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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 JuneSeptember 30, 2023
OR
    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)
Delaware22-2816046
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
700 Quince Orchard Road,
Gaithersburg,MD20878
(Address of principal executive offices)(Zip code)
(240) 268-2000
(Registrant's telephone number, including area code)

21 Firstfield Road, Gaithersburg, MD 20878
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading
Symbol(s)
Name of each exchange on which registered
Common Stock, Par Value $0.01 per shareNVAXThe 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 filerxAccelerated Filero
Non-accelerated fileroSmaller reporting companyo
Emerging growth companyo 
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 94,404,185118,790,222 as of JulyOctober 31, 2023.


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NOVAVAX, INC.
TABLE OF CONTENTS
Page No.
Item 1A.
Item 2.

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PART I. FINANCIAL INFORMATION
Item 1.    Financial Statements
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NOVAVAX, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share information)
(unaudited)
For the Three Months Ended
June 30,
For the Six Months Ended
June 30,
For the Three Months Ended
September 30,
For the Nine Months Ended
September 30,
20232022202320222023202220232022
Revenue:Revenue:Revenue:
Product salesProduct sales$285,163 $55,455 $277,706 $641,083 Product sales$2,231 $626,091 $279,937 $1,267,174 
GrantsGrants137,079 107,774 224,458 207,075 Grants164,922 106,273 389,380 313,348 
Royalties and otherRoyalties and other2,184 22,696 3,213 41,738 Royalties and other19,833 2,213 23,046 43,951 
Total revenueTotal revenue424,426 185,925 505,377 889,896 Total revenue186,986 734,577 692,363 1,624,473 
Expenses:Expenses:Expenses:
Cost of salesCost of sales55,777 271,077 89,863 286,281 Cost of sales98,929 434,593 188,792 720,874 
Research and developmentResearch and development219,475 289,648 466,576 673,131 Research and development106,229 304,297 572,805 977,428 
Selling, general, and administrativeSelling, general, and administrative93,717 108,160 206,249 204,152 Selling, general, and administrative107,460 122,876 313,709 327,028 
Total expensesTotal expenses368,969 668,885 762,688 1,163,564 Total expenses312,618 861,766 1,075,306 2,025,330 
Income (Loss) from operations55,457 (482,960)(257,311)(273,668)
Loss from operationsLoss from operations(125,632)(127,189)(382,943)(400,857)
Other income (expense):Other income (expense):Other income (expense):
Interest expenseInterest expense(3,124)(6,234)(7,440)(11,110)Interest expense(2,859)(4,169)(10,299)(15,279)
Other income (expense)Other income (expense)5,532 (19,873)29,894 (18,219)Other income (expense)(2,982)(34,783)26,912 (53,002)
Income (Loss) before income tax expense (benefit)57,865 (509,067)(234,857)(302,997)
Loss before income taxesLoss before income taxes(131,473)(166,141)(366,330)(469,138)
Income tax expense (benefit)Income tax expense (benefit)(143)1,418 1,040 4,080 Income tax expense (benefit)(697)2,472 343 6,552 
Net income (loss)$58,008 $(510,485)$(235,897)$(307,077)
Net lossNet loss$(130,776)$(168,613)$(366,673)$(475,690)
Net income (loss) per share:
Basic$0.65 $(6.53)$(2.69)$(3.97)
Diluted$0.58 $(6.53)$(2.69)$(3.97)
Net loss per share:Net loss per share:
Basic and dilutedBasic and diluted$(1.26)$(2.15)$(3.94)$(6.13)
Weighted average number of common shares outstandingWeighted average number of common shares outstandingWeighted average number of common shares outstanding
Basic89,362 78,143 87,769 77,305 
Diluted104,065 78,143 87,769 77,305 
Basic and dilutedBasic and diluted103,429 78,274 93,046 77,631 
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)LOSS
(in thousands)
(unaudited)
For the Three Months Ended
June 30,
For the Six Months Ended
June 30,
2023202220232022
Net income (loss)$58,008 $(510,485)$(235,897)$(307,077)
Other comprehensive income (loss):
Foreign currency translation adjustment(5,011)(9,558)(1,800)(9,517)
Other comprehensive income (loss)(5,011)(9,558)(1,800)(9,517)
Comprehensive income (loss)$52,997 $(520,043)$(237,697)$(316,594)
For the Three Months Ended
September 30,
For the Nine Months Ended
September 30,
2023202220232022
Net loss$(130,776)$(168,613)$(366,673)$(475,690)
Other comprehensive loss:
Foreign currency translation adjustment(3,686)(12,924)(5,486)(22,441)
Other comprehensive loss(3,686)(12,924)(5,486)(22,441)
Comprehensive loss$(134,462)$(181,537)$(372,159)$(498,131)
The accompanying notes are an integral part of these financial statements.
2

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NOVAVAX, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share information)
June 30,
2023
December 31,
2022
September 30,
2023
December 31,
2022
(unaudited)(unaudited)
ASSETSASSETSASSETS
Current assets:Current assets:Current assets:
Cash and cash equivalentsCash and cash equivalents$505,912 $1,336,883 Cash and cash equivalents$651,104 $1,336,883 
Restricted cashRestricted cash10,361 10,303 Restricted cash10,393 10,303 
Accounts receivableAccounts receivable394,890 82,375 Accounts receivable123,657 82,375 
InventoryInventory23,488 36,683 Inventory69,592 36,683 
Prepaid expenses and other current assetsPrepaid expenses and other current assets192,903 237,147 Prepaid expenses and other current assets152,018 237,147 
Total current assetsTotal current assets1,127,554 1,703,391 Total current assets1,006,764 1,703,391 
Property and equipment, netProperty and equipment, net299,955 294,247 Property and equipment, net300,982 294,247 
Right of use asset, netRight of use asset, net95,739 106,241 Right of use asset, net190,741 106,241 
GoodwillGoodwill128,366 126,331 Goodwill123,780 126,331 
Other non-current assetsOther non-current assets33,434 28,469 Other non-current assets34,890 28,469 
Total assetsTotal assets$1,685,048 $2,258,679 Total assets$1,657,157 $2,258,679 
LIABILITIES AND STOCKHOLDERS’ DEFICITLIABILITIES AND STOCKHOLDERS’ DEFICITLIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:Current liabilities:Current liabilities:
Accounts payableAccounts payable$87,246 $216,517 Accounts payable$101,914 $216,517 
Accrued expensesAccrued expenses458,397 591,158 Accrued expenses311,201 591,158 
Deferred revenueDeferred revenue300,473 370,137 Deferred revenue192,187 370,137 
Current portion of finance lease liabilitiesCurrent portion of finance lease liabilities953 27,196 Current portion of finance lease liabilities1,332 27,196 
Convertible notes payableConvertible notes payable— 324,881 Convertible notes payable— 324,881 
Other current liabilitiesOther current liabilities749,186 930,055 Other current liabilities861,956 930,055 
Total current liabilitiesTotal current liabilities1,596,255 2,459,944 Total current liabilities1,468,590 2,459,944 
Deferred revenueDeferred revenue606,937 179,414 Deferred revenue608,842 179,414 
Convertible notes payableConvertible notes payable167,248 166,466 Convertible notes payable167,621 166,466 
Non-current finance lease liabilitiesNon-current finance lease liabilities30,744 31,238 Non-current finance lease liabilities53,158 31,238 
Other non-current liabilitiesOther non-current liabilities38,383 55,695 Other non-current liabilities37,296 55,695 
Total liabilitiesTotal liabilities2,439,567 2,892,757 Total liabilities2,335,507 2,892,757 
Commitments and contingencies (Note 15)
Commitments and contingencies (Note 14)Commitments and contingencies (Note 14)
Preferred stock, $0.01 par value, 2,000,000 shares authorized at June 30, 2023 and December 31, 2022; no shares issued and outstanding at June 30, 2023 and December 31, 2022.— — 
Preferred stock, $0.01 par value, 2,000,000 shares authorized at September 30, 2023 and December 31, 2022; no shares issued and outstanding at September 30, 2023 and December 31, 2022Preferred stock, $0.01 par value, 2,000,000 shares authorized at September 30, 2023 and December 31, 2022; no shares issued and outstanding at September 30, 2023 and December 31, 2022— — 
Stockholders' deficit:Stockholders' deficit:Stockholders' deficit:
Common stock, $0.01 par value, 600,000,000 shares authorized at June 30, 2023 and December 31, 2022; 95,183,750 shares issued and 94,308,379 shares outstanding at June 30, 2023 and 86,806,554 shares issued and 86,039,923 shares outstanding at December 31, 2022952 868 
Common stock, $0.01 par value, 600,000,000 shares authorized at September 30, 2023 and December 31, 2022; 119,641,667 shares issued and 118,730,398 shares outstanding at September 30, 2023 and 86,806,554 shares issued and 86,039,923 shares outstanding at December 31, 2022Common stock, $0.01 par value, 600,000,000 shares authorized at September 30, 2023 and December 31, 2022; 119,641,667 shares issued and 118,730,398 shares outstanding at September 30, 2023 and 86,806,554 shares issued and 86,039,923 shares outstanding at December 31, 20221,196 868 
Additional paid-in capitalAdditional paid-in capital3,855,916 3,737,979 Additional paid-in capital4,066,585 3,737,979 
Accumulated deficitAccumulated deficit(4,511,786)(4,275,889)Accumulated deficit(4,642,562)(4,275,889)
Treasury stock, cost basis, 875,371 shares at June 30, 2023 and 766,631 shares at December 31, 2022(91,424)(90,659)
Treasury stock, cost basis, 911,269 shares at September 30, 2023 and 766,631 shares at December 31, 2022Treasury stock, cost basis, 911,269 shares at September 30, 2023 and 766,631 shares at December 31, 2022(91,706)(90,659)
Accumulated other comprehensive lossAccumulated other comprehensive loss(8,177)(6,377)Accumulated other comprehensive loss(11,863)(6,377)
Total stockholders’ deficitTotal stockholders’ deficit(754,519)(634,078)Total stockholders’ deficit(678,350)(634,078)
Total liabilities and stockholders’ deficitTotal liabilities and stockholders’ deficit$1,685,048 $2,258,679 Total liabilities and stockholders’ deficit$1,657,157 $2,258,679 
The accompanying notes are an integral part of these financial statements.
3


NOVAVAX, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)DEFICIT
Three and SixNine Ended JuneSeptember 30, 2023 and 2022
(in thousands, except share information)
(unaudited)
Common StockAdditional
Paid-in
Capital
Accumulated
Deficit
Treasury
Stock
Accumulated Other
Comprehensive
Loss
Total Stockholders'
Equity (Deficit)
Common StockAdditional
Paid-in
Capital
Accumulated
Deficit
Treasury
Stock
Accumulated Other
Comprehensive
Loss
Total Stockholders'
Deficit
SharesAmountSharesAmount
Balance at March 31, 202387,139,831 $871 $3,767,733 $(4,569,794)$(91,226)$(3,166)$(895,582)
Balance at June 30, 2023Balance at June 30, 202395,183,750 $952 $3,855,916 $(4,511,786)$(91,424)$(8,177)$(754,519)
Stock-based compensationStock-based compensation— — 20,292 — — — 20,292 Stock-based compensation— — 21,254 — — — 21,254 
Stock issued under incentive programsStock issued under incentive programs95,965 (1)— (198)— (198)Stock issued under incentive programs176,329 634 — (282)— 354 
Issuance of common stock, net of issuance costs $8617,947,954 80 67,892 — — — 67,972 
Issuance of common stock, net of issuance costs $3,063
Issuance of common stock, net of issuance costs $3,063
24,281,588 242 188,781 — — — 189,023 
Foreign currency translation adjustmentForeign currency translation adjustment— — — — — (5,011)(5,011)Foreign currency translation adjustment— — — — — (3,686)(3,686)
Net income— — — 58,008 — — 58,008 
Balance at June 30, 202395,183,750 $952 $3,855,916 $(4,511,786)$(91,424)$(8,177)$(754,519)
Net lossNet loss— — — (130,776)— — (130,776)
Balance at September 30, 2023Balance at September 30, 2023119,641,667 $1,196 $4,066,585 $(4,642,562)$(91,706)$(11,863)$(678,350)
Balance at March 31, 202278,722,337 $787 $3,566,292 $(3,414,542)$(85,901)$(1,312)$65,324 
Balance at June 30, 2022Balance at June 30, 202278,776,234 $788 $3,604,614 $(3,925,027)$(86,455)$(10,870)$(416,950)
Stock-based compensationStock-based compensation— — 38,048 — — — 38,048 Stock-based compensation— — 33,386 — — — 33,386 
Stock issued under incentive programsStock issued under incentive programs53,897 274 — (554)— (279)Stock issued under incentive programs428,275 2,597 — (3,485)— (884)
Foreign currency translation adjustmentForeign currency translation adjustment— — — — — (9,558)(9,558)Foreign currency translation adjustment— — — — — (12,924)(12,924)
Net lossNet loss— — — (510,485)— — (510,485)Net loss— — — (168,613)— — (168,613)
Balance at June 30, 202278,776,234 $788 $3,604,614 $(3,925,027)$(86,455)$(10,870)$(416,950)
Balance at September 30, 2022Balance at September 30, 202279,204,509 $792 $3,640,597 $(4,093,640)$(89,940)$(23,794)$(565,985)

                            
Common StockAdditional
Paid-in
Capital
Accumulated
Deficit
Treasury
Stock
Accumulated Other
Comprehensive
Loss
Total Stockholders'
Equity (Deficit)
Common StockAdditional
Paid-in
Capital
Accumulated
Deficit
Treasury
Stock
Accumulated Other
Comprehensive
Loss
Total Stockholders'
Deficit
SharesAmountSharesAmount
Balance at December 31, 2022Balance at December 31, 202286,806,554 $868 $3,737,979 $(4,275,889)$(90,659)$(6,377)$(634,078)Balance at December 31, 202286,806,554 $868 $3,737,979 $(4,275,889)$(90,659)$(6,377)$(634,078)
Stock-based compensationStock-based compensation— — 48,939 — — — 48,939 Stock-based compensation— — 70,193 — — — 70,193 
Stock issued under incentive programsStock issued under incentive programs429,242 1,106 — (765)— 345 Stock issued under incentive programs605,571 1,740 — (1,047)— 699 
Issuance of common stock, net of issuance costs of $8617,947,954 80 67,892 — — — 67,972 
Issuance of common stock, net of issuance costs of $3,924Issuance of common stock, net of issuance costs of $3,92432,229,542 322 256,673 — — — 256,995 
Foreign currency translation adjustmentForeign currency translation adjustment— — — — — (1,800)(1,800)Foreign currency translation adjustment— — — — — (5,486)(5,486)
Net lossNet loss— — — (235,897)— — (235,897)Net loss— — — (366,673)— — (366,673)
Balance at June 30, 202395,183,750 $952 $3,855,916 $(4,511,786)$(91,424)$(8,177)$(754,519)
Balance at September 30, 2023Balance at September 30, 2023119,641,667 $1,196 $4,066,585 $(4,642,562)$(91,706)$(11,863)$(678,350)
Balance at December 31, 2021Balance at December 31, 202176,433,151 $764 $3,351,967 $(3,617,950)$(85,101)$(1,353)$(351,673)Balance at December 31, 202176,433,151 $764 $3,351,967 $(3,617,950)$(85,101)$(1,353)$(351,673)
Stock-based compensationStock-based compensation— — 70,981 — — — 70,981 Stock-based compensation— — 104,367 — — — 104,367 
Stock issued under incentive programsStock issued under incentive programs145,685 2,303 — (1,354)— 951 Stock issued under incentive programs573,960 4,900 — (4,839)— 67 
Issuance of common stock, net of issuance costs of $2,311Issuance of common stock, net of issuance costs of $2,3112,197,398 22 179,363 — — — 179,385 Issuance of common stock, net of issuance costs of $2,3112,197,398 22 179,363 — — — 179,385 
Foreign currency translation adjustmentForeign currency translation adjustment— — — — — (9,517)(9,517)Foreign currency translation adjustment— — — — — (22,441)(22,441)
Net lossNet loss— — — (307,077)— — (307,077)Net loss— — — (475,690)— — (475,690)
Balance at June 30, 202278,776,234 $788 $3,604,614 $(3,925,027)$(86,455)$(10,870)$(416,950)
Balance at September 30, 2022Balance at September 30, 202279,204,509 $792 $3,640,597 $(4,093,640)$(89,940)$(23,794)$(565,985)
The accompanying notes are an integral part of these financial statements.




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NOVAVAX, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Six Months Ended June 30,Nine Months Ended September 30,
2023202220232022
Operating Activities:Operating Activities:Operating Activities:
Net lossNet loss$(235,897)$(307,077)Net loss$(366,673)$(475,690)
Reconciliation of net loss to net cash used in operating activities:Reconciliation of net loss to net cash used in operating activities:Reconciliation of net loss to net cash used in operating activities:
Depreciation and amortizationDepreciation and amortization19,110 13,485 Depreciation and amortization30,431 21,832 
Non-cash stock-based compensationNon-cash stock-based compensation48,939 70,981 Non-cash stock-based compensation69,699 102,525 
Provision for excess and obsolete inventoryProvision for excess and obsolete inventory31,546 155,662 Provision for excess and obsolete inventory49,533 358,075 
Impairment of long-lived assetsImpairment of long-lived assets10,081 — Impairment of long-lived assets10,081 — 
Right-of-use assets expensed, net of credits receivedRight-of-use assets expensed, net of credits received— (3,291)Right-of-use assets expensed, net of credits received— 40,187 
Other items, netOther items, net(89)(642)Other items, net(3,015)(25,059)
Changes in operating assets and liabilities:Changes in operating assets and liabilities:Changes in operating assets and liabilities:
InventoryInventory(19,361)(403,725)Inventory(82,542)(426,466)
Accounts receivable, prepaid expenses, and other assetsAccounts receivable, prepaid expenses, and other assets(266,482)112,845 Accounts receivable, prepaid expenses, and other assets(34,418)171,325 
Accounts payable, accrued expenses, and other liabilitiesAccounts payable, accrued expenses, and other liabilities(443,238)179,158 Accounts payable, accrued expenses, and other liabilities(349,261)90,418 
Deferred revenueDeferred revenue357,860 (76,809)Deferred revenue138,979 (155,268)
Net cash used in operating activitiesNet cash used in operating activities(497,531)(259,413)Net cash used in operating activities(537,186)(298,121)
Investing Activities:Investing Activities:Investing Activities:
Capital expendituresCapital expenditures(26,774)(41,402)Capital expenditures(44,932)(66,033)
Internal-use softwareInternal-use software(4,563)— Internal-use software(4,796)(4,888)
Net cash used in investing activitiesNet cash used in investing activities(31,337)(41,402)Net cash used in investing activities(49,728)(70,921)
Financing Activities:Financing Activities:Financing Activities:
Net proceeds from sales of common stockNet proceeds from sales of common stock61,986 179,385 Net proceeds from sales of common stock256,995 179,385 
Net proceeds from the exercise of stock-based awardsNet proceeds from the exercise of stock-based awards345 1,050 Net proceeds from the exercise of stock-based awards699 67 
Finance lease paymentsFinance lease payments(26,784)(15,911)Finance lease payments(25,026)(45,904)
Repayment of 2023 Convertible notesRepayment of 2023 Convertible notes(325,000)— Repayment of 2023 Convertible notes(325,000)— 
Payments of costs related to issuance of 2027 Convertible notesPayments of costs related to issuance of 2027 Convertible notes(3,591)— Payments of costs related to issuance of 2027 Convertible notes(3,591)— 
Net cash provided by (used in) financing activitiesNet cash provided by (used in) financing activities(293,044)164,524 Net cash provided by (used in) financing activities(95,923)133,548 
Effect of exchange rate on cash, cash equivalents, and restricted cashEffect of exchange rate on cash, cash equivalents, and restricted cash(8,992)(4,453)Effect of exchange rate on cash, cash equivalents, and restricted cash355 257 
Net decrease in cash, cash equivalents, and restricted cashNet decrease in cash, cash equivalents, and restricted cash(830,904)(140,744)Net decrease in cash, cash equivalents, and restricted cash(682,482)(235,237)
Cash, cash equivalents, and restricted cash at beginning of periodCash, cash equivalents, and restricted cash at beginning of period1,348,845 1,528,259 Cash, cash equivalents, and restricted cash at beginning of period1,348,845 1,528,259 
Cash, cash equivalents, and restricted cash at end of periodCash, cash equivalents, and restricted cash at end of period$517,941 $1,387,515 Cash, cash equivalents, and restricted cash at end of period$666,363 $1,293,022 
Supplemental disclosure of non-cash activities:Supplemental disclosure of non-cash activities:Supplemental disclosure of non-cash activities:
Sales of common stock not settled at end of period$5,986 $— 
Right-of-use assets from new lease agreementsRight-of-use assets from new lease agreements$— $69,366 Right-of-use assets from new lease agreements$96,492 $118,262 
Capital expenditures included in accounts payable and accrued expensesCapital expenditures included in accounts payable and accrued expenses$6,591 $17,890 Capital expenditures included in accounts payable and accrued expenses$2,394 $11,984 
Internal-use software included in accounts payable and accrued expensesInternal-use software included in accounts payable and accrued expenses$167 $— 
Supplemental disclosure of cash flow information:Supplemental disclosure of cash flow information:Supplemental disclosure of cash flow information:
Cash interest payments, net of amounts capitalizedCash interest payments, net of amounts capitalized$11,294 $8,604 Cash interest payments, net of amounts capitalized$11,751 $17,260 
Cash paid for income taxesCash paid for income taxes$128 $17,778 Cash paid for income taxes$128 $17,843 
    
The accompanying notes are an integral part of these financial statements.
5


NOVAVAX, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
JuneSeptember 30, 2023
(unaudited)
Note 1 – Organization and Business
Novavax, Inc. (“Novavax,” and together with its wholly owned subsidiaries, the “Company”) is a biotechnology company that promotes improved health globally through the discovery, development,by discovering, developing, and commercialization ofcommercializing innovative vaccines to prevent serious infectious diseases. The Company’s vaccinesNovavax offers a differentiated vaccine platform that combines a recombinant protein approach, innovative nanoparticle technology and vaccine candidates are genetically engineered nanostructures of conformationally correct recombinant proteins criticalpatented Matrix-M™ adjuvant to disease pathogenesis and may elicit differentiatedenhance the immune responses, which may be more efficacious than naturally occurring immunity or other vaccine approaches.response. Novavax currently has one commercial program, for vaccines to prevent COVIDCOVID-19, which includes Nuvaxovid prototype COVID-19 vaccine ("NVX-CoV2373,” or “prototype vaccine”) and Nuvaxovid updated COVID-19 vaccine (“NVX-CoV2601,” or “updated vaccine”) (collectively, “COVID-19 Program,” or “COVID-19 Vaccine”). Local authorities have also specified nomenclature for the prototype and updated vaccines within their labeling (“Novavax COVIDCOVID-19 Vaccine, Adjuvanted”) and “Novavax COVID-19, Adjuvanted (2023-2024 Formula), which it markets in various territories where it is allowed to do so, underrespectively, for the brand name “Nuvaxovid™”U.S.). Novavax’s prototype COVID vaccine was derived from the prototype strain of COVID and is variously referred to here and in prior financial statements without branding as “NVX-CoV2373”. Our partners,The Company’s partner, Serum Institute of India Pvt. Ltd. (“SIIPL”), markets NVX-CoV2373 as “Covovax™.” Novavax is currently developing an updated vaccine which it refers to as its “XBB COVID vaccine.”

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 NVX-CoV2373its prototype vaccine for both adult and adolescent populations as a primary series and for both homologous and heterologous booster indications. Novavax is currently seeking similar approvals from multiple regulatory authorities globallyindications in select territories. In October 2023, the U.S. Food and Drug Administration (“U.S. FDA”) amended the EUA for its XBB COVIDprototype vaccine as a single dose boosterto 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 fall 2023Company’s updated vaccine for active immunization to prevent COVID-19 caused by SARS-CoV-2 in individuals aged 12 and subsequently.older. The Company exclusively depends on its supply agreement with SIIPL and its subsidiary, Serum Life Sciences Limited (“SLS”), for co-formulation, filling and finishing (other than in Europe) and on its service agreement with PCI Pharma Services (“PCI”) for finishing in Europe. The Company plans to rely on these arrangements to supply the XBB COVIDits updated vaccine if authorized, during the 2023 fall2023-2024 vaccination campaignseason and subsequently (see Note 4).

Novavax is advancing development of other vaccine candidates, including its influenza vaccine candidate, its COVID-InfluenzaCOVID19-Influenza Combination (“CIC”) vaccine candidate and additional vaccine candidates. Novavax COVID Vaccine, AdjuvantedThe Company’s COVID-19 Program and its other vaccine candidates incorporate the Company’s proprietary Matrix-M™ adjuvant to enhance the immune response and stimulate higher levels of functional antibodies and induce a cellular immune response.

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 $8.2$11.9 million and $6.4 million at JuneSeptember 30, 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 $0.2$12.2 million loss and a $16.1$3.9 million gain, and a $22.2$38.6 million loss and $21.0$59.6 million loss for the three months and sixnine months ended JuneSeptember 30, 2023 and 2022, respectively, which are reflected in Other income (expense).
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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. 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.
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Liquidity and Going Concern
The accompanying unaudited consolidated financial statements have been prepared assuming, subject to the disclosures herein, that the Company will continue as a going concern within one year after the date that the financial statements are issued. In addition, as of JuneSeptember 30, 2023, the Company had $517.9$666.4 million in cash and cash equivalents and restricted cash. Pursuant to the June 2023 Amendment to the advance purchase agreement (“APA”) between the Company and His Majesty the King in Right of Canada, as represented by the Minister of Public Works and Government Services, as successor in interest to Her Majesty the Queen in Right of Canada, as represented by the Minister of Public Works and Government Services (“Canadian government”government (the “Canada APA”), the Company receivedexpects to receive the second installment of $174.8 million from the Canadian government in July 2023 with a second installment of $174.8 million that is contingent and payable upon the Company’s delivery of vaccine doses in the second halffourth quarter of 2023 (see Note 3). During the sixnine months ended JuneSeptember 30, 2023, the Company incurred a net loss of $235.9$366.7 million and had net cash flows used in operating activities of $497.5$537.2 million.
In accordance with Accounting Standards Codification 205-40, Going Concern, the Company evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about its ability to continue as a going concern within one year after the date that these unaudited consolidated financial statements are issued. While the Company’s current cash flow forecast for the one-year going concern look forward period estimates that there will be sufficient capital available to fund operations, this forecast is subject to significant uncertainty, including as it relates to revenue for the next 12 months, funding from the U.S. government,Company’s ability to execute on certain cost-cutting initiatives and a pending matter subject to arbitration proceedings. The Company’s revenue projections depend on its ability to successfully develop, manufacture, distribute and market anits updated monovalent formulation of a vaccine candidate for COVID-19 for the fall 2023 COVID vaccine2023-2024 vaccination season, which is inherently uncertain and subject to a number of risks, including the Company’s ability to obtain regulatory authorization,authorizations, the incidence of COVID-19 during the 2023-2024 vaccination season, the Company’s ability to timely deliver doses and achieve commercial adoption and market acceptance. Further, failureacceptance of its updated vaccine.
Failure to meet regulatory milestones, timely obtain supportive recommendations from governmental advisory committees, or achieve product volume or delivery timing obligations under the Company’s advance purchase agreements (“APAs”) may require the Company to refund portions of upfront and other payments or result in reduced future payments.payments which would adversely affect the Company’s ability to continue as a going concern. For example, if the Company fails to deliver XBB COVIDits updated vaccine doses to the Canadian government in the second halffourth quarter of 2023, the second installment payment of $174.8 million will be terminated and not be payable to the Company. In addition, the Canadian government may terminate the Canada APA if the Company fails to achieve regulatory approval for use of the Biologics Manufacturing Centre, Inc. (“BMC”) for COVID-19 Vaccine production on or before December 31, 2024. Also, if the Company does not timely achieve supportive recommendations from the Joint Committee on Vaccination and Immunisation (the “JCVI”) of the government of the United Kingdom of Great Britain and Northern Ireland (the “Authority”) with respect to use of NVX-CoV2373its COVID-19 Program for (a) the general adult population as part of a SARS-CoV-2 vaccine booster campaign in the United Kingdom or (b) the general adolescent population as part of a SARS-CoV-2 vaccine booster campaign in the United Kingdom or as a primary series SARS-CoV-2 vaccination, excluding where that recommendation relates only to one or more population groups comprising less than one million members in the United Kingdom, then the Company would be required to repay up to $112.5 million related to the upfront payment previously received from the Authority under the Original UKSARS-CoV-2 Vaccine Supply Agreement. In February 2023, in connection with the execution of Modification 17 to the USG Agreement, (as defined in Note 3), the U.S. government indicated todated October 22, 2020, between the Company thatand the award may not be extended past its current period of performance. If the USG Agreement is not amended, as the Company’s management had previously expected, then the Company may not receive all of the remaining $250.6 million in funding as of June 30, 2023.Authority. On January 24, 2023, Gavi, the Vaccine Alliance (“Gavi”) filed a demand for arbitration with the International Court of Arbitration regarding an alleged material breach by the Company of the Company’s advance purchase agreementAPA with Gavi (the “Gavi APA”). The arbitration hearing is scheduled for July 2024, with a written decision to follow. The outcome of that arbitration is inherently uncertain, and it is possible the Company could be required to refund all or a portion of the remaining advance payments of $696.4 million as of JuneSeptember 30, 2023 (see Note 3 and Note 15)14).
Management believes that, given the significance of these uncertainties, substantial doubt exists regarding the Company’s ability to continue as a going concern through one year from the date that these financial statements are issued.
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In May 2023, the Company announced a global restructuring and cost reduction plan (the “Restructuring Plan”), which includes a more focused investment in its NVX-CoV2373 program,COVID-19 Program, reduction to its pipeline spending, the continued rationalization of its manufacturing network, a reduction to the Company’s global workforce, as well as the consolidation of facilities, and infrastructure. The workforce reduction plan included an approximately 25% reduction in the Company’s global workforce, comprised of an approximately 20% reduction in full-time Novavax employees and the remainder comprised of contractors and consultants. The Company has decided to progress its CIC vaccine candidate toward late-stage development and, as such, is assessing the impact on its workforce requirements. The Company expects the full annual impact of the cost savings from the Restructuring Plan to be realized in 2024 and approximately half of the annual impact to be realized in 2023 due to timing of implementing the measures, and the applicable laws, regulations, and other factors in the jurisdictions in which the Company operates. During the threenine months ended JuneSeptember 30, 2023, the Company recorded a charge of $4.6$4.5 million related to one-time employee severance and benefit costs and recorded an impairment charge of $10.1 million related to the consolidation of facilities and infrastructure (see Note 16)15).
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The Company’s ability to fund Company operations is dependent upon revenue related to vaccine sales for its products and product candidates, if such product candidates receive marketing approval and are successfully commercialized, and in particular the 2023 fall COVID2023-2024 vaccination campaign,season, which is inherently uncertain and subject to a number of risks, including the incidence of COVID-19 during the 2023-2024 vaccination season, regulatory authorization, ability to timely deliver doses and commercial adoption and market acceptance of its updated vaccine, the resolution of certain matters, including whether, when, and how the dispute with Gavi is resolved, and management’s plans, which includes cost reductions associated with the Restructuring Plan. Management’s plans may also include raising additional capital through a combination of equity and debt financing, collaborations, strategic alliances, 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 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-CoV2373the Company’s COVID-19 Program and the Company’s other vaccine candidates, including an influenza vaccine candidate, and a CIC vaccine candidate, remains uncertain. Also, the impact of the Company’s more focused investment in its COVID-19 Program, reduction to its pipeline spending, continued rationalization of its manufacturing network, reduction to its global workforce, and a COVID-19 variant strain-containing monovalent formulation, remainsconsolidation of its facilities and infrastructure remain uncertain. If the Company is unable to obtain additional capital, the Company will assess its capital resources and may be required to delay, reduce the scope of, or eliminate some or all of its operations, or further downsize its organization, any of which may have a material adverse effect on its business, financial condition, results of operations, and ability to operate as a going concern.
Use of Estimates
The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ materially from those estimates.
Revenue Recognition Constraints
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 effect of decreasing the transaction price, revenue is constrained based on an estimate of the impact to the transaction price recognized until it is probable that a significant reversal in cumulative revenue recognized will not occur.
Restructuring
The Company recognizes restructuring charges when such costs are incurred. The Company'sCompany’s restructuring charges consist of employee severance and other termination benefits related to the reduction of its workforce, the consolidation of facilities, and infrastructure and other costs. Termination benefits are expensed on the date the Company notifies the employee, unless the employee must provide future service, in which case the benefits are expensed ratably over the future service period. Ongoing benefits are expensed when restructuring activities are probable and the benefit estimable.
See Note 1615 for additional information on the severance and employee benefit costs for terminated employees and impairment of assets in connection with the Company’s Restructuring Plan.
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Recent Accounting Pronouncements
Adopted
In June 2016, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), with amendments in 2018, 2019, 2020, and 2022. The ASU sets forth a “current expected credit loss” model that requires companies to measure all expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions, and reasonable supportable forecasts. ASU 2016-13 applies to financial instruments that are not measured at fair value, including receivables that result from revenue transactions. The Company adopted ASU 2020-06 on January 1, 2023, using a modified retrospective approach, and it did not have a material impact on the Company’s consolidated financial statements.
Note 3 – Revenue
The Company's accounts receivable included $334.4$71.1 million and $53.8 million related to amounts that were billed to
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customers and $60.5$52.6 million and $28.6 million related to amounts which had not yet been billed to customers as of JuneSeptember 30, 2023 and December 31, 2022, respectively. During the sixnine months ended JuneSeptember 30, 2023, and 2022, changes in the Company'sCompany’s accounts receivables, allowance for doubtful accounts, and deferred revenue balances were as follows (in thousands):
Balance, Beginning of PeriodAdditionsDeductionsBalance, End of Period
Accounts receivable:
Six Months Ended June 30, 2023$96,210 $793,039 $(486,684)$402,565 
Six Months Ended June 30, 2022454,993 808,713 (1,069,173)194,533 
Allowance for doubtful accounts(1):
Six Months Ended June 30, 2023$(13,835)$— $6,160 $(7,675)
Six Months Ended June 30, 2022— — — — 
Deferred revenue:(2)
Six Months Ended June 30, 2023$549,551 $414,816 $(56,957)$907,410 
Six Months Ended June 30, 20221,595,472 49,107 (128,432)1,516,147 
Balance, Beginning of PeriodAdditionsDeductionsBalance, End of Period
Accounts receivable:
Nine Months Ended September 30, 2023$96,210 $981,305 $(946,182)$131,333 
Nine Months Ended September 30, 2022454,993 1,519,345 (1,862,693)111,645 
Allowance for doubtful accounts(1):
Nine Months Ended September 30, 2023$(13,835)$— $6,159 $(7,676)
Nine Months Ended September 30, 2022— — — — 
Deferred revenue:(2)
Nine Months Ended September 30, 2023$549,551 $422,766 $(171,288)$801,029 
Nine Months Ended September 30, 20221,595,472 96,298 (251,576)1,440,194 
(1)    There was no bad debt expense recorded during the three and sixnine months ended JuneSeptember 30, 2023 or 2022. There was a $6.2 million reversal of a bad debt allowance during the threenine months ended JuneSeptember 30, 2023 due to the collection of a previously recognized allowance for doubtful accounts. To estimate the allowance for doubtful accounts, the Company evaluates the credit risk related to its customers based on historical loss experience, economic conditions, the aging of receivables, and 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 and nine months ended September 30, 2023, deductions included a $112.5 million reclassification of refundable upfront payments previously included in Deferred revenue to Other current liabilities. There were no such reclassifications during the three and nine months ended September 30, 2022.
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As of JuneSeptember 30, 2023, the aggregate amount of the transaction price allocated to performance obligations that were unsatisfied (or partially unsatisfied), excluding amounts related to sales-based royalties, the Gavi APA, and the reduction in doses related to the Amended and Restated SARS-CoV-2 Vaccine Supply Agreement, dated as of July 1, 2022 (as amended on September 26, 2022, the “Amended and Restated UK Supply Agreement”) between the Company and the Authority, which amended and restated the Original UK Supply Agreement, was approximately $2 billion of which $907.4$801.0 million was included in Deferred revenue. Failure to meet regulatory milestones, timely obtain supportive recommendations from governmental advisory committees, or achieve product volume or delivery timing obligations under the Company’s advance purchase agreements may require the Company to refund portions of upfront and other payments or result in reduced future payments, which could adversely impact the Company’s ability to realize revenue from its unsatisfied performance obligations. The timing to fulfill performance obligations related to grant agreements will depend on the results of the Company's research and development activities, including clinical trials, and delivery of doses.trials. The timing to fulfill performance obligations related to APAs will depend on the timing of product manufacturing, receipt of marketing authorizations for additional indications, delivery of doses based on customer demand, and the ability of the customer to request variantthe Company’s updated vaccine in place of the prototype NVX-CoV2373 vaccine under certain of the Company’s APAs.
Under the terms of the Gavi APA and a separate purchase agreement between Gavi and SIIPL, 1.1 billion doses of NVX-CoV2373the prototype vaccine were to be made available to countries participating in the COVAX Facility. The Company expected to manufacture and distribute 350 million doses of NVX-CoV2373the prototype vaccine 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-CoV2373the prototype vaccine for low- and middle-income countries participating in the COVAX Facility. The Company expected to deliver doses with antigen and adjuvant manufactured at facilities directly funded under the Company's funding agreement with Coalition for Epidemic Preparedness Innovations (“CEPI”), with initial doses supplied by SIIPL and SLS under a supply agreement. The Company expected to supply significant doses that Gavi would allocate to low-, middle- and high-income countries, subject to certain limitations, utilizing a tiered pricing schedule and Gavi could prioritize such doses to low- and middle- income countries, at lower prices. Additionally, the Company could provide additional doses of NVX-CoV2373,prototype vaccine, to the extent available from CEPI-funded manufacturing facilities, in the event that SIIPL could not materially deliver expected vaccine doses to the COVAX Facility. Under the agreement, the Company received an upfront payment of $350.0 million from Gavi in 2021 and an additional payment of $350$350.0 million in 2022 related to the Company’s achieving an emergency use license for NVX-CoV2373the Company’s prototype vaccine by the WHOWorld Health Organization (“WHO”) (the “Advance Payment Amount”). The Company maintains that its termination of the Advance Payment Amount was valid and denies that Gavi is entitled to a refund.
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-CoV2373the Company’s 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
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December 2, 2022, Gavi issued a written notice purporting to terminate the Gavi APA based on Gavi’s contention that the Company repudiated the agreement and, therefore, materially breached the Gavi APA. Gavi also contends that, based on its purported termination of the Gavi APA, it is entitled to a refund of the Advance Payment Amount less any amounts that have been credited against the purchase price for binding orders placed by a buyer participating in the COVAX Facility. Since December 31, 2022, the remaining Gavi Advance Payment Amount, which is $696.4 million as of JuneSeptember 30, 2023, pending resolution of the dispute with Gavi related to a return of the remaining Advance Payment Amount, has been classified within Other current liabilities in the Company’s consolidated balance sheet. On January 24, 2023, Gavi filed a demand for arbitration with the International Court of Arbitration based on the claims described above. The Company filed its Answer and Counterclaims on March 2, 2023. On April 5, 2023, Gavi filed its Reply to the Company’s Counterclaims. The arbitration hearing is scheduled for July 2024, with a written decision to follow. Arbitration is inherently uncertain, and while the Company believes that it is entitled to retain the remaining Advance Payment Amount received from Gavi, it is possible that it could be required to refund all or a portion of the remaining Advance Payment Amount from Gavi.
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Product Sales
Product sales by the Company’s customer’s geographic location was as follows (in thousands):
Three Months Ended
June 30,
Six Months Ended
June 30,
Three Months Ended
September 30,
Nine Months Ended
September 30,
20232022202320222023202220232022
North AmericaNorth America$— $— $— $64,762 North America$2,231 $129,718 $2,231 $194,480 
EuropeEurope1,518 — 58,785 413,745 Europe— 347,005 59,322 760,750 
Rest of the worldRest of the world283,645 55,455 218,921 162,576 Rest of the world— 149,368 218,384 311,944 
Total product sales revenueTotal product sales revenue$285,163 $55,455 $277,706 $641,083 Total product sales revenue$2,231 $626,091 $279,937 $1,267,174 
In May 2023, the Company extended a credit for certain doses delivered in 2022 that qualified for replacement under the contract with the Australian government. This credit is the result of a single lot sold to the Australian government that upon pre-planned 6-month stability testing was found to have fallen below the defined specifications and the lot therefore was removed from the market. The credit will be applied against the future sale of doses to the customer and, during the sixnine months ended JuneSeptember 30, 2023, the Company recorded a reduction of $64.7 million in product sales, with a corresponding increase to Deferred revenue, non-current.
In April 2023, the Company amended itsthe Canada APA with the Canadian government, for the purchase of doses of NVX-CoV2373 (the “Canada APA”) to forfeit certain doses originally scheduled for delivery in 2022 for a payment of $100.4 million received in the second quarter of 2023. On June 30, 2023, the Company entered into an additional amendment (the “June 2023 Amendment”) to the Canada APA. Pursuant to the June 2023 Amendment, the parties revised the Canadian government’s previous commitment by (i) forfeiting certain doses of the NVX-CoV2373COVID-19 Vaccine previously scheduled for delivery, (ii) reducing the amount of doses of NVX-CoV2373COVID-19 Vaccine due for delivery, (iii) revising the delivery schedule for the remaining doses of NVX-CoV2373COVID-19 Vaccine to be delivered, and (iv) requiring use of the Biologics Manufacturing Centre (“BMC”) Inc. to produce bulk antigen for doses in 2024 and 2025. In connection with the forfeiture of doses of NVX-CoV2373,COVID-19 Vaccine, the Canadian government agreed to pay a total amount of $349.6 million to the Company in two equal installments in 2023, which total amount equals the remaining balance owed by the Canadian government with respect to such forfeited vaccine doses. The first installment was payable upon execution of the June 2023 Amendment and the second installment is contingent and payable upon the Company’s delivery of vaccine doses in the second half of 2023. The first installment of $174.8 million was received from the Canadian government in July 2023. If the Company fails to deliver COVID-19 vaccineVaccine doses to the Canadian government in the second halffourth quarter of 2023, the second installment payment of $174.8 million will be terminated and not be payable to the Company. The Canadian Governmentgovernment may terminate the Canada APA, as amended, if the Company fails to achieve regulatory approval for use of BMC for NVX-CoV2373COVID-19 Vaccine production on or before December 31, 2024. The June 2023 Amendment maintained the total contract value of the original Canada APA. Pursuant to the June 2023 Amendment, the Company and the Canadian government will endeavor to expand the Company’s previously agreed in-country commitment to Canada and to further partner to provide health, economic, and future pandemic preparedness benefits to Canada, which value may be provided through a number of activities, including without limitation, capital investments, the performance of activities or services, or the provision of technology or intellectual property licenses. Further, the parties will endeavor to enter into a memorandum of understanding (the “MOU”) to illustrate the Company’s ability to deliver such benefits over a 15 year15-year period with an aggregate value of not less than 100% of the amount remaining to be paid under the June 2023 Amendment and ultimately received by the Company. As of September 30, 2023, the Company is in the process of negotiating the MOU. The Company agreed to hold $20$20.0 million in escrow for the benefit of the Canadian
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government, which amount is the sole recourse available to the Canadian government in the event of non-performance under the MOU.
Grants
The Company’s U.S. government agreement consists 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 (“Modification 17”), the U.S. government indicated to the Company that the award may not be extended past its current period of performance, which is December 31, 2023. Also, Modification 17 included provisions requiring that the payment of up to $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-CoV2373its prototype vaccine and
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development and regulatory milestones related to commercial readiness, expansion of the EUA and development of multiple vial presentations. As of JuneSeptember 30, 2023, the Company constrainednow expects to be entitled to the total transaction pricefull $1.8 billion-funding under the USG Agreement by $48.0 million for consideration associated with milestones that are not fully withinDecember 31, 2023, and accordingly, the Company’s control. This constraint, in addition to other contract changes included within Modification 17, resulted in an approximately $29Company recognized a $43.8 million cumulative reductionincrease to grant revenue previously recognized under the contract forduring the sixthree months ended JuneSeptember 30, 2023.
Royalties and Other
Royalties and other includes royalty milestone payments, sales-based royalties, and Matrix-M™ adjuvant sales.
During the three and sixnine months ended JuneSeptember 30, 2023, the Company recognized $6.0 million revenue related to sales-based royalties, and $13.8 million and $17.0 million, respectively in revenue related to a Matrix-M™ adjuvant sales. During the three and nine months ended September 30, 2023, the Company did not recognize revenue related to milestone payments or sales-based royalties. payments.
During the three and sixnine months ended JuneSeptember 30, 2022, the Company recognized ano revenue and $20.0 million, respectively, related to milestone payment upon the first sale of NVX-CoV2373 in Japan and $1.7payments, $1.3 million and $9.2$10.5 million, respectively, in revenue related to sales-based royalties.royalties, and $1.0 million and $13.4 million, respectively, related to a Matrix-M™ adjuvant sales.
Note 4 – Collaboration, License, and Supply Agreements
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-CoV2373the 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-CoV2373COVID-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, a malaria candidate developed by the Jenner Institute, University of Oxford (“R21/Malaria”). Under the agreement, SIIPL purchases the Company's Matrix-M™ adjuvant to manufacture R21/Malariafor use in development activities at cost and SIIPLfor commercial purposes at a tiered commercial supply price, and pays a royalty in the single to lowsingle-to low- double-digit range based on vaccine sales for a period of 15 years after the first commercial sale of productthe 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-CoV2373the 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 cancelledcanceled 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.
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Bill & Melinda Gates Medical Research Institute
In May 2023, wethe Company entered into a 3-year agreement with the Bill & Melinda Gates Medical Research Institute
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to provide ourthe Company’s Matrix-M™ adjuvant for use in preclinical vaccine research.
SK bioscience, Co., Ltd
In February 2021, the Company entered into a Collaboration and License Agreement (“CLA”) with SK bioscience, Co., Ltd. (“SK”) to manufacture and commercialize its prototype vaccine for sale to the government of South Korea. The CLA was amended in December 2021 and July 2022 to include the sale of its prototype vaccine to Thailand and Vietnam and to supply the Company with the antigen component of prototype vaccine for use in the final drug product globally, including product to be distributed by the COVAX Facility. Under the CLA, as amended, SK agreed to pay the Company a royalty on the sale of its prototype vaccine in the low to middle double-digit range. The CLA was in addition to the Company's existing manufacturing arrangement with SK under a Development and Supply Agreement (“DSA”) entered into in August 2020. In July 2022, the Company signed an additional agreement with SK for the technology transfer of the Company’s proprietary COVID-19 variant antigen materials so that SK can manufacture the drug substance targeting COVID-19 variants, including the Omicron subvariants. The companies also signed an agreement to manufacture and supply its prototype vaccine in a prefilled syringe.
In June 2023, the Company entered into a material transfer agreement with SK for the use by SK of the Company’s Matrix-M™ adjuvant in preclinical vaccine experiments for shingles, influenza, and pan-COVID-19.
In August 2023, the Company and SK entered into a Settlement Agreement and General Release (the “Settlement Agreement”) regarding mutual release by the parties of all claims arising from or in relation to statements of work (“SOWs”) canceled by the Company under the DSA and the CLA (collectively the “Business Agreements”), and other SOWs under the Business Agreements (collectively, the “Subject SOWs”), in each case, in connection with the cessation of all drug substance and drug product manufacturing activity at SK for supply to the Company. Subject SOWs canceled by the Company under the Settlement Agreement included (i) Statement of Work No. 1 dated as of December 23, 2021 as amended to date under the CLA; (ii) Statement of Work No. 5 dated as of July 18, 2022 under the DSA; and (iii) Statement of Work No. 6 dated as of July 18, 2022, and as amended as of December 28, 2022 under the DSA.
Pursuant to the Settlement Agreement, the Company is responsible for payment of $149.8 million to SK in connection with the cancellation of manufacturing activity for the SOWs under the Business Agreements, of which (i) $130.4 million was paid in August 2023 and (ii) the remaining balance is to be paid on or before November 15, 2023. Under the Settlement Agreement, the Company and SK agreed to a wind down plan with respect to the remaining products, materials and equipment under the SOWs.
Under the Settlement Agreement, the Company and SK agreed to remove certain restrictions under the CLA that have been triggered by the launch of SK’s competing vaccine SKYCovione™ in the Republic of Korea. In addition, the Company agreed to extend the term of an exclusive license to SK under the CLA for the exploitation of antigen and vaccine products utilizing Company’s proprietary coronavirus vaccine antigens and Matrix-M adjuvant in certain territories. The Company recorded $4.0 million to Deferred revenue related to the extended licenses granted to SK under the Settlement Agreement.
In August 2023, the Company also entered into a Securities Subscription Agreement (the “Subscription Agreement”) with SK, pursuant to which the Company agreed to sell and issue to SK, in a private placement (the “Private Placement”), 6.5 million shares of the Company’s common stock, par value $0.01 per share (the “Shares”) at a price of $13.00 per share for aggregate gross proceeds to the Company of approximately $84.5 million. The closing of the Private Placement occurred on August 10, 2023. The fair value of the Company’s common stock on the date of closing, based on the quoted market price, was $46.5 million, which results in a premium paid by SK of approximately $38.0 million.
The Settlement Agreement and the Subscription Agreement were negotiated concurrently between the parties, and therefore were combined for accounting purposes and analyzed as a single arrangement. As a result, the Company recorded the $46.5 million fair value of common stock issued to SK, based on the quoted market price on the date of close, as an equity transaction. The remaining elements of the arrangement were deemed to relate to the settlement of the Company’s outstanding liabilities due to SK. These elements consist primarily of the cash payable to SK of $149.8 million, offset by the premium paid on the common stock purchase by SK of $38.0 million, which resulted in a net gain upon derecognition of the liabilities due to SK of $79.2 million in connection with the settlement. As a result, during the three and nine months ended September 30, 2023, the Company recorded this net gain of $79.2 million between research and development expense, for $57.7 million, and cost of sales, for $21.5 million, proportionally based on the where the underlying costs were originally recorded.

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Other Supply Agreements
On September 30, 2022, the Company, FUJIFILM Diosynth Biotechnologies UK Limited (“FDBK”), FUJIFILM Diosynth Biotechnologies Texas, LLC (“FDBT”), and FUJIFILM Diosynth Biotechnologies USA, Inc. (“FDBU” and together with FDBK and FDBT, “Fujifilm”) entered into a Confidential Settlement Agreement and Release (the “Fujifilm Settlement Agreement”) regarding amounts due to Fujifilm in connection with the termination of manufacturing activity at FDBT under the Commercial Supply Agreement (the “CSA”) dated August 20, 2021 and Master Services Agreement dated June 30, 2020 and associated statements of work (the “MSA”) by and between the Company and Fujifilm. The MSA and CSA established the general terms and conditions applicable to Fujifilm’s manufacturing and supply activities related to NVX-CoV2373the Company’s prototype vaccine under the associated statements of work.
Pursuant to the Fujifilm Settlement Agreement, the Company is responsible for payment ofagreed to pay up to $185.0 million (the “Settlement Payment”) to Fujifilm in connection with cancellation of manufacturing activity at FDBT under the CSA, of which (i) $47.8 million, constituting the initial reservation fee under the CSA, was credited against the Settlement Payment on September 30, 2022 and (ii) the remaining balance is to be paid in four equal quarterly installments of $34.3 million each, which began on March 31, 2023. As of JuneSeptember 30, 2023, the remaining payment of $68.6 million was reflected in Accrued expenses. Under the Fujifilm Settlement Agreement, the final two quarterly installments due to Fujifilm is requiredwere subject to 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 the Fujifilm CSA, and the final two quarterly installments will be mitigated by anyCSA. Any replacement revenue achieved by FujifilmFujifilm’s mitigation efforts between July 1, 2023 and December 31, 2023.
In May2023 would offset the final two settlement payments owed by the Company. On October 2, 2023, the Company issuedsent a notice of breach under the Fujifilm Settlement Agreement to SK bioscience Co., Ltd. (“SK bioscience)Fujifilm setting forth the Company’s position that Fujifilm had not used commercially reasonable efforts to cancel and wind down all drug substance and drug product manufacturing activities for supply by SK bioscience to the Company.mitigate losses. The Company recognized $20.4withheld the $34.3 million of research and development expense associated with a take-or-pay obligation that becameinstallment payment due as a resultto Fujifilm on September 30, 2023, pending resolution of the cancellation.issues identified in the notice of breach. On October 30, 2023, FDBT filed a demand for arbitration with Judicial Arbitration and Mediation Services (“JAMS”) seeking payment of the third quarter installment of the Settlement Payment.
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.
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Note 5Earnings (Loss) per Share
Basic and diluted net income (loss) per share were calculated as follows (in thousands, except per share data):
Three Months Ended
June 30,
Six Months Ended
June 30,
2023202220232022
Numerator:
Net income (loss), basic$58,008 $(510,485)$(235,897)$(307,077)
Interest on convertible notes2,582 — — — 
Net income (loss), dilutive60,590 (510,485)(235,897)(307,077)
Denominator:
Weighted average number of common shares outstanding, basic89,362 78,143 87,769 77,305 
Effect of dilutive securities14,703 — — — 
Weighted average number of common shares outstanding, dilutive104,065 78,143 87,769 77,305 
Net income (loss) per share:
Basic$0.65 $(6.53)$(2.69)$(3.97)
Diluted$0.58 $(6.53)$(2.69)$(3.97)
Anti-dilutive securities excluded from calculations of diluted net income (loss) per share6,791 8,073 23,447 8,073 
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):

June 30, 2023December 31, 2022September 30, 2023December 31, 2022
Cash and cash equivalentsCash and cash equivalents$505,912 $1,336,883 Cash and cash equivalents$651,104 $1,336,883 
Restricted cash, currentRestricted cash, current10,361 10,303 Restricted cash, current10,393 10,303 
Restricted cash, non-current(1)
Restricted cash, non-current(1)
1,668 1,659 
Restricted cash, non-current(1)
4,866 1,659 
Cash, cash equivalents, and restricted cashCash, cash equivalents, and restricted cash$517,941 $1,348,845 Cash, cash equivalents, and restricted cash$666,363 $1,348,845 
(1)Classified as Other non-current assets as of JuneSeptember 30, 2023 and December 31, 2022, on the consolidated balance sheets.
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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 June 30, 2023Fair Value at December 31, 2022Fair Value at September 30, 2023Fair Value at December 31, 2022
AssetsAssetsLevel 1Level 2Level 3Level 1Level 2Level 3AssetsLevel 1Level 2Level 3Level 1Level 2Level 3
Money market funds(1)
Money market funds(1)
$81,268 $— $— $398,834 $— $— 
Money market funds(1)
$196,679 $— $— $398,834 $— $— 
Government-backed securities(1)
Government-backed securities(1)
— 180,000 — — 296,000 — 
Government-backed securities(1)
— 200,000 — — 296,000 — 
Treasury securities(1)
Treasury securities(1)
— 36,913 — — — — 
Corporate debt securities(1)
Corporate debt securities(1)
— 28,515 — — — — 
Corporate debt securities(1)
— 23,028 — — — — 
Agency securities(1)
Agency securities(1)
— 9,971 — — 104,536 — 
Agency securities(1)
— — — — 104,536 — 
Total cash equivalentsTotal cash equivalents$81,268 $218,486 $— $398,834 $400,536 $— Total cash equivalents$196,679 $259,941 $— $398,834 $400,536 $— 
LiabilitiesLiabilitiesLiabilities
5.00% Convertible notes due 20275.00% Convertible notes due 2027$$130,957 $$$172,789$5.00% Convertible notes due 2027$$131,292 $$$172,789$
3.75% Convertible notes due 20233.75% Convertible notes due 2023— — — — 322,111 — 3.75% Convertible notes due 2023— — — — 322,111 — 
Total convertible notes payableTotal convertible notes payable$— $130,957 $— $— $494,900 $— Total convertible notes payable$— $131,292 $— $— $494,900 $— 
(1)All investments are classified as Cash and cash equivalents as of JuneSeptember 30, 2023 and December 31, 2022, 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 sixnine months ended JuneSeptember 30, 2023 and 2022, the Company did not have any transfers between levels.
The amount in the Company’s consolidated balance sheets for accounts payable and accrued expenses approximates its fair value due to its short-term nature.
Note 87 – Inventory
Inventory consisted of the following (in thousands):
June 30, 2023December 31, 2022September 30, 2023December 31, 2022
Raw materialsRaw materials$10,892 $13,912 Raw materials$10,385 $13,912 
Semi-finished goodsSemi-finished goods12,596 21,410 Semi-finished goods10,405 21,410 
Finished goodsFinished goods— 1,361 Finished goods48,802 1,361 
Total inventoryTotal inventory$23,488 $36,683 Total inventory$69,592 $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 ourthe Company’s consolidated statements of operations. For the three and sixnine months ended JuneSeptember 30, 2023, inventory write-downs were $19.1$18.1 million and $31.5$49.6 million, respectively and losses on firm purchase commitments were $0.7$63.5 million and $8.5$71.9 million, respectively. In addition, for the three and sixnine months ended JuneSeptember 30, 2023 the Company recorded recoveries on firm purchase commitments of $17.9$21.5 million and $18.8$40.3 million, respectively, related primarily to negotiated reductions to previously recognized firm purchase commitments. For the three and sixnine months ended JuneSeptember 30, 2022, inventory write-downs were $202.4 million and $358.1 million, respectively. For the three and nine months ended September 30, 2022, losses on firm purchase commitments were $155.7$46.6 million and $99.6$146.2 million, respectively.
Note 98 – Goodwill
The Company has one reporting unit, which has a negative equity balance as of JuneSeptember 30, 2023 and December 31, 2022. The
1415


2022. The change in the carrying amounts of goodwill for the sixnine months ended JuneSeptember 30, 2023 was as follows (in thousands):
Amount
Balance at December 31, 2022$126,331 
Currency translation adjustments2,035 (2,551)
Balance at JuneSeptember 30, 2023$128,366123,780 
Note 109 – 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,its COVID-19 Vaccine, as well as leases for its research and development and manufacturing facilities, corporate headquarters and offices, and certain equipment. During the sixnine months ended JuneSeptember 30, 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.its COVID-19 Program.
During the three and sixnine months ended JuneSeptember 30, 2023, the Company recognized a short-term lease benefit of $9.2$39.5 million and $8.5$48.0 million, respectively, related to itsthe reversal of previously recognized embedded leases, primarily as a resultlease expense on the settlement of a benefit of $9.5 million related to a settlement executed during the three months ended June 30, 2023.CMO contracts. During the three and sixnine months ended JuneSeptember 30, 2022, the Company recognized a short-term lease benefit of $46.6 million and expense of $5.8 million and $83.9$37.3 million respectively, related to its embedded leases and expensed $9.4$24.2 million and $19.8$44.0 million respectively, 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 ROU written off. There were no ROU assets written off during the three and sixnine months ended JuneSeptember 30, 2023, related to embedded leases.
During the three and sixnine months ended JuneSeptember 30, 2023, the Company recognized $0.5 million and $0.9$1.4 million of interest expense, respectively, on its finance lease liabilities. During the three and sixnine months ended JuneSeptember 30, 2022, the Company recognized $2.3$0.9 million and $3.4$4.3 million of interest expense, respectively, on its finance lease liabilities.
During the three and sixnine months ended JuneSeptember 30, 2023, the Company recorded an impairment charge of $5.9 million related to ROU facility leases used for research and development, manufacturing and offices space that are impacted by the Restructuring Plan (see Note 16)15).
The Company has a lease agreement for approximately 170,000 square feet of space at 700 Quince Orchard Road, Gaithersburg, Maryland, which the Company uses for manufacturing, research and development, and corporate offices. The term of the lease expires in 2035 with options to extend the lease. The lease provides for an annual base rent of $5.8 million that is subject to future rent increases and obligates the Company to pay building operating costs. During the three months ended September 30, 2023, the Company obtained the right to direct the use of, and obtain substantially all of the benefit from, certain floors located at the premises and recognized a ROU asset and related lease obligation of $96.5 million as the lease commencement dates for accounting purposes had occurred. The lease obligation was reduced by $73.4 million for prepaid rent and prior costs incurred on behalf of the landlord.
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Note 1110 – Long-Term Debt
Total convertible notes payable consisted of the following (in thousands):
June 30, 2023December 31, 2022September 30, 2023December 31, 2022
Current portion:Current portion:Current portion:
3.75% Convertible notes due 20233.75% Convertible notes due 2023$— $325,000 3.75% Convertible notes due 2023$— $325,000 
Unamortized debt issuance costsUnamortized debt issuance costs— (119)Unamortized debt issuance costs— (119)
Total current convertible notes payableTotal current convertible notes payable$— $324,881 Total current convertible notes payable$— $324,881 
Non-current portion:Non-current portion:Non-current portion:
5.00% Convertible notes due 20275.00% Convertible notes due 2027$175,250 $175,250 5.00% Convertible notes due 2027$175,250 $175,250 
Unamortized debt issuance costs and discount(8,002)(8,784)
Unamortized debt issuance costsUnamortized debt issuance costs(7,629)(8,784)
Total non-current convertible notes payableTotal non-current convertible notes payable$167,248 $166,466 Total non-current convertible notes payable$167,621 $166,466 
In February 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 effective interest rate of the 2027 Convertible notes is 6.2%.
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The interest expense incurred in connection with the convertible notes payable consisted of the following (in thousands):
Three Months Ended
June 30,
Six Months Ended
June 30,
Three Months Ended
September 30,
Nine Months Ended
September 30,
20232022202320222023202220232022
Coupon interestCoupon interest$2,191 $3,047 $5,397 $6,094 Coupon interest$2,191 $3,047 $7,588 $9,141 
Amortization of debt issuance costsAmortization of debt issuance costs391 356 900 712 Amortization of debt issuance costs395 356 1,295 1,068 
Total interest expense on convertible notes payableTotal interest expense on convertible notes payable$2,582 $3,403 $6,297 $6,806 Total interest expense on convertible notes payable$2,586 $3,403 $8,883 $10,209 
Note 1211 – Stockholders' Equity (Deficit)Deficit
In June 2021,August 2023, the Company entered into an At Market Issuance Sales Agreement (the "June 2021"August 2023 Sales 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 and six months ended JuneSeptember 30, 2023, the Company sold 7.917.8 million shares of its common stock under its August 2023 Sales Agreement resulting in net proceeds of approximately $143 million. During the nine months ended September 30, 2023, the Company sold 25.7 million shares of its common stock under its June 2021 and August 2023 Sales Agreement resulting in net proceeds of approximately $68 million, of which $6 million was included in Prepaid expenses and other current assets as of June 30, 2022 and received in cash in July 2023.$211 million. As of JuneSeptember 30, 2023, the remaining balance available under the June 2021August 2023 Sales Agreement was approximately $249$354 million.
During the sixnine months ended JuneSeptember 30, 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. There was no sale of shares of common stock recorded during the three months ended September 30, 2022.
In August 2023, pursuant to the Securities Subscription Agreement with SK, the Company agreed to sell and issue to SK 6.5 million shares of the Company’s common stock, par value $0.01 per share at a price of $13.00 per share (the “Shares”) in a Private Placement for aggregate gross proceeds to the Company of approximately $84.5 million. The Company recognized the Shares at the settlement date fair value of $46.5 million (see Note 4 for additional discussion of the Securities Subscription Agreement with SK). The closing of the Private Placement occurred on August 10, 2023.

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Note 1312 – Stock-Based Compensation
Equity Plans
In January 2023, the Company established the 2023 Inducement Plan (the “2023 Inducement Plan”), which provides for the granting of share-based awards to individuals who were not previously employees, or following a bona fide period of non-employment, as an inducement material to such individuals entering into employment with the Company. The Company reserved 1.0 million shares of common stock for grants under the 2023 Inducement Plan. As of JuneSeptember 30, 2023, there were 0.30.2 million shares available for issuance under the 2023 Inducement Plan.
The 2015 Stock Incentive Plan, as amended (“2015 Plan”), was approved at the Company'sCompany’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 14.821.0 million shares of common stock under equity awards granted under the 2015 Plan.Plan, which includes an increase of 6.2 million shares approved for issuance under the 2015 Plan at the Company's 2023 annual meeting of stockholders. All such shares authorized for issuance under the 2015 Plan have been reserved. The 2015 Plan will expire on March 4, 2025. As of JuneSeptember 30, 2023, there were 0.97.1 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'sCompany’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
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thousands):
Three Months Ended
June 30,
Six Months Ended
June 30,
Three Months Ended
September 30,
Nine Months Ended
September 30,
20232022202320222023202220232022
Cost of salesCost of sales$998 $— $1,516 $— Cost of sales$767 $51 $2,283 $51 
Research and developmentResearch and development9,946 19,695 23,804 36,582 Research and development10,022 16,107 33,826 52,692 
Selling, general, and administrativeSelling, general, and administrative9,348 18,353 23,619 34,399 Selling, general, and administrative9,971 15,389 33,590 49,782 
Total stock-based compensation expenseTotal stock-based compensation expense$20,292 $38,048 $48,939 $70,981 Total stock-based compensation expense$20,760 $31,547 $69,699 $102,525 
TotalDuring the three and nine months ended September 30, 2023, total stock-based compensation capitalized and included in inventory as of Junewas $0.5 million. During the three and nine months ended September 30, 2023 and December 31, 2022, total stock-based compensation capitalized in inventory was $1.7 million.
As of JuneSeptember 30, 2023, there was approximately $122$102 million of total unrecognized compensation expense related to unvested stock options, SARs, RSUs, and the Company’s Employee Stock Purchase Plan, as amended (“ESPP”). This unrecognized non-cash compensation expense is expected to be recognized over a weighted-average period of approximately one year. This estimate does not include the impact of other possible stock-based awards that may be made during future periods.
The aggregate intrinsic value represents the total intrinsic value (the difference between the Company’s closing stock price on the last trading day of the period and the exercise price, multiplied by the number of in-the-money stock options and SARs) that would have been received by the holders had all stock option and SAR holders exercised their stock options and SARs on JuneSeptember 30, 2023. This amount is subject to change based on changes to the closing price of the Company's common stock. The aggregate intrinsic value of stock options and SARs exercises and vesting of RSUs for the sixnine months ended JuneSeptember 30, 2023 and 2022 was approximately $2$3 million and $8$19 million, respectively.
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Stock Options and Stock Appreciation Rights
The following is a summary of stock options and SARs activity under the 2023 Inducement Plan, 2015 Plan, and 2005 Plan for the sixnine months ended JuneSeptember 30, 2023:
2023 Inducement Plan2015 Plan2005 Plan2023 Inducement Plan2015 Plan2005 Plan
Stock
Options
Weighted-Average
Exercise
Price
Stock
Options
Weighted-Average
Exercise
Price
Stock
Options
Weighted-Average
Exercise
Price
Stock
Options
Weighted-Average
Exercise
Price
Stock
Options
Weighted-Average
Exercise
Price
Stock
Options
Weighted-Average
Exercise
Price
Outstanding at December 31, 2022Outstanding at December 31, 2022— $— 4,053,290 $46.07 63,725 $112.94 Outstanding at December 31, 2022— $— 4,053,290 $46.07 63,725 $112.94 
GrantedGranted358,600 10.96 860,872 7.29 — — Granted422,800 10.67 861,602 7.29 — — 
ExercisedExercised— — (5,031)6.81 — — Exercised— — (5,374)6.71 — — 
CanceledCanceled— — (63,839)51.41 (5,250)36.60 Canceled— — (103,504)56.45 (5,450)39.70 
Outstanding at June 30, 2023358,600 $10.96 4,845,292 $39.15 58,475 $119.80 
Shares exercisable at June 30, 2023— $— 3,295,810 $40.62 58,475 $119.80 
Outstanding at September 30, 2023Outstanding at September 30, 2023422,800 $10.67 4,806,014 $38.94 58,275 $119.79 
Shares exercisable at September 30, 2023Shares exercisable at September 30, 2023— $— 3,437,364 $40.58 58,275 $119.79 
The fair value of stock options granted under the 2023 Inducement Plan and the 2015 Plan was estimated at the date of
17


grant using the Black-Scholes option-pricing model with the following assumptions:
Three Months Ended
June 30,
Six Months Ended
June 30,
Three Months Ended
September 30,
Nine Months Ended
September 30,
20232022202320222023202220232022
Weighted average Black-Scholes fair value of stock options grantedWeighted average Black-Scholes fair value of stock options granted$6.79$43.21$7.24$62.52Weighted average Black-Scholes fair value of stock options granted$7.84$37.66$7.27$60.24
Risk-free interest rateRisk-free interest rate3.5%-3.9%2.7%-3.2%3.5%-4.0%1.4%-3.2%Risk-free interest rate4.3%-4.4%3.0%-3.6%3.5%-4.4%1.4%-3.6%
Dividend yieldDividend yield—%—%—%—%Dividend yield—%—%—%—%
VolatilityVolatility120.4%-131.3%120.5%-136.7%120.4%-140.3%120.5%-136.7%Volatility128.7%-130.3%122.2%-136.4%120.4%-140.3%120.5%-136.7%
Expected term (in years)Expected term (in years)3.9-6.44.0-6.23.9-6.44.0-6.2Expected term (in years)3.9-5.14.0-5.33.9-6.34.0-6.3
The total aggregate intrinsic value and weighted-average remaining contractual term of stock options and SARs outstanding under the 2023 Inducement Plan, 2015 Plan and 2005 Plan as of JuneSeptember 30, 2023 was approximately $1.7$1.4 million and 7.37.1 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 JuneSeptember 30, 2023 was approximately $1.1 million and 6.36.1 years, respectively.
Restricted Stock Units
The following is a summary of RSU activity for the sixnine months ended JuneSeptember 30, 2023:
2023 Inducement Plan2015 Plan2023 Inducement Plan2015 Plan
Number of
Shares
Per Share
Weighted-
Average
Fair Value
Number of
Shares
Per Share
Weighted-
Average
Fair Value
Number of
Shares
Per Share
Weighted-
Average
Fair Value
Number of
Shares
Per Share
Weighted-
Average
Fair Value
Outstanding and unvested at December 31, 2022Outstanding and unvested at December 31, 2022— $— 2,034,574 $61.67 Outstanding and unvested at December 31, 2022— $— 2,034,574 $61.65 
GrantedGranted308,390 $10.96 2,767,475 7.23 Granted363,990 10.66 2,888,793 7.25 
VestedVested— $— (307,653)82.94 Vested— — (403,672)87.17 
ForfeitedForfeited— $— (637,727)29.46 Forfeited— — (780,810)27.77 
Outstanding and unvested at June 30, 2023308,390 $10.96 3,856,669 $26.23 
Outstanding and unvested at September 30, 2023Outstanding and unvested at September 30, 2023363,990 $10.66 3,738,885 $23.95 
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Employee Stock Purchase Plan
The ESPP was approved at the Company'sCompany’s annual meeting of stockholders in June 2013. The ESPP currently authorized an aggregate of 1.2 million shares of common stock to be purchased, and the aggregate amount of shares will continue to increase 5% on each anniversary of its adoption up to a maximum of 1.65 million shares. The ESPP allows employees to purchase shares of common stock of the Company at each purchase date through payroll deductions of up to a maximum of 15% of their compensation, at 85% of the lesser of the market price of the shares at the time of purchase or the market price on the beginning date of an option period (or, if later, the date during the option period when the employee was first eligible to participate). As of JuneSeptember 30, 2023, there were 0.60.5 million shares available for issuance under the ESPP.
Note 1413 – Income Taxes
The Company evaluates the available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit use of the existing deferred tax assets. A significant piece of objective evidence evaluated was the cumulative loss incurred over the three-year period ended JuneSeptember 30, 2023 and that the Company has historically generated pretax losses. Such objective evidence limits the ability to consider other subjective evidence, such as projections for future growth. On the basis of this evaluation, as of JuneSeptember 30, 2023, the Company continued to maintain a full valuation allowance against its deferred tax assets, except to the extent Net Operating Losses (“NOLs”) have been used to reduce taxable income. The Company’s remaining U.S. Federal NOLs are subject to limitation in accordance with the 2017 Tax Cuts and Jobs Act (“TCJA”), which limits allowable NOL deductions to 80% of federal taxable income.
Effective January 1, 2022, a provision of the TCJA has taken effect creating a significant change to the treatment of
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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.
During the three months ended JuneSeptember 30, 2023, and 2022, the Company recognized $0.7 million of federal, state, and foreign income tax benefitbenefit. During the three months ended September 30, 2022, the Company recognized $2.4 million of $0.1 millionfederal, state, and foreign income tax expense of $1.4 million, respectively.expense. During the sixnine months ended JuneSeptember 30, 2023 and 2022, the Company recognized income tax expense of $1.0$0.3 million and $1.9$4.3 million, respectively. The Company recognized income tax expense related to foreign withholding tax expense on royalties of $2.2$0.1 million and $2.3 million, respectively, for the sixthree and nine months ended JuneSeptember 30, 2022. The Company did not recognize any foreign withholding tax expense on royalties for the three and nine months ended June 30, 2022 and the three and six months ended JuneSeptember 30, 2023.
Note 1514Commitments and Contingencies
Legal Matters
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-CoV2373prototype vaccine on a commercial scale and to secure the NVX-CoV2373’sprototype 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.
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After the Sinnathurai Action was filed, 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. 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”), (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.
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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. Defendants filed their reply brief in further support of their motion to dismiss 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. This includes staying the deadline for the individual defendants to respond to the consolidated amended complaint.
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.action. On February 22, 2023, the parties in the Kirst Action filed for the Court’s approval of a stipulation staying the Kirst Action pending the resolution of defendants’ motion to dismiss in the Second Consolidated Derivative Action. On March 22, 2023, the Court entered an order staying the Kirst Action pending resolution of the Motionmotion to Dismissdismiss in the Second Consolidated Derivative Action. The parties continue to discuss next steps in the litigation following the Maryland Court’s ruling on the motion to dismiss 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 ruling on the motion to dismiss the Sinnathurai Action, the Delaware Court entered an order granting the Mesa Action parties’ request to set a briefing schedule in connection with a motion to stay by defendants. On February 28, 2023, the court granted the defendants’ motion and stayed the Mesa Action pending the entry of a final, non-appealable judgment in the Second Consolidated Derivative Action. On 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. On October 17, 2023, the Mesa plaintiff filed his reply in further support of his motion to lift the stay.
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On December 7, 2022, the Acosta Action was filed. On February 6, 2023, defendants accepted service of the complaint and summons in the Acosta Action. On March 9, 2023, the court entered an order granting the parties’ request to stay the Acosta Action pending the entry of a final, non-appealable judgment in the Second Consolidated Derivative Action. On June 28,October 13, 2023, the Company, along with representatives from its insurance carriers, met with the plaintiffsparties filed, and the plaintiffs ofDelaware Court entered, a stipulated order providing that (i) if the SinnathuraiDelaware 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 mediation to engagethe Mesa Action, the stay in potential settlement discussions. The parties continue to discuss whether an amicable resolution is possible.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. The parties continue to discuss next steps in the litigation following the Maryland Court’s ruling on the motion to dismiss the Second Consolidated Derivative Action. The financial impact of this claim, as well as the claims discussed above, is not estimable.
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On February 26, 2021, a Company stockholder named Thomas Golubinski filed a derivative complaint against members ofOctober 6, 2023, the Company’s board of directors voted unanimously to form a Special Litigation Committee (“SLC”) vested with full power and members of senior managementauthority with respect to, among other things, claims in the Delaware Court, captioned Thomas Golubinski v. Richard H. Douglas, et al., No. 2021-0172-JRS.derivative lawsuits related to certain sales of Company stock by certain Company officers, directors, or employees. 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 inSLC has retained 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. On June 8, 2023, the Supreme Court affirmed the Court of Chancery’s denial of the plaintiff’s fee application. The case was closed on June 26, 2023.
On March 29, 2022, Par Sterile Products, LLC (“Par”) submitted a demand for arbitration against the Company with the American Arbitration Association, alleging that the Company breached certain provisions of the Manufacturing and Services Agreement (the “Par MSA”) that the Company entered into with Par in September 2020 to provide fill-finish manufacturing services for NVX-CoV2373. On April 4, 2023 the parties entered into a Settlement Agreement and Release of Claims pursuant to which Novavax agreed to pay $27.0 million to Par, which was fully accrued for as of March 31, 2023. Novavax characterized the payment as a $15.0 million termination fee and a $12.0 million settlement payment. Because Par and its parent company, Endo International plc, are parties to Chapter 11 bankruptcy proceedings, the Settlement Agreement and Release of Claims and the payment due thereunder required, and subsequently received, approval from the bankruptcy court. The Company has made the payment required by the Settlement Agreement and Release of Claims, and the arbitration was dismissed with prejudice following a joint motion by Par and Novavax on August 1, 2023.own independent counsel.
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-CoV2373prototype 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 that, based on its purported termination of the Gavi APA, it is entitled to a refund of the Advance Payment Amount less any amounts that have been credited against the purchase price for binding orders placed by a buyer participating in the COVAX Facility. Since December 31, 2022, the remaining Gavi Advance Payment Amount, which is $696.4 million as of JuneSeptember 30, 2023, pending resolution of the dispute with Gavi related to a return of the remaining Advance Payment Amount, has been classified within Other current liabilities in the Company’s consolidated balance sheet. On January 24, 2023, Gavi filed a demand for arbitration with the International Court of Arbitration based on the claims described above. The Company filed its Answer and Counterclaims on March 2, 2023. On April 5, 2023, Gavi filed its Reply to the Company’s Counterclaims. On August 24, 2023, Gavi filed a Statement of Claim, and on September 21, 2023, the Company filed a Statement of Defense and Counterclaim. The arbitration hearing is scheduled for July 2024, with a written decision to follow. Arbitration is inherently uncertain, and while the Company believes that it is entitled to retain the remaining Advance Payment Amount received from Gavi, it is possible that it could be required to refund all or a portion of the remaining Advance Payment Amount from Gavi.
On September 30, 2022, the Company and Fujifilm entered into the Fujifilm Settlement Agreement regarding amounts due to Fujifilm in connection with the termination of manufacturing activity at FDBT under the CSA dated August 20, 2021 and 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 (see Note 4). On October 30, 2023, FDBT filed a demand for arbitration with JAMS seeking payment of the withheld installment payment.
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 does 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.
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Note 1615Restructuring
During the three and sixnine months ended JuneSeptember 30, 2023, the restructuring charge recorded by the Company as a result of the Restructuring Plan includescomprised (in thousands):
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Amount
Severance and employee benefit costs$4,6434,503 
Impairment of assets10,081 
Total Restructuring charge (1)
$14,72414,584 
(1) Restructuring charges of $0.5 million, $2.7$2.3 million and $11.5 million are included in Cost of sales, Research and development and Selling, general, and administrative expenses, respectively, in the Consolidated Statements of Operations for the nine months ended September 30, 2023. All impairment charges were taken in the three and six months ended June 30, 2023. These charges reflect substantially all expected restructuring charges under the Restructuring Plan.
Severance and employee benefit costs
Employees affected by the reduction in force under the Restructuring Plan are entitled to receive severance payments and certain termination benefits. The Company recorded a severance and termination benefit cost in full for employees who were notified of their termination in the three months ended June 30, 30232023 and had no requirements for future service. The Company paid a total of $3.6$4.3 million for the severance and employee benefit costs during the threenine months ended JuneSeptember 30, 2023 and the remaining liability of $1.0$0.2 million is included in Accrued expenses in the Company’s Consolidated Balance Sheetconsolidated balance sheet as of JuneSeptember 30, 2023.
Impairment of assets
In connection with the Restructuring Plan, the Company evaluated its long-lived assets for impairment including certain leased laboratory and office spaces located in Gaithersburg, Maryland. The Company performed an impairment evaluation for the applicable long-lived assets which is subject to judgment and actual results may vary from the estimates, resulting in potential future adjustments to amounts recorded. During the three and six months ended June 30, 2023, the Company recorded an impairment charge of $10.1 million related to the impairment of long-lived assets, including $5.9 million related to ROU assets for facility leases.

Note 16
Subsequent Events
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 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.
On October 2, 2023, the World Health Organization (“WHO”) announced its recommendation of the R21/Matrix-M™ malaria vaccine to prevent malaria in children following advice from its Strategic Advisory Group of Experts and Malaria Policy Advisory Group. The vaccine contains R21 antigen developed by University of Oxford, specific to the malaria parasite, and Novavax’s Matrix-M™ adjuvant. This recommendation is a required step on the pathway to the WHO’s prequalification (“PQ”) of the vaccine. PQ designation is necessary for United Nations agencies and partners, for example UNICEF and Gavi, to procure the vaccine for eligible countries. This is the first recommendation from WHO to support the use of a vaccine containing the Company’s Matrix-M™ adjuvant in children as young as five months of age and it is based on the results from the Phase 3 clinical trial. The R21/Matrix-M™ malaria vaccine is being developed and manufactured by SIIPL.
On October 3, 2023, the Company announced that the updated vaccine has received EUA from the U.S. FDA for active immunization to prevent COVID-19 in individuals aged 12 and older. Immediately upon authorization, the Company’s updated vaccine has also been included in the recommendations issued by the U.S. Centers for Disease Control and Prevention on September 12, 2023.

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On October 18, 2023, the Company announced that the Medicines and Healthcare products Regulatory Agency in the United Kingdom has granted full marketing authorization for its prototype vaccine for individuals aged 12 and older for active immunization to help prevent COVID-19.
On October 18, 2023, the Company announced that Singapore's Health Sciences Authority has granted full approval for Novavax's prototype vaccine for active immunization to prevent COVID-19 in individuals aged 12 and older. The Singapore Ministry of Health has included Novavax’s prototype vaccine in the National Vaccination Programme as a protein-based non-mRNA option for COVID-19 prevention.
On October 31, 2023, the Company announced that the EC has granted approval for the updated vaccine for active immunization to prevent COVID-19 caused by SARS-CoV-2 in individuals aged 12 and older. This decision follows positive opinion for approval from the Committee for Medicinal Products for Human Use.


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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 our unaudited financial statements for the period ended JuneSeptember 30, 2023;2023 are issued; our global restructuring and cost reduction plan (“Restructuring Plan”), which includes a more focused investment in our NVX-CoV2373COVID-19 program (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 (“COVID-19 Program,” or COVID-19 Vaccine”)), 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; our new cost reduction plan focused on further reductions to spend on Research & development expenses, Selling, general, & administrative expenses and supply network costs; the amount and timing of the charges and cash expenditures resulting from the size and timing of our workforce reduction; the impact of our decision to progress our COVID-19-Influenza Combination (“CIC”) vaccine candidate toward late-stage development on our workforce requirements; the amount and timing of the charges and cash expenditures resulting from our workforce reduction, and the expected timing and impact of cost savings from our global restructuring and cost reduction plan; potential market sizes and demand for our product candidates; the efficacy, safety, and intended utilization of our product candidates; the development of our clinical-stage product candidates and our recombinant vaccine and adjuvant technologies, including our updated monovalent Omicron XBB.1.5 COVID-19 vaccine, which is referred to as our “XBB COVID vaccine”;NVX-CoV2601; the conduct, timing, and potential results from clinical trials; plans for and potential timing of regulatory filings, including our submission to the U.S. Food and Drug Administration (“U.S. FDA”) for the Biologics License Application (“BLA”) for the full approval of the Novavax COVID-19 Vaccine, Adjuvanted; our expectation of manufacturing capacity, timing, production, distribution, and delivery for NVX-CoV2373NVX-CoV2601 by us and our partners; our expectations with respect to the anticipated ongoing development and commercialization or licensure of NVX-CoV2373,our COVID-19 Program, ongoing development of our influenza vaccine candidate, COVID-19-Influenza Combination (“CIC”)CIC vaccine candidate, high-dose COVID-19 vaccine candidate, and COVID-19 variant strain-containing monovalent formulation, including the Phase 2b/3 Hummingbird™ trial, and the timing of anticipated results from and our efforts for the fall 20232023-2024 vaccination season, efforts to expand the NVX-CoV2373COVID-19 Program label worldwide as a booster, and to various age groups and geographic 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, or legal disputes relating to any such agreement; our available cash resources and usage and the availability of financing generally; plans regarding partnering activities and business development initiatives; and other matters referenced herein. Generally, forward-looking statements can be identified through the use of words or phrases such as “believe,” “may,” “could,” “will,” “would,” “possible,” “can,” “estimate,” “continue,” “ongoing,” “consider,” “anticipate,” “intend,” “seek,” “plan,” “project,” “expect,” “should,” “would,” “aim,” or “assume,” the negative of these terms, or other comparable terminology, although not all forward-looking statements contain these words.
Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs and expectations about the future of our business, future plans and strategies, projections, anticipated events and trends, the economy, and other future conditions. Forward-looking statements involve estimates, assumptions, risks, and uncertainties that could cause actual results or outcomes to differ materially from those expressed or implied in any forward-looking statements, and, therefore, you should not place considerable reliance on any such forward-looking statements. Such risks and uncertainties include, without limitation, our ability to successfully develop, manufacture, distribute, or market an XBB COVID vaccine for COVID-19NVX-CoV2601 for the fall 2023 COVID vaccine2023-2024 vaccination season, which is inherently uncertain and subject to a number of risks, including regulatory authorization,our ability to timely deliver doses and commercial adoption and market acceptance;doses; challenges in obtaining commercial adoption and market acceptance of NVX-CoV2601, NVX-CoV2373 or any COVID-19 variant strain containing formulation; challenges satisfying, alone or together with partners, various safety, efficacy, and product characterization requirements, including those related to process qualification, assay validation, and stability testing, necessary to satisfy applicable regulatory authorities, such as the U.S. 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; challenges or delays in conducting clinical trials; or obtaining regulatory authorization for our product candidates, including for our monovalent XBB COVID vaccineNVX-CoV2601 in time for the fall 20232023-2024 vaccination season, or for future COVID variant strain changes manufacturing distribution or export delays or challenges, including the requirement to obtain approval from the drug licensing body in India for the distribution of our XBB COVID vaccine to timely deliver such vaccine candidate for the fall 2023 vaccination season;challenges; our exclusive dependence on SIIPLSerum Institute of India Pvt. Ltd. (“SIIPL”), that markets our prototype vaccine as (“Covovax™”), and SLSSerum Life Sciences Limited (“SLS”) for co-formulation, and filling and finishing (other than in Europe), and PCI Pharma Services for finishing NVX-CoV2373our COVID-19 Vaccine in Europe and the impact of any delays or disruptions in these suppliers’ operations on the delivery of customer orders; difficulty obtaining scarce raw materials and supplies; resource constraints, including human capital and manufacturing capacity, constraints on the ability of Novavax to pursue planned regulatory pathways, alone or with partners, in multiple jurisdictions simultaneously, leading to staggering ofstaggered regulatory filings, and potential regulatory actions; the loss of future funding from the U.S. government; the potential for an unfavorable outcome
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in disputes, including the pending arbitration with Gavi; 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 related to the seasonality of vaccinations against COVID-19; challenges in implementing our global restructuring and cost
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reduction plan; and other risks and uncertainties identified in Part II, Item 1A “Risk Factors” of this Quarterly Report on Form 10-Q for the quarter ended September 30, 2023, in Part II, Item 1A “Risk Factors” of our Quarterly Report on Form 10-Q for the quarter ended June 30, 2023, in Part II, Item 1A “Risk Factors” of our Quarterly Report on Form 10-Q for the quarter ended March 31, 2023 and in Part I, Item 1A “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2022, 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-CoV2373our COVID-19 Program 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 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 developed aan updated COVID-19 vaccine NVX-CoV2373for the 2023-2024 vaccination season. In October 2023, the U.S. FDA granted emergency use authorization (“Nuvaxovid™,” “Covovax™,” “NovavaxEUA”) for our updated vaccine for active immunization to prevent COVID-19. The updated vaccine is authorized as (1) a single dose in individuals 12 years and older who have been vaccinated with any COVID-19 Vaccine, Adjuvanted”vaccine at least 2 months after receipt of the last previous dose of COVID-19 vaccine, and (2) a series of 2 doses administered 3 weeks apart to individuals 12 years and older who were not previously vaccinated with any COVID-19 vaccine. Our updated vaccine is available within the U.S. at many major pharmacy retailers. Outside the U.S., in October 2023, we were granted approval by the European Commission (“EC”) thatfor our updated vaccine. We are committed to meeting the full supply of our key target markets through their advanced purchase agreements (“APAs”). We continue to work closely with regulatory authorities for authorization of our updated vaccine globally. We previously developed a prototype COVID-19 vaccine, which has received full marketing authorization (“MA”), marketing approval, interim authorization, provisional approval, conditional marketing authorization (“CMA”), and emergency use authorization (“EUA”) from multiple regulatory authorities globallyin over 40 countries globally. We continue to seek full regulatory authorizations for both adult and adolescent populations as a primary series andour prototype vaccine, which we believe will facilitate authorization for both homologous and heterologous booster indications. our updated strains in the future.
Additionally, in partnership with regulators and public health authorities, we have been developing and manufacturing at commercial scale our XBB COVID vaccine that is in line with the FDA, WHO, and EMA recommendations for the 2023 fall season. We intend to deliver our XBB COVID vaccine for the 2023 fall vaccination campaign pending authorization from regulatory authorities. We are also developing a stand-alone influenza vaccine candidate, high-dose COVID-19 vaccine candidate, and a CIC vaccine candidate. In addition to COVID-19 and seasonal influenza, our other areas of focus include providing Matrix-M™ adjuvant for collaborations, investigating the prevention of malaria, including in R21/Matrix-M™ adjuvant malaria vaccine, which recently
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received authorization in several countries, as well as other preclinical vaccine research with our Matrix-M™ adjuvant, inincluding a partnership with the Bill & Melinda Gates Medical Research Institute.
We intend to focus the organization to align our investments and activities with our top priority of delivering our XBB COVIDupdated vaccine for the 2023 fall2023-2024 vaccination season. To maximize our opportunities and mitigate the significant risks and uncertainties of the COVID-19 market, we have progressed our cost restructuring measures to reduce spend, extend our cash runway, and operate efficiently to seek to best position the Company to deliver longer-term growth. We discuss these cost restructuring strategies in greater detail in Note 2 to our consolidated financial statements in this Quarterly Report.
Technology Overview
We believe our recombinant nanoparticle vaccine technology, together with our proprietary Matrix-M™ adjuvant, is well suited for the development and commercialization of vaccine candidates targeting a broad scope of respiratory and other
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endemic and emerging infectious diseases.
Recombinant Nanoparticle Vaccine Technology
Once a pathogentarget of interest has been identified, the genetic sequence encoding an antigen is selected for 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 protein-based antigens that are properly folded and modified—which can be critical for functional, protective 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 promote the production of high affinity antibodies, an immune boosting response. This potent mechanism of action enables a lower dose of antigen 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”)SIIPL for commercialization. Additionally, in May 2023, we entered into a 3-year agreement with the Bill & Melinda Gates Medical Research Institute to provide our Matrix-M™ adjuvant for use in preclinical vaccine research. 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 used by commercial partners as a key component in veterinary vaccines against equine influenza and Strangles, as well as the manufacture of black-widow anti-venom.

COVID-19 Vaccine Regulatory and Licensure

In October 2023, we received EUA from the U.S. FDA for our updated vaccine, to prevent COVID-19 in individuals aged 12 and older. Our updated vaccine is marketed in the U.S. under the brand name Novavax COVID-19 Vaccine, Adjuvanted (2023-2024 Formula). In September 2023, the U.S. Centers for Disease Control and Prevention (“CDC”) Advisory Committee on Immunization Practices (“ACIP”) voted in favor of a recommendation for the use of 2023-2024 monovalent XBB containing COVID-19 vaccines authorized under EUA or approved BLA in individuals 6 months and older, which was adopted by the CDC Director. The U.S. FDA’s grant of EUA and CDC’s September 2023 recommendation makes our updated vaccine the only protein-based non-mRNA COVID-19 vaccine available in the U.S. The formulation for our updated vaccine aligns with global harmonized guidance from the U.S. FDA, EMA, and WHO recommendations for the 2023-2024 vaccination season. We continue to expand theprogress regulatory authorizations for our COVID-19updated vaccine and remain focused onglobally. In October 2023, we were granted approval by the planned EUA requestEC for our XBB COVIDupdated vaccine in individuals aged 12 and older, which followed the positive opinion for approval from the 2023 fall season. Committee for Medicinal Products for Human Use of the EMA. We expect to meet the full supply commitment for
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doses to European countries that requested it through APAs.
We have received authorizations for NVX-CoV2373our prototype COVID-19 vaccine in over 40 countries globally including from major regulatory agencies including the 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-CoV2373our prototype vaccine include primary series and both homologous and heterologous booster indications within specific countries. For the territories in which our vaccine has received regulatory authorizations, NVX-CoV2373our 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 In October 2023, for our prototype vaccine we highlightreceived full marketing authorization in the second quarter 2023 and subsequent regulatory progress made for NVX-CoV2373 throughUK from the date of this filing on Form 10-Q.
In July 2023, we initiated the rolling submission to the U.S. FDA for the Biologics License Application for the full approval of the Novavax COVID-19 Vaccine, AdjuvantedMHRA in individuals aged 12 years and older.
In July 2023, the European Commissionolder, full approval in the European Union granted our firstSingapore from Singapore’s Health Sciences Authority in individuals aged 12 and older, full MA for Nuvaxovid™registration in Australia from Australia’s Therapeutic Goods Administration as primary seriesa booster in individuals aged 12 and older, and as a boosterauthorization in adults aged 18 and older. This decision followed the positive opinion in May 2023EU from EMA for full MA from the Committee for Medicinal Products for Human Use of the European Medicines Agency.
In May 2023, the Singapore Health Sciences Authority granted extended interim authorization for Nuvaxovid™ as a non-mRNA option in adolescents aged 12 through 17 years.
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Additionally in May 2023, Taiwan’s Food and Drug Administration granted EUA for Nuvaxovid™use as a booster in adolescents aged 12 through 17 years. We believe these authorizations for our prototype vaccine enable a pathway for additional authorizations for our updated strains of our COVID-19 vaccine in the future.
We are working to continue to expand our label for heterologous boosting in adults and adolescents, for primary and re-vaccination in younger children, and to achieve supportive policy recommendations enabling broad market access. We continue to work closely with governments, regulatory authorities, and non-governmental organizations in our commitment to facilitate global access to our COVID-19 vaccine.
Clinical Pipeline
Our clinical pipeline is comprised of vaccine candidates for infectious diseases, with our COVID-19 vaccines, our prototype vaccine NVX-CoV2373,(NVX-CoV2373) and our updated vaccine (NVX-CoV2601), as our lead product. NVX-CoV2373products. Our prototype has received authorizations for both adult and adolescent populations globally. We advanced NVX-CoV2373,our prototype vaccine, through two pivotal Phase 3 clinical trials that demonstrated high efficacy against both the original COVID-19 strain and commonly circulating COVID-19 variants during the conduct of the trials, while maintaining a favorable safety profile. Our updated vaccine has received authorization from the U.S. FDA, and the EC. We areadvanced our updated vaccine through a Phase 3 strain-change trial and the EUA was based on non-clinical data presented in the process of developing our XBB COVID vaccine, which is in line with the FDA, WHO, and EMA recommendations for the 2023 fall season. In June 2023, at the U.S. Vaccines and Related Biological Products Advisory Committee's meeting we shared nonclinical data demonstrating that our XBB COVID vaccine induced functional immune responses for Omicron XBB.1.5, XBB1.16, and XBB.2.3 subvariants indicating broad responses that could be applicable to forward-drift variants. We are finalizing our COVID-19 Phase 3 Strain-Change interim study report and additional nonclinical and manufacturing data summaries to support our XBB COVID vaccine for EUA and other regulatory authorizations. This is in-line with the expectation set by the U.S. Health and Human Services letter to all COVID-19 manufacturers communicating that the FDA will take regulatory action on submissions and the Centers for Disease Control and Prevention will provide vaccination recommendations in the latter part of September 2023. Pending EUA and additional regulatory authorizations, we expect to commercialize our XBB COVID vaccine for the 2023 fall season providing access and accessibility to a protein-based choice within the market.meeting. Beyond COVID-19, our clinical pipeline includes seasonal influenza and CIC vaccines, in addition to our Matrix-M™ adjuvant being used for collaborations investigating the prevention of malaria.collaboration in R21/Matrix-M™ adjuvant malaria vaccine.
The pipeline chart below summarizes the core clinical development programs that we are focusing on in the near-term.
Pipeline (2023.07.28).jpgPipeline (2023.10.24).jpg
(1) Authorized in select geographies under trade names Novavax COVID-19 Vaccine, Adjuvanted; Covovax™; and Nuvaxovid™.
(2) Authorized in the U.S. under trade name, Novavax COVID-19 Vaccine, Adjuvanted (2023-2024 Formula); Ongoing post-authorization Phase 3 strain changestrain-change trial.
(3) R21/Matrix-M™ adjuvant malaria vaccine being commercializedAuthorized in Ghana, Nigeria, and Burkina Faso; Commercialized by SIIPL.SIIPL; Recommended by the WHO.

Coronavirus Vaccine Clinical Development
We continue to evaluate vaccine effectiveness and safety through ongoing and planned booster studies, as well as
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collect real-world evidence for our updated vaccine. While these studies were not required ahead of our EUA receipt from the U.S., they will generate data to support continued use of our planned requests for authorization to the FDA, WHO, and EMA for our XBB COVID vaccine for the upcoming 2023 fall season.in subsequent seasons. We expect to leverage these studies to pursue additional regulatory authorizations of our COVID-19 vaccine for primary, re-vaccination, and pediatric indications globally.
Phase 3 Strain-Change Trialand Re-vaccination Studies
Study 311 Part 2: In August 2023, we announced topline results from the Phase 3 Strain-Change Trial that achieved all three co-primary
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endpoints demonstrating immunologic superiority for the Omicron BA.5 variant of a bivalent prototype and Omicron BA.5 vaccine compared to our prototype vaccine (NVX-CoV2373). The study compared our prototype vaccine (NVX-CoV2373), to a monovalent Omicron BA.5 vaccine and a bivalent vaccine (prototype and Omicron BA.5) in 750 adults who had previously received three or more doses of mRNA vaccine. This study design was developed in consultation with regulatory agencies to support the upcoming strain-change EUA request to the FDA for our XBB COVID vaccine.
The data also showed that the monovalent Omicron BA.5updated vaccine performed better with higher neutralization titers(NVX-CoV2601) and seroresponse rates than the bivalent vaccine (prototype and Omicron BA.5), supporting the use of our XBB COVID vaccine for the 2023 fall vaccination season. These results showdemonstrated that our protein-based vaccine can be successfully adapted to new variant strains.
Study 312: In May 2023, we completed enrollment of 147 adults aged 18 and older who received 2 or 3 doses of mRNA and boosted with our prototype vaccine (NVX-CoV2373). The trial compared the prototype vaccine (NVX-CoV2373) booster on top of mRNA primed individuals compared to those primed and boosted with our prototype vaccine (NVX-CoV2373). Topline results are expected in the fourth quarter of 2023. This trial is intended to support the use of our vaccine as a second or subsequent re-vaccination.
Study 313: In September 2023, we fully enrolled 332 adults aged 18 and older in Part 1 of the study to evaluate the immunogenicity and safety of our updated vaccine (NVX-CoV2601) in previously mRNA vaccinated individuals. Part 1 topline results are expected in the fourth quarter of 2023. Part 2 of the study is in the process of enrollment and will aim to evaluate the immunogenicity of our updated vaccine (NVX-CoV2601) in previously unvaccinated adults aged 18 and older. This study is intended to support sBLA for future variant vaccine products.
Study 314: In September 2023, we fully enrolled 401 adolescents aged 12 to 17 years who were previously vaccinated with mRNA vaccines to evaluate the immunogenicity of boosting with our updated vaccine (NVX-CoV2601) and with a bivalent format vaccine containing our updated vaccine (NVX-CoV2373 + NVX-CoV2601). This data is intended to support adolescent heterologous label expansion in some territories with topline results expected in the first quarter of 2024.

Phase 2b/3 Pediatric Hummingbird™ TrialStudy
In August 2023, we announced topline results from our Phase 2b/3 Hummingbird™ trial that met its primary endpoints in children aged 6 through 11 years confirmingdemonstrating immunologic effectiveness. We remain on track to submit data for this cohort to the U.S. FDA in the first quarter of 2024. This ongoing trial is evaluating the safety, effectiveness (immunogenicity), and efficacy of two doses of NVX-CoV2373,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 next cohort aged 2 through 5 years is fully enrolled, with topline results expected in the fourth quarter of 2023. The last cohort aged 6 to 23 months is fully enrolled and topline results are expected in first quarter of 2024.
COVID-Influenza Combination and Stand-alone Influenza Program
We continue to make strategic investments to prepare our CIC vaccine for advanced development. We have selected the CIC dose formulation and we remain on track to initiate the next study in the second half of 2024. Pending regulatory concurrence, we have designed this study to evaluate immunogenicity endpoints for accelerated approval while simultaneously expanding our safety database. We have updated the study’s designation to a Phase 3 study.
While our focus remains on the combination product, our development plans will maintain optionality to advance our stand-alone influenza vaccine, creating a pathway to potentially seek licensure. For our stand-alone influenza vaccine we have generated positive data through our previous Phase 2 trial and continue to believe this asset may be attractive from a pandemic preparedness perspective. The neutralization responses were more than double seen with Fluzone® HD for the A strains and similar performance may be expected for A/H5N1 pandemic strains.
In May 2023, we announced preliminary topline data from our Phase 2 trial for CIC, stand-alone influenza and high-dose COVID-19 vaccine candidates. All three vaccine candidates contain our Matrix-M™ adjuvant, showed preliminary robust immune responses, reassuring safety profiles, and reactogenicity that was comparable to the licensed influenza vaccine comparator arms. We intend
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High-dose COVID-19 Vaccine Study
Study 205: In October 2023, we initiated a Phase 2 trial to evaluate our high-dose COVID-19 vaccine for annual vaccination in older adults. The trial will compare immunogenicity levels of 5 micrograms of our prototype vaccine (NVX-CoV2373) against 5 micrograms, 35 micrograms, and 50 micrograms of our updated vaccine (NVX-CoV2601) that are matched with different levels of adjuvant. Data from this trial is intended to potentially support further explore our optionsdevelopment of a higher dose formulation for older adults, similar to progress select candidates into late-stage development.that of influenza vaccines.
R21/Matrix-M™ Adjuvant Malaria Vaccine
Our partner-led malaria candidates present strong opportunities for future development. An ongoing Phase 3 clinical trial is being conducted for R21/Matrix-M™ adjuvant malaria vaccine, developed by our partner, the Jenner Institute, University of Oxford and manufactured by SIIPL, which is formulated with our Matrix-M™ adjuvant. In April 2023, the R21/Matrix-M™ adjuvant malaria vaccine received multiple authorizations including in Ghana and Nigeria as well as in July 2023 received authorization in Burkina Faso. We have an agreement with SIIPL related to its manufacture of R21/Matrix-M™ adjuvant malaria vaccine under which SIIPL purchases our Matrix-M™ adjuvant as well asfor use in development activities at cost and for commercial purposes at a tiered commercial supply price, and pays royaltiesa royalty in the single- to low- double digit range based on vaccine sales for a period of 15 years after the first commercial sale of the vaccine in each country.
In October 2023, the WHO announced its recommendation of R21/Matrix-M™ adjuvant malaria vaccine sales.to prevent malaria in children following advice from its Strategic Advisory Group of Experts and Malaria Policy Advisory Group. The WHO recommended that the R21/Matrix-M™ adjuvant malaria vaccine be administered in a 4-dose schedule from five months of age. This recommendation is a required step on the pathway to the WHO’s prequalification (“PQ”) of the vaccine. PQ designation is necessary for United Nations agencies and partners, for example UNICEF and Gavi, to procure the vaccine for eligible countries. This is the first recommendation from WHO to support the use of a vaccine containing our Matrix-M™ adjuvant in children as young as five months of age and it is based on the results from the Phase 3 clinical trial.
In September 2023, results from the Phase 3 clinical trial conducted in four African countries with 4,800 children aged 36 months to five years were published in a preprint manuscript in The Lancet. The preprint manuscript reported that R21/Matrix-M™ adjuvant malaria vaccine is well-tolerated and offers high-level efficacy against clinical malaria in African children at sites of both seasonal and perennial transmission.
In July 2023, R21/Matrix-M™ adjuvant malaria vaccine received authorization in Burkina Faso and in April 2023, received authorizations in Ghana and Nigeria.

Business Highlights
SecondThird Quarter 2023 and Recent Highlights
DuringU.S. Market: Novavax received EUA from the second quarter, we continuedU.S. FDA in October for its updated vaccine and is executing its commercial strategy to make progress on our three key prioritiesmaximize access for 2023.

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

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

Continue to prepare to deliver our updated XBB COVIDExpect U.S. 2023-2024 season COVID-19 vaccine demand of between 30 and 50 million doses, with potential for the fall, consistent with recommendations from the FDA, EMAsignificant November and WHO
Initiated filing in the U.S., with submissions in the European Union (“EU”)December vaccinations given current trends and Canada to follow in the coming weeks
Manufacturing ongoing at commercial scale to supply global markets
Fully deployed commercial teams across the U.S., EU and other select markets, with executed contracts to support market access

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Received first Full Marketing Authorization in the EU for Nuvaxovid™later start as a primary series in individuals aged 12 and older and as a booster in adults aged 18 and older

Initiated rolling submission of U.S. Biologics License Application (BLA) for full approval of the Novavax COVID-19 Vaccine, Adjuvanted for adults and adolescents aged 12 through 18

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

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

Reduced current liabilities by $323 million during the second quarter and by $864 million in the first half of 2023

Reduced combined research and development and selling, general and administrative expenses to $313 million in the second quarter of 2023, compared to $398 million in the same period in 2022

On trackSecured broad access to the Company’s updated vaccine through major pharmacies, clinics and government programs
Novavax’s vaccine is available at approximately 14,000 pharmacy locations, including Costco, CVS Pharmacy, Giant, Publix, Rite Aid and Stop & Shop

Global Markets: Received approval in Europe for the Company’s updated vaccine in individuals aged 12 and older

Advancing regulatory filings against existing APAs for Australia, New Zealand, Singapore and Taiwan

Clinical development and technology platform updates

Expect to initiate a pivotal Phase 3 trial for CIC vaccine candidate in the second half of 2024, with our Restructuring Planpotential for accelerated approval and reiterate targetlaunch as early as 2026

Advanced partnerships with Matrix-M™ adjuvant technology
R21/Matrix-M™ adjuvant vaccine received recommendation from the WHO; launch expected in 2024
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Novavax is prepared to initiate a new cost reduction program to reduce our annual combined research2024 expenses by over $300 million. Intend to further reshape the size and scope of global business operations beyond previously announced 2024 targets to align with the COVID-19 market opportunity.

Anticipate reducing 2024 Research & development expenses and selling,Selling, general, and& administrative expenses by approximately 20%over $200 million compared to 25% in 2023 versus 2022, and by approximately 40%prior targets to reflect $750 million or lower spend for 2024, representing a greater than 50% in 2024 versusreduction compared to 2022

Executed amended Canada APA in June 2023, outlining an updated delivery schedule for Nuvaxovid™ and negotiated upIn addition, anticipate reducing supply network costs by over $100 million as we continue to $350 million in 2023 paymentsrationalize our manufacturing footprint

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

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

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

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

Announced partnership with Bill & Melinda Gates Medical Research Institute to provide our Matrix-MTM adjuvant for use in preclinical vaccine research

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 $500.0$500 million in gross proceeds of shares of itsour common stock.stock, and terminated our then-existing At Market Issuance Sales agreement entered in June 2021 (the "June 2021 Sales Agreement"). During the three and six months ended JuneSeptember 30, 2023, we sold 7.917.8 million shares of our common stock under our August 2023 Sales Agreement resulting in net proceeds of approximately $143 million. During the nine months ended September 30, 2023, we sold 25.7 million shares of our common stock under our June 2021 and August 2023 Sales Agreement resulting in net proceeds of approximately $68 million, of which $6 million was included in prepaid expenses and other current assets as of June 30, 2023 and received in cash in July 2023.$211 million. As of JuneSeptember 30, 2023, the remaining balance available under the June 2021August 2023 Sales Agreement was approximately $249$354 million.
During the sixnine months ended JuneSeptember 30, 2022, we sold 2.2 million shares of our common stock resulting in net proceeds of approximately $179 million, under theour June 2021 Sales Agreement. There was no sale of shares of common stock recorded during the three months ended September 30, 2022.

In August 2023, we entered into a Securities Subscription Agreement (the “Subscription Agreement”) with SK, pursuant to which we agreed to sell and issue to SK, in a private placement (the “Private Placement”), 6.5 million shares of the Company’s common stock, par value $0.01 per share (the “Shares”) at a price of $13.00 per share for aggregate gross proceeds to us of approximately $84.5 million. We recognized the Shares at the settlement date fair value of $46.5 million (see Note 4 to our consolidated financial statements in this Quarterly Report). The closing of the Private Placement occurred on August 10, 2023.
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
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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, 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.
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Three Months Ended JuneSeptember 30, 2023 and 2022
Revenue
Three Months Ended June 30,Three Months Ended September 30,
20232022Change20232022Change
Revenue (in thousands):Revenue (in thousands):Revenue (in thousands):
Product salesProduct sales$285,163 $55,455 $229,708 Product sales$2,231 $626,091 $(623,860)
GrantsGrants137,079 107,774 29,305 Grants164,922 106,273 58,649 
Royalties and otherRoyalties and other2,184 22,696 (20,512)Royalties and other19,833 2,213 17,620 
Total revenueTotal revenue$424,426 $185,925 $238,501 Total revenue$186,986 $734,577 $(547,591)
Revenue for the three months ended JuneSeptember 30, 2023 was $424.4$187.0 million as compared to $185.9$734.6 million for the same period in 2022, an increasea decrease of $238.5$547.6 million. Revenue for the three months ended JuneSeptember 30, 2023 and June 30, 2022 was primarily comprised of revenue from product sales of NVX-CoV2373COVID-19 Vaccine and services performed under our U.S. government agreement with Advanced Technology International (“USG Agreement”), the Consortium Management Firm acting on behalf of the Medical CBRN Defense Consortium in connection with the partnership formerly known as Operation Warp Speed. The increasedecrease in revenue is primarily due to an increaseda decreased quantity of dose sales of NVX-CoV2373COVID-19 Vaccine during the three months ended JuneSeptember 30, 2023 as compared to the same period in 2022.

2022, partially offset by increased support activities under the USG Agreement, a $43.8 million increase to cumulative revenue under the USG Agreement, and additional Royalties and other revenue related to sales-based royalties and sales of Matrix-M™ adjuvant.
Product sales
Product sales for the three months ended JuneSeptember 30, 2023 were $285.2$2.2 million as compared to $55.5$626.1 million during the three months ended JuneSeptember 30, 2022. Our product sales related to sales of NVX-CoV2373COVID-19 Vaccine under our APA agreements. The geographic distribution of product sales was as follows:
Three Months Ended March 31,Three Months Ended September 30,
20232022Change20232022Change
North AmericaNorth America$— $— $— North America$2,231 $129,718 $(127,487)
EuropeEurope1,518 — 1,518 Europe— 347,005 (347,005)
Rest of the worldRest of the world283,645 55,455 228,190 Rest of the world— 149,368 (149,368)
Total product sales revenue$285,163 $55,455 $229,708 
Total product salesTotal product sales$2,231 $626,091 $(623,860)
Grants
Grant revenue during the three months ended JuneSeptember 30, 2023 was $137.1$164.9 million as compared to $107.8$106.3 million during the same period in 2022, an increase of $29.3$58.6 million. Grant revenue for 2023 and 2022, comprised revenue for services performed under our USG Agreement. The increase was primarily due to increased support activities and achievement of certain milestones under the USG Agreement during the three months ended JuneSeptember 30, 2023.
Royalties and other
Royalties and other includes royalty milestone payments, sales-based royalties, and Matrix-M™ adjuvant sales. Royalties and other revenue during the three months ended September 30, 2023 was $19.8 million as compared to $2.2 million during the same period in 2022, an increase of $17.6 million. The increase was primarily due to increased revenue related to a Matrix-M™ adjuvant sales and sales-based royalties.
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Expenses
Three Months Ended June 30,Three Months Ended September 30,
20232022Change20232022Change
Expenses (in thousands):Expenses (in thousands):Expenses (in thousands):
Cost of salesCost of sales$55,777 271,077 $(215,300)Cost of sales$98,929 $434,593 $(335,664)
Research and developmentResearch and development219,475 289,648 (70,173)Research and development106,229 304,297 (198,068)
Selling, general, and administrativeSelling, general, and administrative93,717 108,160 (14,443)Selling, general, and administrative107,460 122,876 (15,416)
Total expensesTotal expenses$368,969 $668,885 $(299,916)Total expenses$312,618 $861,766 $(549,148)
Cost of Sales
Cost of sales was $55.8$98.9 million for the three months ended JuneSeptember 30, 2023, including expenses of $19.8$81.6 million related to excess, obsolete, or expired inventory and losses on certain firm purchase commitments, $14.3 million related to unutilized manufacturing capacity, and a credit of $17.9$21.5 million related to certain negotiated certain reductions to previously recognized firm purchase commitments. Cost of sales was $271.1$434.6 million for the three months ended JuneSeptember 30, 2022, including expense of $255.3$249.0 million related to excess, obsolete, or expired inventory and losses on firm purchase commitments. Prior to receiving regulatory approval, we expensed manufacturing costs as research and development expenses. After receiving regulatory approval, we capitalize the costs of production for a particular supply chain when we determine that we have a present right to the economic benefit associated with the product. While we tracked the quantities of our manufactured vaccine product and components, we did not track pre-approval manufacturing costs and therefore the manufacturing cost of our pre-launch inventory produced prior to approval is not reasonably determinable. However, based on our expectations for future manufacturing costs to produce our vaccine product and components inventory, we estimate at JuneSeptember 30, 2023, we had approximately $25.9$24.3 million of salable commercial inventory that was expensed prior to approval. We expect to utilize the majority of our reduced-cost inventory through 2023.2024. If inventory sold for the three months ended JuneSeptember 30, 2023 was valued at expected standard cost, including expenses related to excess and obsolete inventory, adjusted cost of sales for the period would have been approximately $71.7$103.2 million, an adjustment of $15.9$4.3 million as compared to cost of sales recognized. If inventory sold for the three months ended JuneSeptember 30, 2022 was valued at expected standard cost, adjusted cost of sales for the period would have been approximately $279.5$444.0 million, an adjustment of $8.4$9.4 million. The cost of sales as a percentage of product sales may fluctuate in the future as a result of changes to our customer pricing mix or standard costs.
Research and Development Expenses
Research and development expenses were $219.5$106.2 million for the three months ended JuneSeptember 30, 2023 as compared to $289.6$304.3 million for the three months ended JuneSeptember 30, 2022, a decrease of $70.2$198.1 million. The decrease was primarily due to a reduction in overall expenditures relating to development activities on coronavirus vaccines, including NVX-CoV2373 and XBB COVID vaccine,our COVID-19 Program, and CIC, as summarized in the table below (in thousands):
Three Months Ended June 30,Three Months Ended September 30,
2023202220232022
Coronavirus vaccinesCoronavirus vaccines$139,646 $201,015 Coronavirus vaccines$41,263 $208,004 
Influenza vaccineInfluenza vaccine— 2,274 Influenza vaccine662 3,011 
Other vaccine development programsOther vaccine development programs285 224 Other vaccine development programs91 843 
Total direct external research and development expenseTotal direct external research and development expense139,931 203,513 Total direct external research and development expense42,016 211,858 
Employee expensesEmployee expenses46,132 43,177 Employee expenses33,957 45,150 
Stock-based compensation expenseStock-based compensation expense9,946 19,695 Stock-based compensation expense10,022 16,107 
Facility expensesFacility expenses14,158 10,863 Facility expenses12,360 16,770 
Other expensesOther expenses9,308 12,400 Other expenses7,874 14,412 
Total research and development expensesTotal research and development expenses$219,475 $289,648 Total research and development expenses$106,229 $304,297 
Research and development expenses for coronavirus vaccines for the three months ended JuneSeptember 30, 2023 and 2022 decreased from $201.0$208.0 million to $139.6$41.3 million primarily as a result of a reduction in manufacturing and support costs due, in part, to a reduction in our global manufacturing footprint consistent with our contractual obligations to supply, and anticipated demand for, COVID-19 Vaccine, including embedded lease costs, under manufacturing supply agreements with
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Contract Manufacturing Organizations (“CMOs”) and contract manufacturing and development organizations (“CDMOs”),. The decrease was also due to a reductionbenefit of $57.7 million for the three months ended September 30, 2023 resulting from our settlement agreement and Private Placement with SK (see Note 4 to our consolidated financial statements in clinical study costs and the commercialization of internal manufacturing
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capabilities, asthis Quarterly Report). The decrease was partially offset by a benefit of $20.5$80.5 million and $87.2 million, respectively,for the three months ended September 30, 2022 related to previously accelerated manufacturing costs for leases that we determined were embedded in manufacturing supply agreements with CMOs and CDMOs.
Selling, General, and Administrative Expenses
Selling, general, and administrative expenses were $93.7$107.5 million for the three months ended JuneSeptember 30, 2023 as compared to $108.2$122.9 million for the same period in 2022, a decrease of $14.4$15.4 million. The decrease in selling, general, and administrative expenses is primarily due to certain cost containment measures to reduce our operating spend, partially offset by restructuring expenses of $11.5 million.spend.
For the remainder of 2023, we expect a reduction in our annual combined research and development, and selling, general, and administrative spend as a result of our Restructuring Plan announced during the three months ended June 30, 2023.
Other Income (Expense)
Three Months Ended June 30,Three Months Ended September 30,
20232022Change20232022Change
Other income (expense):Other income (expense):Other income (expense):
Interest expenseInterest expense$(3,124)$(6,234)$3,110 Interest expense$(2,859)$(4,169)$1,310 
Other income (expense)Other income (expense)5,532 (19,873)25,405 Other income (expense)(2,982)(34,783)31,801 
Total other income (expense), netTotal other income (expense), net$2,408 $(26,107)$28,515 Total other income (expense), net$(5,841)$(38,952)$33,111 
Total other income,expense, net was $2.4$5.8 million for the three months ended JuneSeptember 30, 2023 as compared to a total other expense, net of $26.1$39.0 million for the same period in 2022. The increasedecrease in other incomeexpense, net is due to the favorable impact in 2023 as compared to 2022 of exchange rates on foreign currency denominated balances, including an intercompany loan with Novavax CZ.CZ, and an increase in interest income due to higher interest rates.
Income Tax Expense
During the three months ended JuneSeptember 30, 2023, and 2022, we recognized an income tax benefit of $0.1$0.7 million related to federal, state, and foreign income taxes. During the three months ended September 30, 2022, we recognized an income tax expense $1.4of $2.5 million respectively, of income tax expense related to federal, state, and foreign income taxes.
Net Income (Loss)
Three Months Ended June 30,
20232022Change
Net Income (Loss) (in thousands, except per share information):
Net income (loss)$58,008 $(510,485)$568,493 
Net income (loss) per share, basic$0.65 $(6.53)$7.18 
Net income (loss) per share, dilutive$0.58 $(6.53)$7.11 
Weighted average shares outstanding, basic89,362 78,143 11,219 
Weighted average shares outstanding, dilutive104,065 78,143 25,922 
Three Months Ended September 30,
20232022Change
Net Loss (in thousands, except per share information):
Net loss$(130,776)$(168,613)$37,837 
Net loss per share, basic and diluted$(1.26)$(2.15)$0.89 
Weighted average shares outstanding, basic and diluted103,429 78,274 25,155 
Net incomeloss for the three months ended JuneSeptember 30, 2023 was $58.0$130.8 million, or $0.65$1.26 per share, basic, as compared to net loss of $510.5$168.6 million, or $6.53$2.15 per share, basic, for the same period in 2022. The increasedecrease in incomenet loss during the three months ended JuneSeptember 30, 2023, was primarily due to the increase in commercial sales of NVX-CoV2373 in the three months ended June 30, 2023 and by a decrease in excess, obsolete, or expired inventory and losses on firm purchase commitments, research and development expenses, and selling, general and administrative expenses as a result of the implementation of our Restructuring Plan.Plan, partially offset by a decrease in product sales.
The increase in weighted average shares outstanding for the three months ended JuneSeptember 30, 2023 was primarily a result of the salesales of our common stock.
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SixNine Months Ended JuneSeptember 30, 2023 and 2022
Revenue
Six Months Ended June 30,Nine Months Ended September 30,
20232022Change20232022Change
Revenue (in thousands):Revenue (in thousands):Revenue (in thousands):
Product salesProduct sales$277,706 $641,083 $(363,377)Product sales$279,937 $1,267,174 $(987,237)
GrantsGrants224,458 207,075 17,383 Grants389,380 313,348 76,032 
Royalties and otherRoyalties and other3,213 41,738 (38,525)Royalties and other23,046 43,951 (20,905)
Total revenueTotal revenue$505,377 $889,896 $(384,519)Total revenue$692,363 $1,624,473 $(932,110)
Revenue for the sixnine months ended JuneSeptember 30, 2023 was $505.4$692.4 million as compared to $889.9 million$1.6 billion for the same period in 2022, a decrease of $384.5$932.1 million. Revenue for the sixnine months ended JuneSeptember 30, 2023 was primarily comprised of revenue from product sales of NVX-CoV2373COVID-19 Vaccine and services performed under our USG Agreement. The decrease in revenue was primarily due to a decrease in quantity of doses sold of NVX-CoV2373COVID-19 Vaccine during the sixnine months ended JuneSeptember 30, 2023 as compared to the same period in 2022.
Product sales
Product sales for the sixnine months ended JuneSeptember 30, 2023 were $277.7$279.9 million as compared to $641.1 million$1.3 billion during the sixnine months ended JuneSeptember 30, 2022. Our product sales related to sales of NVX-CoV2373COVID-19 Vaccine under our APA agreements. The geographic distribution of product sales was as follows:
Six Months Ended June 31,Nine Months Ended September 30,
20232022Change20232022Change
North AmericaNorth America$— $64,762 $(64,762)North America$2,231 $194,480 $(192,249)
EuropeEurope58,785 413,745 (354,960)Europe59,322 760,750 (701,428)
Rest of the worldRest of the world218,921 162,576 56,345 Rest of the world218,384 311,944 (93,560)
Total product sales revenue$277,706 $641,083 $(363,377)
Total product salesTotal product sales$279,937 $1,267,174 $(987,237)
Grants
Grant revenue during the sixnine months ended JuneSeptember 30, 2023 was $224.5$389.4 million as compared to $207.1$313.3 million during the same period in 2022, an increase of $17.4$76.0 million. Grant revenue for 2023 and 2022, comprised revenue for services performed under our USG Agreement. The increase was primarily due to increased clinical and developmentsupport activities under the USG Agreement during the sixnine months ended JuneSeptember 30, 2023.
ExpensesRoyalties and other
Six Months Ended June 30,
20232022Change
Expenses (in thousands):
Cost of sales$89,863 $286,281 $(196,418)
Research and development466,576 673,131 (206,555)
Selling, general, and administrative206,249 204,152 2,097 
Total expenses$762,688 $1,163,564 $(400,876)
Royalties and other includes royalty milestone payments, sales-based royalties, and Matrix-M™ adjuvant sales. Royalties and other revenue during the nine months ended September 30, 2023 was $23.0 million as compared to $44.0 million during the same period in 2022, a decrease of $20.9 million. The decrease was primarily due to decreased revenue related to milestone payments.
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Expenses
Nine Months Ended September 30,
20232022Change
Expenses (in thousands):
Cost of sales$188,792 $720,874 $(532,082)
Research and development572,805 977,428 (404,623)
Selling, general, and administrative313,709 327,028 (13,319)
Total expenses$1,075,306 $2,025,330 $(950,024)
Cost of Sales
Cost of sales was $89.9$188.8 million for the sixnine months ended JuneSeptember 30, 2023, including expense of $40.0$121.6 million related to excess, obsolete, or expired inventory and losses on certain firm purchase commitments, $30.1 million related to unutilized manufacturing capacity, and a credit of $18.8$40.3 million related to negotiated reductions to certain previously recognized firm purchase commitments. Cost of sales was $286.3$720.9 million for the sixnine months ended JuneSeptember 30, 2022, including expense of $255.3$504.3 million related to excess, obsolete, or expired inventory and losses on firm purchase commitments. Prior to receiving approval, we expensed manufacturing costs as research and development expenses. After receiving approval, we capitalize the costs of production for a particular supply chain when we determine that we have a present right to the economic benefit associated with the product. While we tracked the quantities of our manufactured vaccine product and components, we did not track pre-approval manufacturing costs and therefore the manufacturing cost of our pre-launch inventory produced prior to approval is not reasonably determinable. However, based on our expectations for future manufacturing costs to produce our vaccine product and components inventory, we estimate at JuneSeptember 30, 2023 we had approximately $25.9$24.3 million of commercial inventory that was expensed prior to approval. We expect to utilize the majority of our reduced-cost inventory through 2023.2024. If inventory sold for the sixnine months ended JuneSeptember 30, 2023 was valued at expected standard cost, including expenses related to excess and obsolete inventory, adjusted cost of sales for the period would have been approximately $120.8$224.0 million, an adjustment of $30.9$35.2 million as compared to cost of sales recognized. If inventory sold for the threenine months ended JuneSeptember 30, 2022 was valued at expected standard cost, adjusted cost of sales for the period would have been approximately $439.5$883.5 million, an adjustment of $153.2$162.6 million. The cost of sales as a percentage of product sales may fluctuate in the future as a result of changes to our customer mix or standard costs.
Research and Development Expenses
Research and development expenses decreased to $466.6$572.8 million for the sixnine months ended JuneSeptember 30, 2023 from $673.1$977.4 million for the same period in 2022, a decrease of $206.6$404.6 million. The decrease was primarily due to a reduction in overall expenditures relating to development activities on coronavirus vaccines, including NVX-CoV2373 and XBB COVID vaccine,our COVID-19 Program, and CIC, as summarized in the table below (in thousands):
Six Months Ended June 30,Nine Months Ended September 30,
2023202220232022
Coronavirus vaccinesCoronavirus vaccines$279,869 $489,948 Coronavirus vaccines$321,132 $697,952 
Influenza vaccineInfluenza vaccine1,476 3,570 Influenza vaccine1,929 6,581 
Other vaccine development programsOther vaccine development programs557 1,027 Other vaccine development programs857 1,156 
Total direct external research and development expenseTotal direct external research and development expense281,902 494,545 Total direct external research and development expense323,918 705,689 
Employee expensesEmployee expenses99,545 86,919 Employee expenses133,502 132,069 
Stock-based compensation expenseStock-based compensation expense23,804 36,582 Stock-based compensation expense33,826 52,692 
Facility expensesFacility expenses33,561 24,072 Facility expenses45,920 40,842 
Other expensesOther expenses27,764 31,013 Other expenses35,639 46,136 
Total research and development expensesTotal research and development expenses$466,576 $673,131 Total research and development expenses$572,805 $977,428 
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Research and development expenses for coronavirus vaccines for the sixnine months ended JuneSeptember 30, 2023 and 2022 decreased from $489.9$698.0 million to $279.9$321.1 million primarily as a result of a reduction in manufacturing and support costs due, in part, to a reduction in our global manufacturing footprint consistent with our contractual obligations to supply, and anticipated demand for, COVID-19 Vaccine, including under manufacturing supply agreements with CMO and CDMO, and a reduction in clinical study costs and the commercialization of internal manufacturing capabilities, ascapabilities. The decrease was also due to a benefit of $57.7 million for the nine months ended September 30, 2023 resulting from our settlement agreement and Private Placement with SK (see Note 4 to our consolidated financial statements in this Quarterly Report). The decrease was partially offset by a benefit of $32.2$31.8 million and $67.4$147.8 million for the nine months ended September 30, 2023 and 2022, respectively, related to previously accelerated manufacturing costs for leases that we determined were embedded in manufacturing supply agreements with CMOs and CDMOs.

Selling, General, and Administrative Expenses
Selling, general, and administrative expenses increaseddecreased to $206.2$313.7 million for the sixnine months ended JuneSeptember 30, 2023 from $204.2$327.0 million for the same period in 2022, an increasedecrease of $2.1$13.3 million. The increasedecrease in selling, general, and administrative expenses is primarily due to restructuring expenses, partially offset by cost containment measures to reduce our operating spend including a decrease in professional fees and marketing costs in support of our NVX-CoV2373 program.
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COVID-19 Program, partially offset by restructuring expenses.
Other Income (Expense)
Six Months Ended June 30,Nine Months Ended September 30,
20232022Change20232022Change
Other income (expense) (in thousands):Other income (expense) (in thousands):Other income (expense) (in thousands):
Interest expenseInterest expense$(7,440)$(11,110)$3,670 Interest expense$(10,299)$(15,279)$4,980 
Other income (expense)Other income (expense)29,894 (18,219)48,113 Other income (expense)26,912 (53,002)79,914 
Total other income (expense), netTotal other income (expense), net$22,454 $(29,329)$51,783 Total other income (expense), net$16,613 $(68,281)$84,894 
We had total other income, net of $22.5$16.6 million for the sixnine months ended JuneSeptember 30, 2023 as compared to total other expense, net of $29.3$68.3 million for the same period in 2022.2022, an increase of $84.9 million. During the sixnine months ended JuneSeptember 30, 2023, other income, net increased due to the favorable impact in 2023 as compared to 2022 of exchange rates on foreign currency denominated balances, including an intercompany loan with Novavax CZ, and an increase in investment income due to higher interest rates. During the six months ended June 30, 2022, Other expense was primarily related to the unfavorable impact of foreign exchange rate differences on the intercompany loan with Novavax CZ.
Income Tax Expense
During the sixnine months ended JuneSeptember 30, 2023 and 2022, we recognized $1.0$0.3 million and $4.1$6.6 million, respectively, of income tax expense related to federal, state and stateforeign income taxes and foreign withholding tax on royalties.
Net Loss
Six Months Ended June 30,Nine Months Ended September 30,
20232022Change20232022Change
Net Loss (in thousands, except per share information):Net Loss (in thousands, except per share information):Net Loss (in thousands, except per share information):
Net lossNet loss$(235,897)$(307,077)$71,180 Net loss$(366,673)$(475,690)$109,017 
Net loss per share, basic and dilutedNet loss per share, basic and diluted$(2.69)$(3.97)$1.28 Net loss per share, basic and diluted$(3.94)$(6.13)$2.19 
Weighted average shares outstanding, basic and dilutedWeighted average shares outstanding, basic and diluted87,769 77,305 10,464 Weighted average shares outstanding, basic and diluted93,046 77,631 15,415 
Net loss for the sixnine months ended JuneSeptember 30, 2023 was $235.9$366.7 million, or $2.69$3.94 per share, as compared to $307.1$475.7 million, or $3.97$6.13 per share, for the same period in 2022. The decrease in net loss during the sixnine months ended JuneSeptember 30, 2023 was primarily due to the decline in cost of sales and research and development expenses associated with NVX-CoV2373 and cost of sales,our COVID-19 Program, partially offset by reduceda decrease in revenue from product sales revenue.sales.
The increase in weighted average shares outstanding for the sixnine months ended JuneSeptember 30, 2023 is primarily a result of sales of our common stock in 2023 and 2022.stock.
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Liquidity Matters and Capital Resources
Our future capital requirements depend on numerous factors including, but not limited to, revenue from our product sales and royalties under licensing arrangements with our strategic partners; funding and repayments under our grant agreements; our projected activities related to the developmentmanufacturing and commercial support of NVX-CoV2373 and variant candidates,our COVID-19 Program, including significant commitments under various contract research organization, CMO, and CDMO agreements; the progress of preclinical studies and clinical trials; the time and costs involved in obtaining regulatory approvals; the costs of filing, prosecuting, defending, and enforcing patent claims and other intellectual property rights; and other manufacturing, sales, and distribution costs. We plan to continue developing other vaccines and product candidates, such as our influenza vaccine candidate and potential combination vaccines candidates, which are in various stages of development.
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 JuneSeptember 30, 2023, the aggregate amount of the transaction price allocated to performance obligations that were unsatisfied (or partially unsatisfied), excluding amounts related to sales-based royalties under the license agreements, our advance purchase agreement with Gavi (the “Gavi APA”) and the reduction in doses related to the Amended and Restated UK Supply Agreement (as defined below), was approximately $2 billion, of which $907.4$801.0 million is included in Deferred revenue in our Consolidatedconsolidated balance
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sheet. Failure to meet regulatory milestones, 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.trials. 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 on September 12, 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.
Pursuant to the Fujifilm Settlement Agreement (see Note 4 to our consolidated financial statements in this Quarterly Report), we are responsible for a Settlement Payment ofagreed to pay up to $185.0$185 million (the “Settlement Payment”) to Fujifilm in connection with the cancellation of manufacturing activity at FDBT under the Fujifilm CSA, of which (i) $47.8 million, constituting the initial reservation fee under the CSA, was credited against the Settlement Payment on September 30, 2022 and (ii) the remaining balance is to be paid in four equal quarterly installments of $34.3 million each.each, which began on March 31, 2023. 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, we 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. We 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. We paid the first and second installmenttwo installments of $68.6 million during the three and sixnine months ended JuneSeptember 30, 2023, respectively, and the remaining balance of $68.6 million is reflected in Accrued expenses in our consolidated balance sheet. On October 30, 2023, FDBT filed a demand for arbitration with Judicial Arbitration and Mediation Services (“JAMS”) seeking payment of the third quarter installment of the Settlement Payment.
In August 2023, we entered into a Settlement Agreement and General Release (the “Settlement Agreement”) with SK regarding the mutual release by the parties of all claims arising from or in relation to certain statements of work (“SOWs”) under the Development and Supply Agreement entered into in August 2020 and the Collaboration and License Agreement, entered into in February 2021 as amended in December 2021 and July 2022 in connection with the cessation of all drug substance and drug product manufacturing activity at SK for supply to us. Pursuant to the Settlement Agreement, we agreed to pay $149.8 million, of which (i) $130.4 million was paid in August 2023 and (ii) the remaining balance is to be paid on or before November 15, 2023. Under the Settlement Agreement, we also agreed with SK to a wind down plan with respect to the
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remaining products, materials and equipment under the SOWs (see Note 4 to our consolidated financial statements in this Quarterly Report).
During AprilIn August 2023, we madeentered into a paymentSecurities Subscription Agreement (the “Subscription Agreement”) with SK, pursuant to which we agreed to sell and issue to SK, in a private placement (the “Private Placement”), 6.5 million shares of $27.0 millionour common stock, par value $0.01 per share at a price of $13.00 per share for aggregate gross proceeds to Par Sterile Products, LLC (“Par”) underus of approximately $84.5 million. The closing of the Settlement Agreement and Release of ClaimsPrivate Placement occurred on August 10, 2023 (see Note 154 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 demand for, NVX-CoV2373,COVID-19 Vaccine, and in doing so recognize that significant costs may be incurred. We currently depend exclusively on SIIPL and SLS for co-formulation and filling (other than in Europe), and PCI Pharma Services for finishing NVX-CoV2373COVID-19 Vaccine in Europe and any delays or disruptions in these suppliers’ operations could prevent or delay the delivery of customer orders.

We have an APA with the Commonwealth of Australia for the purchase of doses of NVX-CoV2373COVID-19 Vaccine (the “Australia APA”). In April 2023, we amended the Australia APA to reduce the number of doses to be delivered with a commensurate increase in the per-dose price, such 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 therefore was removed from the market. The credit will be applied against the future sale of doses to Australia. In July 2023, we amended the Australia APA to provide for replacement doses and to extend the delivery schedule through 2025.

We have an APA with His Majesty the King in Right of Canada as represented by the Minister of Public Works and Government Services, as successor in interest to Her Majesty the Queen in Right of Canada, as represented by the Minister of Public Works and Government Services (the “Canadian government”), for the purchase of doses of NVX-CoV2373COVID-19 Vaccine (the “Canada APA”). In April 2023, we amended the Canada APA to forfeit certain doses originally scheduled for delivery in 2022 for a payment of $100.4 million received in the second quarter of 2023. In June 2023, we entered into an additional amendment (the “June 2023 Amendment”) to the Canada APA. Pursuant to the June 2023 Amendment, the parties revised the Canadian government’s previous commitment by (i) forfeiting certain doses of the NVX-CoV2373COVID-19 Vaccine previously scheduled for delivery, (ii) reducing the amount of doses of NVX-CoV2373COVID-19 Vaccine due for delivery, (iii) revising the delivery schedule for the remaining doses of NVX-CoV2373COVID-19 Vaccine to be delivered, and (iv) requiring use of the Biologics Manufacturing Centre (“BMC”) Inc. to produce bulk antigen for doses in 2024 and 2025. In connection with the forfeiture of doses of NVX-CoV2373,COVID-19 Vaccine, the Canadian government agreed to pay a total payment amount of $349.6 million to the Company in two equal installments in 2023, which total amount equals the remaining balance owed by the Canadian government with respect to such forfeited vaccine doses. The first installment was payable upon execution of the June 2023 Amendment and the second installment is contingent and payable upon our delivery of vaccine doses in the second half of 2023. The first installment of $174.8 million was received from the Canadian government in July 2023. If the Company fails to deliver COVID-19 vaccine doses to the Canadian government byin the second halffourth quarter of 2023, the second installment of $174.8 million will be terminated and not be payable to the Company. The Canadian government may terminate the Canada APA, as amended, if we fail to achieve regulatory approval for use of BMC for NVX-CoV2373COVID-19 Vaccine production on or before December 31, 2024. The June 2023 Amendment maintained the total contract value of the original Canada APA.

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Pursuant to the June 2023 Amendment, we and the Canadian government will endeavor to expand our previously agreed in-country commitment to Canada and to partner to provide health, economic, and future pandemic preparedness benefits to Canada, which value may be provided through a number of activities, including without limitation, capital investments, the performance of activities or services, or the provision of technology or intellectual property licenses. Further, the parties will endeavor to enter into a memorandum of understanding (the “MOU”) to illustrate our ability to deliver such benefits over a 15 year15-year period with an aggregate value of not less than 100% of the amount remaining to be paid under the June 2023 Amendment and ultimately received by us. As of September 30, 2023, we are in the process of negotiating the MOU. We agreed to hold $20.0 million in escrow for the benefit of the Canadian government, which amount is the sole recourse available to the Canadian government in the event of non-performance under the MOU.
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In July 2022, we entered into an Amended and Restated SARS-CoV-2 Vaccine Supply Agreement (as amended on September 26, 2022, the “Amended and Restated UK Supply Agreement”) with The Secretary of State for Business, Energy and Industrial Strategy (as assigned to the UK Health Security Agency), acting on behalf of the government of the United Kingdom of Great Britain and Northern Ireland (the “Authority”), which amended and restated in its entirety the SARS-CoV-2 Vaccine Supply Agreement, 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-CoV2373prototype vaccine 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,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”) 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. If the Authority does not purchase the Conditional Doses or the number of such Conditional Doses is reduced below 15 million doses of NVX-CoV2373,prototype vaccine, we would have to repay up to $225.0$225 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 a supportive recommendation from the JCVI by November 30, 2023, a reduction in the number of Conditional Doses from 7.5 million doses to zero will be triggered and we may be required to repay an additional $112.5 million in 2024.

Under the terms of the Gavi APA, we received an upfront payment of $350.0 million from Gavi in 2021 and an additional payment of $350.0 million in 2022 related to our achieving an emergency use license for NVX-CoV2373our prototype vaccine 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 of Gavi’s failure to procure the purchase of 350 million doses of NVX-CoV2373prototype vaccine from us as required by the Gavi APA. As of November 18, 2022, we had only received orders under the Gavi APA for approximately 2 million doses. On December 2, 2022, Gavi issued a written notice purporting to terminate the Gavi APA based on Gavi’s contention that the Company repudiated the agreement and, therefore, materially breached the Gavi APA. Gavi also contends that, based on its purported termination of the Gavi APA, it is entitled to a refund of the Advance Payment Amount less any amounts that have been credited against the purchase price for binding orders placed by a buyer participating in the COVAX Facility. Since December 31, 2022, the remaining Gavi Advance Payment Amount, which is $696.4 million as of JuneSeptember 30, 2023, pending resolution of the dispute with Gavi related to a return of the remaining Advance Payment Amount, has been classified within Other current liabilities in our consolidated balance sheet. On January 24, 2023, Gavi filed a demand for arbitration with the 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. The arbitration hearing is scheduled for July 2024, with a written decision to follow. Arbitration is inherently uncertain, and while we believe that we are entitled to retain the remaining Advance Payment Amount received from Gavi, it is possible that we will be required to refund all or a portion of the remaining Advance Payment Amount from Gavi.

In February 2023, in connection with the execution of Modification 17 to the USG Agreement the U.S. government indicated to us that the award may not be extended past its current period of performance. If the USG Agreement is not amended, as we had previously expected, then we may not receive all of the remaining $250.6 million in funding of June 30,
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2023 we had previously anticipated pursuant to the USG Agreement. Modification 17 included provisions requiring that the payment of $60.0 million of consideration associated with manufacturing work now be contingent upon meeting certain milestones, including the delivery of up to 1.5 million doses of NVX-CoV2373prototype vaccine and development and regulatory milestones related to commercial readiness, expansion of the EUA and development of multiple vial presentations. As of June 30, 2023, we constrained $48.0 million of these contingentWe expect to substantially meet milestones related that we are eligible to recognize inand other performance requirements under the 2023 fall vaccination campaign.

USG Agreement by December 31, 2023.
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-CoV2373COVID-19 Vaccine manufactured by the CMO network funded by CEPI is sold to one or more third parties (which would have previously included, but is not limited to, any sales under our
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Gavi APA prior to its termination), and such sales cover our costs of manufacturing such vaccine, not including manufacturing costs funded by CEPI. The timing and amount of any loan repayments is currently uncertain.
As of JuneSeptember 30, 2023, we had $517.9$666.4 million in cash and cash equivalents and restricted cash as compared to $1.3 billion as of December 31, 2022.
We funded our operations for the sixnine months ended JuneSeptember 30, 2023 primarily with cash and cash equivalents, and revenue from product sales, together with revenue under the USG Agreement that support our NVX-CoV2373 vaccineCOVID-19 Vaccine development activities.activities and the sale of our common stock under our June 2021 and August 2023 Sales Agreements. In May 2023, we announced our plan to restructure our global footprint to reduce our planned expenditures. We anticipate our future operations to be funded primarily by revenue from product sales, revenue under our USG Agreement, our cash and cash equivalents, and other potential funding sources.sources including equity financings, which may include at-the-market offerings under our August 2023 Sales Agreement, debt financings, collaborations, strategic alliances, and marketing, distribution or licensing arrangements.
The following table summarizes cash flows for the sixnine months ended JuneSeptember 30, 2023 and 2022 (in thousands):
Six Months Ended June 30,Nine Months Ended September 30,
20232022Change20232022Change
Net cash provided by (used in):Net cash provided by (used in):Net cash provided by (used in):
Operating activitiesOperating activities$(497,531)$(259,413)$(238,118)Operating activities$(537,186)$(298,121)$(239,065)
Investing activitiesInvesting activities(31,337)(41,402)10,065 Investing activities(49,728)(70,921)21,193 
Financing activitiesFinancing activities(293,044)164,524 (457,568)Financing activities(95,923)133,548 (229,471)
Effect on exchange rate on cash, cash equivalents, and restricted cashEffect on exchange rate on cash, cash equivalents, and restricted cash(8,992)(4,453)(4,539)Effect on exchange rate on cash, cash equivalents, and restricted cash355 257 98 
Net increase (decrease) in cash, cash equivalents, and restricted cash(830,904)(140,744)(690,160)
Net decrease in cash, cash equivalents, and restricted cashNet decrease in cash, cash equivalents, and restricted cash(682,482)(235,237)(447,245)
Cash, cash equivalents, and restricted cash at beginning of periodCash, cash equivalents, and restricted cash at beginning of period1,348,845 1,528,259 (179,414)Cash, cash equivalents, and restricted cash at beginning of period1,348,845 1,528,259 (179,414)
Cash, cash equivalents, and restricted cash at end of periodCash, cash equivalents, and restricted cash at end of period$517,941 $1,387,515 $(869,574)Cash, cash equivalents, and restricted cash at end of period$666,363 $1,293,022 $(626,659)
Net cash used in operating activities was $497.5$537.2 million for the sixnine months ended JuneSeptember 30, 2023, as compared to $259.4$298.1 million for the same period in 2022. The increase in cash used in operating activities is primarily due to a decrease in upfront payments received under our APAs, partially offset by the timing of payments to vendors.
Net cash used in investing activities was $31.3$49.7 million for the sixnine months ended JuneSeptember 30, 2023, as compared to $41.4$70.9 million for the same period in 2022. The decrease in cash used in investing activities is primarily due to lower expenditureexpenditures on equipment and leasehold improvements.
Net cash used in financing activities was $293.0$95.9 million for the sixnine months ended JuneSeptember 30, 2023, as compared to net cash provided by finance activities of $164.5$133.5 million for the same period in 2022. The increase in cash used in financing activities in 2023 as compared with 2022, is primarily due to the $325 million repayment of our 3.75% Convertible notes during 2023, andpartially offset by an increase in net proceeds of approximately $179 million from the sales of our common stock under our June 2021 and August 2023 Sales Agreement during 2022.Agreements and the Private Placement with SK.
Going Concern
The accompanying unaudited consolidated financial statements in Part I, Item 1, “Consolidated Financial Statements” of this Quarterly Report have been prepared assuming that we will continue as a going concern within one year after the date that the financial statements are issued. At JuneSeptember 30, 2023, we had $517.9$666.4 million in cash and cash equivalents and restricted cash. During the sixnine months ended JuneSeptember 30, 2023, we incurred a net loss of $235.9$366.7 million and had net cash flows used in operating activities of $497.5$537.2 million.
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In accordance with Accounting Standards Codification 205-40, Going Concern, we evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about our ability to continue as a going concern within one year after the date that these unaudited consolidated financial statements are issued. 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,our ability to execute on certain cost-cutting initiatives and a pending matter subject to arbitration proceedings. Our revenue projections depend on our ability to successfully develop, manufacture, distribute, or market an updated monovalent formulation of a vaccine candidate forour COVID-19 Vaccine for the fall 2023 COVID vaccine2023-2024
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vaccination season, which is inherently uncertain and subject to a number of risks, including our ability to obtain regulatory authorization, the incidence of COVID-19 during the 2023-2024 vaccination season, our ability to timely deliver doses and commercial adoption and market acceptance. acceptance of our updated vaccine.
Further, failure to meet regulatory milestones, timely obtain supportive recommendations from governmental advisory committees, or achieve product volume or delivery timing obligations under the Company’s advance purchase agreements may require the Company to refund portions of upfront and other payments or result in reduced future payments. In February 2023, in connection with the execution of Modification 17payments which could adversely affect our ability to the USG Agreement, the U.S. government indicated to us that the award may not be extended past its current period of performance, which may result in us not receiving all of the remaining $250.6 million in fundingcontinue as of June 30, 2023 we had previously anticipated.a going concern. 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 paymentPayment Amount of $696.4 million as of JuneSeptember 30, 2023. See Note 3 and Note 1514 to our unaudited consolidated financial statements in Part I, Item 1, “Consolidated Financial Statements” of this Quarterly Report for additional information related to the arbitration with Gavi. Management believes that, given the significance of these uncertainties, substantial doubt exists regarding our ability to continue as a going concern through one year from the date that these financial statements are issued.

In accordance with Accounting Standards Codification 205-40, Going Concern, we evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about our ability to continue as a going concern within one year after the date that these unaudited consolidated financial statements are issued. In May 2023, we announced our Restructuring Plan, which includes a more focused investment in our NVX-CoV2373 program,COVID-19 Program, reduction to our pipeline spending, the continued rationalization of our manufacturing network, a reduction to our global workforce, as well as the consolidation of facilities, and infrastructure. The workforce reduction plan included an approximately 25% reduction in the Company’s global workforce, comprised of an approximately 20% reduction in full-time NovavaxCompany employees and the remainder comprised of contractors and consultants. We have decided to progress CIC toward late-stage development and, as such, we are assessing the impact on our workforce requirements and ability to meet our future needs. We incurred one time restructuring expenses of $14.7$14.6 million during the threenine months ended JuneSeptember 30, 2023. See Note 1615 to our unaudited consolidated financial statements in Part I for more details on restructuring. We expect the full annual impact of the cost savings to be realized in 2024 and approximately half of the annual impact to be realized in 2023 due to timing of implementing the measures, and the applicable laws, regulations, and other factors in the jurisdictions in which we operate.

Our ability to fund our operations is dependent upon revenue related to vaccine sales for our products and product candidates, if such product candidates receive marketing approvalauthorization and are successfully commercialized, and in particular the 2023 Fallour 2023-2024 vaccination campaign,season, which is inherently uncertain and subject to a number of risks, including the incidence of COVID-19 during the 2023-2024 vaccination season, regulatory authorization, ability to timely deliver doses and achieve commercial adoption and market acceptance;acceptance of our updated vaccine; the resolution of certain matters, including whether, when, and how the dispute with Gavi is resolved; and management’s plans, which include completing cost reductions associated with our global restructuring and cost reduction plan. Our plans may include raising additional capital through a combination of equity and debt financings, collaborations, strategic alliances, asset sales 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, asset sales 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-CoV2373our COVID-19 Program and our other vaccine candidates, including an influenza vaccine candidate and a CIC vaccine candidate, or aremains uncertain. Also, the impact of our more focused investment in our COVID-19 variant strain-containing monovalent formulation, remainsProgram, reduction to our pipeline spending, continued rationalization of our manufacturing network, reduction to our global workforce, and consolidation of our facilities and infrastructure remain uncertain. If we are unable to obtain additional capital, we will assess our capital resources and may be required to delay, reduce the scope of, or eliminate some or all of our operations, or further downsize our organization, any of which may have a material adverse effect on our business, financial condition, results of operations, and ability to operate as a going concern.

Item 3.    Quantitative and Qualitative Disclosures about 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
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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 $20$24 million as of JuneSeptember 30, 2023.
Market and Interest Rate Risk
The primary objective of our investment activities is preservation of capital, with the secondary objective of maximizing income.
Our exposure to 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 JuneSeptember 30, 2023. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Our disclosure controls and procedures are designed to provide reasonable assurance of achieving such control objectives. Based on the evaluation of our disclosure controls and procedures as of JuneSeptember 30, 2023, our chief executive officer and chief financial officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.
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 JuneSeptember 30, 2023, and have concluded that there have been no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II. OTHER INFORMATION
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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-CoV2373prototype vaccine on a commercial scale and to secure the NVX-CoV2373’sprototype 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.
After the Sinnathurai Action was filed, 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. 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”), (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. The plaintiffs filed their opposition to the motion to dismiss on April 11, 2023. Defendants filed their reply brief in further support of their motion to dismiss on May 11, 2023. On 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. This includes staying the deadline for the individual defendants to respond to the consolidated amended complaint.
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On July 21, 2022, the Maryland Court issued a memorandum opinion and order remanding the Kirst Action to state court. On December 6, 2022, the parties to the Kirst Action filed a stipulated schedule pursuant to which the plaintiffs were expected to file an amended complaint on December 22, 2022, and either (i) the parties would file a stipulated stay of the Kirst Action or (ii) the defendants would file a motion to stay the case by January 23, 2023. The plaintiffs filed an amended complaint on December 30, 2022. On January 23, 2023, defendants filed a motion to stay the Kirst action. On February 22, 2023, the parties in the Kirst Action filed for the Court’s approval of a stipulation staying the Kirst Action pending the resolution of defendants’ motion to dismiss in the Second Consolidated Derivative Action. On March 22, 2023, the Court entered an order staying the Kirst Action pending resolution of the Motionmotion to Dismissdismiss in the Second Consolidated Derivative Action.
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The parties continue to discuss next steps in the litigation following the Maryland Court’s ruling on the motion to dismiss 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 ruling on the motion to dismiss the Sinnathurai Action, the Delaware Court entered an order granting the Mesa Action parties’ request to set a briefing schedule in connection with a motion to stay by defendants. On February 28, 2023, the court granted the defendants’ motion and stayed the Mesa Action pending the entry of a final, non-appealable judgment in the Second Consolidated Derivative Action. On 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. On October 17, 2023, the Mesa plaintiff filed his reply in further support of his motion to lift the 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. On March 9, 2023, the court entered an order granting the parties’ request to stay the Acosta Action pending the entry of a final, non-appealable judgment in the Second Consolidated Derivative Action. On June 28,October 13, 2023, the Company, along with representatives from its insurance carriers, met with the plaintiffsparties filed, and the plaintiffs ofDelaware Court entered, a stipulated order providing that (i) if the SinnathuraiDelaware 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 mediation to engagethe Mesa Action, the stay in potential settlement discussions. The parties continue to discuss whether an amicable resolution is possible.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. The parties continue to discuss next steps in the litigation following the Maryland Court’s ruling on the motion to dismiss the Second Consolidated Derivative Action. The financial impact of this claim, as well as the claims discussed above, is not estimable.
On February 26, 2021, a 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. On June 8, 2023, the Supreme Court affirmed the Court of Chancery’s denial of the plaintiff’s fee application. The case was closed on June 26, 2023.
On March 29, 2022, Par Sterile Products, LLC (“Par”) submitted a demand for arbitration against the Company with the American Arbitration Association, alleging that the Company breached certain provisions of the Manufacturing and Services Agreement (the “Par MSA”) that the Company entered into with Par in September 2020 to provide fill-finish manufacturing services for NVX-CoV2373. On April 4, 2023 the parties entered into a Settlement Agreement and Release of Claims pursuant to which Novavax agreed to pay $27.0 million to Par, which was fully accrued for as of March 31, 2023. Novavax characterized the payment as a $15.0 million termination fee and a $12.0 million settlement payment. Because Par and its parent company, Endo International plc, are parties to Chapter 11 bankruptcy proceedings, the Settlement Agreement and Release of Claims and the payment due thereunder required, and subsequently received, approval from the bankruptcy court. The Company has made the payment required by the Settlement Agreement and Release of Claims, and the arbitration was dismissed with prejudice following a joint motion by Par and Novavax on August 1, 2023.
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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-CoV2373prototype 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 that, based on its purported termination of the Gavi APA, it is entitled to a refund of the Advance Payment Amount less any amounts that have been credited against the purchase price for binding orders placed by a buyer participating in the COVAX Facility. Since December 31, 2022, the remaining Gavi Advance Payment Amount, which is $696.4 million as of JuneSeptember 30, 2023, pending resolution of the dispute with Gavi related to a return of the remaining Advance Payment Amount, has been classified within Other current liabilities in the Company’s consolidated balance sheet. On January 24, 2023, Gavi filed a demand for arbitration with the International Court of Arbitration based on the claims described above. The Company filed its Answer and Counterclaims on March 2, 2023. On April 5, 2023, Gavi filed its Reply to the Company’s Counterclaims. The arbitration hearing is scheduled for July 2024, with a written decision to follow. Arbitration is inherently uncertain, and while we believe that we are entitled to retain the remaining Advance Payment Amount received from Gavi, it is possible that we could be required to refund all or a portion of the remaining Advance Payment Amount from Gavi.
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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 JAMS seeking payment of the withheld installment payment.
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, which was filed with the SEC on February 28, 2023, and Part II, Item 1A. “Risk Factors” of our Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2023, which was filed with the SEC on May 9, 2023 and our Quarterly Report on Form 10-Q for the quarter ended June 30, 2023, which was filed with the SEC on August 8, 2023. There have been no material changes from the risk factors previously disclosed in the Annual Report on Form 10-K, for the fiscal year ended December 31, 2022, and the Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2023 and the Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2023 other than as described below.

Risks Related to Employee Matters, Managing Growth and Information Technology

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

Our management must evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about our ability to continue as a going concern within one year after the date the financial statements are issued. At JuneSeptember 30, 2023, we had $517.9$666.4 million in cash and cash equivalents and restricted cash. During the sixnine months ended JuneSeptember 30, 2023, we incurred a net loss of $235.9$366.7 million and had net cash flows used in operating activities of $497.5$537.2 million.

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

•    
Revenue: Revenue: The Company’s revenue projections depend on its ability to successfully develop, manufacture, distribute and market an updated monovalent formulation of a vaccine candidate forits COVID-19 Vaccine for the fall 2023 COVID vaccine2023-2024 vaccination season, which is inherently uncertain and subject to a number of risks, including regulatory authorization, ability to timely deliver doses and commercial adoption and market acceptance. Further, failure to meet regulatory milestones, timely obtain supportive recommendations from governmental advisory committees, or achieve product volume or delivery timing obligations under the Company’s advance purchase agreements may require the Company to refund portions of upfront and other payments or result in reduced future payments.

Funding from the U.S. Government:Our USG Agreement will expire by its terms in December 2023. We had anticipated that the U.S. government would extend the USG Agreement until the full $1.8 billion authorized amount had been realized. In February 2023, in connection with the execution of Modification 17 to the USG Agreement, the U.S. government indicated to us that the award may not be extended past its current period of performance. If the USG Agreement is not amended, as we had previously expected, then we may not receive all of the remaining $250.6 million in funding as of June 30, 2023 we had previously anticipated pursuant to the USG Agreement.

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•    Pending Arbitration: On January 24, 2023, Gavi filed a demand for arbitration with the International Court of Arbitration regarding an alleged material breach by us of the Gavi APA. The outcome of that arbitration is inherently uncertain, and it is possible we could be required to refund all or a portion of the remaining advance payments of $696.4 million. See Note 3 and Note 1514 to our consolidated financial statements in Part I, Item 1, “Financial Information” of this Quarterly Report on Form 10-Q for additional information related to the arbitration with Gavi.

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

Our ability to fund Company operations is dependent upon revenue related to vaccine sales for our products and product candidates, if such product candidates receive marketing authorization and are successfully commercialized;commercialized, and in particular the 2023-2024 vaccination season, which is inherently uncertain and subject to a number of risks, including the incidence of COVID-19 during the 2023-2024 vaccination season, regulatory authorization, ability to timely deliver doses and achieve commercial adoption and market acceptance of its updated vaccine; the resolution of certain matters, including whether, when, and how the dispute with Gavi is resolved; and management’s plans, which include cost reductions associated with the restructuring of our global footprint. Management’s plans may also include raising additional capital through a combination of equity and debt financing, collaborations, strategic alliances, asset sales and marketing, distribution, or licensing arrangements. In May 2023, we announced a global restructuring and cost reduction plan. This plan includes a more focused investment in our COVID-19 vaccine program,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, asset sales and marketing, distribution, or licensing arrangements may require us to give up some or all of our rights to a product or technology, which in some cases may be at less than the full potential value of such rights. In addition, the regulatory and commercial success of our COVID-19 vaccineProgram and our other vaccine candidates, including an influenza vaccine candidate and CIC vaccine candidate, or aremains uncertain. Also, the impact of the Company’s more focused investment in its COVID-19 variant strain-containing monovalent formulation, remainsProgram, reduction to its pipeline spending, continued rationalization of its manufacturing network, reduction to its global workforce, and consolidation of its facilities and infrastructure remain uncertain. If we are unable to obtain additional capital, we will assess our capital resources and may be required to delay, reduce the scope of, or eliminate some or all of our operations, or downsize our organization, any of which may have a material adverse effect on our business, financial condition, results of operations, and ability to operate as a going concern.

Risks Related to Regulatory
Item 2.    Unregistered Sales of Equity Securities, Use of Proceeds, and Compliance MattersIssuer Purchases of Equity Securities

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

Regulatory authorities globally, including the U.S. FDA, have recommended that manufacturers update their COVID vaccines with a monovalent XBB.1.5 strain for the fallOn August 8, 2023, COVID vaccine season and subsequent vaccination. We continue to pursue the manufacture, clinical testing, regulatory authorization, and distribution of our XBB COVID vaccine, with a goal of making it commercially available for the fall 2023 COVID vaccine season. We intend to submit applications for authorization of the XBB COVID vaccine to several regulatory authorities. We expect that regulatory authorities will continue to monitor and assess SARS-CoV-2 evolution and recommend that manufacturers make corresponding updates to the composition of their COVID vaccines at least annually.

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

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

We were unable to accomplish the timely validation of the single-dose vial presentation we had intended to use with the XBB COVID vaccine in the U.S. As a result, if we obtain EUA from the FDA for this vaccine, we expect to offer the product only in a five dose vial presentation for the fall 2023 vaccination season, which may adversely impact market acceptance, rate of product returns, or require higher price concessions in the U.S.
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Because the finished product is manufactured by SIIPL in India, timely authorization is needed from the Drugs Controller General of India (“DCGI”), the drug licensing body in India, to export the XBB COVID vaccine to the respective markets where regulatory review of the product application is pending.If we are unable to receive this timely DCGI authorization, we may be unable to commercially distribute our XBB COVID vaccine in a timely manner for the fall 2023 season.

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

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

Additionally, to ensure adequate inventory supply and manage our operations, we forecast anticipated manufacturing requirements and customer demand to predict inventory needs and place orders with our third-party manufacturers based on such predictions. Our ability to accurately forecast demand for our COVID vaccine could be negatively affected by many factors, including challenges in managing our commercial strategy, unanticipated changes in general market conditions or regulatory matters, and market demand for variant-specific COVID vaccines, among others. If we underestimate our third-party manufacturing requirements, we may not be able to timely meet obligations under our customer supply agreements. Conversely, if we overestimate our third-party manufacturing requirements, we may end up with inventory levels in excess of customer demand that result in a portion of our inventory becoming obsolete or expiring, as well as inventory write-downs or write-offs, or we may need to cancel previously forecasted batches of product from our third-party manufacturers, which may result in material cancellation fees. In September 2022, for example, we entered into a Confidential SettlementSecurities Subscription Agreement and Release(the “Subscription Agreement”) with FUJIFILM underSK, pursuant to which we are responsible for up to $185 million to FUJIFILM in connection with the termination of manufacturing activity. In December 2022, we agreed to sell and issue to SK, in a private placement (the “Private Placement”), 6.5 million shares of the Company’s common stock, par value $0.01 per share at a price of $13.00 per share for aggregate gross proceeds to us of approximately $95 million in fees owed to AGC Biologics in connection with$84.5 million. The proceeds from the cancellation of batches in 2022. If we are unable to accurately forecast demand for our COVID vaccine and the required services from third-party manufacturers, our results of operations could be materially harmed.

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

Because of contractual restraints and the limited number of third-party manufacturers with the expertise, required regulatory approvals and facilities to manufacture bulk vaccines at commercial-scale, replacement of a manufacturer may be expensive and time-consuming and may cause interruptions in the production of our vaccine and negatively impact our ability to timely meet obligations under our customer supply agreements. We and our third-party manufacturers may also encounter production challenges related to:
costs, scale up, and yields;
shortages of raw materials and supplies;
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shipment delays or other supply chain disruptions
quality control and assurance;
contamination, lot consistency, potency, and purity;
shortages of qualified personneltrial expenditures, commercialization activities, acquisitions and other capacity constraints;
compliance with strictly enforced and evolving federal, state and foreign regulations that varystrategic purposes. We recognized the shares at the settlement date fair value of $46.5 million (see Note 4 to our consolidated financial statements in each country where products might be sold including nationalization or other territory restrictions placedthis Quarterly Report). The closing of the Private Placement occurred on our owned and third-party manufacturing sites;
and capital funding.

Delays or interruptions could have a material adverse effect on our business, financial condition, results of operations and cash flows.August 10, 2023.
Item 5.    Other Information
During the three months ended JuneSeptember 30, 2023, no director or “officer” (as defined in Rule 16a-1(f) under the Securities Exchange Act of 1934, as amended) of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.
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Item 6.    Exhibits
3.1
3.2
3.3
3.4
10.1*±
10.2*±
10.3*±
10.4*±
10.5*±
10.6*±
10.7*±
10.8*±
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10.9*
10.10*
10.11*
10.12*
31.1*
31.2*
32.1*
32.2*
101The following financial information from our Quarterly Report on Form 10-Q for the quarter ended JuneSeptember 30, 2023, formatted in Inline Extensible Business Reporting Language (Inline XBRL): (i) the Consolidated Statements of Operations for the three- and six-monthnine-month periods ended JuneSeptember 30, 2023 and 2022, (ii) the Consolidated Statements of Comprehensive Income (Loss) for the three- and six-monthnine-month periods ended JuneSeptember 30, 2023 and 2022, (iii) the Consolidated Balance Sheets as of JuneSeptember 30, 2023 and December 31, 2022, (iv) the Consolidated Statements of Changes in Stockholders’ Equity (Deficit) for the three- and six-monthnine-month periods ended JuneSeptember 30, 2023 and 2022, (v) the Consolidated Statements of Cash Flows for the six-monthnine-month periods ended JuneSeptember 30, 2023 and 2022, and (vi) the Notes to Consolidated Financial Statements.
104Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

*Filed or furnished herewith.
±    Certain portions of this exhibit have been omitted pursuant to Item 601(b)(10)(iv) of Regulation S-K.
Management contracts, compensatory plans, or arrangements
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
NOVAVAX, INC.
Date: August 8,November 9, 2023By:/s/ John C. Jacobs
John C. Jacobs
President and Chief Executive Officer
(Principal Executive Officer)
Date: August 8,November 9, 2023By:/s/ James P. Kelly
James P. Kelly
Executive Vice President, Chief Financial Officer and Treasurer
(Principal Financial and Accounting Officer)



















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