deficit:	Stockholders' deficit:
Common stock, $0.01 par value, 600,000,000 shares authorized at March 31, 2023 and December 31, 2022; 87,139,831 shares issued and 86,291,473 shares outstanding at March 31, 2023 and 86,806,554 shares issued and 86,039,923 shares outstanding at December 31, 2022		871		868
Stockholders' deficit:
Stockholders' deficit:
Common stock, $0.01 par value, 600,000,000 shares authorized at March 31, 2024 and December 31, 2023; 141,700,972 shares issued and 140,373,255 shares outstanding at March 31, 2024 and 140,506,093 shares issued and 139,505,770 shares outstanding at December 31, 2023
Common stock, $0.01 par value, 600,000,000 shares authorized at March 31, 2024 and December 31, 2023; 141,700,972 shares issued and 140,373,255 shares outstanding at March 31, 2024 and 140,506,093 shares issued and 139,505,770 shares outstanding at December 31, 2023
Common stock, $0.01 par value, 600,000,000 shares authorized at March 31, 2024 and December 31, 2023; 141,700,972 shares issued and 140,373,255 shares outstanding at March 31, 2024 and 140,506,093 shares issued and 139,505,770 shares outstanding at December 31, 2023
Additional paid-in capital	Additional paid-in capital	3,767,733		3,737,979
Accumulated deficit	Accumulated deficit	(4,569,794)		(4,275,889)
Treasury stock, cost basis, 848,358 shares at March 31, 2023 and 766,631 shares at December 31, 2022		(91,226)		(90,659)
Accumulated other comprehensive loss		(3,166)		(6,377)
Treasury stock, cost basis, 1,327,717 shares at March 31, 2024 and 1,000,323 shares at December 31, 2023
Accumulated other comprehensive income (loss)
Total stockholders’ deficit	Total stockholders’ deficit	(895,582)		(634,078)
Total liabilities and stockholders’ deficit	Total liabilities and stockholders’ deficit	$	1,542,699	$	2,258,679

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

NOVAVAX, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' ~~EQUITY (DEFICIT)~~DEFICIT

Three Months Ended March 31, ~~2023~~2024 and ~~2022~~2023

(in thousands, except share information)

(unaudited)


	Common Stock																											Common Stock	Additional Paid-in Capital	Accumulated Deficit	Treasury Stock	Accumulated Other Comprehensive Income (Loss)	Total Stockholders' Deficit
	Shares
Balance at December 31, 2023
Balance at December 31, 2023
Balance at December 31, 2023
Stock-based compensation
Stock issued under incentive programs
		Common Stock			Additional Paid-in Capital			Accumulated Deficit				Treasury Stock					Accumulated Other Comprehensive Loss					Total Stockholders' Equity (Deficit)
Foreign currency translation adjustment
Foreign currency translation adjustment
Foreign currency translation adjustment
Net loss
Balance at March 31, 2024
		Shares	Amount				Additional Paid-in Capital							Accumulated Deficit					Treasury Stock					Accumulated Other Comprehensive Loss			Total Stockholders' Equity (Deficit)
Balance at December 31, 2022
Balance at December 31, 2022
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	—	—		28,647			—				—					—					28,647
Stock issued under incentive programs	Stock issued under incentive programs	333,277	3		1,107			—				(567)					—					543

Foreign currency translation adjustment

Foreign currency translation adjustment

Foreign currency translation adjustment	Foreign currency translation adjustment	—	—		—			—				—					3,211					3,211
Net loss	Net loss	—	—		—			(293,905)				—					—					(293,905)
Balance at March 31, 2023	Balance at March 31, 2023	87,139,831	$	871	$	3,767,733		$	(4,569,794)			$	(91,226)				$	(3,166)				$	(895,582)

Balance at December 31, 2021		76,433,151	$	764	$	3,351,967		$	(3,617,950)			$	(85,101)				$	(1,353)				$	(351,673)
Stock-based compensation		—	—		32,933			—				—					—					32,933
Stock issued under incentive programs		91,788	1		2,029			—				(800)					—					1,230
Issuance of common stock, net of issuance costs of $2,311		2,197,398	22		179,363			—				—					—					179,385

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

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

NOVAVAX, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)


		Three Months Ended March 31,
		2023		2022
	Three Months Ended March 31,						Three Months Ended March 31,
	2024					2024		2023
Operating Activities:	Operating Activities:
Net income (loss)		$	(293,905)	$	203,408
Reconciliation of net income (loss) to net cash provided by (used in) operating activities:
Net loss
Net loss
Net loss
Reconciliation of net loss to net cash used in operating activities:
Depreciation and amortization
Depreciation and amortization
Depreciation and amortization	Depreciation and amortization	9,043		6,765

Non-cash stock-based compensation	Non-cash stock-based compensation	28,647		32,933
Non-cash stock-based compensation
Non-cash stock-based compensation
Provision for excess and obsolete inventory	Provision for excess and obsolete inventory	12,490		—
Right-of-use assets expensed, net of credits received		—		214
Impairment of long-lived assets

Other items, net
Other items, net
Other items, net	Other items, net	(1,252)		634
Changes in operating assets and liabilities:	Changes in operating assets and liabilities:
Inventory
Inventory
Inventory	Inventory	(9,222)		(99,557)
Accounts receivable, prepaid expenses, and other assets	Accounts receivable, prepaid expenses, and other assets	18,430		(56,016)
Accounts payable, accrued expenses, and other liabilities	Accounts payable, accrued expenses, and other liabilities	(230,099)		(115,500)
Deferred revenue	Deferred revenue	140,275		(61,391)
Net cash used in operating activities	Net cash used in operating activities	(325,593)		(88,510)

Investing Activities:	Investing Activities:
Investing Activities:
Investing Activities:
Capital expenditures
Capital expenditures
Capital expenditures	Capital expenditures	(19,801)		(16,826)
Internal-use software	Internal-use software	(3,757)		—
Net cash used in investing activities	Net cash used in investing activities	(23,558)		(16,826)

Financing Activities:	Financing Activities:
Financing Activities:
Financing Activities:
Net proceeds from sales of common stock
Net proceeds from sales of common stock
Net proceeds from sales of common stock	Net proceeds from sales of common stock	—		179,385
Net proceeds from the exercise of stock-based awards	Net proceeds from the exercise of stock-based awards	543		1,318
Finance lease payments	Finance lease payments	(26,331)		(20,838)
Repayment of 2023 Convertible notes	Repayment of 2023 Convertible notes	(325,000)		—
Payments of costs related to issuance of 2027 Convertible notes	Payments of costs related to issuance of 2027 Convertible notes	(3,591)		—
Net cash provided by (used in) financing activities	Net cash provided by (used in) financing activities	(354,379)		159,865
Effect of exchange rate on cash, cash equivalents, and restricted cash	Effect of exchange rate on cash, cash equivalents, and restricted cash	(8,372)		1,312
Net increase (decrease) in cash, cash equivalents, and restricted cash		(711,902)		55,841
Net decrease in cash, cash equivalents, and restricted cash
Cash, cash equivalents, and restricted cash at beginning of period	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	$	636,943	$	1,584,100

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

Right-of-use assets from new lease agreements		$	—	$	58,352

Capital expenditures included in accounts payable and accrued expenses	Capital expenditures included in accounts payable and accrued expenses	$	10,847	$	15,874

Capital expenditures included in accounts payable and accrued expenses

Capital expenditures included in accounts payable and accrued expenses
Internal-use software included in accounts payable and accrued expenses

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

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

NOVAVAX, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

March 31, ~~2023~~2024

(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,~~by discovering, developing, and ~~commercialization of~~commercializing innovative vaccines to prevent serious infectious diseases. ~~The Company’s~~Novavax offers a differentiated vaccine platform that combines a recombinant protein approach, innovative nanoparticle technology and patented Matrix-M™ adjuvant to enhance the immune response. Novavax currently has one commercial program, for vaccines to prevent COVID-19, which includes Nuvaxovid™ prototype COVID-19 vaccine (“("NVX-CoV2373,” ~~“Nuvaxovid™,~~or “prototype vaccine”) and Nuvaxovid™ updated COVID-19 vaccine (“NVX-CoV2601,” ~~“Covovax™~~or “updated vaccine”) (collectively, “COVID-19 Vaccine”). Local regulatory authorities have also specified nomenclature for the labeling of the prototype and updated vaccines within their territories (e.g.,” “Novavax COVID-19 Vaccine, Adjuvanted” and “Novavax COVID-19, Adjuvanted (2023-2024 Formula),” respectively, for the U.S.)~~; influenza~~. The Company’s partner, Serum Institute of India Pvt. Ltd. (“SIIPL”), markets NVX-CoV2373 as “Covovax™.”

Beginning in 2022, the Company received approval, interim authorization, provisional approval, conditional marketing authorization, and emergency use authorization (“EUA”) from multiple regulatory authorities globally for its prototype vaccine ~~candidate;~~for both adult and adolescent populations as a primary series and for both homologous and heterologous booster indications in select territories. In October 2023, the U.S. Food and Drug Administration amended the EUA for its prototype vaccine to include its updated vaccine. The amended EUA authorizes use of the Company’s updated vaccine in individuals 12 years and older. In October 2023, the European Commission (“EC”) granted approval for the Company’s updated vaccine for active immunization to prevent COVID-19 caused by SARS-CoV-2 in individuals aged 12 and older. Currently, the Company significantly 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 for finishing in Europe.

Novavax is advancing development of other vaccine candidates, including its COVID-19-Influenza Combination (“CIC”) vaccine ~~candidate;~~candidate and additional vaccine ~~candidates, including for Omicron subvariants~~candidates. The Company’s COVID-19 Vaccine and bivalent formulations with prototype vaccine (“NVX-CoV2373”), are genetically engineered nanostructures of conformationally correct recombinant proteins critical to disease pathogenesis and may elicit differentiated immune responses, which may be more efficacious than naturally occurring immunity or other vaccine approaches. NVX-CoV2373 and the Company’sits other vaccine candidates incorporate the ~~Company's~~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 from its ongoing PREVENT-19 study supporting the use of NVX-CoV2373 for homologous boosting in adults and adolescents aged 12 through 17. Additional findings in Phase 3 COVID-19 Omicron (study 311) trial showed utility of the prototype vaccine as a heterologous booster, inducing broad immune responses against contemporary Omicron variants.

The Company has received approval, interim authorization, provisional approval, conditional marketing authorization, and emergency use authorization (“EUA”) from multiple regulatory authorities globally for NVX-CoV2373 for both adult and adolescent populations as a primary series and for both homologous and heterologous booster indications, and commenced commercial shipments of NVX-CoV2373 doses under the name “Novavax COVID-19 Vaccine, Adjuvanted” and the brand name “Nuvaxovid™” during the first quarter 2022.

Note 2 – Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. The consolidated financial statements are unaudited but include all adjustments (consisting of normal recurring adjustments) that the Company considers necessary for a fair presentation of the financial position, operating results, comprehensive loss, changes in stockholders’ ~~equity (deficit),~~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 $3.2 million and $6.4 million at March 31, 2023 and December 31, 2022, respectively.~~ The aggregate foreign currency transaction gains and losses resulting from the conversion of the transaction currency to functional currency were a $5.1 million loss and a $16.3 million ~~and $2.2 million~~gain for the three months ended March 31, ~~2023~~2024 and ~~2022,~~2023, respectively, which are reflected in Other ~~income.~~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, ~~2022.~~2023. 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.

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 and contemplates the realization of assets and satisfaction of liabilities in the ordinary course of business. The consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of the uncertainty described below.

Management’s plans discussed below, including specifically the execution of the collaboration and license agreement (the “Collaboration and License Agreement”) and securities subscription agreement (the “Subscription Agreement”) effective May 10, 2024, with Sanofi Pasteur Inc. (“Sanofi”) which will result in cash proceeds to the Company of $568.8 million during the second quarter of 2024, has alleviated the substantial doubt outlined below regarding the Company’s ability to continue as a going concern for the one year period from the date that these financial statements were issued. At

As of March 31, ~~2023,~~2024, the Company had ~~$636.9~~$480.6 million in cash and cash equivalents and restricted cash. In April 2023, the Company repaid $112.5 million related to the refund due under the Amended and Restated SARS-CoV-2 Vaccine Supply Agreement, dated July 1, 2022, as further 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, which amended and restated in its entirety the SARS-CoV-2 Vaccine Supply Agreement, dated October 22, 2020, between the parties, and $27.0 million related tohad a ~~Settlement Agreement and Release of Claims between the Company and Par Sterile Products, LLC (“Par”), as described in Note 15 below, which was fully accrued as of March 31, 2023.~~working capital deficiency. During the three months ended March 31, ~~2023,~~2024, the Company incurred a net loss of ~~$293.9~~$147.6 million and had net cash flows used in operating activities of ~~$325.6~~$83.6 million.

In accordance with Accounting Standards Codification (“ASC”) Topic 205-40, Presentation of Financial Statements - 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~~and the ~~U.S. government, and a pending matter subject~~Company’s ability to ~~arbitration proceedings.~~execute on certain cost-reduction initiatives. The Company’s revenue projections depend on its ability to successfully develop, manufacture, distribute, and market anits updated ~~monovalent or bivalent formulation of a~~ vaccine ~~candidate for COVID-19~~ for the ~~Fall 2023 COVID vaccine~~2024-2025 vaccination season, which is inherently uncertain and subject to a number of risks, including the Company’s ability to obtain regulatory ~~approval~~authorizations, introduce a single-dose vial or pre-filled syringe product presentation for the U.S. commercial and certain other markets, the incidence of COVID-19 during the 2024-2025 vaccination season, and the Company’s ability to timely deliver doses and achieve commercial ~~adoption. In February 2023,~~adoption and market acceptance of its updated vaccine. Further, the Company’s revenue projections also depend on its ability to achieve expected product sales and related cash flows under its advance purchase agreements (“APAs”), including APAs in ~~connection with the execution of Modification 17~~Australia and Canada, which are subject to ~~the USG Agreement (as defined~~regulatory uncertainties as described in Note ~~3),~~3.

Failure to meet regulatory milestones or achieve product volume or delivery timing obligations under the ~~U.S. government indicated to~~Company’s APAs may require the Company ~~that the award may not be extended past its current period~~to refund portions of ~~performance. If the USG Agreement is not amended, as~~upfront and other payments or result in reduced future payments, which would adversely affect the Company’s ~~management had previously expected, then the Company may not receive all of the remaining $336.4 million in funding that was previously anticipated pursuant~~ability to ~~the USG Agreement. On January 24, 2023, Gavi, the Vaccine Alliance (“Gavi”) filed~~continue as a demand for arbitration with the International Court of Arbitration regarding an alleged material breach by the Company of the Company’s advance purchase agreement with Gavi (the “Gavi APA”). The outcome of that arbitration is inherently uncertain, and it is possible the Company could be required to refund all or a portion of the remaining advance payments of $697.4 million (see Note 3 and Note 15).

going concern.

Management believes that, given the ~~significance~~history of ~~these uncertainties,~~recurring losses, negative working capital, and accumulated deficit, conditions or events exist that raise substantial doubt ~~exists regarding~~about the Company’s ability to continue as a going concern through one year from the date that these financial statements are issued. Management’s plans to potentially alleviate such conditions or events include the execution effective May 10, 2024, of the Collaboration and License Agreement with Sanofi that grants a co-exclusive license to Sanofi of the Company’s current COVID-19 and related vaccine products, which will provide the Company with an initial $500 million nonrefundable upfront payment, as well as the execution effective May 10, 2024, of the Subscription Agreement with Sanofi, which will provide the Company with a $68.8 million equity investment, both of which are expected to be received in the second quarter of 2024 and are described further below. Management’s plans also include execution of its commercial plans and its ongoing restructuring and cost reduction measures.

On May 10, 2024, the Company entered into the Collaboration and License Agreement with Sanofi pursuant to which Sanofi received:

i) A co-exclusive license to commercialize with the Company all of the Company’s current stand-alone COVID-19 vaccine products, including the Company’s Nuvaxovid™ prototype COVID-19 vaccine and Nuvaxovid™ updated COVID-19 vaccine, and updated versions that address seasonal variants throughout the world (“COVID Mono Products”),

ii) A sole license to develop and commercialize combination products containing a potential combination of the Company’s COVID-19 vaccine and Sanofi’s seasonal influenza vaccine (“COVID and influenza Combination Products” or “CIC Products”),

iii) A non-exclusive license to develop and commercialize combination products containing both the Company’s COVID-19 vaccine and one or more non-influenza vaccines (“Other Combination Products” and together with the COVID Mono Products, CIC Products, and Other Combination Products (“Licensed COVID-19 Products” )), and

iv) A non-exclusive license to develop and commercialize other vaccine products selected by Sanofi that include the Company’s Matrix-M™ adjuvant (as described below, the “Adjuvant Products”).

Under the Collaboration and License Agreement, the Company will receive a non-refundable upfront payment of $500 million. In addition, the Company will also be eligible to receive development, technology transfer, launch, and sales milestone payments totaling up to $700 million in the aggregate with respect to the Licensed COVID-19 Products and royalty payments on Sanofi’s sales of such licensed products. In addition, the Company is eligible to receive development, launch, and sales milestone payments of up to $200 million for each of the first four Adjuvant Products and $210 million for each Adjuvant Product thereafter, and royalty payments on Sanofi’s sales of all such licensed products.

Commencing shortly after the Effective Date of the Collaboration and License Agreement, the Company will perform a technology transfer of its manufacturing process for the COVID Mono Products and Matrix-M™ components to Sanofi. Until the successful completion of such transfer, the Company will supply Sanofi with both COVID Mono Products and Matrix-M™ intermediary components for Sanofi’s use and is eligible for reimbursement of such costs from Sanofi. Additionally, Sanofi will reimburse the Company for its research and development and medical affairs costs related to the COVID Mono Products in accordance with agreed upon plans and budgets.

Under the Collaboration and License Agreement, the Company will continue to commercialize the COVID Mono Products in 2024. Beginning in 2025 and continuing during the term of the Collaboration and License Agreement, Sanofi and the Company will commercialize the COVID Mono Products worldwide in accordance with a commercialization plan agreed by the Company and Sanofi, under which the Company will continue to supply its existing APA customers and strategic partners, including Takeda, SK Biosciences, and the Serum Institute of India. Upon completion of the existing advance purchase agreements, Novavax and Sanofi will jointly agree on commercialization activities of each party in each jurisdiction.

Effective May 10, 2024, the Company also entered into the Subscription Agreement with Sanofi, pursuant to which the Company sold and issued to Sanofi, in a private placement, 6,880,481 shares of the Company’s common stock, par value $0.01 per share at a price of $10.00 per share for aggregate gross proceeds to the Company of $68.8 million.

In May 2023, the Company announced a global restructuring and cost reduction ~~plan. This~~ plan (the “2023 Restructuring Plan”), which includes a more focused investment in its ~~NVX-CoV2373 program,~~COVID-19 Vaccine, reduction to its pipeline spending, the continued rationalization of its manufacturing network, a reduction to the Company’s global workforce, as well as the consolidation of facilities, and infrastructure. ~~The planned workforce reduction includes an approximately 25% reduction~~In January 2024, as part of reducing combined research and development and selling, general and administrative expenses, the Company announced further reductions in ~~the Company’s~~its global workforce ~~comprised of an approximately 20% reduction in full-time Novavax employees and the remainder comprised of contractors and consultants.~~(the “2024 Cost Reduction Plan”). The Company intends to prioritize improvements to its long-term supply chain efficiency. The Company expects the full annual impact of the ~~cost savings~~2023 Restructuring Plan to be realized in 2024, the full annual impact of the 2024 Cost Reduction Plan to be realized in 2025, and approximately ~~half~~85% of the annual impact of the 2024 Cost Reduction Plan, excluding one-time charges, to be realized in 2024. The 2024 Cost Reduction Plan supplemented the 2023 ~~due~~Restructuring Plan and hereafter both are jointly referred to ~~timing of implementing~~as the ~~measures, and~~“Restructuring Plan.” During the ~~applicable laws, regulations, and other factors in the jurisdictions in which~~three months ended March 31, 2024, the Company ~~operates. The Company expects to record~~recorded a charge of ~~approximately $10 million to $15~~$4.4 million related to one-time employee severance and benefit costs ~~the majority~~and recorded an impairment charge of ~~which are expected to be incurred in the second quarter of 2023 and is evaluating the anticipated costs~~$1.7 million related to the ~~consolidation~~impairment of ~~facilities and infrastructure.~~capitalized internal-use software (see Note 14).

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

Management’s plans discussed above, including specifically the execution of the Collaboration and License Agreement and the Subscription Agreement effective May 10, 2024, with Sanofi which will result in cash proceeds to the Company of $568.8 million during the second quarter of 2024, has alleviated the substantial doubt outlined below regarding the Company’s ability to continue as a going concern for the one year period from the date that these financial statements were

issued.

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 Constraints~~Restructuring

The Company constrains the transaction price for customer arrangements 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 effectrecognizes restructuring charges when such costs are incurred. The Company’s restructuring charges consist of ~~decreasing the transaction price, revenue is constrained based on an estimate of the impact~~employee severance and other termination benefits related to the ~~transaction price recognized until it is~~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 ~~that a significant reversal~~and the benefit estimable.

See Note 14 for additional information on the severance and employee benefit costs for terminated employees and impairment of assets in ~~cumulative revenue recognized will not occur.~~connection with the Company’s Restructuring Plan.

Recent Accounting Pronouncements

Not Yet Adopted

In ~~June 2016,~~October 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) ~~No. 2016-13, Financial Instruments - Credit Losses (Topic 326):~~ ~~Measurement~~2023-06, Disclosure Improvements (“ASU 2023-06”), to clarify or improve disclosure and presentation requirements of ~~Credit Losses~~a variety of topics and align the requirements in the FASB ASC with the SEC's regulations. The Company is currently evaluating ASU 2023-06 to determine its impact on ~~Financial Instruments~~the Company's consolidated financial statements and disclosures.

In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures (“ASU ~~2016-13”~~2023-09”)~~, with amendments~~. The standard enhances transparency in ~~2018, 2019, 2020,~~income tax disclosures by requiring, on an annual basis, certain disaggregated information about a reporting entity’s effective tax rate reconciliation and ~~2022.~~income taxes paid. The ASU ~~sets forth a “current expected credit loss” model that~~also requires ~~companies~~disaggregated disclosure related to ~~measure all expected credit losses~~pre-tax income (or loss) and income tax expense (or benefit) and eliminates certain disclosures related to the balance of an entity’s unrecognized tax benefit and the cumulative amount of certain temporary differences. The ASU is effective 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 Company ~~adopted ASU 2020-06~~beginning on January 1, ~~2023, using a modified retrospective approach, and it did not have a material~~2025. The Company is currently evaluating ASU 2023-09 to determine its impact on the ~~Company’s consolidated financial statements.~~Company's disclosures.

Note 3 – Revenue

The Company's accounts receivable included ~~$70.2 million, $53.8 million, $425.9~~$21.2 million and ~~$419.7~~$286.4 million related to amounts that were billed to customers and ~~$42.7 million, $28.6 million, $52.3~~$0.2 million and ~~$35.3~~$10.8 million related to amounts which had not yet been billed to customers as of March 31, ~~2023, December 31, 2022, March 31, 2022,~~2024 and December 31, ~~2021,~~2023, respectively. During the three months ended March 31, ~~2023~~2024 and ~~2022,~~2023, changes in the ~~Company's~~Company’s accounts receivables, allowance for ~~doubtful accounts,~~credit losses, and deferred revenue balances were as follows (in thousands):

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


	Balance, Beginning of Period		Additions		Deductions		Balance, End of Period
Accounts receivable:
Three Months Ended March 31, 2024	$	304,916	$	136,510	$	(412,370)	$	29,056
Three Months Ended March 31, 2023	96,210		146,424		(115,950)		126,684
Allowance for credit losses(1):
Three Months Ended March 31, 2024	$	(7,676)	$	—	$	—	$	(7,676)
Three Months Ended March 31, 2023	(13,835)		—		—		(13,835)
Deferred revenue:(2)
Three Months Ended March 31, 2024	$	863,521	$	225,000	$	(6,148)	$	1,082,373
Three Months Ended March 31, 2023	549,551		140,324		(49)		689,826

(1) There was no ~~bad debt expense~~allowance for credit losses recorded during the three months ended March 31, ~~2023~~2024 or ~~2022.~~2023. To estimate the allowance for ~~doubtful accounts,~~credit losses, the Company evaluates the credit risk related to its customers based on historical loss experience, economic conditions, the aging of receivables, and customer-specific risks.

(2) Deductions from Deferred revenue generally related to the recognition of revenue once performance obligations on a contract with a customer are met. During the three months ended March 31, 2024, deductions included a $2.2 million reclassification of refundable upfront payments previously included in Deferred revenue to Other current liabilities. During the three months ended March 31, 2024, additions included a $225.0 million reclassification of refundable upfront payment from Other current liabilities to Deferred revenue related to the settlement with Gavi as discussed below. There were no such reclassifications during the three months ended March 31, 2023.

As of March 31, ~~2023,~~2024, 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 $3$2 billion of which ~~$689.8 million~~$1.1 billion was included in Deferred revenue. Failure to meet regulatory milestones, obtain timely ~~obtain~~ supportive recommendations from governmental advisory committees, or achieve product volume or delivery timing obligations under the Company’s ~~advance purchase agreements (“APAs”)~~APAs 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~~APAs will depend on the ~~results of the Company's research and development activities, including clinical trials, and delivery of doses. The timing to fulfill performance obligations related to APAs will depend on~~ timing of product manufacturing, receipt of marketing authorizations for additional indications, delivery of doses based on customer demand, and the ability of the customer to request ~~variant vaccine in place of~~ the ~~prototype~~

~~NVX-CoV2373~~Company’s updated vaccine under certain of ~~our~~the Company’s APAs. ~~The remaining unfilled performance obligations not related to grant agreements or APAs are expected to be fulfilled in less than 12 months.~~

Under ~~the terms of the Gavi~~an APA and a separate purchase agreement between Gavi and Serum Institute of India Pvt. Ltd. (“SIIPL”), 1.1 billion doses of NVX-CoV2373 were to be made available to countries participating in the COVAX Facility. The Company 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 InnovationsVaccine Alliance (“~~CEPI”~~Gavi”), with initial doses supplied by SIIPL and Serum Life Sciences Limited (“SLS”) under a supply agreement. The Company expected to supply significant doses that Gavi would allocate to low-, middle- and high-income countries, subject to certain limitations, utilizing a tiered pricing schedule and Gavi could prioritize such doses to low- and middle- income countries, at lower prices. Additionally, the Company could provide additional doses of NVX-CoV2373, to the extent available from CEPI-funded manufacturing facilities,entered into in ~~the event that SIIPL could not materially deliver expected vaccine doses to the COVAX Facility. Under the agreement,~~May 2021 (the “Gavi APA”), the Company received an upfront ~~payment~~payments of ~~$350.0~~$700 million from Gavi ~~in 2021 and an additional payment of $350 million in 2022 related to the Company’s achieving an emergency use license for NVX-CoV2373 by the WHO~~ (the “Advance Payment Amount”).

~~On November 18, 2022, the Company delivered written notice~~ to Gavi to terminate the Gavi APA on the basis of Gavi’s failure to procure the purchase of 350 million doses of NVX-CoV2373 from the Company as required by the Gavi APA. As of November 18, 2022, the Company had only received orders under the Gavi APA for approximately 2 million doses. On December 2, 2022, Gavi issued a written notice purporting to terminate the Gavi APA based on Gavi’s contention that the Company repudiated the agreement and, therefore, materially breached the Gavi APA. Gavi also contends that, based on its purported terminationbe applied against purchases 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~~Company’s prototype vaccine by ~~a buyer~~certain countries participating in the COVAX Facility. As of ~~March~~December 31, 2023, the remaining Gavi Advance Payment Amount was $696.4 million. On February 16, 2024, the Company entered into a Termination and Settlement Agreement with Gavi (the “Gavi Settlement Agreement”) terminating the Gavi APA, settling the arbitration proceedings, and releasing both parties of ~~$697.4~~all claims arising from, under, or otherwise in connection with the Gavi APA. On February 22, 2024, the claims and counterclaims were dismissed with prejudice. Pursuant to the Gavi Settlement Agreement, the Company is responsible for payment to Gavi of (i) an initial settlement payment of $75 million, ~~pending resolution~~which the Company paid in February 2024, and (ii) deferred payments, in equal annual amounts of $80 million payable each calendar year through a deferred payment term ending December 31, 2028. The deferred payments are due in variable quarterly installments beginning in the second quarter of 2024 and total $400 million during the deferred payment term. Such deferred payments may be reduced through Gavi’s use of an annual vaccine credit equivalent to the unpaid balance of such deferred payments each year, which may be applied to qualifying sales of any of the ~~dispute~~Company’s vaccines for supply to certain low-income and lower-middle income countries. The Company has the right to price the vaccines offered to such low-income and lower-middle income countries in its discretion, and, when utilized by Gavi, the Company will credit the actual price per vaccine paid against the applicable credit. The Company intends to price vaccines offered via the tender process, consistent with its shared goal with Gavi ~~related~~ to ~~a return~~provide equitable access to those countries. Also, pursuant to the Gavi Settlement Agreement,

the Company granted Gavi an additional credit of up to $225 million that may be applied against qualifying sales of any of the Company’s vaccines for supply to such low-income and lower-middle income countries that exceed the $80 million deferred payment amount in any calendar year during the deferred payment term. In total, the Gavi settlement agreement is comprised of $700 million of potential consideration, consisting of the $75 million initial settlement payment, deferred payments of up to $400 million that may be reduced through annual vaccine credits, and the additional credit of up to $225 million that may be applied for certain qualifying sales.

The Company recorded the $3.6 million difference between the refund liability recorded as of December 31, 2023 of $696.4 million and the $700 million of total consideration under the arrangement as a reduction to revenue during the three months ended March 31, 2024. As of March 31, 2024, the remaining ~~Advance Payment Amount, was reclassified from Deferred revenue to Other current liabilities in~~amounts included on the Company’s consolidated balance ~~sheets. On January 24, 2023, Gavi filed a demand~~sheet are classified as $225 million in non-current Deferred revenue for ~~arbitration with~~ the ~~International Court of Arbitration based on the claims described above. The Company filed its Answer~~additional credit that may be applied against future qualifying sales, $80 million in Other current liabilities, and ~~Counterclaims on March 2, 2023. On April 5, 2023, Gavi filed its Reply to the Company’s Counterclaims. Arbitration is inherently uncertain, and while~~$320 million in Other non-current liabilities. In addition, the Company ~~believes that it is entitled~~and Gavi entered into a security agreement pursuant to ~~retain~~which Novavax granted Gavi a security interest in accounts receivable from SIIPL under the ~~remaining Advance Payment Amount received from Gavi, it is possible that it could be required to refund all or a portion~~SIIPL R21 Agreement (see Note 4), which will continue for the deferred payment term of the ~~remaining Advance Payment Amount from Gavi.~~Gavi Settlement Agreement.

Product Sales

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


		Three Months Ended March 31,
		2023		2022
	Three Months Ended March 31,									Three Months Ended March 31,
	2024							2024			2023
North America	North America	$	—	$	64,762
Europe	Europe	57,267		413,745		Europe	90,416		57,267
Rest of the world	Rest of the world	(64,724)		107,121		Rest of the world	(1,731)		(64,724)
Total product revenue		$	(7,457)	$	585,628
Total product sales revenue

~~In May 2023,~~Product sales in the ~~Company extended a credit for certain doses delivered~~U.S. are primarily made through large pharmaceutical wholesale distributors at the wholesale acquisition cost (“WAC”). Product sales in ~~2022 that qualified for replacement under~~ the ~~contract with the customer. This credit is the result~~U.S. are recorded net of a single lot sold to the Australian government that upon pre-planned 6-month stability testing was found to have fallen below the defined specifications and the lot was therefore removed from the market. The credit will be applied against the future sale of doses to the customer and, duringgross-to-net deductions. During the three months ended March 31, 2024, product sales in North America includes $6.4 million of gross-to-net deductions in excess of the WAC, primarily due to wholesale distributor fees for shipments expected to be returned and adjustments made to estimated returns of prior period product sales. Product sales for the rest of the world includes a $3.6 million reduction to revenue recognized pursuant to the Gavi Settlement Agreement as discussed above.

As of March 31, 2024, changes in the Company’s gross-to-net deductions balances were as follows (in thousands):


	Wholesale Distributor Fees, Discounts, and Chargebacks		Product Returns		Total
Balance as of December 31, 2023	$	21,072	$	84,616	$	105,688
Amounts charged against product sales(1)	16,076		19,296		35,372
Payments	(26,979)		(10,999)		(37,978)
Balance as of March 31, 2024	$	10,169	$	92,913	$	103,082

(1) Amounts charged against product sales include $3.4 million of adjustments made to prior period product sales due primarily to changes in the estimate of product returns.

As of March 31, 2024 and December 31, 2023, $5.4 million and $2.6 million of gross-to-net deductions were included in Accounts receivable, respectively, and $97.7 million and $103.1 million were included in Accrued expenses, respectively.

The Company has an APA with the Commonwealth of Australia (“Australia”) for the purchase of doses of COVID-19 Vaccine (the “Australia APA”). In November 2023, the Company ~~recorded~~filed with the Therapeutic Goods Administration (“TGA”) for authorization for its updated vaccine. Based on subsequent communication from the TGA that it will not recommend

approval of the filing as submitted and new data and information generated since that filing, the Company is evaluating the regulatory path for approval, including the potential to update the filing with new data and information, and resubmit in the coming months. In March 2024, the Company and Australia agreed to cancel the COVID-19 Vaccine doses previously scheduled for delivery in the fourth quarter of 2023. As a ~~reduction~~result of ~~$64.7~~the cancellation, the total contract value was reduced by $54.0 million, including $6.0 million of deferred revenue related to the cancelled doses that will be applied as a credit towards future deliveries of doses. Under the Australia APA, Australia is not required to purchase the updated COVID-19 Vaccine doses until the Company receives authorization from TGA. The Company plans to seek an amendment to the Australia APA to address performance obligations and future delivery schedule, which may not be achievable on acceptable terms or at all.

The Company had an APA with the 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 prototype vaccine, with the option for the EC to purchase an additional 100 million doses up to a maximum aggregate of 200 million doses in ~~product sales,~~one or more tranches, through 2023. In January 2023, the Company finalized a revised delivery schedule for the remaining committed doses under the APA that were originally scheduled for delivery during the first and second quarters of 2022. The APA expired in August 2023 and required that any open and outstanding orders from European Union member states be satisfied by February 2024. All outstanding orders were delivered to European Union Member states by February 2024.

The Company has an APA with ~~a corresponding increase~~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 COVID-19 Vaccine (the “Canada APA”). The Canadian government may terminate the Canada APA, as amended, if the Company fails to receive regulatory approval for its COVID-19 Vaccine using bulk antigen produced at Biologics Manufacturing Centre (“BMC”) Inc. on or before December 31, 2024. The Company does not anticipate achieving regulatory approval of its COVID-19 Vaccine using bulk antigen produced at BMC on or before December 31, 2024. Therefore, the Company plans to seek an amendment to the Canada APA to address possible alternatives, which may not be achievable on acceptable terms or at all. As of March 31, 2024, $110.6 million was classified as current Deferred revenue ~~non-current.~~and $477.6 million was classified as non-current Deferred revenue with respect to the Canadian APA in the Company’s consolidated balance sheet. If the Canadian government terminates the Canada APA, $28.0 million of the deferred revenue would become refundable and approximately $224 million of the contract value related to future deliverables would no longer be available.

Grants

The Company’s U.S. government agreement ~~consists~~consisted of a Project Agreement (the “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 (the Base Agreement

together with the Project Agreement ~~are referred to as~~ the “USG Agreement”). In February 2023, in connection with the execution of Modification 17 to the Project Agreement, the U.S. government indicated to the Company that the award may not be extended past its current period of performance, December 31, 2023. Also, Modification 17 included provisions requiring that the payment of $60.0 million of consideration associated with manufacturing work now be contingent upon meeting certain milestones, including the delivery of up to 1.5 million doses of NVX-CoV2373 and development and regulatory milestones related to commercial readiness, expansion of the EUA and development of multiple vial presentations. As of ~~March~~December 31, 2023, the Company ~~constrained~~recognized the ~~total transaction price by $48.0 million for consideration associated with milestones that are not fully within the Company’s control. This constraint,~~full $1.8 billion funding in ~~addition to~~revenue.

Royalties and Other

Royalties and other ~~contract changes included within Modification 17, resulted in an approximately $29 million cumulative reduction to revenue previously recognized under the contract for~~includes royalty milestone payments, sales-based royalties, and Matrix-M™ adjuvant sales.

During the three months ended March 31, ~~2023.~~2024, the Company recognized $4.0 million in revenue related to license fees and $7.5 million in revenue related to a Matrix-M™ adjuvant sales. During the three months ended March 31, 2024, the Company did not recognize revenue related to milestone payments.

~~Royalties and Other~~

During the three months ended March 31, 2023, the Company recognized $1.0 million in revenue related to a Matrix-M™ adjuvant sales. During the three months ended March 31, 2023, the Company did not recognize revenue related to ~~sales-based royalties. The Company recognized $7.4 million in revenue related to sales-based royalties during the three months ended March 31, 2022.~~license fees or milestone payments.

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,~~its prototype vaccine, 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™ adjuvant and the Company granted SIIPL a non-exclusive license to manufacture the antigen drug substance component of ~~NVX-CoV2373~~the Company’s COVID-19 Vaccine in SIIPL’s licensed territory solely for use in the manufacture of ~~NVX-CoV2373.~~COVID-19 Vaccine. The Company and SIIPL equally split the revenue from SIIPL’s sale of ~~NVX-CoV2373~~COVID-19 Vaccine in its licensed territory, net of agreed costs. The Company also has a supply agreement with SIIPL and SLS under which SIIPL and SLS supply the Company with ~~NVX-CoV2373,~~prototype vaccine, 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 March 2020, the Company entered into an agreement with SIIPL that granted SIIPL a non-exclusive license for the use of Matrix-M™ adjuvant supplied by the Company to develop, manufacture, and commercialize R21/Matrix-M™ adjuvant (“SIIPL R21 Agreement”), a malaria ~~candidate developed~~vaccine created by the Jenner Institute, University of Oxford (“R21/~~Malaria”~~Matrix-M™”). In December 2023, R21/Matrix-M™ received prequalification by the World Health Organization (“WHO”). Under the ~~agreement,~~SIIPL R21 Agreement, SIIPL purchases the Company's Matrix-M™ adjuvant ~~to manufacture R21/Malaria~~for use in development activities at cost and ~~SIIPL~~for commercial purposes at a tiered commercial supply price, and pays a royalty in the ~~single to low~~single-to low- double-digit range based on vaccine sales for a period of 15 years after the first commercial sale of ~~product~~the vaccine 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~~the Company’s COVID-19 Vaccine in Japan. Under the agreement, Takeda purchases Matrix-M™ adjuvant from the Company to manufacture doses of ~~NVX-CoV2373~~COVID-19 Vaccine, and the Company is entitled to receive milestone and sales-based royalty 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.~~COVID-19 Vaccine. In September 2021, Takeda finalized an agreement with the Government of Japan’s Ministry of Health, Labour and Welfare ("MHLW") for the purchase of 150 million doses of ~~NVX-CoV2373.~~its prototype vaccine. In February 2023, MHLW ~~cancelled~~canceled the remainder of doses under its agreement with Takeda. As a result, it is uncertain whether the Company will receive future sales-based royalty payments from Takeda under the terms and conditions of their current collaboration and licensing agreement.

Sanofi

Effective May 10, 2024, the Company entered into the Collaboration and License Agreement with Sanofi pursuant to which Sanofi received:

i) A co-exclusive license to commercialize with the Company all of the COVID Mono Products,

ii) A sole license to develop and commercialize combination COVID and influenza Combination Products,

iii) A non-exclusive license to develop and commercialize Other Combination Products, and

iv) A non-exclusive license to develop and commercialize Adjuvant Products.

Bill & Melinda Gates Medical Research Institute

In May 2023, the Company entered into a three-year agreement with the Bill & Melinda Gates Medical Research Institute to provide the Company’s Matrix-M™ adjuvant for use in preclinical vaccine research.

Other Supply Agreements

~~On September 30, 2022,~~In March 2024, 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~~“Settlement Agreement”) to resolve disputes regarding amounts that Fujifilm claimed were due ~~to Fujifilm in connection with the termination of manufacturing activity at FDBT~~ under ~~the Commercial Supply~~a prior Confidential Settlement Agreement and Release effective September 30, 2022 (the ~~“CSA”) dated August 20, 2021 and Master Services Agreement dated June 30, 2020 and associated statements of work (the “MSA”~~“CSAR”) by and between the Company and Fujifilm. ~~The MSA and CSA established~~

Under 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,~~CSAR, the Company ~~is responsible for payment of~~agreed to pay up to $185.0 million ~~(the “Settlement Payment”)~~ to Fujifilm in connection with the cancellation of manufacturing activity at ~~FDBT~~FDBT. The final two quarterly installments due to Fujifilm in 2023 under the ~~CSA, of which (i) $47.8~~CSAR, totaling $68.6 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~~were subject to ~~be paid in four equal quarterly installments of $34.3 million each, which began on March 31, 2023. As of March 31, 2023, the remaining payment of~~ ~~$102.9 million was~~ ~~reflected in Accrued expenses. Under the Fujifilm Settlement Agreement, Fujifilm is required~~Fujifilm’s obligation 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~~FDBT. In October 2023, the Company sent Fujifilm ~~CSA,~~a notice of breach and refused to pay the final two ~~quarterly~~ installments ~~will be mitigated by any replacement revenue achieved by~~based on its contention that Fujifilm ~~between July 1,~~had not used commercially reasonable efforts to mitigate losses and should have offset some portion of the final two payments. In October 2023, Fujifilm filed a demand for arbitration with Judicial Arbitration and ~~December~~Mediation Services (“JAMS”) seeking payment of the full amount (the “Fujifilm Arbitration”).

Pursuant to the Settlement Agreement, in March 2024 the Company paid $42.0 million to Fujifilm, the parties agreed to a mutual release of claims arising from, under or otherwise in connection with the CSAR, and Fujifilm agreed to dismiss the Fujifilm Arbitration. This payment is less than amounts previously accrued for and reflected in Research and development expense, and accordingly, the Company recorded a benefit of $26.6 million as Research and development expense during the three months ended March 31, ~~2023.~~2024 upon the execution of the Settlement Agreement.

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,~~its COVID-19 Program, and in doing so, recognizes that significant costs may be incurred.

~~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
March 31,
2023 2022
Numerator:
Net income (loss), basic $ (293,905) $ 203,408
Interest on convertible notes, net — 3,403
Net income (loss), dilutive (293,905) 206,811
Denominator:
Weighted average number of common shares outstanding, basic 86,158 76,457
Effect of dilutive securities — 4,254
Weighted average number of common shares outstanding, dilutive 86,158 80,711
Net income (loss) per share:
Basic $ (3.41) $ 2.66
Diluted $ (3.41) $ 2.56
Anti-dilutive securities excluded from calculations of diluted net income (loss) per share 23,971 1,474

Note 65 – Cash, Cash Equivalents, and Restricted Cash

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported in the consolidated

balance sheets that sums to the total of such amounts shown in the consolidated statements of cash flows (in thousands):


		March 31, 2023		December 31, 2022
	March 31, 2024					March 31, 2024	December 31, 2023
Cash and cash equivalents	Cash and cash equivalents	$	624,950	$	1,336,883
Restricted cash, current	Restricted cash, current	10,330		10,303
Restricted cash, non-current(1)	Restricted cash, non-current(1)	1,663		1,659
Cash, cash equivalents, and restricted cash	Cash, cash equivalents, and restricted cash	$	636,943	$	1,348,845

(1)Classified as Other non-current assets as of March 31, ~~2023~~2024 and December 31, ~~2022,~~2023, on the consolidated balance sheets.

Note 76 – Fair Value Measurements

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


		Fair Value at March 31, 2023						Fair Value at December 31, 2022
	Fair Value at March 31, 2024																		Fair Value at March 31, 2024							Fair Value at December 31, 2023
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)	$	152,786	$	—	$	—	$	398,834	$	—	$	—
Government-backed securities(1)	Government-backed securities(1)	—		296,000		—		—		296,000		—

Treasury securities(1)
Corporate debt securities(1)	Corporate debt securities(1)	—		4,991		—		—		—		—
Agency securities(1)		—		—		—		—		104,536		—
Total cash equivalents	Total cash equivalents	$	152,786	$	300,991	$	—	$	398,834	$	400,536	$	—
Liabilities	Liabilities
5.00% Convertible notes due 2027	5.00% Convertible notes due 2027	$	—	$	103,811	$	—	$	—	$	172,789	$	—
3.75% Convertible notes due 2023		—		—		—		—		322,111		—
Total convertible notes payable		$	—	$	103,811	$	—	$	—	$	494,900	$	—
5.00% Convertible notes due 2027
5.00% Convertible notes due 2027															$	—	$	109,088		$	—	$	—	$	100,909		$	—

(1)All investments are classified as Cash and cash equivalents as of March 31, ~~2023~~2024 and December 31, ~~2022,~~2023, on the consolidated balance sheets.

Fixed-income investments categorized as Level 2 are valued at the custodian bank by a third-party pricing vendor’s valuation models that use verifiable observable market data, 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 convertible notes has been estimated using observable inputs, including the price of the Company’s common stock, implied volatility, interest rates, and credit spreads.

During the three months ended March 31, ~~2023~~2024 and ~~2022,~~2023, 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 87 – Inventory

Inventory consisted of the following (in thousands):


		March 31, 2023		December 31, 2022
	March 31, 2024					March 31, 2024	December 31, 2023
Raw materials	Raw materials	$	12,320	$	13,912
Semi-finished goods	Semi-finished goods	13,108		21,410
Finished goods	Finished goods	8,757		1,361
Total inventory	Total inventory	$	34,185	$	36,683

Inventory write-downs as a result of excess, obsolescence, expiry, or other reasons, and losses on firm purchase commitments, offset by recoveries of such commitments, are recorded as a component of cost of sales in ~~our~~the Company’s consolidated statements of operations. For the three months ended March 31, 2024, inventory write-downs were $8.8 million. For the three months ended March 31, 2023, inventory write-downs were $12.5 ~~million. For the three months ended March 31, 2023,~~million and losses on firm purchase commitments were $7.7 million. ~~There were no inventory write-downs or losses on firm purchase commitments during~~In addition, for the three months ended March 31, ~~2022.~~2023 the Company recorded recoveries on

1215

firm purchase commitments of $0.8 million related primarily to negotiated reductions to previously recognized firm purchase commitments.

Note 98 – Goodwill

The Company has one reporting unit, which has a negative ~~equity value~~carrying amount as of ~~ended~~ March 31, ~~2023~~2024 and December 31, ~~2022.~~2023. The change in the carrying amounts of goodwill for the three months ended March 31, ~~2023~~2024 was as follows (in thousands):


	Amount
Balance at December 31, ~~2022~~2023	$	~~126,331~~127,454
Currency translation adjustments	~~3,496~~ (4,275)
Balance at March 31, ~~2023~~2024	$	~~129,827~~123,179

Note ~~10 – Leases~~

The Company has embedded leases related to supply agreements with contract manufacturing organizations (“CMOs”) and contract manufacturing and development organizations to manufacture NVX-CoV2373, as well as operating leases for its research and development and manufacturing facilities, corporate headquarters and offices, and certain equipment. During the three months ended March 31, 2023, the Company continued to align its global manufacturing footprint as a result of its ongoing assessment of manufacturing needs consistent with its contractual obligations related to the supply, and anticipated demand for, NVX-CoV2373.

During the three months ended March 31, 2023, the Company recognized a short-term lease expense of $0.7 million, related to its embedded leases and no expense was recognized for the write off of 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. During the three months ended March 31, 2022, the Company recognized a short-term lease expense of $78.1 million, related to its embedded leases and expensed $10.4 million of ROU write off. During the three months ended March 31, 2023 and 2022, the Company recognized $0.5 million and $1.1 million, respectively, of interest expense on its finance lease liabilities.

~~Note 11~~9 – Long-Term Debt

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

March 31, 2023 December 31, 2022
Current portion:
3.75% Convertible notes due 2023 $ — $ 325,000
Unamortized debt issuance costs — (119)
Total current convertible notes payable $ — $ 324,881
Non-current portion:
5.00% Convertible notes due 2027 $ 175,250 $ 175,250
Unamortized debt issuance costs and discount (8,393) (8,784)
Total non-current convertible notes payable $ 166,857 $ 166,466


	March 31, 2024		December 31, 2023





5.00% Convertible notes due 2027	$	175,250	$	175,250

Unamortized debt issuance costs	(6,818)		(7,234)
Total convertible notes payable	$	168,432	$	168,016

The effective interest rate of the 2027 Convertible notes is 6.2%. During the three months ended March 31, 2023, the Company repaid the outstanding principal amount of $325.0 million on its 3.75% Convertible notes 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 well as cash on hand.~~

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


		Three Months Ended March 31,
		2023		2022
		Three Months Ended March 31,
		Three Months Ended March 31,
		Three Months Ended March 31,
		2024
		2024
		2024
Coupon interest
Coupon interest
Coupon interest	Coupon interest	$	3,206	$	3,047
Amortization of debt issuance costs	Amortization of debt issuance costs	510		356
Amortization of debt issuance costs
Amortization of debt issuance costs
Total interest expense on convertible notes payable	Total interest expense on convertible notes payable	$	3,716	$	3,403
Total interest expense on convertible notes payable
Total interest expense on convertible notes payable

Note 1210 – ~~Stockholders' Equity (Deficit)~~Stockholders’ Deficit

In ~~June 2021,~~August 2023, the Company entered into an At Market Issuance Sales Agreement (the ~~"June 2021~~“August 2023 Sales ~~Agreement"~~Agreement”), which allows it to issue and sell up to $500 million in gross proceeds of shares of its common ~~stock.~~stock, and terminated its then-existing At Market Issuance Sales agreement entered in June 2021 (the “June 2021 Sales Agreement”). During the three months ended March 31, 2024, there were no sales recorded under the August 2023 Sales Agreement. As of March 31, ~~2023,~~2024, the remaining balance available under the ~~June 2021~~August 2023 Sales Agreement was approximately ~~$318~~$242 million. ~~There~~

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

~~During the three months ended March 31, 2022, the Company sold 2.2 million shares of its common stock resulting in net proceeds of approximately $179 million, under its June 2021 Sales~~ Agreement.

Note 1311 – Stock-Based Compensation

Equity Plans

In January 2023, the Company established the 2023 Inducement Plan (the “2023 Inducement Plan”), which provides for the granting of share-based awards to individuals who were not previously employees, or following a bona fide period of non-employment, as an inducement material to such individuals entering into employment with the Company. The Company reserved 1.0 million shares of common stock for ~~grant~~grants under the 2023 Inducement Plan. As of March 31, ~~2023,~~2024, there were ~~0.3~~0.2 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~~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~~21.0 million shares of common stock under equity awards granted under the 2015 Plan. All such shares authorized for issuance under the 2015 Plan have been reserved. The 2015 Plan will expire on March ~~4, 2025.~~30, 2033. As of March 31, ~~2023,~~2024, there were ~~0.5~~2.6 million shares available for issuance under the 2015 Plan.

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

The 2023 Inducement Plan and the 2015 Plan 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~~Company’s common stock at the time of grant. Grants of share-based awards are generally subject to vesting over periods ranging from one to four years.

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


		Three Months Ended March 31,
		2023		2022
		Three Months Ended March 31,
		Three Months Ended March 31,
		Three Months Ended March 31,
		2024
		2024
		2024
Cost of sales
Cost of sales
Cost of sales	Cost of sales	$	519	$	—
Research and development	Research and development	13,858		16,887
Research and development
Research and development
Selling, general, and administrative
Selling, general, and administrative
Selling, general, and administrative	Selling, general, and administrative	14,270		16,046
Total stock-based compensation expense	Total stock-based compensation expense	$	28,647	$	32,933
Total stock-based compensation expense
Total stock-based compensation expense

~~Total stock-based compensation capitalized and included in inventory as of~~During the three months ended March 31, ~~2023~~2024, and ~~December 31, 2022 was $1.7 million.~~

~~As of~~ March 31, 2023, there was no stock-based compensation capitalized in inventory.

As of March 31, 2024, there was approximately ~~$174~~$87 million of total unrecognized compensation expense related to unvested stock options, SARs, RSUs, and the ~~Company’s Employee Stock Purchase Plan, as amended (“ESPP”).~~ESPP. This unrecognized non-cash compensation expense is expected to be recognized over a weighted-average period of approximately ~~one year.~~two years and will be allocated between cost of sales, research and development, and general and administrative expenses accordingly. This estimate does not include the impact of other possible stock-based awards that may be made during future periods.

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 March 31, ~~2023.~~2024. This amount is subject to change based on changes to the closing price of the Company's common stock. The aggregate intrinsic value of stock options and SARs exercises and vesting of RSUs for the three months ended March 31, ~~2023~~2024 and ~~2022~~2023 was approximately $4.5 million and $1.5 million, ~~and $5.6 million,~~ respectively.

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 three months ended March 31, ~~2023:~~2024:

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
Outstanding at December 31, 2022 — $ — 4,053,290 $ 46.07 63,725 $ 112.94
Granted 358,600 10.96 927,742 7.20 — —
Exercised — — (5,031) 6.81 — —
Canceled — — (15,835) 81.44 (5,250) 36.60
Outstanding at March 31, 2023 358,600 $ 10.96 4,960,166 $ 38.73 58,475 $ 119.80
Shares exercisable at March 31, 2023 — $ — 311,560 $ 40.60 58,475 $ 119.80


	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
Outstanding at December 31, 2023	422,800	$	10.67	4,787,042	$	38.10	58,275	$	119.79
Granted	—	—		594,367	5.39		—	—
Exercised	—	—		(142)	5.22		—	—
Canceled	—	—		(284,823)	37.60		(57,569)	120.01
Outstanding at March 31, 2024	422,800	$	10.67	5,096,444	$	34.31	706	$	102.11
Shares exercisable at March 31, 2024	101,762	$	11.08	3,411,898	$	41.21	706	$	102.11

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
March 31,

2023

2022

Three Months Ended
March 31,

2024

Weighted average Black-Scholes fair value of stock options granted

$7.19

$65.78

Risk-free interest rate

3.6%-4.0%

1.4%-2.0%

Risk-free interest rate

Dividend yield

—%

Volatility

127.7%-140.3%

120.5%-130.6%

Volatility

Expected term (in years)

3.9-5.1

4.1-5.3

Expected term (in years)

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 March 31, ~~2023~~2024 was ~~approximately $0.9~~less than $0.1 million and ~~7.5~~7.1 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 March 31, ~~2023~~2024 was ~~approximately $0.7~~less than $0.1 million and ~~6.5~~6.0 years, respectively.

Restricted Stock Units

The following is a summary of RSU activity for the three months ended March 31, ~~2023:~~2024:


		2023 Inducement Plan			2015 Plan
		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		—	$	—	2,034,574	$	61.67
	2023 Inducement Plan								2023 Inducement Plan			2015 Plan
	Number of Shares							Number of Shares		Per Share Weighted- Average Fair Value	Number of Shares		Per Share Weighted- Average Fair Value
Outstanding and unvested at December 31, 2023
Granted	Granted	308,390	$	10.96	2,531,445	7.20
Vested	Vested	—	$	—	(211,688)	87.25
Forfeited	Forfeited	—	$	—	(88,570)	52.68
Outstanding and unvested at March 31, 2023		308,390	$	10.96	4,265,761	$	28.26
Outstanding and unvested at March 31, 2024

Employee Stock Purchase Plan

The ESPP was approved at the ~~Company's~~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~~number of shares will continue to increase 5% on each anniversary of its adoption up to a maximum of ~~1.65~~1.6 million shares. The ESPP allows

employees to purchase shares of common stock of the Company at each purchase date through payroll deductions of up to a maximum of 15% of their compensation, at 85% of the lesser of the market price of the shares at the time of purchase or the market price on the beginning date of an option period (or, if later, the date during the option period when the employee was first eligible to participate). As of March 31, ~~2023,~~2024, there were ~~0.5~~0.2 million shares available for issuance under the ESPP.

Note 1412 – 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~~Significant pieces of objective evidence evaluated ~~was~~by the Company were the cumulative loss incurred over the three-year period ended March 31, ~~2023~~2024 and that the Company has historically generated pretax losses. Such objective evidence limits the ability to consider other subjective evidence, such as projections for future growth. On the basis of this evaluation, as of March 31, ~~2023,~~2024, 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~~As of March 31, 2024, the Company has $2.4 billion of U.S. Federal NOLs carryforward, and all but $11.3 million 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~~For the ~~TCJA has taken effect creating a significant change to~~three months ended March 31, 2024 and March 31, 2023, the treatment of research and experimental expenditures under Section 174 of the IRC (“Sec. 174 expenses”). Historically, businesses have had the option of deducting Sec. 174 expenses in the year incurred or capitalizing and amortizing the costs over five years. The new TCJA provision, however, eliminates this option and will require Sec. 174 expenses associated with research conducted in the U.S. to be capitalized and amortized over a five-year period. For expenses associated with research outside of the U.S., Sec. 174 expenses will be capitalized and amortized over a 15-year period.

~~The~~ Company recognized $2.3 million and $1.2 million of federal, state, and foreign income tax expense, ~~of $1.2 million and $0.6 million, in total, for the three months ended March 31, 2023 and 2022,~~ respectively. The Company recognized foreign withholding tax expense on royalties of $2.1 million for the three months ended March 31, 2022. The Company did not recognize any foreign withholding tax expense on royalties for the three months ended March 31, 2023.

Note 1513 – Commitments and Contingencies

Legal Matters

Stockholder Litigation

alleging that the defendants made certain purportedly false and misleading statements concerning the Company’s ability to manufacture ~~NVX-CoV2373~~prototype vaccine on a commercial scale and to secure the ~~NVX-CoV2373’s~~prototype vaccine’s regulatory approval. The amended complaint defines the purported class as those stockholders who purchased the Company’s securities between February 24, 2021 and October 19, 2021. On April 25, 2022, the defendants filed a motion to dismiss the consolidated amended complaint. On December 12, 2022, the 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 defendants, and directed the Company and other remaining defendants to answer within fourteen days. On December 27, 2022, the Company filed its answer and affirmative defenses. On March 16, 2023, the plaintiffs filed a motion for class certification and to appoint class representatives and counsel. The Company filed its opposition to the plaintiffs’ motion on September 22, 2023. On December 4, 2023, the parties agreed to a binding settlement in principle (the “Proposed Settlement”) to fully resolve the surviving claims in the Sinnathurai Action. Under the Proposed Settlement’s terms, the Company agreed to pay $47 million into a settlement fund, which will be funded by the Company’s directors and officers’ liability insurance and paid to members of a putative settlement class. On January 12, 2024, after the parties negotiated and executed a written agreement governing the Proposed Settlement, plaintiffs filed an unopposed motion for the Proposed Settlement’s preliminary approval. On January 23, 2024, the Maryland Court granted the motion for preliminary approval and, as requested by the parties, preliminarily certified, for the purposes of settlement only, the settlement class. The court also scheduled a settlement hearing to consider final approval of the settlement for May 23, 2024. Ahead of the May 23 settlement hearing, on April 11, 2024, Plaintiffs filed a motion seeking the Maryland Court’s final approval of the settlement. The Company determined that the settlement is probable and the insurance funding is realizable and, as such, recorded the $47 million estimated settlement liability within Accrued expenses and the $47 million estimated insurance recovery within Prepaid expenses and other current assets on the consolidated balance sheet as of December 31, 2023 and March 31, 2024.

After the Sinnathurai Action was filed, ~~seven~~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”), (vi) Diego J. Mesa v. Stanley C. Erck, et al., No. 2022-0770-NAC (the “Mesa Action”), ~~and~~ (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 Maryland Court. The Kirst Action was filed in the Circuit Court for Montgomery County, Maryland, and shortly thereafter removed to the Maryland Court by the defendants. The 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 (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 February 7, 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 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 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 filed a consolidated amended complaint on November 21, 2022. On February 10, 2023, defendants filed a motion to dismiss the Second Consolidated Derivative Action. ~~Plaintiffs’~~The plaintiffs filed their opposition to the motion to dismiss on April 11, 2023. ~~Defendant’s~~Defendants filed their reply brief in further support of their motion to dismiss ~~is due by~~on May 11, 2023. On August 21, 2023, the court entered an order granting in part and denying in part the motion to dismiss. On September 5, 2023, the Company filed an Answer to the consolidated amended complaint. On September 6, 2023, the court entered an order granting the individual defendants an extension of time to file their answer until November 6, 2023. On October 6, 2023, the Board of Directors of the Company formed a Special Litigation Committee (“SLC”) with full and exclusive power and authority of the Board to, among other things, investigate, review, and analyze the facts and circumstances surrounding the claims asserted in the pending derivative actions, including the claims that remain following the court’s order on the motion to dismiss in the Second Consolidated Derivative Action. On November 7, 2023, the court entered an order granting the parties’ request to stay the Second Consolidated Derivative Action for up to six months from the date of entry of the order, and, on April 15, 2024, the court entered a further order extending the stay by an additional month, and, on April 15, 2024, the court entered a further order extending the stay by an additional month. This includes staying the deadline for the individual defendants to respond to the consolidated amended complaint.

The Kirst Action was filed on December 28, 2021, and the defendants immediately removed the case to the Maryland Court. 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 parties’ stipulated stay of the Kirst Action pending resolution of the ~~Motion~~motion to ~~Dismiss~~dismiss in the Second Consolidated Derivative Action.

On August 30, 2022, the Mesa Action was filed. On October 3, 2022, the 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 ~~court~~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 that defendants intended to file. Pursuant to the order, defendants filed a motion to stay on January 18, 2023. The plaintiff filed his opposition on February 8, 2023. Defendants filed their reply on February 22, 2023.by defendants. On February 28, 2023, the court granted ~~Defendants’~~the defendants’ motion and stayed the Mesa Action pending the entry of a final, non-appealable judgment in the Second Consolidated Derivative Action. On August 31, 2023, the Mesa plaintiffs filed a motion to lift the stay in the Mesa Action. On October 6, 2023, the Company filed an opposition to plaintiff’s motion to lift the stay. Plaintiff filed his reply on October 17, 2023.On December 27, 2023, the parties filed a letter informing the Court that the Second Consolidated Derivative Action had been stayed for a period of six months and asked the Court to stay further proceedings in the Mesa Action until expiration of that stay.

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.~~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 October 13, 2023, the parties filed, and the Delaware Court entered, a stipulated order providing that (i) if the Delaware Court declines to lift the stay in the Mesa Action, the Acosta Action will also remain stayed, and (ii) if the Delaware Court lifts the stay in the Mesa Action, the stay in the Acosta Action will also be lifted.

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 court entered that order on July 17, 2023.

On November 30, 2023, the court entered an order consolidating the Kirst and Needelman Actions.On December 14, 2023, the parties filed a stipulation (i) extending the plaintiffs’ deadline to file a consolidated complaint until January 29, 2024, and (ii) otherwise staying all other proceedings in the case (including the defendants’ deadline to respond to the consolidated complaint) until February 12, 2024. The stipulation entered by the court instructs the parties to discuss whether the stay should be further extended in light of the then-current status of the SLC’s investigation. On May 3, 2024, the plaintiffs filed a consolidated complaint. The parties are discussing whether to extend defendants' deadline to respond to the consolidated complaint through early June.

The financial impact of ~~this claim, as well as~~ the above derivative claims ~~discussed above,~~ is not estimable.

On February 26, 2021, a Company stockholder named Thomas Golubinski filed a derivative complaint against members of the Company’s board of directors and members of senior management in the Delaware 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 on May 3, 2021. The results of the vote were disclosed in the Company’s Current Report on Form 8-K filed 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. On October 18, 2022, the Delaware Court denied the plaintiff’s fee application in its entirety. Under a prior Delaware Court order, the case was automatically dismissed with prejudice upon denial of the plaintiff’s fee application. On November 14, 2022, Golubinski filed a Notice of Appeal in the Supreme Court of the State of Delaware. The plaintiff / appellant filed his opening appellate brief on December 30, 2022. The Company filed its responsive brief on January 30, 2023 and the appellant filed his reply brief on February 14, 2023. The financial impact of this claim, as well as the claims discussed above, is not estimable.

On March 29, 2022, Par submitted a demand for arbitration against the Company with the American Arbitration Association, alleging that the Company breached certain provisions of the Manufacturing and Services Agreement (the “Par MSA”) that the Company entered into with Par in September 2020 to provide fill-finish manufacturing services for NVX-CoV2373. On April 4, 2023, the parties entered into a Settlement Agreement and Release of Claims pursuant to which Novavax agreed to pay $27.0 million to Par, which was fully accrued for as of March 31, 2023. Novavax characterized the payment as a $15.0 million termination fee due under the Par MSA and a $12.0 million settlement payment. Because Par and its parent company, Endo International plc, are parties to Chapter 11 bankruptcy proceedings, the Settlement Agreement and Release of Claims and the payment due thereunder required, and subsequently received, approval from the bankruptcy court. The Company has made the payment required by the Settlement Agreement and Release of Claims, and, subject to the non-occurrence of certain contingencies, the arbitration will be dismissed on or about July 13, 2023.

On February 16, 2024, the Company ~~believes~~entered into a Termination and Settlement Agreement with Gavi (the “Gavi Settlement Agreement”) terminating the Gavi APA, settling the arbitration proceedings, and releasing both parties of all claims arising from, under, or otherwise in connection with the Gavi APA. Pursuant to the Gavi Settlement Agreement, the Company is responsible for payment to Gavi of (i) an initial settlement payment of $75 million, which the Company paid in February 2024, and (ii) deferred payments, in equal annual amounts of $80 million payable each calendar year through a deferred payment term ending December 31, 2028. The deferred payments are due in variable quarterly installments beginning in the second quarter of 2024 and total $400 million during the deferred payment term. Such deferred payments may be reduced through Gavi’s use of an annual vaccine credit equivalent to the unpaid balance of such deferred payments each year, which may be applied to qualifying sales of any of the Company’s vaccines for supply to certain low-income and lower-middle income countries. The Company has the right to price the vaccines offered to such low-income and lower-middle income countries in its discretion, and, when utilized by Gavi, the Company will credit the actual price per vaccine paid against the applicable credit. The Company intends to price vaccines offered via the tender process, consistent with its shared goal with Gavi to provide equitable access to those countries. Also, pursuant to the Gavi Settlement Agreement, the Company granted Gavi an additional credit of up to $225 million that itmay be applied against qualifying sales of any of the Company’s vaccines for supply to such low-income and lower-middle income countries that exceed the $80 million deferred payment amount in any calendar year during the deferred payment term. In total, the Gavi settlement agreement is ~~entitled~~comprised of $700 million of potential consideration, consisting of the $75 million initial settlement payment, deferred payments of up to ~~retain~~$400 million that may be reduced through annual vaccine credits, and the additional credit of up to $225 million that may be applied for certain qualifying sales. In addition, the Company and Gavi entered into a security agreement pursuant to which Novavax granted Gavi a security interest in accounts receivable from SIIPL under the SIIPL R21 Agreement (see Note 4), which will continue for the deferred payment term of the Gavi Settlement Agreement. On February 22, 2024, the claims and counterclaims were dismissed with prejudice.

On September 30, 2022, the Company and Fujifilm entered into the CSAR regarding amounts due to Fujifilm in

connection with the termination of manufacturing activity at FDBT under the Commercial Supply Agreement dated August 20, 2021 (the “CSA”) and the 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 the Company’s prototype vaccine under the associated statements of work. Pursuant to the CSAR, the Company agreed to pay up to $185.0 million (the “Settlement Payment”) to Fujifilm in connection with cancellation of manufacturing activity at FDBT. Under the CSAR, the final two quarterly installments due to Fujifilm were subject to Fujifilm’s obligation to use commercially reasonable efforts to mitigate losses associated with the vacant manufacturing capacity caused by the termination of manufacturing activities at FDBT under the CSA. Any replacement revenue achieved by Fujifilm’s mitigation efforts between July 1, 2023 and December 31, 2023 would offset the final two settlement payments owed by the Company. On October 2, 2023, the Company sent a notice of breach under the Fujifilm Settlement Agreement to Fujifilm setting forth the Company’s position that Fujifilm had not used commercially reasonable efforts to mitigate losses. The Company withheld the $34.3 million installment payment due to Fujifilm on September 30, 2023, pending resolution of the issues identified in the notice of breach (see Note 4). On October 30, 2023, FDBT filed a demand for arbitration with JAMS seeking payment of the third quarter installment of the Settlement Payment. An arbitration hearing was scheduled for May 2024. As of December 31, 2023, the remaining ~~Advance Payment Amount received~~payment of $68.6 million was reflected in Accrued expenses. On March 21, 2024, the Company and Fujifilm entered into a Settlement Agreement to resolve disputes regarding amounts that Fujifilm claimed were due under the CSAR. Pursuant to the Settlement Agreement, in March 2024 the Company paid $42.0 million to Fujifilm, the parties agreed to a mutual release of claims arising from, ~~Gavi, it~~under or otherwise in connection with the CSAR, and Fujifilm agreed to dismiss the Fujifilm Arbitration. This payment is ~~possible that it will be required to refund all or~~less than amounts previously accrued for and reflected in Research and development expense, and accordingly, the Company recorded a ~~portion~~benefit of $26.6 million as Research and development expense in the first quarter of 2024 upon the execution of the ~~remaining Advance Payment Amount from Gavi.~~Settlement Agreement.

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, the Company dodoes not expect the resolution of these other legal proceedings to have a material adverse effect on its financial position, results of operations, or cash flows.

Note 14 – Restructuring

During the three months ended March 31, 2024, the restructuring charge recorded by the Company comprised (in thousands):


	Amount
Severance and employee benefit costs	$	4,401


Impairment of assets	1,669


Total Restructuring charge (1)	$	6,070

(1) Restructuring charges of $1.6 million and $4.5 million are included in Research and development and Selling, general, and administrative expenses, respectively, in the Consolidated Statements of Operations for the three months ended March 31, 2024.

During the three months ended March 31, 2023, the Company did not recognize any restructuring charges.

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 March 31, 2024 and had no requirements for future service. The Company paid a total of $3.9 million for the severance and employee benefit costs during the three months ended March 31, 2024 and the remaining liability of $0.5 million is included in Accrued expenses in the Company’s consolidated balance sheet as of March 31, 2024.

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 months ended March 31, 2024, the Company

recorded an impairment charge of $1.7 million related to the impairment of capitalized internal-use software.

Note 1615 – Subsequent Events

~~In December 2020,~~Effective May 10, 2024, the Company entered into ~~an APA~~the Collaboration and License Agreement with Sanofi pursuant to which Sanofi received:

i) A co-exclusive license to commercialize with the ~~Commonwealth of Australia for the purchase of doses of NVX-CoV2373 (the “Australia APA”). In April 2023, the~~ Company entered into an amendment to the Australia APA that reduced the number of doses to be delivered under the Australia APA with a commensurate increase in the per-dose price, such that the total contract valueall of the ~~Australia APA was maintained, with doses~~COVID Mono Products,

ii) A sole license to ~~be delivered through 2024.~~develop and commercialize combination COVID and influenza Combination Products,

iii) A non-exclusive license to develop and commercialize Other Combination Products, and

~~In January 2021,~~iv) A non-exclusive license to develop and commercialize Adjuvant Products.

Under the Collaboration and License Agreement, the Company entered into an APA with Her Majesty the Queen in Right of Canada as represented by the Minister of Public Works and Government Services for the purchase of doses of NVX-CoV2373 (the “Canada APA”). In April 2023, the Company entered into an amendment to the Canada APA under which it will receive a non-refundable upfront payment of ~~$100.4~~$500 million. In addition, the Company will also be eligible to receive development, technology transfer, launch, and sales milestone payments totaling up to $700 million in the aggregate with respect to the Licensed COVID-19 Products and royalty payments on Sanofi’s sales of such licensed products. In addition, the Company is eligible to receive development, launch, and sales milestone payments of up to $200 million for each of the ~~forfeiture~~first four Adjuvant Products and $210 million for each Adjuvant Product thereafter, and royalty payments on Sanofi’s sales of ~~doses originally scheduled for delivery in 2022.~~all such licensed products.

~~In May 2023,~~Commencing shortly after the Effective Date of the Collaboration and License Agreement, the Company ~~announced~~will perform a ~~global restructuring and cost reduction plan. This plan includes a more focused investment in its NVX-CoV2373 program, reduction to its pipeline spending, the continued rationalization~~technology transfer of its manufacturing ~~network, a reduction~~process for the COVID Mono Products and Matrix-M™ components to Sanofi. Until the ~~Company’s global workforce, as well as the consolidation~~successful completion of facilities and infrastructure. The planned workforce reduction includes an approximately 25% reduction in the Company’s global workforce, comprised of an approximately 20% reduction in full-time Novavax employees and the remainder comprised of contractors and consultants. The Company expects the full annual impact of the cost savings to be realized in 2024 and approximately half of the annual impact to be realized in 2023 due to timing of implementing the measures, and the applicable laws, regulations, and other factors in the jurisdictions in whichsuch transfer, the Company ~~operates. The Company expects to record a charge of approximately $10 million to $15 million related to one-time employee severance~~will supply Sanofi with both COVID Mono Products and ~~benefit costs, the majority of which are expected to be incurred in the second quarter of 2023~~Matrix-M™ intermediary components for Sanofi’s use and is ~~evaluating~~eligible for reimbursement of such costs from Sanofi. Additionally, Sanofi will reimburse the ~~anticipated~~Company for its research and development and medical affairs costs related to the ~~consolidation of facilities~~COVID Mono Products in accordance with agreed upon plans and ~~infrastructure.~~budgets.

~~In May 2023,~~Under the Collaboration and License Agreement, the Company ~~announced that its CIC, stand-alone influenza~~will continue to commercialize the COVID Mono Products in 2024. Beginning in 2025 and high-dose COVID vaccine candidates all showed a reassuring preliminary safety profile as well as comparable reactogenicity to individual Novavax influenza and COVID vaccine candidates or authorized influenza vaccine comparators. Additionally, all three vaccines demonstrated preliminary robust immune responses. The primary endpoint evaluatedcontinuing during the ~~safety of different formulations~~term of the ~~CIC vaccine candidate~~Collaboration and License Agreement, Sanofi and the ~~quadrivalent influenza vaccine candidate compared~~Company will commercialize the COVID Mono Products worldwide in accordance with a commercialization plan agreed by the Company and Sanofi, under which the Company will continue to ~~Fluad®~~supply its existing APA customers and ~~Fluzone High-Dose Quadrivalent® (Fluzone HD), as well as~~strategic partners, including Takeda, SK Biosciences, and the Serum Institute of India. Upon completion of the existing advance purchase agreements, Novavax and Sanofi will jointly agree on commercialization activities of each party in each jurisdiction.

Effective May 10, 2024, the Company also entered into the Subscription Agreement with Sanofi, pursuant to which the Company sold and issued to Sanofi, in a high-dose COVID vaccine candidate in adults aged 50 through 80. All three vaccine candidates contained Novavax’s patented Matrix-M adjuvant and showed reassuring preliminary safety profiles and reactogenicity that was comparableprivate placement, 6,880,481 shares of the Company’s common stock, par value $0.01 per share at a price of $10.00 per share for aggregate gross proceeds to ~~Fluad and Fluzone HD.~~

the Company of $68.8 million.

1923

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 (“Quarterly Report”) about expectations, beliefs, plans, objectives, assumptions, or future events or performance of Novavax, Inc. (“Novavax,” 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, including our ability to continue as a going concern through one year from the date of ~~Novavax’~~our unaudited financial statements for the period ended March 31, ~~2023;~~2024 are issued; our global restructuring and cost reduction plan (“Restructuring Plan”), which includes a more focused investment in our ~~NVX-CoV2373~~COVID-19 program ~~reduction~~(which currently includes Nuvaxovid™ prototype COVID-19 vaccine ("NVX-CoV2373” or “prototype vaccine”) and Nuvaxovid™ updated COVID-19 vaccine (“NVX-CoV2601” or “updated vaccine”) collectively referred to as our ~~pipeline spending, the continued rationalization of~~(“COVID-19 Program,” or “COVID-19 Vaccine”)); our ~~manufacturing network, a reduction to our global workforce, as well as the consolidation of facilities~~cash flow forecast and infrastructure, the size and timing of the Company’s workforce reduction, the amount and timing of the charges and cash expenditures resulting from the workforce reduction, and the expected timing and impact of cost savings from our global restructuring and cost reduction plan;projected revenue; potential market sizes and demand for our products and product candidates; the efficacy, safety, and intended utilization of our products and product candidates; the development of our clinical-stage product candidates and our recombinant vaccine and adjuvant technologies; the development of our preclinical product candidates; our expectations related to enrollment in our clinical trials; the conduct, timing, and potential results from clinical trials and other preclinical studies; plans for and potential timing of regulatory filings; our expectation of manufacturing capacity, timing, production, distribution, and delivery for ~~NVX-CoV2373 (as defined below)~~our COVID-19 Vaccine 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,~~the COVID-19 Vaccine, ongoing development of COVID-19 variant ~~strain~~strain-containing monovalent or bivalent formulations, including the Phase 2b/3 Hummingbird™ trial, ~~the timing of anticipated results~~ and our ~~efforts for the Fall 2023 vaccination season,~~COVID-19 Influenza Combination (“CIC”) vaccine candidate and our stand-alone influenza vaccine candidate; efforts to expand the ~~NVX-CoV2373~~COVID-19 Vaccine 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 under the USG Agreement (as defined below);~~ funding under our advance purchase agreements (“APAs”) and supply agreements and amendments to, termination of, discussion regarding, 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; our plans regarding APA amendments; 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 and timely manufacture, distribute, or market our updated COVID-19 vaccine including as a single dose vial or pre-filled syringe product presentation for the 2024-2025 vaccination season and our ability to receive a Biologics License Application (“BLA”) from the U.S. Food and Drug Administration (“U.S. FDA”) for the 2024-2025 vaccination season; 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”), 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; unanticipatedauthorities; challenges or delays in conducting clinical trials; challenges or delays in obtaining regulatory authorization for our product candidates, including our updated COVID-19 vaccine in time for the 2024-2025 vaccination season or for future COVID-19 variant strain changes, our CIC vaccine candidate and our stand-alone influenza vaccine candidate; manufacturing, distribution or export delays or challenges; our substantial dependence on Serum Institute of India Pvt. Ltd. and Serum Life Sciences Limited for co-formulation and filling, and PCI Pharma Services for finishing our COVID-19 vaccine and the impact of any delays or disruptions in their 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 in implementing the Restructuring Plan; our ability to timely deliver doses; challenges in obtaining commercial adoption and market acceptance of our updated COVID-19 Vaccine or any COVID-19 variant strain containing formulation; challenges meeting contractual requirements under agreements with multiple commercial, governmental, and other ~~entities;~~entities including requirements to deliver doses that may require us to refund portions of upfront and other payments previously received or result in reduced future payments pursuant to such agreements; challenges ~~in implementing our global restructuring and cost reduction plan; challenges in obtaining commercial adoption~~related to the seasonality of ~~NVX-CoV2373 or a COVID-19 variant strain-containing formulation;~~vaccinations against COVID-19; and other risks and uncertainties identified ~~in Part II, Item 1A “Risk Factors” of this Quarterly Report and~~ in Part I, Item 1A “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, ~~2022,~~2023 and this Quarterly Report on Form 10-Q, which may be detailed and modified or updated in other documents filed with the 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.

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.

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~~our COVID-19 Vaccine that would otherwise have been capitalized to inventory. Any non-GAAP financial measures presented are not, and should not be viewed as, substitutes for financial measures required by GAAP, have no standardized meaning prescribed by GAAP, and may not be comparable to the calculation of similar measures of other companies.

Overview

We are a biotechnology company that promotes improved global 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 nanostructures of conformationally correct recombinant proteins that mimic those found on ~~natural~~ pathogens. This technology enables the immune system to recognize target proteins and develop protective ~~antibodies.~~immune responses. 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, stimulate higher levels of functional antibodies, and induce a cellular immune response.

We ~~have~~previously developed an updated COVID-19 vaccine for the 2023-2024 vaccination season, for which the U.S. FDA granted emergency use authorization (“EUA”) in October 2023 for active immunization to prevent COVID-19. We are in the process of developing an updated COVID-19 vaccine for the 2024-2025 vaccination season and expect our updated COVID-19 vaccine to be available at U.S. pharmacy retailers in September 2024. During the first quarter of 2024, we completed the submission of the BLA for our prototype COVID-19 vaccine with the U.S. FDA. In addition, we aligned with the U.S. FDA on pathway for EUA for our updated COVID-19 vaccine for the 2024-2025 vaccination season.

Outside the U.S., in January 2024, our updated vaccine was granted marketing authorization by the United Kingdom’s (“UK”) Medicines and Healthcare products Regulatory Agency (“MHRA”). We are committed to meeting the full supply of our key target markets through APAs covering such markets. We continue to work closely with regulatory authorities globally for authorization of our updated vaccine. We previously developed a prototype COVID-19 vaccine, which has received full marketing authorization (“~~NVX-CoV2373, “Nuvaxovid™,” “Covovax™,” “Novavax COVID-19 Vaccine, Adjuvanted”~~MA”), ~~that has received~~marketing approval, interim authorization, provisional approval, or conditional marketing authorization (“CMA”), ~~and emergency use authorization (“EUA”)~~ from multiple regulatory authorities ~~globally~~in over 40 countries globally. We continue to progress our regulatory authorizations for ~~both adult and adolescent populations~~our prototype vaccine in select territories, as we believe these may facilitate authorization of our vaccine candidates for updated strains in the future.

Additionally, our near-term focus is on developing a ~~primary series and for both homologous and heterologous booster indications. We are also developing an influenza vaccine candidate, a COVID-19-Influenza Combination (“CIC”)~~CIC vaccine candidate as well as ~~COVID-19 variant strain-containing formulation that we intend to provide in a monovalent or bivalent presentation in alignment with public health recommendations. In addition to COVID-19 and~~ seasonal influenza ~~our other areas~~vaccine candidate, and we are on track to initiate a Phase 3 trial in the second half of ~~focus include providing~~2024 for both vaccines. Furthermore, we provide our Matrix-M™ adjuvant for collaborations, ~~investigating the prevention of malaria,~~ including in R21/Matrix-M™ adjuvant malaria vaccine, which recently received authorization in several ~~countries.~~countries, as well as other preclinical vaccine research with our Matrix-M™ adjuvant, including through a partnership with the Bill & Melinda Gates Medical Research Institute.

We intend to focus ~~the~~our organization to align our investments and activities with our top priority of delivering anour updated COVID-19 vaccine ~~consistent with public health recommendations for strain composition~~ for the ~~2023 Fall~~2024-2025 vaccination season. To maximize our opportunities and mitigate the significant risks and uncertainties of the COVID-19 market, we have ~~taken several~~progressed our cost restructuring measures to reduce spend, extend our cash runway, and operate efficiently to seek the best position for the ~~company~~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.~~statements.

Technology Overview

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

Recombinant Nanoparticle Vaccine Technology

Once a ~~pathogenic threat~~target 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 (“Sf-/BV”) insect cell-expression system, which enables efficient, large-scale expression of the optimized protein. The 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™ adjuvant.

Matrix-M™ Adjuvant

Our proprietary Matrix-M™ adjuvant is a key differentiator within our platform. This adjuvant has enabled potent, well tolerated, and durable efficacy by stimulating the entry of antigen presenting cells (“APCs”) into the injection site and

enhancing antigen presentation in local lymph nodes. This in turn activates APCs, T-cell and B-cell populations, and plasma cells, which ~~promotes~~promote the production of high affinity antibodies, an immune boosting response. This potent mechanism of action enables a lower dose of antigen ~~required~~ to achieve the desired immune response, thereby 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.~~commercialization and in December 2023 received prequalification by the World Health Organization (“WHO”), along with authorizations received earlier in the year in Burkino Faso, Ghana, and Nigeria. Additionally, in May 2023, we entered into a three-year agreement with the Bill & Melinda Gates Medical Research Institute to provide our Matrix-M™ adjuvant for use in preclinical vaccine research. In June 2023, we signed a material transfer agreement with SK bioscience Co., Ltd. (“SK”) for use of our Matrix-M™ adjuvant in preclinical vaccine experiments for shingles, influenza, and pan-COVID-19. Our adjuvant technology is also being ~~investigated in veterinary applications and is~~used by commercial partners as a key component in veterinary vaccines against equine ~~vaccine to prevent Strangles.~~influenza and Strangles, as well as the manufacture of black-widow anti-venom.

~~NVX-CoV2373~~COVID-19 Vaccine Regulatory and Licensure

We continue to receive authorizations for our updated vaccine developed for the 2023-2024 COVID-19 vaccination season in accordance with the updated strain protocol guidance. We are ~~advancing NVX-CoV2373 through multiple~~also continuing to progress our regulatory ~~approvals.~~ authorizations for our prototype vaccine in select territories, as we believe these may facilitate authorization of our vaccine candidates for updated strains in the future. Additionally, we continue to progress our regulatory authorizations for our updated vaccine and plan to continue to do so for subsequent future variant strains for each annual respiratory season, including the upcoming 2024-2025 vaccination season.

Within the U.S. market, our updated vaccine received EUA in October 2023 from the U.S. FDA to prevent COVID-19 in individuals aged 12 and older and is marketed in the U.S. under the name Novavax COVID-19 Vaccine, Adjuvanted (2023-2024 Formula). The formulation for our updated vaccine aligns with global harmonized guidance from the U.S. FDA, the European Medicines Agency (“EMA”), and WHO recommendations for the 2023-2024 vaccination season.

Outside the U.S. market, we continue to progress regulatory authorizations for our updated vaccine globally. In January 2024, we were granted marketing authorization by the UK MHRA for our updated vaccine, marketed under the name Nuvaxovid™ XBB.1.5 Vaccine, in individuals aged 12 and older.

We have previously received authorizations for our prototype COVID-19 vaccine in over 40 countries globally, including from major regulatory agencies ~~including~~such as the U.S. FDA, ~~the~~ WHO, ~~the~~ EMA, and ~~the~~ 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~~our prototype vaccine include primary series and both homologous and heterologous booster indications within specific countries. For the territories in which our vaccine has ~~gained authorization, NVX-CoV2373~~received regulatory authorizations, our prototype vaccine 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 first quarter 2023 and subsequent regulatory authorizations received through the date of this filing on Form 10-Q.~~

In January 2023, our partner SK bioscience received expanded manufacturing and marketing approval from Korean Ministry of Food and Drug Safety for Nuvaxovid™ for use as a booster in adults aged 18 and older.

We are working to continue to expand our label for ~~heterologous boosting~~primary and re-vaccination in ~~adults, adolescents, and~~ younger children, and to achieve supportive policy recommendations enabling broad market access. We continue to work closely with governments, regulatory authorities, and non-governmental organizations in our commitment to facilitate global access to our COVID-19 vaccine.

~~Clinical~~

Product Pipeline

Our clinical pipeline ~~is comprised of~~encompasses vaccine candidates for infectious ~~diseases. Our lead product is~~diseases, with our COVID-19 prototype vaccine ~~NVX-CoV2373, which~~(NVX-CoV2373) and our COVID-19 updated vaccine (NVX-CoV2601), as our lead products. Our updated vaccine has received ~~approval, interim~~ authorization ~~provisional approval, CMA, or EUA for both adult~~from the U.S. FDA, the EC, the WHO, and ~~adolescent populations in over 40 countries. We advanced NVX-CoV2373 through two pivotal Phase 3 clinical trials that demonstrated high efficacy against both the original~~several other countries globally. Beyond our COVID-19 ~~strain and commonly circulating COVID-19 variants, while maintaining a favorable safety profile. Beyond COVID-19,~~vaccine, our clinical pipeline includes a CIC vaccine candidate, and a seasonal influenza ~~and CIC vaccines,~~vaccine candidate in addition to our Matrix-M™ adjuvant being used for ~~collaborations investigating~~collaboration in R21/Matrix-M™ adjuvant malaria vaccine.

Novavax continues to optimize preclinical candidates, including a new approach to H5N1 pandemic bird flu vaccination, and expand our core technology for novel applications including mucosal vaccination and high-density nanoparticles.

(1) Authorized in select geographies under trade names Novavax COVID-19 Vaccine, Adjuvanted; Covovax™; and Nuvaxovid™, and authorized in the ~~prevention~~U.S. under trade name, Novavax COVID-19 Vaccine, Adjuvanted (2023-2024 Formula); Ongoing post-authorization Phase 3 strain change trial.

(2) Authorized in Ghana, Nigeria, and Burkina Faso; Commercialized by Serum Institute of ~~malaria.~~India; Granted prequalification by the WHO.

Coronavirus Vaccine Clinical Development

We remain focused on expanding our ~~NVX-CoV2373~~COVID-19 vaccine label within the booster, adolescent, and ~~adolescent market following global regulatory authorizations.~~pediatric indications. We continue to evaluate vaccine safety, immunogenicity, and effectiveness through ongoing ~~booster studies in our~~ clinical trials and ~~we continue~~collaborative evidence-generating real-world studies. We expect to leverage these clinical insights to advance ~~development~~additional regulatory approvals of our COVID-19 ~~variant strain containing monovalent or bivalent formulation.~~vaccine globally, amidst the evolving COVID-19 landscape.

Phase 3 Strain-Change and Re-vaccination Studies

Study 311 Part 2: In ~~March~~August 2023, we ~~initiated the Phase 3 COVID-19~~announced primary endpoint topline results demonstrating immunologic superiority of our bivalent prototype and Omicron BA.5 ~~clinical trial evaluating~~vaccine compared to our prototype vaccine ~~compared to an~~(NVX-CoV2373) for Omicron BA.5 specific responses. This study was designed to support our 2023-2024 strain change for our updated vaccine ~~as well as a bivalent containing vaccine.~~(NVX-CoV2601). In March 2024, interim results of this study were published in The Lancet.

Study 313: In November 2023, we fully enrolled 338 adults aged 18 and older and in Part 2 of the study we will evaluate the immunogenicity of our updated vaccine (NVX-CoV2601) in previously unvaccinated individuals. Topline results are expected ~~mid-year 2023, which we expect will confirm~~by the ~~strain-change approach we anticipate using~~second quarter of 2024. Data from Study 313 are intended to support BLA supplements and similar

regulatory submissions in other territories for future variant ~~vaccine candidate approvals.~~strain formulations.

~~Further pediatric development is ongoing in the~~Phase 2b/3 Pediatric Hummingbird™ Study

In August 2023, we announced topline results from our Phase 2b/3 Hummingbird™ ~~Global Clinical Trial, which~~trial that met its primary endpoints in children aged 6 through 11 years demonstrating both tolerability and immunologic responses. This ongoing trial is evaluating the safety, ~~immunogenicity,~~effectiveness (immunogenicity), and ~~effectiveness~~efficacy of ~~NVX-CoV2373 in children.~~two doses of our prototype vaccine (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 cohort~~Cohorts aged ~~six~~2 through 5 years and 6 to ~~11 years has completed enrollment,~~23 months are fully enrolled. In consultation with regulatory bodies, the filing strategy includes filing a supplemental BLA for these cohorts once the initial BLA is approved. Therefore, we do not anticipate authorization for these age groups for the 2024-2025 vaccination season.

COVID-Influenza Combination and ~~enrollment is ongoing in~~Stand-alone Influenza Program

For our CIC vaccine, we have previously received agreement with the ~~cohort aged two to five years. Topline results in the cohort aged six to 11 years are expected mid-year 2023.~~

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

~~Additionally, we are developing our quadrivalent nanoparticle influenza vaccine (“qNIV”) candidate, which we advanced through~~U.S. FDA on a ~~successful~~ Phase 3 design, study ~~published in September 2021, demonstrating~~endpoints, trivalent comparators, and size of licensure enabling safety database. We have recently decided to modify the ~~utility of~~study to focus on individuals at higher risk by enrolling adults aged 60 years and older and to include a stand-alone influenza vaccine ~~or for use~~comparative component. We remain on track to submit an investigational new drug application, inclusive of this new study design and initiate the study in athe second half of 2024, with potential accelerated approval and launch of the CIC vaccine in the fall of 2026.

While our focus remains on the combination ~~vaccine. We have subsequently updated~~product, our ~~qNIV candidate for further development. We continue~~development plans will maintain optionality to ~~progress a Phase 2 dose-confirming trial evaluating~~advance our stand-alone influenza vaccine, ~~candidate, qNIV~~as described above, creating a pathway to potentially seek licensure. For our stand-alone influenza vaccine, we have generated positive data through our previous Phase 2 trial. We expect to confirm and ~~our CIC vaccine candidate, which combines NVX-CoV2373~~expand on these findings in the planned Phase 3 trial. We continue to believe this asset may also be attractive from a pandemic preparedness perspective and ~~our updated qNIV approach~~that similar performance in ~~a single formulation.~~terms of comparative immunogenicity may be expected for A/H5N1 pandemic strains.

High-dose COVID-19 Vaccine Study

Study 205: In ~~January~~October 2023, we completed enrollment ~~of 1,575 participants~~ in ~~the~~a Phase 2 ~~CIC clinical trial.~~trial to evaluate our high-dose COVID-19 vaccine for annual vaccination in 994 adults ages 50 years and older. The ~~clinical~~ trial will ~~evaluate safety~~compare immunogenicity levels of 5 micrograms of our prototype vaccine (NVX-CoV2373) against 5 micrograms, 35 micrograms, and ~~immunogenicity~~50 micrograms of our updated vaccine (NVX-CoV2601) that are matched with different ~~formulations~~levels of ~~CIC and influenza stand-alone vaccine candidates in adults aged 50 to 80 years, with topline results expected by mid-year 2023.~~

Although our COVID-19, CIC, and influenza stand-alone vaccine candidates are our near-term priorities, our partner-led malaria candidates present strong opportunities for future development. An ongoing Phase 3 clinicaladjuvant. Data from this trial is ~~being conducted~~intended to potentially support further development of a higher-dose formulation for older adults, similar to that of influenza vaccines. Analysis of the complete dataset is ongoing to determine the utility of pursuing a high dose formulation.

R21/Matrix-M™ Adjuvant Malaria Vaccine

R21/Matrix-M™ adjuvant malaria vaccine, formulated with our Matrix-M™ adjuvant is developed by our partner, the Jenner Institute, University of Oxford, and manufactured by ~~SIIPL, and is formulated with our Matrix-M™ adjuvant. As of the filing of this Quarterly Report, the R21/Matrix-M™ adjuvant malaria vaccine received authorizations in Ghana and Nigeria.~~SIIPL. We have an agreement with SIIPL related to its manufacture of R21/Matrix-M™ adjuvant malaria vaccine under which SIIPL purchases our Matrix-M™ adjuvant ~~as well as~~for use in development activities at cost and for commercial purposes at a tiered commercial supply price, and pays ~~royalties~~a royalty in the single- to low-double digit range based on ~~its~~ vaccine ~~sales.~~sales for a period of 15 years after the first commercial sale of the vaccine in each country.

~~The pipeline chart below summarizes~~In February 2024, peer-reviewed results from the ~~core clinical development programs that we are focusing on in the near-term.~~

~~(1) Authorized in select geographies under trade names Novavax COVID-19 Vaccine, Adjuvanted; Covovax™; and Nuvaxovid™.~~

~~(2) Ongoing~~ Phase 3 ~~strain change trial.~~

~~(3)~~efficacy trial were published in The Lancet reporting R21/Matrix-M™ adjuvant malaria vaccine ~~being commercialized~~has a well-tolerated safety profile and offers high-level efficacy against clinical malaria in African children at sites of both seasonal and perennial transmission.

In December 2023, the WHO announced it prequalified the R21/Matrix-M™ adjuvant malaria vaccine to prevent malaria disease in children caused by ~~SIIPL.~~the P. falciparum parasite in endemic areas. Prequalification status enables United Nations agencies to procure the vaccine for eligible countries and will enable rollout of the vaccine in mid-2024. The WHO recommended that the R21/Matrix-M™ adjuvant malaria vaccine be administered in a four-dose schedule beginning at five months of age. Previously, R21/Matrix-M™ adjuvant malaria vaccine received authorization in Burkina Faso, Ghana and Nigeria.

Business Highlights

First Quarter ~~2023~~2024 and Recent Highlights

~~During~~We and Sanofi Pasteur Inc. (“Sanofi”) announced that we entered into a co-exclusive licensing agreement. The terms of the ~~quarter,~~agreement include: a co-exclusive license to co-commercialize our current stand-alone adjuvanted COVID-19 vaccine worldwide (except in countries with existing APAs and in India, Japan and South Korea where we ~~made progress delivering on~~have existing partnership agreements); a sole license to our adjuvanted COVID-19 vaccine for use in combination with Sanofi’s influenza vaccines while we retain the ~~three near-term priorities laid out during~~right to and is developing its own COVID-19-Influenza Combination vaccine candidate; a non-exclusive license to use our ~~fourth quarter 2022 earnings call.~~adjuvanted COVID-19 vaccine for use in combination with non-influenza vaccines; and a non-exclusive license to use the Matrix-M™ adjuvant in vaccine products. In addition, Sanofi will take a minority (<5%) equity investment in our Company.

~~Priority #1: Deliver an Updated, Competitive COVID Vaccine for the Upcoming 2023 Fall Vaccination Season~~First Quarter 2024 and Recent Highlights

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

•~~Ongoing discussions~~Updatedour protein-based non-mRNACOVID-19 vaccine to JN.1 with ~~global regulators on strain selection guidance and advancement of commercial preparedness for Fall 2023~~anticipated pre-filled syringe presentation.

◦•~~Invited to join~~Completed the submission of the BLA for Novavax's COVID-19 vaccine with the U.S. FDA.

•Aligned with the U.S. FDA ~~Technology Working Group to evaluate emerging variants in preparation~~on pathway for ~~strain selection~~EUA for updated COVID-19 vaccine for the 2024-2025 vaccination season, with the intent of facilitating product availability at the ~~June VRBPAC meeting~~beginning of the season.

◦•~~Ongoing development~~Advanced retail pharmacy contract negotiations for the 2024-2025 vaccination season.

Global Markets:

•Delivered doses of ~~variant strains “at risk”~~Nuvaxovid™ XBB.1.5 vaccine to ~~support regulatory~~Europe and ~~commercial readiness~~for distribution by the Taiwan Centers for Disease Control.

◦•~~Modified U.S. government agreement~~Received marketing authorization from the UK’s MHRA for ~~up to 1.5 million additional doses of Novavax’s COVID vaccine~~Nuvaxovid™ XBB.1.5 in individuals aged 12 and older in January and progressed preparations for ~~delivery in 2023, with initial delivery supplied in five-dose vials~~participation in the ~~first quarter~~UK spring campaign for private healthcare providers.

•Granted full approval from Singapore’s Health Sciences Authority for Nuvaxovid™ XBB.1.5 for active immunization to prevent COVID-19 in individuals aged 12 and older.

Clinical development and technology platform updates:

•Made strategic decision to add a stand-alone influenza vaccine comparative component and to focus on individuals at higher risk by enrolling adults aged 60 and older for both the stand-alone influenza and CIC arms of ~~2023~~the trial.

•On track to submit an investigational new drug application and initiate the pivotal Phase 3 trial for both CIC and stand-alone influenza vaccine candidates in the second half of 2024, with potential for accelerated approval and launch in 2026.

•Continued ~~expansion of Nuvaxovid label~~ to ~~enable broader uptake in the long-term commercial market~~

•~~Completed enrollment~~optimize preclinical candidates, including a new approach to H5N1 pandemic bird flu vaccination, and ~~on track to receive topline results mid-2023~~expanded our core technology for ~~Part 2 of Phase 3 strain change study, which is a regulatory prerequisite for updating our 2023-2024 vaccine composition~~

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

~~Priority #2: Reduce our Rate of Spend, Manage our Cash Flow~~novel applications including mucosal vaccination and ~~Evolve our Scale & Structure~~high-density nanoparticles.

We are ~~focused~~ on ~~significantly reducing~~track with our ~~expenses while retaining the key capabilities needed to execute our operating plans.~~

•~~Announced a~~ global restructuring and cost reduction plan, ~~which is expected to reduce our annual combined 2024 R&D and SG&A expenses~~

◦~~Includes consolidation of facilities and infrastructure and approximately 25% reduction in global workforce~~

◦~~2023 R&D and SG&A expense reduction expected to be based on timing of implementation, local laws and regulations and other factors~~

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

Weas we continue to ~~leverage our pipeline~~transform the Company into a more lean and ~~technology~~agile organization, with an approximately 50% reduction to combined research and development and Selling, general, and administrative expenses in the ~~intent~~first quarter of ~~delivering long-term growth and protecting global health.~~

•~~Announced positive Phase 2 COVID-Influenza Combination (CIC) vaccine, standalone influenza, and high-dose COVID vaccine data, which evaluated safety and immunogenicity of different formulations~~

◦~~All three vaccine candidates were well-tolerated, demonstrated a reassuring preliminary safety profile, and had reactogenicity comparable~~2024, compared to ~~authorized comparators~~

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

•~~Serum Institute of India has received authorizations in Ghana and Nigeria for R21/Matrix-M™ adjuvanted malaria vaccine~~

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

2023.

Sales of Common Stock

In ~~June 2021,~~August 2023, we entered into an At Market Issuance Sales Agreement (the ~~"June 2021~~“August 2023 Sales ~~Agreement"~~Agreement”), which allows us to issue and sell up to $500 million in gross proceeds of shares of ~~its~~our common ~~stock.~~stock, and terminated our then-existing At Market Issuance Sales agreement entered in June 2021 (the "June 2021 Sales Agreement"). There were no sales recorded under the August 2023 Sales Agreement during the three months ended March 31, 2024. As of March 31, ~~2023,~~2024, the remaining balance available under the ~~June 2021~~August 2023 Sales Agreement was approximately ~~$318~~$242 million. There were no sales recorded under the June 2021 Sales Agreement during the three months ended March 31, 2023.

~~During the three months ended March 31, 2022, we sold 2.2 million shares of our common stock resulting in net proceeds of approximately $179 million, under the June 2021 Sales Agreement.~~

Critical Accounting Policies and Use of Estimates

The discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements (unaudited) and the accompanying notes, which have been prepared in accordance with generally accepted accounting principles in the United States.

The preparation of our consolidated financial statements requires us to make estimates, assumptions, and judgments that affect the reported amounts of assets, liabilities, and equity and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Our critical accounting policies and estimates are included under Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2022,~~2023, as filed with the 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 March 31, ~~2023~~2024 and ~~2022~~2023

Revenue


		Three Months Ended March 31,
		2023		2022		Change
	Three Months Ended March 31,									Three Months Ended March 31,
	2024							2024	2023		Change
Revenue (in thousands):	Revenue (in thousands):
Product sales
Product sales
Product sales	Product sales	$	(7,457)	$	585,628	$	(593,085)
Grants	Grants	87,379		99,301		(11,922)
Royalties and other	Royalties and other	1,029		19,042		(18,013)
Total revenue	Total revenue	$	80,951	$	703,971	$	(623,020)

Revenue for the three months ended March 31, ~~2023~~2024 was ~~$81.0~~$93.9 million as compared to ~~$704.0~~$81.0 million for the same period in ~~2022, a decrease~~2023, an increase of ~~$623.0~~$12.9 million. Revenue for the three months ended March 31, 2024 was primarily comprised of revenue from product sales of COVID-19 Vaccine. Revenue for the three months ended March 31, 2023 was primarily ~~for~~comprised of services performed under our U.S. government agreement with Advanced Technology International (“USG Agreement”), the Consortium Management Firm acting on behalf of the Medical CBRN Defense Consortium in connection with the partnership formerly known as Operation Warp Speed, net of a credit related to product sales of NVX-CoV2373. Revenue for the three months ended March 31, 2022 was primarily comprised of revenue from product sales of NVX-CoV2373, which commenced in 2022 and, to a lesser extent, revenue for services performed under the USG Agreement.Speed. The ~~reduction~~increase in revenue is ~~primarily~~ due to an increase in the ~~decrease in product~~quantity of dose sales of ~~NVX-CoV2373~~COVID-19 Vaccine, sales-based royalties, and Matrix-M™ adjuvant sales during the three months ended March 31, ~~2023 as compared to~~2024, partially offset by a decrease in revenue under the ~~same period in 2022.~~

USG Agreement.

Product sales

Product sales for the three months ended March 31, ~~2023~~2024 were ~~$(7.5)~~$82.3 million as compared to ~~$585.6~~$(7.5) million during the three months ended March 31, 2023. Our product sales related to revenue from commercial sales of COVID-19 Vaccine, which commenced in 2022. Product sales in the three months ended March 31, 2023, included a credit of $64.7 million for certain doses delivered in 2022 that qualified for replacement. The credit is the result of a single lot sold to the Australian government that upon pre-planned 6-month stability testing was found to have fallen below the defined specifications and the lot was

therefore removed from the market.

The geographic distribution of product sales was as follows:


		Three Months Ended March 31,
		2023		2022		Change
	Three Months Ended March 31,									Three Months Ended March 31,
	2024							2024	2023		Change
North America	North America	$	—	$	64,762	$	(64,762)
Europe	Europe	57,267		413,745		(356,478)
Rest of the world	Rest of the world	(64,724)		107,121		(171,845)
Total product revenue		$	(7,457)	$	585,628	$	(593,085)
Total product sales

During the three months ended March 31, 2024, product sales in North America includes $6.4 million of gross-to-net deductions in excess of the wholesaler acquisition costs (“WAC”), primarily due to wholesale distributor fees for shipments expected to be returned and adjustments made to estimated returns of prior period product sales. Product sales for the rest of the world includes a $3.6 million reduction to revenue recognized in prior periods due to the Gavi Settlement Agreement (see Note 3 to our consolidated financial statements).

Grants

We did not have any Grant revenue during the three months ended March 31, ~~2023 was $87.4 million~~2024, as compared to ~~$99.3~~$87.4 million during the same period in ~~2022,~~2023, a decrease of ~~$11.9~~$87.4 million. Grant revenue ~~for 2023 and 2022,~~ comprised revenue for services performed under our USG Agreement. As of December 31, 2023, we had recognized the ~~Project Agreement. The decrease was primarily due to~~full contract funding under the ~~net effect of a cumulative constraint on~~USG Agreement in revenue.

Royalties and other

Royalties and other includes royalty milestone payments, sales-based royalties, and Matrix-M™ adjuvant sales. Royalties and other revenue ~~as a result of the execution of Modification 17 to the Project Agreement~~ during the three months ended March 31, ~~2023.~~

2024 was $11.5 million as compared to $1.0 million during the same period in 2023, an increase of $10.5 million. The increase was primarily due to $4.0 million in revenue related to license fees and $7.5 million in revenue related to a Matrix-M™ adjuvant sales.

Expenses


		Three Months Ended March 31,
		2023		2022		Change
	Three Months Ended March 31,									Three Months Ended March 31,
	2024							2024	2023		Change
Expenses (in thousands):	Expenses (in thousands):
Cost of sales
Cost of sales
Cost of sales	Cost of sales	$	34,086	15,204		$	18,882
Research and development	Research and development	247,101		383,483		(136,382)
Selling, general, and administrative	Selling, general, and administrative	112,532		95,992		16,540
Total expenses	Total expenses	$	393,719	$	494,679	$	(100,960)

Cost of Sales

Cost of sales was $59.2 million for the three months ended March 31, 2024, including expenses of $8.8 million related to excess, obsolete, or expired inventory, and $6.0 million related to unutilized manufacturing capacity. Cost of sales was $34.1 million for the three months ended March 31, 2023, including expense of ~~$20.2~~$19.4 million related to excess, obsolete, or expired inventory and losses on firm purchase ~~commitments. Cost of sales was $15.2~~commitments, partially offset by negotiated reductions to certain previously recognized firm purchase commitments, and $4.6 million ~~or 3% of product sales, for the three months ended March 31, 2022, due~~related to ~~the significant write off of pre-launch inventory as research and development expenses.~~unutilized manufacturing capacity. 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 March 31, 2023, we had approximately $6.4 million of salable commercial inventory that was expensed prior to approval. We expect to utilize the majority of our reduced-cost inventory through 2023. If inventory sold for the three months ended March 31, ~~2023~~2024 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 ~~$49.1~~$60.8 million, an adjustment of ~~$15.0~~$1.6 million as compared to cost of sales recognized. If inventory sold for the three months ended March 31, ~~2022~~2023 was valued at expected standard cost, adjusted cost of

sales for the period would have been approximately ~~$160.0~~$49.1 million, ~~or 27% of product sales,~~ an adjustment of ~~$145.0~~$15.0 million. The cost of sales as a percentage of product sales may fluctuate in the future as a result of changes to our customer pricing mix or standard costs.

Research and Development Expenses

Research and development expenses ~~decreased~~were $92.7 million for the three months ended March 31, 2024 as compared to $247.1 million for the three months ended March 31, 2023, ~~as compared to $383.5 million for the three months ended March 31, 2022,~~ a decrease of ~~$136.4~~$154.4 million. The decrease was primarily due to a reduction in overall expenditures relating to development activities on coronavirus vaccines, including ~~NVX-CoV2373 and Omicron variant vaccine candidates, bivalent formulations,~~our COVID-19 Program, and CIC, as summarized in the table below (in thousands):


		Three Months Ended March 31,
		2023		2022
	Three Months Ended March 31,						Three Months Ended March 31,
	2024					2024		2023
Coronavirus vaccines	Coronavirus vaccines	$	140,014	$	288,933
Influenza vaccine		1,476		1,296
Other vaccine development programs	Other vaccine development programs	481		803
Total direct external research and development expense	Total direct external research and development expense	141,971		291,032
Employee expenses	Employee expenses	53,413		43,742
Stock-based compensation expense	Stock-based compensation expense	13,858		16,887
Facility expenses	Facility expenses	19,402		13,208
Other expenses	Other expenses	18,457		18,614
Total research and development expenses	Total research and development expenses	$	247,101	$	383,483

Research and development expenses for coronavirus vaccines for the three months ended March 31, 2024 and 2023 decreased from $140.0 million to $26.1 million primarily as a result of a reduction in manufacturing and ~~2022, included~~support costs due, in part, to a ~~benefit of $11.7 million related~~reduction in our global manufacturing footprint consistent with our contractual obligations to ~~previously accelerated manufacturing~~supply, and anticipated demand for, COVID-19 Vaccine, including embedded lease costs, ~~and an expense of $21.0 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”). The decrease was also due to a benefit of $26.6 million for the three months ended March 31, 2024 resulting from the Confidential Settlement Agreement and Release agreement executed with Fujifilm resulting in a reduction to previously recorded expense (see Note 4 to our consolidated financial statements).

Selling, General, and Administrative Expenses

Selling, general, and administrative expenses ~~increased to $112.5~~were $86.8 million for the three months ended March 31, ~~2023 from $96.0~~2024 as compared to $112.5 million for the same period in ~~2022, an increase~~2023, a decrease of ~~$16.5~~$25.7 million. The ~~increase~~decrease in selling, general, and administrative expenses is primarily due to ~~an increase in expenses related to the expansion of our commercial sales operations in Europe and other costs in support of our NVX-CoV2373 program, partially offset by~~ certain cost containment measures to reduce our operating spend.

For the remainder of ~~2023,~~2024, we ~~plan to restructure our global footprint to reduce~~expect a reduction in our annual combined research and development, and selling, general, and administrative ~~spend.~~spend as a result of our Restructuring Plan announced during the three months ended March 31, 2024.

Other ~~Expense~~Income (Expense)


		Three Months Ended March 31,
		2023		2022		Change
	Three Months Ended March 31,									Three Months Ended March 31,
	2024							2024	2023		Change
Other income (expense):	Other income (expense):
Interest expense
Interest expense
Interest expense	Interest expense	$	(4,316)	$	(4,876)	$	560
Other income	Other income	24,362		1,654		22,708
Total other income (expense), net	Total other income (expense), net	$	20,046	$	(3,222)	$	23,268

Total other ~~income,~~expense, net was ~~$20.0~~$0.5 million for the three months ended March 31, ~~2023~~2024 as compared to a total other ~~expense,~~income, net of ~~$3.2~~$20.0 million for the same period in ~~2022.~~2023. The ~~increase~~decrease in other income, net is due to the ~~favorable~~unfavorable impact in 2024 as compared to 2023 of exchange rates on foreign currency denominated balances, ~~and~~including an ~~increase in investment income due to higher interest rates.~~intercompany loan with Novavax CZ.

Income Tax Expense

During the three months ended March 31, ~~2023 and 2022,~~2024, we recognized ~~$1.2 million and $2.7 million, respectively, of~~an income tax expense of $2.3 million related to foreign income taxes. During the three months ended March 31, 2023, we recognized an income tax expense of $1.2 million related to federal, state, and foreign income ~~taxes and foreign withholding tax expense on royalties.~~taxes.

Net ~~Loss~~Income (Loss)

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


	Three Months Ended March 31,
	2024		2023		Change
Net Loss (in thousands, except per share information):
Net loss	$	(147,550)	$	(293,905)	$	146,355
Net loss per share, basic and diluted	$	(1.05)	$	(3.41)	$	2.36

Weighted average shares outstanding, basic and diluted	139,916		86,158		53,758

Net loss for the three months ended March 31, ~~2023~~2024 was $147.6 million, or $1.05 per share, as compared to net loss of $293.9 million, or $3.41 per share, ~~basic, as compared to net income of $203.4 million, or $2.66 per share, basic,~~ for the same period in ~~2022.~~2023. The decrease in ~~income~~net loss during the three months ended March 31, ~~2023,~~2024, was primarily due to ~~the decline in commercial sales of NVX-CoV2373 in the three months ended March 31, 2023, offset by~~ a decrease in research and development expenses.

The increase in weighted average shares outstanding for the three months ended March 31, ~~2023~~2024 was primarily a result of ~~the sale~~sales of our common ~~stock and exercises of stock-based awards.~~stock.

Liquidity Matters and Capital Resources

Our future capital requirements depend on numerous factors including, but not limited to, revenue from our product sales, milestone payments, royalties and ~~royalties~~reimbursements 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~~our COVID-19 Vaccine and ~~variant candidates,~~our CIC vaccine candidate, including significant commitments under various ~~contract~~clinical research ~~organization,~~organizations, 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.

Effective May 10, 2024, we entered into a collaboration and license agreement (the “Collaboration and License Agreement”) with Sanofi pursuant to which Sanofi received:

i) A co-exclusive license to commercialize with us all of our current stand-alone COVID-19 vaccine products, including the our Nuvaxovid™ prototype COVID-19 vaccine and Nuvaxovid™ updated COVID-19 vaccine, and updated versions that address seasonal variants throughout the world (“COVID Mono Products”),

ii) A sole license to develop and commercialize combination products containing a potential combination of our COVID-19 vaccine and Sanofi’s seasonal influenza vaccine (“COVID and influenza Combination Products” or “CIC Products”),

iii) A non-exclusive license to develop and commercialize combination products containing both our COVID-19 vaccine and one or more non-influenza vaccines (“Other Combination Products” and together with the COVID Mono Products, CIC Products, and Other Combination Products (“Licensed COVID-19 Products”)), and

iv) A non-exclusive license to develop and commercialize other vaccine products selected by Sanofi that include our Matrix-M™ adjuvant (as described below, the “Adjuvant Products”).

Under the Collaboration and License Agreement, we will receive a non-refundable upfront payment of $500 million. In addition, we will also be eligible to receive development, technology transfer, launch, and sales milestone payments totaling up to $700 million in the aggregate with respect to the Licensed COVID-19 Products and royalty payments on Sanofi’s sales of such licensed products. In addition, we are eligible to receive development, launch, and sales milestone payments of up to $200 million for each of the first four Adjuvant Products and $210 million for each Adjuvant Product thereafter, and royalty payments on Sanofi’s sales of all such licensed products.

Commencing shortly after the Effective Date of the Collaboration and License Agreement, we will perform a technology transfer of our manufacturing process for the COVID Mono Products and Matrix-M™ components to Sanofi. Until the successful completion of such transfer, we will supply Sanofi with both COVID Mono Products and Matrix-M™intermediary components for Sanofi’s use and are eligible for reimbursement of such costs from Sanofi. Additionally, Sanofi will reimburse us for our research and development and medical affairs costs related to the COVID Mono Products in accordance with agreed upon plans and budgets.

Under the Collaboration and License Agreement, we will continue to commercialize the COVID Mono Products in 2024. Beginning in 2025 and continuing during the term of the Collaboration and License Agreement, Sanofi and we will commercialize the COVID Mono Products worldwide in accordance with a commercialization plan agreed by us and Sanofi, under which we will continue to supply our existing APA customers and strategic partners, including Takeda, SK Biosciences, and the Serum Institute of India. Upon completion of the existing advance purchase agreements, we and Sanofi will jointly agree on commercialization activities of each party in each jurisdiction.

Effective May 10, 2024, we also entered into a securities subscription agreement (the “Subscription Agreement”) with Sanofi, pursuant to which we sold and issued to Sanofi, in a private placement, 6,880,481 shares of our common stock, par value $0.01 per share at a price of $10.00 per share for aggregate gross proceeds to us of $68.8 million.

We have entered into supply agreements, sometimes referred to as APAs, with ~~Gavi,~~ the ~~Vaccine Alliance (“Gavi”); the European Commission (“EC”);~~EC and various countries globally. We also have ~~grant and~~ license agreements. As of March 31, ~~2023,~~2024, 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~~licensing 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 $3$2 billion, of which ~~$689.8 million~~$1.1 billion is included in Deferred revenue inon our ~~Consolidated~~consolidated balance sheet. Failure to timely meet regulatory milestones, obtain timely ~~obtain~~ supportive recommendations from governmental advisory committees, or achieve product volume or delivery timing obligations under our 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.~~COVID-19 Vaccine. Such upfront payments generally become non-refundable upon our achievement of certain development, regulatory, and commercial milestones.

On October 3, 2023, our updated vaccine received EUA from the U.S. FDA for active immunization to prevent COVID-19 in individuals aged 12 and older. Immediately upon authorization, our updated vaccine has also been included in the recommendations issued by the CDC in September 2023. Doses became available within the U.S. at many major pharmacy retailers, following the Center for Biologics Evaluation and Research release of vaccine batches. We have established reserves for gross-to-net deductions for amounts that we expect to return to our customers. As of March 31, 2024, gross-to-net reserve balances were $92.9 million related to product returns and $10.2 million related to wholesale distributor fees, discounts, and chargebacks, of which $5.4 million was included in Accounts receivable and $97.7 million was included in Accrued expenses on our consolidated balance sheet.

Pursuant to the ~~Fujifilm~~ Settlement Agreement ~~we are responsible for a Settlement Payment of up to $185.0 million to~~with Fujifilm in connection with the cancellation of manufacturing activity at FDBT under the Fujifilm CSA, of which (i) $47.8 million, constituting the initial reservation fee under the CSA, was credited against the Settlement Payment on September 30, 2022 and (ii) the remaining balance is to be paid in four equal quarterly installments of $34.3 million each. We paid the first installment of $34.3 million during the three months ended March 31, 2023 and the remaining balance of $102.9 million is reflected in Accrued expenses (see Note 4 to our consolidated financial ~~statements~~statements), in ~~this Quarterly Report).~~

~~During April 2023,~~March 2024 we ~~made a payment of $27.0~~paid $42.0 million to ~~Par Sterile Products, LLC (“Par”)~~Fujifilm, the parties agreed to a mutual release of claims arising from, under or otherwise in connection with the ~~Settlement Agreement~~prior confidential settlement agreement and ~~Release of Claims (see Note 15~~release effective September 30, 2022, and Fujifilm agreed to ~~our consolidated financial statements in this Quarterly Report).~~

~~In addition, we continue to assess our manufacturing needs and modify our global manufacturing footprint consistent with our contractual obligations to supply, and anticipated~~dismiss its demand for ~~NVX-CoV2373,~~arbitration with the Judicial Arbitration and Mediation Services (“JAMS”). This payment is less than amounts previously recognized as embedded lease expense and reflected in ~~doing so recognize that significant costs may be incurred.~~Research and development expenses from Fujifilm manufacturing activity and accordingly, during the three ended March 31, 2024, we recorded a benefit of $26.6 million as Research and development expenses.

We have an APA with the Commonwealth of Australia (“Australia”) for the purchase of doses of ~~NVX-CoV2373~~COVID-19 Vaccine (the “Australia APA”). In ~~April~~November 2023, we ~~amended~~filed with the Therapeutic Goods Administration (“TGA”) for authorization for our updated vaccine. Based on subsequent communication from the TGA that it will not recommend approval of the filing as submitted and new data and information generated since that filing, we are evaluating the regulatory path for approval, including the potential to withdraw the filing, update with new data and information, and resubmit in the coming months. In March 2024, we and Australian agreed to cancel the COVID-19 Vaccine doses previously scheduled for delivery in the fourth quarter of 2023. As a result of the cancellation, the total contract value was reduced by $54.0 million, including $6.0 million of deferred revenue related to the cancelled doses that will be applied as a credit towards future deliveries of doses. Australia is not required to purchase the updated COVID-19 Vaccine doses until we receive authorization from TGA. We plan to seek an

amendment to the Australia APA to ~~reduce the number of doses to~~address performance obligations and future delivery schedule, which may not be delivered with a commensurate increase in the per-dose price, such that the total contract value of the Australia APA is maintained with doses to 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 upon pre-planned 6-month stability testing was found to have fallen below the defined specifications and the lot was therefore removed from the market. The credit will be applied against the future sale of doses to Australia.achievable on acceptable terms or at all.

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~~COVID-19 Vaccine (the “Canada APA”). ~~In April 2023,~~The Canadian government may terminate the Canada APA, as amended, if we ~~amended~~fail to receive regulatory approval for its COVID-19 Vaccine using bulk antigen produced at Biologics Manufacturing Centre (“BMC”) Inc. on or before December 31, 2024. We do not anticipate achieving regulatory approval of our COVID-19 Vaccine using bulk antigen produced at BMC on or before December 31, 2024. Therefore, we plan to seek an amendment to the Canada APA to ~~forfeit certain doses originally scheduled for delivery~~address possible alternatives, which may not be achievable on acceptable terms or at all. As of March 31, 2024, $110.6 million was classified as current Deferred revenue and $477.6 million was classified as non-current Deferred revenue with respect to the Canadian APA in ~~2022 for a payment~~our consolidated balance sheet. If the Canadian government terminates the Canada APA, $28.0 million of ~~$100.4~~the deferred revenue would become refundable and approximately $224 million ~~expected~~of the contract value related to future deliverables would no longer be ~~received in the second quarter of 2023.~~

available.

In ~~July~~September 2022, we entered into an Amended and Restated SARS-CoV-2 Vaccine Supply Agreement ~~(as amended on September 26, 2022, the~~(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, dated October 22, 2020, between the parties (the “Original UK Supply Agreement”). Under the ~~Original UK Supply Agreement, the Authority agreed to purchase 60 million doses of 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,~~our prototype vaccine, with the number of Conditional Doses contingent on, and subject to reduction based on, our timely achievement of supportive recommendations from the Joint Committee on Vaccination and Immunisation ~~(the “JCVI”~~(“JCVI”) that is approved by the 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.Health. If the Authority ~~does~~did not purchase the Conditional Doses or the number of such Conditional Doses iswas reduced below 15 million doses of ~~NVX-CoV2373,~~our prototype vaccine, we would have to repay up to $225.0 million related to the upfront payment previously received from the Authority under the Original UK Supply Agreement. 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.

As of November 30, 2022, the JCVI had not ~~yet~~ made a supportive recommendation with respect to ~~NVX-CoV2373,~~our prototype vaccine, 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~~As of November 30, 2023, the JCVI had not made a supportive recommendation ~~from~~with respect to the ~~JCVI by November 30, 2023,~~prototype vaccine, thereby triggering a reduction in the number of Conditional Doses from 7.5 million doses to ~~zero will be triggered and~~zero. As of May 2024, we ~~may be required to repay an additional~~are in discussions with the Authority regarding the treatment of the remaining upfront amount previously received of $112.5 million, which is reflected in ~~2024.~~Other current liabilities on our consolidated balance sheet.

~~Under~~We entered into an APA with the ~~terms of the Gavi APA,~~Vaccine Alliance (“Gavi”) in May 2021 (the “Gavi APA”), pursuant to which we received an upfront ~~payment~~payments of ~~$350.0~~$700 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 WHO~~ (the “Advance Payment Amount”)~~. On November 18, 2022, we delivered written notice~~ to ~~Gavi to terminate the Gavi APA on the basis~~be applied against purchases of ~~Gavi’s failure to procure the purchase of 350 million doses of NVX-CoV2373 from us as required~~our prototype vaccine 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 buyercertain countries participating in the COVAX Facility. As of December 31, ~~2022,~~2023, the remaining Gavi Advance Payment Amount was $696.4 million. On February 16, 2024, we and Gavi entered into a Termination and Settlement Agreement (the “Gavi Settlement Agreement”) terminating the Gavi APA, settling the arbitration proceedings, and releasing both parties of ~~$697.4 million, pending resolution of the dispute with Gavi related to a return of the remaining Advance Payment Amount, was reclassified~~all claims arising from, Deferred revenue to Other current liabilities in our 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. We filed our Answer and Counterclaims on March 2, 2023. On April 5, 2023, Gavi filed its Reply to our Counterclaims. Arbitration is inherently uncertain, and while we believe that we are entitled to retain the remaining Advance Payment Amount received from Gavi, it is possible that we will be required to refund allunder, or ~~a portion of the remaining Advance Payment Amount from Gavi.~~

~~In February 2023,~~otherwise in connection with the ~~execution of Modification 17~~Gavi APA. Pursuant to the ~~USG~~Gavi Settlement Agreement, we are responsible for payment to Gavi of (i) an initial settlement payment of $75 million, which we paid in February 2024, and (ii) deferred payments, in equal annual amounts of $80 million payable each calendar year through a deferred payment term ending December 31, 2028. The deferred payments are due in variable quarterly installments beginning in the ~~U.S. government indicated~~second quarter of 2024 and total $400 million during the deferred payment term. Such deferred payments may be reduced through Gavi’s use of an annual vaccine credit equivalent to ~~us that~~ the ~~award~~unpaid balance of such deferred payments each year, which may ~~not~~ be ~~extended past its current period~~applied to qualifying sales of ~~performance. If~~any of our vaccines funded by Gavi for supply to certain low-income and lower-middle income countries. We have the ~~USG Agreement is not amended, as~~right to price the vaccines offered to such low-income and lower-middle income countries in our discretion, and, when utilized by Gavi, we ~~had previously expected, then we may not receive all of~~will credit the ~~remaining $336.4 million in funding we had previously anticipated~~actual price per vaccine paid against the applicable credit. We intend to price vaccines offered via the tender process, consistent with our shared goal with Gavi to provide equitable access to those countries. Also, pursuant to the USG Agreement. Modification 17 included provisions requiring that the payment of $60.0 million of consideration associated with manufacturing work now be contingent upon meeting certain milestones, including the deliveryGavi Settlement Agreement, we granted Gavi an additional credit of up to ~~1.5~~$225 million ~~doses~~that may be applied against qualifying sales of ~~NVX-CoV2373~~any of our vaccines for supply to such low-income and ~~development and regulatory milestones related to commercial readiness, expansion~~lower-middle income

countries that exceed the $80 million deferred payment amount in any calendar year during the deferred payment term. In total, the Gavi settlement agreement is comprised of $700 million of potential consideration, consisting of the ~~EUA~~$75 million initial settlement payment, deferred payments of up to $400 million that may be reduced through annual vaccine credits, and ~~development~~the additional credit of ~~multiple vial presentations.~~up to $225 million that may be applied for certain qualifying sales.

We recorded the $3.6 million difference between the refund liability recorded as of December 31, 2023 of $696.4 million and the $700 million of total consideration under the arrangement as a revenue adjustment during the three months ended March 31, 2024. As of March 31, 2024, the remaining amounts included on our consolidated balance sheet are classified as $225 million in non-current Deferred revenue for the additional credit that may be applied against future qualifying sales, $80 million in Other current liabilities, and $320 million in Other non-current liabilities. In addition, we and Gavi entered into a security agreement pursuant to which we granted Gavi a security interest in accounts receivable from SIIPL under the SIIPL R21 Agreement (see Note 4 to our consolidated financial statements), which will continue for the deferred payment term of the Gavi Settlement Agreement. On February 22, 2024, the claims and counterclaims were dismissed with prejudice.

Our funding agreements currently include funding from the Coalition for Epidemic Preparedness Innovations (“CEPI”) in the form of one or more forgivable no interest term loans (“CEPI Forgivable Loan Funding”). Payments received under the CEPI Forgivable Loan Funding are only repayable if ~~NVX-CoV2373~~project vaccine, as defined under the CEPI funding agreement, 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~~could include sales credited under ~~our~~the Gavi ~~APA prior to its termination)~~Settlement Agreement), 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.

We continue to assess our manufacturing needs and modify our global manufacturing footprint consistent with our contractual obligations to supply, and anticipated demand for, COVID-19 Vaccine, and in doing so recognize that significant costs may be incurred. For the 2023-2024 vaccination season, we have depended exclusively on SIIPL and SLS for co-formulation and filling (other than in Europe), and PCI Pharma Services for finishing COVID-19 Vaccine in Europe. For the 2024-2025 vaccination season, we are seeking to expand our supply chain network and introduce new single-dose vial or pre-filled syringe product presentations in certain markets. Any delays or disruptions in these suppliers’ operations could prevent or delay the delivery of customer orders.

As of March 31, ~~2023,~~2024, we had ~~$636.9~~$495.9 million in cash and cash equivalents and restricted cash as compared to ~~$1.3 billion~~$583.8 million as of December 31, ~~2022.~~2023.

We funded our operations for the three months ended March 31, ~~2023~~2024 primarily with cash and cash equivalents, ~~and~~upfront payments under APAs, revenue from product sales, ~~together~~and royalties under licensing arrangements with ~~revenue under the USG Agreement that support~~ our ~~NVX-CoV2373 vaccine development~~

~~activities.~~strategic partners. In May 2023, we announced our plan to restructure our global footprint to reduce our planned ~~expenditures.~~expenditures and in January 2024, we announced further reductions in our global workforce. We anticipate our future operations to be funded primarily by milestone payments, royalties and reimbursements under our Collaboration and License Agreement and equity investment under the Subscription Agreement with Sanofi, revenue from product sales, ~~revenue under our USG Agreement,~~ our cash and cash equivalents, and other potential funding ~~sources.~~sources including equity financings, which may include at the market offerings under our August 2023 Sales Agreement, debt financings, collaborations, strategic alliances, asset sales, and marketing, distribution or licensing arrangements.

The following table summarizes cash flows for the three months ended March 31, ~~2023~~2024 and ~~2022~~2023 (in thousands):


		Three Months Ended March 31,
		2023		2022		Change
	Three Months Ended March 31,									Three Months Ended March 31,
	2024							2024	2023		Change
Net cash provided by (used in):	Net cash provided by (used in):
Operating activities
Operating activities
Operating activities	Operating activities	$	(325,593)	$	(88,510)	$	(237,083)
Investing activities	Investing activities	(23,558)		(16,826)		(6,732)
Financing activities	Financing activities	(354,379)		159,865		(514,244)
Effect on exchange rate on cash, cash equivalents, and restricted cash	Effect on exchange rate on cash, cash equivalents, and restricted cash	(8,372)		1,312		(9,684)
Net increase (decrease) in cash, cash equivalents, and restricted cash		(711,902)		55,841		(767,743)
Net decrease in cash, cash equivalents, and restricted cash
Cash, cash equivalents, and restricted cash at beginning of period	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	$	636,943	$	1,584,100	$	(947,157)

Net cash used in operating activities was ~~$325.6~~$83.6 million for the three months ended March 31, ~~2023,~~2024, as compared to ~~$88.5~~

$325.6 million for the same period in ~~2022.~~2023. The ~~increase~~decrease in cash used in operating activities is primarily due to ~~a decrease~~an increase in ~~upfront payments~~amounts received under our APAs and an overall decrease in operating expenses period over period, partially offset by the timing of payments to vendors.

Net cash used in investing activities was ~~$23.6~~$7.3 million for the three months ended March 31, ~~2023,~~2024, as compared to ~~$16.8~~$23.6 million for the same period in ~~2022.~~2023. The ~~increase~~decrease in cash used in investing activities is primarily due to ~~an increase in internal use software expenditure.~~lower expenditures on equipment and leasehold improvements.

Net cash ~~used in finance~~provided by financing activities was ~~$354.4~~$5.9 million for the three months ended March 31, ~~2023,~~2024, as compared to net cash ~~provided by finance~~used in financing activities of ~~$159.9~~$354.4 million for the same period in ~~2022.~~2023. The ~~increase~~decrease in cash used in financing activities is primarily due to the $325 million repayment of our 3.75% Convertible notes and finance lease payments during ~~2023 and net proceeds of approximately $179 million from the sales of our common stock under our June 2021 Sales Agreement during 2022.~~2023.

Going Concern

~~The accompanying unaudited~~As described in Note 2 to our consolidated financial statements, ~~in Part I, Item 1, “Consolidated Financial Statements” of this Quarterly Report have been prepared assuming~~conditions or events existed that we will continue as a going concern within one year after the date that the financial statements are issued. At March 31, 2023, we had $636.9 million in cash and cash equivalents and restricted cash. During the three months ended March 31, 2023, we incurred a net loss of $293.9 million and had net cash flows used in operating activities of $325.6 million.

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

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

~~global restructuring and cost reduction plan. This plan includes a more focused investment in our NVX-CoV2373 program, reduction to our pipeline spending,~~However, management’s plans, including specifically the continued rationalization of our manufacturing network, a reduction to our global workforce, as well as the consolidation of facilities and infrastructure. The planned workforce reduction includes an approximately 25% reduction in our global workforce, comprised of an approximately 20% reduction in full-time Novavax employees and the remainder comprised of contractors and consultants. We expect the full annual impactexecution of the ~~cost savings~~Collaboration and License Agreement and Subscription Agreement with Sanofi effective May 10, 2024, which will result in cash proceeds to ~~be realized in 2024 and approximately half~~us of the annual impact to be realized in 2023 due to timing of implementing the measures, and the applicable laws, regulations, and other factors in the jurisdictions in which we operate. We expect to record a charge of approximately $10$568.8 million ~~to $15 million related to one-time employee severance and benefit costs, the majority of which is expected to be incurred in~~during the second quarter of ~~2023 and are evaluating~~2024, has alleviated the ~~anticipated costs related to the consolidation of facilities and infrastructure.~~

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

Item 3. Quantitative and Qualitative Disclosures about Market Risk

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

Foreign Currency Exchange Risk

Although we are headquartered in the U.S. our results of operations, including our foreign subsidiaries’ operations, are subject to foreign currency exchange rate fluctuations, primarily the U.S. dollar against the Euro, Pound Sterling, Swedish Krona, and Czech Koruna. This exchange exposure may have a material effect on our cash 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 for 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 subsidiaries would result in a decline of stockholders’ equity (deficit) of approximately ~~$14~~$54.1 million as of March 31, ~~2023.~~2024.

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 interest rate risk is primarily confined to our investment ~~portfolio, which historically has been classified as available-for-sale.~~portfolio. 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 March 31, ~~2023.~~2024. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Our disclosure controls and procedures are designed to provide reasonable assurance of achieving such control objectives. Based on the evaluation of our disclosure controls and procedures as of March 31, ~~2023,~~2024, 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.

Changes in Internal Control over Financial Reporting

Our management, including our chief executive officer and chief financial officer, have evaluated changes in our internal control over financial reporting that occurred during the quarter ended March 31, ~~2023,~~2024, 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.

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 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 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~~prototype vaccine on a commercial scale and to secure the ~~NVX-CoV2373’s~~prototype vaccine’s regulatory approval. The amended complaint defines the purported class as those stockholders who purchased the Company’s securities between February 24, 2021 and October 19, 2021. On April 25, 2022, the defendants filed a motion to dismiss the consolidated amended complaint. On December 12, 2022, the 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 defendants, and directed the Company and other remaining defendants to answer within fourteen days. On December 27, 2022, the Company filed its answer and affirmative defenses. On March 16, 2023, the plaintiffs filed a motion for class certification and to appoint class representatives and counsel. The Company filed its opposition to the plaintiffs’ motion on September 22, 2023. On December 4, 2023, the parties agreed to a binding settlement in principle (the “Proposed Settlement”) to fully resolve the surviving claims in the Sinnathurai Action. Under the Proposed Settlement’s terms, the Company agreed to pay $47 million into a settlement fund, which will be funded by the Company’s directors and officers’ liability insurance and paid to members of a putative settlement class. On January 12, 2024, after the parties negotiated and executed a written agreement governing the Proposed Settlement, plaintiffs filed an unopposed motion for the Proposed Settlement’s preliminary approval. On January 23, 2024, the Maryland Court granted the motion for preliminary approval and, as requested by the parties, preliminarily certified, for the purposes of settlement only, the settlement class. The court also scheduled a settlement hearing to consider final approval of the settlement for May 23, 2024. Ahead of the May 23 settlement hearing, on April 11, 2024, Plaintiffs filed a motion seeking the Maryland Court’s final approval of the settlement.

3238

On February 7, 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 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 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 filed a consolidated amended complaint on November 21, 2022. On February 10, 2023, defendants filed a motion to dismiss the Second Consolidated Derivative Action. The plaintiffs filed their opposition to the motion to dismiss on April 11, 2023. ~~Defendant’s~~Defendants filed their reply brief in further support of their motion to dismiss ~~is due by~~on May 11, 2023. On August 21, 2023, the court entered an order granting in part and denying in part the motion to dismiss. On September 5, 2023, the Company filed an Answer to the consolidated amended complaint. On September 6, 2023, the court entered an order granting the individual defendants an extension of time to file their answer until November 6, 2023. On October 6, 2023, the Board of Directors of the Company formed a Special Litigation Committee (“SLC”) with full and exclusive power and authority of the Board to, among other things, investigate, review, and analyze the facts and circumstances surrounding the claims asserted in the pending derivative actions, including the claims that remain following the court’s order on the motion to dismiss in the Second Consolidated Derivative Action. On November 7, 2023, the court entered an order granting the parties’ request to stay the Second Consolidated Derivative Action for up to six months from the date of entry of the order, and, on April 15, 2024, the court entered a further order extending the stay by an additional month, and, on April 15, 2024, the court entered a further order extending the stay by an additional month. This includes staying the deadline for the individual defendants to respond to the consolidated amended complaint.

On August 30, 2022, the Mesa Action was filed. On October 3, 2022, the 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 ~~court~~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 that defendants intended to file. Pursuant to the order, defendants filed a motion to stay on January 18, 2023. The plaintiff filed his opposition on February 8, 2023. Defendants filed their reply on February 22, 2023.by defendants. On February 28, 2023, the court granted ~~Defendants’~~the defendants’ motion and stayed the Mesa Action pending the entry of a final, non-appealable judgment in the Second Consolidated Derivative Action. On August 31, 2023, the Mesa plaintiffs filed a motion to lift the stay in the Mesa Action. On October 6, 2023, the Company filed an opposition to plaintiff’s motion to lift the stay. Plaintiff filed his reply on October 17, 2023. On December 27, 2023, the parties filed a letter informing the Court that the Second Consolidated Derivative Action had been stayed for a period of six months and asked the Court to stay further proceedings in the Mesa Action until expiration of that stay.

~~On February 26, 2021, a Company stockholder named Thomas Golubinski~~parties filed, ~~a derivative complaint against members of the Company’s board of directors~~ and ~~members of senior management in~~ the Delaware Court ~~captioned Thomas Golubinski v. Richard H. Douglas, et al., No. 2021-0172-JRS. The Company is deemed~~entered, a ~~nominal defendant. Golubinski challenged equity awards made in April 2020 and in June 2020 on the ground~~stipulated order providing 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 on May 3, 2021. The results of the vote were disclosed in the Company’s Current Report on Form 8-K filed 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. On October 18, 2022,(i) if the Delaware Court ~~denied~~declines to lift the ~~plaintiff’s fee application~~stay in ~~its entirety. Under a prior~~the Mesa Action, the Acosta Action will also remain stayed, and (ii) if the Delaware Court ~~order,~~lifts 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~~stay in the ~~Supreme Court of~~Mesa Action, 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~~stay in the ~~appellant filed his reply brief on February 14, 2023. The financial impact of this claim, as well as the claims discussed above, is not estimable.~~

Acosta Action will also be lifted.

On ~~March 29, 2022, Par Sterile Products, LLC (“Par”) submitted a demand for arbitration against~~April 17, 2023, 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.Needelman Action was filed. On ~~April 4,~~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 court entered ~~into~~that order on July 17, 2023.

On November 30, 2023, the court entered an order consolidating the Kirst and Needelman Actions. On December 14, 2023, the parties filed a ~~Settlement Agreement~~stipulation (i) extending the plaintiffs’ deadline to file a consolidated complaint until January 29, 2024, and ~~Release of Claims pursuant~~(ii) otherwise staying all other proceedings in the case (including the defendants’ deadline to ~~which Novavax agreed~~respond 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~~consolidated complaint) until February 12, 2024. The stipulation entered by the court instructs the parties to ~~Chapter 11 bankruptcy proceedings,~~discuss whether the ~~Settlement Agreement and Release~~stay should be further extended in light of ~~Claims and~~ the ~~payment due thereunder required, and subsequently received, approval from~~then-current status of the ~~bankruptcy court.~~SLC’s investigation. On May 3, 2024, the plaintiffs filed a consolidated complaint. The ~~Company has made the payment required by the Settlement Agreement and Release of Claims, and, subject~~parties are discussing whether to extend defendants' deadline to respond to the ~~non-occurrence of certain contingencies, the arbitration will be dismissed on or about July 13, 2023.~~

consolidated complaint through early June.

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~~prototype vaccine from the Company as required by the Gavi APA. As of November 18, 2022, the Company had only received orders under the Gavi APA for approximately 2 million doses. On December 2, 2022, Gavi issued a written notice purporting to terminate the Gavi APA based on Gavi’s contention that the Company repudiated the agreement and, therefore, materially breached the Gavi APA. Gavi also ~~contends~~contended that, based on its purported termination of the Gavi APA, it iswas entitled to a refund of the Advance Payment Amount less any amounts that have been credited against the purchase price for binding orders placed by a buyer participating in the COVAX Facility. ~~As of~~Since December 31, 2022, the remaining Gavi Advance Payment Amount, which was $696.4 million as of ~~$697.4 million,~~December 31, 2023, pending resolution of the dispute with Gavi related to a return of the remaining Advance Payment Amount, ~~was reclassified from Deferred revenue to~~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 filed its Answer and Counterclaims on March 2, 2023. On April 5, 2023, Gavi filed its Reply to the Company’s Counterclaims. ~~Arbitration~~On February 16, 2024, the Company and Gavi entered into a Termination and Settlement Agreement (the “Gavi Settlement Agreement”) terminating the Gavi APA, settling the arbitration proceedings and releasing both parties of all claims arising from, under or otherwise in connection with the Gavi APA. Pursuant to the Gavi Settlement Agreement, the Company is ~~inherently uncertain,~~responsible for payment to Gavi of (i) an initial settlement payment of $75 million, which the Company paid in February 2024, and ~~while we believe that we~~(ii) deferred payments, in equal annual amounts of $80 million payable each calendar year through a deferred payment term ending December 31, 2028. The deferred payments are ~~entitled~~due in variable quarterly installments beginning in the second quarter of 2024 and total $400 million during the deferred payment term. Such deferred payments may be reduced through Gavi’s use of an annual vaccine credit equivalent to ~~retain~~ the ~~remaining Advance Payment Amount received from Gavi, it is possible that we could~~unpaid balance of such deferred payments each year, which may be ~~required~~applied to ~~refund all or a portion~~qualifying sales of any of the ~~remaining Advance Payment Amount~~Company’s vaccines funded by Gavi for supply to certain low-income and lower-middle income countries. The Company has the right to price the vaccines offered to such low-income and lower-middle income countries at its discretion, and, when utilized by Gavi, the Company will credit the actual price per vaccine paid against the applicable credit. The Company intends to price vaccines offered via the tender process, consistent with its shared goal with Gavi to provide equitable access to those countries. Also, pursuant to the Gavi Settlement Agreement, we granted Gavi an additional credit of up to $225 million that may be applied against qualifying sales of any of the Company’s vaccines for supply to such low-income and lower-middle income countries that exceed the $80 million deferred payment amount in any calendar year during the deferred payment term. In total, the Gavi settlement agreement is comprised of $700 million of potential consideration, consisting of the $75 million initial settlement payment, deferred payments of up to $400 million that may be reduced through annual vaccine credits, and the additional credit of up to $225 million that may be applied for certain qualifying sales. In addition, we and Gavi entered into a security agreement pursuant to which Novavax granted Gavi a security interest in accounts receivable from ~~Gavi.~~SIIPL under the SIIPL R21 Agreement (see Note 4 to our consolidated financial statements), which will continue for the deferred payment term of the Gavi Settlement Agreement. On February 22, 2024, the claims and counterclaims were dismissed with prejudice.

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 the Company’s prototype vaccine under the associated statements of work. Pursuant to the Fujifilm Settlement Agreement, the Company agreed to pay up to $185.0 million (the “Settlement Payment”) to Fujifilm in connection with cancellation of manufacturing activity at FDBT. Under the Fujifilm Settlement Agreement, the final two quarterly installments due to Fujifilm were subject to Fujifilm’s obligation to use commercially reasonable efforts to mitigate losses associated with the vacant manufacturing capacity caused by the termination of manufacturing activities at FDBT under the CSA. Any replacement revenue achieved by Fujifilm’s mitigation efforts between July 1, 2023 and December 31, 2023 would offset the final two settlement payments owed by the Company. On October 2, 2023, the Company sent a notice of breach under the Fujifilm Settlement Agreement to Fujifilm setting forth the Company’s position that Fujifilm had not used commercially reasonable efforts to mitigate losses. The Company withheld the $34.3 million installment payment due to Fujifilm on September 30, 2023, pending resolution of the issues identified in the notice of breach. On October 30, 2023, FDBT filed a demand for arbitration with Judicial Arbitration and Mediation Services seeking payment of the third quarter installment of the Settlement Payment. On March 21, 2024, the Company and Fujifilm entered into a Confidential Settlement Agreement and Release (“Second Fujifilm Settlement Agreement”) to resolve the disputes in the pending arbitration. Pursuant to the Second Fujifilm Settlement Agreement, the Company paid $42.0 million to Fujifilm in March 2024 in exchange for a full release of claims and dismissal of the arbitration.

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, ~~2022,~~2023, which was filed with the SEC on February 28, ~~2023.~~2024. 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, 2023, other than ~~set forth~~as described below.

Risks Related to Regulatory and Compliance Matters

~~Our~~We may not succeed in obtaining full U.S. FDA licensure or foreign regulatory approvals necessary to sell our vaccine candidates.

The development, manufacture and marketing of our pharmaceutical and biological products ~~might fail~~are subject to ~~meet their primary endpoints~~government regulation by the U.S. FDA and regulatory authorities in other jurisdictions, including the EMA, the Czech Republic’s State Institute for Drug Control (“SUKL”) with respect to our manufacturing facility in the Czech Republic and the Swedish Medical Products Agency (Läkemedelsverket, LV) with respect to our adjuvant product being developed in Sweden, as well as other country authorities into which active pharmaceutical ingredients and excipients are imported and/or manufactured by us or our sub-contracted manufacturers. In the U.S. and most foreign countries, we must complete rigorous preclinical testing and extensive clinical trials ~~meaning~~ that ~~we will not have the clinical data required to support regulatory approvals.~~

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

• ~~performance of preclinical (animal and laboratory) tests;~~

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

• ~~performance of adequate and well controlled clinical trials to establish~~demonstrate the safety and efficacy of ~~the investigational~~a product in order to apply for regulatory approval to market the ~~intended target population;~~

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

• ~~submission to~~product. For example, while we have completed the ~~FDA of a Biologics License Application (“BLA”) or a New Drug Application; and~~

• ~~FDA approval~~submission of the BLA ~~or NDA before any commercial sale or shipment~~for our COVID-19 Vaccine, we have decided, based on discussions with U.S. FDA, to also seek EUA for our updated COVID-19 Vaccine for the 2024-2025 vaccination season. Operating under an EUA for the 2024-2025 vaccination season, rather than an approved BLA, could have a negative impact on our ability to successfully market and commercialize our updated COVID-19 Vaccine and therefore our financial condition and results of ~~the product.~~operation.

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

~~These processes are expensive and can take many years to complete, and we may not be able to demonstrate the~~assure safety, purity and potency and ~~efficacy~~comply with applicable good manufacturing practice requirements. None of our vaccine candidates tohas yet gained full regulatory approval in the ~~satisfaction of regulatory authorities. The start of~~U.S., although our COVID-19 Vaccine has received provisional registration, conditional marketing authorization, emergency use authorization, or full approval in the various jurisdictions. We also have vaccine candidates in clinical trials ~~can be delayed~~and preclinical laboratory or take longer than anticipated for many and varied reasons, many of which are out of our control. Safety concerns may emerge that could lengthen the ongoing clinical trials or require additional clinical trials to be conducted. Promising results in early clinical trials may not be replicated in subsequent clinical trials. For example, the first batch of top line results from our Phase 2 CIC clinical trial evaluating safety and immunogenicity of different formulations of CIC and influenza stand-alone vaccine candidates, may not be consistent with top line results from subsequent batches in such trial. Regulatory authorities may also require additional testing, and we may be required to demonstrate that our proposed products represent an improved form of treatment over existing therapies, which we may be unable to do without conducting further clinical trials. Moreover, if a regulatory authority grants regulatory approval of a product, the approval may be limited to specific indications or limited with respect to its distribution. Expanded or additional indications for approved products may not be approved, which could limit our revenue. Foreign regulatory authorities may apply similar limitations or may refuse to grant any approval. Consequently, even if we believe that preclinical and clinical data are sufficient to support regulatory approval for our vaccine candidates, the FDA and foreign regulatory authorities ultimately may not grant approval for commercial sale in their applicable jurisdiction, or may impose regulatory requirements that make further pursuit of approval uneconomical in one or more jurisdictions. If our vaccine candidates are not approved, our ability to generate revenue will be limited, and our business will be adversely affected.

animal studies.

Risks Related to ~~our Intellectual Property~~

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

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

Capital Requirements

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

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

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

~~Risks Related to Employee Matters, Managing Growth and Information Technology~~

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

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

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

• ~~Funding from the U.S. Government:~~Our ~~USG Agreement will expire by its terms in December 2023. We had anticipated that~~funding agreements with the U.S. government ~~would extend~~(“USG”) and CEPI each reimburse a portion of the expenses associated with the development and commercialization of our COVID-19 Vaccine. To the extent funding commitments in such agreements are conditioned on our meeting certain milestones or conditions, we may not ultimately receive the full amount of committed funds and may require additional funding to support our COVID-19 Vaccine development and commercialization activities, and we may be unable to timely obtain additional funding. For example, in July 2021, in connection with funding from the USG ~~Agreement~~partnership formerly known as Operation Warp Speed, the USG instructed us to prioritize alignment with the U.S. FDA on our analytic methods before conducting additional U.S. manufacturing, and the USG indicated that it would not fund additional U.S. manufacturing until ~~the full $1.8 billion authorized amount had been realized.~~such alignment was reached, which did not occur until June 2022. 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. IfThe USG Agreement also includes provisions giving the USG ~~Agreement is~~termination rights based on a determination that the funded project will not ~~amended,~~produce beneficial results commensurate with the expenditure of resources and that termination would be in the USG’s interest. Such a determination would result in the loss of funding under that agreement and could result in other actions by the USG. The CEPI funding agreement, meanwhile, provides CEPI certain “march-in” rights in the event of certain breaches of that agreement.

Additionally, we have entered into, and plan to continue entering into, supply agreements (also sometimes referred to as ~~we had previously expected, then we may not receive all~~advance purchase agreements) for our COVID-19 Vaccine that include prepayments from the purchasers to help fund our development and manufacture of the ~~remaining $336.4 million~~vaccine. Under certain supply agreements, if we do not timely achieve requisite regulatory milestones for our COVID-19 Vaccine in ~~funding we had previously anticipated pursuant~~the relevant jurisdictions, obtain supportive recommendations from governmental advisory committees, and/or achieve product volume or delivery timing obligations, purchasers may seek 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~~terminate such agreements, reduce their purchase commitments, require us ~~of the Gavi APA. The outcome of that arbitration is inherently uncertain, and it is possible we could be required~~ to refund all or a portion of the remaining advance payments of $697.4 million. See Note 3 and Note 15 to our consolidated financial statements in Part I, Item 1, “Financial Information” of this Quarterly Report on Form 10-Q for additional information related to the 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~~some prepayments we have received, or renegotiate such product candidates receive marketing approval and are successfully commercialized; the resolution of certain matters, including whether, when, and how the dispute with Gavi is resolved; and management’s plans, which include resolving the dispute with Gavi and cost reductions associated with the restructuring of our global footprint. Management’s plans may also include raising additional capital through a combination of equity and debt financing, collaborations, strategic alliances, and marketing, distribution, or licensing arrangements. In May 2023, we announced a global restructuring and cost reduction plan. This plan includes a more focused investment in our NVX-CoV2373 program, reduction to our pipeline spending, the continued rationalization of our manufacturing network, a reduction to our global workforce, as well as the consolidation of facilities and infrastructure. New financings may not be available to us on commercially acceptable terms, or at all. Also, any collaborations, strategic alliances, and marketing, distribution, or licensing arrangements may require us to give up some or all of our rights to a product or technology, which in some cases may be at less than the full potential value of such rights. In addition, the regulatory and commercial success of NVX-CoV2373 and our other vaccine candidates, including an influenza vaccine candidate, CIC vaccine candidate, or a COVID-19 variant strain-containing monovalent or bivalent formulation, remains uncertain. If we are unable to obtain additional capital, we will assess our capital resources and may be required to delay, reduce the scope of, or eliminate some or all of our operations, or downsize our organization, anyagreements, each of which ~~may~~could have a material and adverse effect on our ~~business,~~ financial ~~condition, results~~condition. The timing to fulfill performance obligations related to supply agreements will depend on timing of ~~operations,~~product manufacturing, receipt of marketing authorizations for additional indications, delivery of doses based on customer demand, and the ability of the customer to ~~operate as a going concern.~~

~~Our announced~~request variant vaccine in place of prototype vaccine under certain of our supply agreements. 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 ~~restructuring~~supply commitment, and ~~cost reduction plan~~are applied to billings upon delivery of COVID-19 Vaccine. Such upfront payments generally become non-refundable upon our achievement of certain development, regulatory and commercial milestones. We may not ~~result~~achieve such milestones, which could have a material and adverse effect on our financial condition.

For example, in ~~anticipated reductions~~September 2022, following a delay in ~~combined research~~obtaining regulatory approval in the United Kingdom, we entered into the Amended and ~~development~~Restated UK Supply Agreement, which amended and ~~selling, general,~~restated in its entirety the Original UK Supply Agreement, which reduced the volume of vaccine doses that the Authority is committed to purchase as compared to the Original UK Supply Agreement. Under the terms of the Amended and ~~administrative expenses~~Restated UK Supply Agreement, the Authority agreed to purchase a minimum of 1 million doses and ~~may disrupt our business.~~

~~In May 2023, we announced a global restructuring and cost reduction plan. This plan includes a more focused investment in our NVX-CoV2373 program, reduction~~up to ~~our pipeline spending, the continued rationalization~~an additional 15 million doses (the “Conditional Doses”) of our ~~manufacturing network, a~~prototype vaccine, with the number of Conditional Doses contingent on, and subject to reduction based on, our timely achievement of supportive recommendations from the JCVI that is approved by the UK Secretary of State for Health. If the Authority did not purchase the Conditional Doses or the number of such Conditional Doses was reduced below 15 million doses of our prototype vaccine, we would have to our global workforce, as well as the consolidation of facilities and infrastructure. The planned workforce reduction includes an approximately 25% reduction in our global workforce, comprised of an approximately 20% reduction in full-time Novavax employees and the remainder comprised of contractors and consultants. We expect the full annual impact of the cost savingsrepay up to be realized in 2024 and approximately half of the annual impact to be realized in 2023 due to timing of implementing the measures, and the applicable laws, regulations, and other factors in the jurisdictions in which we operate. We expect to record a charge of approximately $10 million to $15$225.0 million related to ~~one-time employee severance~~the upfront payment previously received from the Authority under the Original UK Supply Agreement. Under the Amended and ~~benefit costs,~~Restated UK Supply Agreement, the ~~majority~~Authority also has the option to purchase up to an additional 44 million doses, in one or more tranches, through 2024. As of November 30, 2022, the JCVI had not made a supportive recommendation with respect to our prototype vaccine, 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 ~~expected to be incurred~~approved by the UK Secretary of State for Health as described in the ~~second quarter of 2023~~paragraph above, and ~~are evaluating the anticipated costs~~(ii) an obligation for us to repay $112.5 million related to the ~~consolidation~~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. As of ~~facilities and infrastructure.We may~~November 30, 2023, the JCVI had not ~~realize,~~made a supportive recommendation with respect to the prototype vaccine, thereby triggering a reduction in ~~full or in part,~~ the ~~anticipated benefits, savings and improvements in our cost structure~~number of Conditional Doses from ~~these efforts due~~7.5 million doses to ~~unforeseen difficulties, delays or unexpected costs. If~~zero. As of May 2024, we are ~~unable to realize~~in discussions with the ~~potential development progress and cost savings from~~Authority regarding the ~~global restructuring and cost reduction plan, including~~treatment of the reduction to our global workforce, our business strategy, operating results and financial condition would be adversely affected. Our workforce reductions could yield unanticipated consequences, such as attrition beyond planned workforce reductions or disruptionsremaining upfront amount previously received of $112.5 million, which is reflected in our day-to-day operations. Our global restructuring and cost reduction plan, including the reduction to our global workforce, could also harm our ability to attract and retain qualified management and development personnel who are critical to our business. If we are unable to realize the expected benefits from the restructuring and cost reduction plan, we may decide to undertake additional workforce reductions.

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

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

consolidated balance sheet.

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We have an APA with the Commonwealth of Australia (“Australia”) for the purchase of doses of COVID-19 Vaccine (the “Australia APA”). In November 2023, we filed with the Therapeutic Goods Administration (“TGA”) for authorization for our updated vaccine. Based on subsequent communication from the TGA that it will not recommend approval of the filing as submitted and new data and information generated since that filing, we are evaluating the regulatory path for approval, including the potential to withdraw the filing for authorization, update with new data and information, and resubmit in the coming months. In March 2024, we and Australian agreed to cancel the COVID-19 Vaccine doses previously scheduled for delivery in the fourth quarter of 2023. As a result of the cancellation, the total contract value was reduced by $54.0 million, including $6.0 million of deferred revenue related to the cancelled doses that will be applied as a credit towards future deliveries of doses. We are working with Australia on an amendment to the APA that addresses performance obligations and future delivery schedules.

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 COVID-19 Vaccine (the “Canada APA”). The Canadian government may terminate the Canada APA, as amended, if we fail to receive regulatory approval for its COVID-19 Vaccine using bulk antigen produced at Biologics Manufacturing Centre (“BMC”) Inc. on or before December 31, 2024. We do not currently anticipate achieving regulatory approval of our COVID-19 Vaccine using bulk antigen produced at BMC on or before December 31, 2024. Therefore, in parallel, we plan to work with the Canadian government on an amendment that addresses possible alternatives, which may not be ~~able~~achievable on acceptable terms or at all. As of March 31, 2024, $110.6 million was classified as current Deferred revenue and $477.6 million was classified as non-current Deferred revenue with respect to ~~attract qualified individuals for key positions on terms acceptable~~the Canadian APA in our consolidated balance sheet. If the Canadian government terminates the Canada APA, $28.0 million of the deferred revenue would become refundable and approximately $224.0 million of the contract value related to us. Competition for qualified employees is intense among pharmaceutical and biotechnology companies, and the loss of qualified employees, or an inability to attract, retain and motivate additional highly skilled employees could hinder our ability to complete clinical trials successfully and otherwise develop marketable products.future deliverables would no longer be available.

~~We also rely from time to time on outside advisors who assist us~~

Item 5. Other Information

During the three months ended March 31, 2024, no director or “officer” (as defined in ~~formulating our research and development and clinical strategy. We may not be able to attract and retain these individuals on acceptable terms, which could delay our development efforts.~~

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

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Item 6. Exhibits


3.1						Second Amended and Restated Certificate of Incorporation of the Company (Incorporated by reference to Exhibit 3.1 to the 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 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 Company (Incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on April 22 , 202 4 ~~2023~~ (File No. 000-26770))

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

10.1*±						Confidential Settlement Agreement and Release, dated March 21, 2024, between the Company and FUJIFILM Diosynth Biotechnologies UK Limited, FUJIFILM Diosynth Biotechnologies Texas, LLC, and FUJIFILM Diosynth Biotechnologies USA, Inc.

10.2*±						Modification No. 1719 to Undefinitized Project Agreement No. 1, dated ~~February 6,~~September 19, 2023, between the Company and Advanced Technology International

~~10.2~~10.3*±						~~Employment~~Modification No. 20 to Undefinitized Project Agreement No. 1, dated December 1, 2023, between the Company and John C. Jacobs, dated as of January 5, 2023 (Incorporated by reference to Exhibit 10.18 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, filed on February 28, 2023 (File No. 000-26770))Advanced Technology International

~~10.3~~10.4*±						~~Consulting and Advisory~~Modification No. 21 to Undefinitized Project Agreement No. 1, dated February 6, 2024, between the Company and Stanley C. Erck, dated as of January 5, 2023 (Incorporated by reference to Exhibit 10.20 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, filed on February 28, 2023 (File No. 000-26770))Advanced Technology International

10.4*						~~Consulting and Advisory Agreement between the Company and Dr. Gregory M. Glenn, dated as of March 20, 2023~~

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

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

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

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

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

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

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

101						The following financial information from our Quarterly Report on Form 10-Q for the quarter ended March 31, ~~2023,~~2024, formatted in Inline Extensible Business Reporting Language (Inline XBRL): (i) the Consolidated Statements of Operations for the three-month periods ended March 31, ~~2023~~2024 and ~~2022,~~2023, (ii) the Consolidated Statements of Comprehensive ~~Income (Loss)~~Loss for the three-month periods ended March 31, ~~2023~~2024 and ~~2022,~~2023, (iii) the Consolidated Balance Sheets as of March 31, ~~2023~~2024 and December 31, ~~2022,~~2023, (iv) the Consolidated Statements of Changes in Stockholders’ ~~Equity (Deficit)~~Deficit for the three-month periods ended March 31, ~~2023~~2024 and ~~2022,~~2023, (v) the Consolidated Statements of Cash Flows for the three-month periods ended March 31, ~~2023~~2024 and ~~2022,~~2023, 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.

SIGNATURES

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


	NOVAVAX, INC.

Date: May ~~9, 2023~~10, 2024	By:	/s/ John C. Jacobs
		John C. Jacobs President and Chief Executive Officer (Principal Executive Officer)

Date: May ~~9, 2023~~10, 2024	By:	/s/ James P. Kelly
		James P. Kelly Executive Vice President, Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer)

4045


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

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