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

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

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

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


Large accelerated filer	☐x	Accelerated ~~filer~~Filer	☒o

Non-accelerated filer	☐o	Smaller reporting company	☒o

Emerging growth company	☐

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 ~~63,659,952~~74,484,166 as of ~~October~~July 31, ~~2020.~~

~~Table of Contents~~

~~NOVAVAX, INC.~~

~~TABLE OF CONTENTS~~


		~~Page No.~~
~~PART I. FINANCIAL INFORMATION~~		1

~~Item 1.~~	~~Consolidated Financial Statements~~	1

Table of Contents

NOVAVAX, INC.

TABLE OF CONTENTS

~~Consolidated Balance Sheets as of September 30, 2020 (unaudited) and December 31, 2019~~	1

					Page No.
PART I. FINANCIAL INFORMATION					1
Item 1.			Consolidated Financial Statements		1
			Consolidated Balance Sheets as of June 30 , 2021 (unaudited) and December 31, 2020		1
			Unaudited Consolidated Statements of Operations and Unaudited Consolidated Statements of Comprehensive Loss for the three and ~~nine~~ six months ended ~~September~~June 30 , 2021 and 2020 ~~and 2019~~		2

	Unaudited Consolidated Statements of Changes in Stockholders’ Equity (Deficit) for the three and ~~nine~~ six months ended ~~September~~June 30 , 2021 and 2020 ~~and 2019~~	3

	Unaudited Consolidated Statements of Cash Flows for the ~~nine~~six months ended ~~September~~ June 30 ~~2020~~, 2021 and ~~2019~~2020	5

	Notes to the Consolidated Financial Statements (unaudited)	6

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations			23 17

Item 3.	Quantitative and Qualitative Disclosures about Market Risk			39 33

Item 4.	Controls and Procedures			39 34

PART II. OTHER INFORMATION		40 34
Item 1.			Legal Proceedings		34
Item 1A.			Risk Factors		40 62
Item 6.			Exhibits		63
~~Item 6.~~SIGNATURES					~~Exhibits~~64	46

~~SIGNATURES~~		48

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

NOVAVAX, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share information)

September 30,

December 31,


2020

2019

(unaudited)

ASSETS





Current assets:





Cash and cash equivalents

$
334,171

$
78,823

Marketable securities

169,860

—

Restricted cash

67,154

2,947

Accounts receivable

12,355

7,500

Unbilled services

3,826

—

Prepaid expenses and other current assets

83,851

7,977

Total current assets

671,217

97,247

Restricted cash

411

410

Property and equipment, net

131,834

11,445

Intangible assets, net

5,332

5,581

Goodwill

126,932

51,154

Other non-current assets

8,294

7,120

Total assets

$
944,020

$
172,957

LIABILITIES AND STOCKHOLDERS’ DEFICIT





Current liabilities:





Accounts payable

$
15,097

$
2,910

Accrued expenses

78,812

14,867

Accrued interest

2,031

5,078

Deferred revenue

81,814

1,678

Current portion of finance lease liabilities

55,860

—

Other current liabilities

5,604

1,262

Total current liabilities

239,218

25,795

Deferred revenue

2,500

2,500

Convertible notes payable

321,679

320,611

Non-current finance lease liabilities

63,099

—

Other non-current liabilities

11,262

10,068

Total liabilities

637,758

358,974

Commitments and contingencies





Preferred stock, $0.01 par value, 2,000,000 shares authorized; 438,885 shares of redeemable Series A Convertible Preferred Stock issued and outstanding at September 30, 2020 and 0 shares issued and outstanding at December 31, 2019

199,822

—

Stockholders' equity (deficit):





Common stock, $0.01 par value, 600,000,000 shares authorized at September 30, 2020 and December 31, 2019; and 63,318,888 shares issued and 62,927,485 shares outstanding at September 30, 2020 and 32,399,352 shares issued and 32,352,416 shares outstanding at December 31, 2019

633

324

Additional paid-in capital

1,848,644

1,260,551

Accumulated deficit

(1,696,635)

(1,431,801)

Treasury stock, 391,403 shares, cost basis at September 30, 2020 and 46,936 shares, cost basis at December 31, 2019

(41,207)

(2,583)

Accumulated other comprehensive loss

(4,995)

(12,508)

Total stockholders’ equity (deficit)

106,440

(186,017)

Total liabilities and stockholders’ equity (deficit)

$
944,020

$
172,957


	June 30, 2021		December 31, 2020
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	2,074,880	$	553,398
Marketable securities	0		157,649
Restricted cash	46,398		93,880
Accounts receivable	49,989		262,012
Unbilled services	21,374		0
Prepaid expenses and other current assets	162,351		181,264
Total current assets	2,354,992		1,248,203
Restricted cash	1,461		1,460
Property and equipment, net	213,186		179,954
Intangible assets, net	5,281		5,725
Goodwill	134,294		135,379
Other non-current assets	40,373		11,758
Total assets	$	2,749,587	$	1,582,479

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	73,995	$	54,332
Accrued expenses	249,178		142,468

Deferred revenue	1,220,073		273,228
Current portion of finance lease liabilities	98,383		105,862
Other current liabilities	9,887		3,782
Total current liabilities	1,651,516		579,672
Convertible notes payable	322,746		322,035
Non-current finance lease liabilities	9,193		40,083
Other non-current liabilities	20,570		13,480
Total liabilities	2,004,025		955,270

Commitments and contingencies	0		0


Preferred stock, $0.01 par value, 2,000,000 shares authorized at June 30, 2021 and December 31, 2020; 0 shares issued and outstanding at June 30, 2021 and December 31, 2020	0		0

Stockholders' equity:
Common stock, $0.01 par value, 600,000,000 shares authorized at June 30, 2021 and December 31, 2020; and 74,672,351 shares issued and 74,248,279 shares outstanding at June 30, 2021 and 71,350,365 shares issued and 70,953,739 shares outstanding at December 31, 2020	747		714
Additional paid-in capital	3,237,085		2,535,476
Accumulated deficit	(2,449,235)		(1,874,199)
Treasury stock, 424,072 shares, cost basis at June 30, 2021 and 396,626 shares, cost basis at December 31, 2020	(47,205)		(41,806)
Accumulated other comprehensive income	4,170		7,024
Total stockholders’ equity	745,562		627,209
Total liabilities and stockholders’ equity	$	2,749,587	$	1,582,479

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

Table of Contents

NOVAVAX, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share information)

(unaudited)

For the Three Months Ended

For the Nine Months Ended

September 30,

September 30,

2020

2019

2020

2019


Revenue:









Grant and other
$
114,086

$
2,507

$
152,690

$
9,846

Government contract

42,938

—

43,249

—

Total revenue

157,024

2,507

195,939

9,846

Expenses:









Research and development

294,087

18,611

345,828

84,502

Gain on Catalent transaction

—

(9,016)

—

(9,016)

General and administrative

56,879

7,899

83,977

26,236

Total expenses

350,966

17,494

429,805

101,722

Loss from operations

(193,942)

(14,987)

(233,866)

(91,876)

Other income (expense):









Investment income

140

342

872

1,236

Interest expense

(4,460)

(3,403)

(11,266)

(10,209)

Other income (expense)

952

5

3,565

(15)

Net loss
$
(197,310)

$
(18,043)

$
(240,695)

$
(100,864)

Basic and diluted net loss per share
$
(3.21)

$
(0.74)

$
(4.39)

$
(4.43)

Basic and diluted weighted average number of common shares outstanding

61,554

24,327

54,810

22,761


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2021		2020		2021		2020

Revenue:
Government contracts	$	240,534	$	0	$	623,238	$	0
Grant and other	34,026		35,538		98,551		38,915
Royalties	23,457		0		23,457		0
Total revenue	298,017		35,538		745,246		38,915

Expenses:
Research and development	570,685		34,846		1,163,356		51,741
General and administrative	73,161		17,719		136,351		27,098
Total expenses	643,846		52,565		1,299,707		78,839
Loss from operations	(345,829)		(17,027)		(554,461)		(39,924)
Other income (expense):
Investment income	369		297		731		732
Interest expense	(5,968)		(3,403)		(10,807)		(6,806)
Other income (expense)	2,659		2,612		(3,934)		2,613
Net loss before income tax expense	$	(348,769)	$	(17,521)	$	(568,471)	$	(43,385)
Income tax expense	3,548		0		6,565		0
Net loss	$	(352,317)	$	(17,521)	$	(575,036)	$	(43,385)

Basic and diluted net loss per share	$	(4.75)	$	(0.30)	$	(7.82)	$	(0.84)

Basic and diluted weighted average number of common shares outstanding	74,118		58,618		73,580		51,401

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(in thousands)

(unaudited)


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2021		2020		2021		2020

Net loss	$	(352,317)	$	(17,521)	$	(575,036)	$	(43,385)
Other comprehensive income (loss):
Net unrealized losses on marketable securities available-for-sale, net of reclassifications	0		176		(9)		44
Foreign currency translation adjustment	4,527		1,115		(2,845)		(731)
Other comprehensive loss	4,527		1,291		(2,854)		(687)
Comprehensive loss	$	(347,790)	$	(16,230)	$	(577,890)	$	(44,072)

For the Three Months Ended

For the Nine Months Ended


September 30,

September 30,


2020

2019

2020

2019


Net loss

$
(197,310)

$
(18,043)

$
(240,695)

$
(100,864)

Other comprehensive income (loss):

Net unrealized gains (losses) on marketable securities available-for-sale

(26)

—

18

5

Foreign currency translation adjustment

8,226

(1,564)

7,495

(2,668)

Other comprehensive income (loss)

8,200

(1,564)

7,513

(2,663)

Comprehensive loss

$
(189,110)

$
(19,607)

$
(233,182)

$
(103,527)

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

Table of Contents

NOVAVAX, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)

Three Months Ended ~~September~~June 30, ~~2020~~2021 and ~~2019~~

2020

(in thousands, except share information)

(unaudited)

Additional

Other

Stockholders'

Common Stock

Paid-in

Accumulated

Treasury

Comprehensive

Equity


Shares

Amount

Capital

Deficit

Stock

Income (Loss)

(Deficit)

(in thousands, except share information)
Balances at June 30, 2020

61,262,632

$
612

$
1,699,072

$
(1,499,325)

$
(2,638)

$
(13,195)

$
184,526
Preferred stock beneficial conversion feature

—

—

—

—

—

—

—
Non-cash stock-based compensation

—

—

65,705

—

—

—

65,705
Stock issued under incentive programs

1,534,345

16

26,682

—

(38,569)

—

(11,871)
Issuance of common stock, net of issuance costs of $725

521,911

5

57,185

—

—

—

57,190
Unrealized loss on marketable securities

—

—

—

—

—

(26)

(26)
Foreign currency translation adjustment

—

—

—

—

—

8,226

8,226
Net loss

—

—

—

(197,310)

—

—

(197,310)
Balance at September 30, 2020

63,318,888

$
633

$
1,848,644

$
(1,696,635)

$
(41,207)

$
(4,995)

$
106,440

Balances at June 30, 2019

23,495,466

$
235

$
1,210,941

$
(1,381,928)

$
(2,451)

$
(12,290)

$
(185,493)
Non-cash stock-based compensation

—

—

2,624

—

—

—

2,624
Stock issued under incentive programs

122,485

1

181

—

(132)

—

50
Issuance of common stock, net of issuance costs of $161

1,957,627

20

12,568

—

—

—

12,588
Foreign currency translation adjustment

—

—

—

—

—

(1,564)

(1,564)
Net loss

—

—

—

(18,043)

—

—

(18,043)
Balance at September 30, 2019

25,575,578

$
256

$
1,226,314

$
(1,399,971)

$
(2,583)

$
(13,854)

$
(189,838)


	Common Stock			Additional Paid-in Capital		Accumulated Deficit		Treasury Stock		Other Comprehensive Income (Loss)		Stockholders' Equity (Deficit)
	Shares	Amount

Balance at March 31, 2021	74,470,583	$	745	$	3,180,114	$	(2,096,918)	$	(44,457)	$	(357)	$	1,039,127

Non-cash stock-based compensation	—	—		53,123		—		—		—		53,123
Stock issued under incentive programs	201,768	2		3,848		—		(2,748)		—		1,102
Foreign currency translation adjustment	—	—		—		—		—		4,527		4,527
Net loss	—	—		—		(352,317)		—		—		(352,317)
Balance at June 30, 2021	74,672,351	$	747	$	3,237,085	$	(2,449,235)	$	(47,205)	$	4,170	$	745,562

Balance at March 31, 2020	53,906,322	$	539	$	1,450,279	$	(1,457,665)	$	(2,638)	$	(14,486)	$	(23,971)
Preferred stock beneficial conversion feature	—	—		24,139		(24,139)		—		—		0
Non-cash stock-based compensation	—	—		7,932		—		—		—		7,932
Stock issued under incentive programs	316,815	3		8,947		—		—		—		8,950
Issuance of common stock, net of issuance costs of $2,647	7,039,495	70		207,775		—		—		0		207,845
Unrealized loss on marketable securities	—	—		—		—		—		176		176
Foreign currency translation adjustment	—	—		—		—		—		1,115		1,115
Net loss	—	—		—		(17,521)		—		—		(17,521)
Balance at June 30, 2020	61,262,632	$	612	$	1,699,072	$	(1,499,325)	$	(2,638)	$	(13,195)	$	184,526

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

Table of Contents

NOVAVAX, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)

~~Nine~~

Six Months Ended ~~September~~June 30, ~~2020~~2021 and ~~2019~~

2020

(in thousands, except share information)

(unaudited)

Additional

Other

Stockholders'

Common Stock

Paid-in

Accumulated

Treasury

Comprehensive

Equity


Shares

Amount

Capital

Deficit

Stock

Income (Loss)

(Deficit)

(in thousands, except share information)
Balance at December 31, 2019

32,399,352

$
324

$
1,260,551

$
(1,431,801)

$
(2,583)

$
(12,508)

$
(186,017)
Preferred stock beneficial conversion feature

0

0

24,139

(24,139)

0

0

0
Non-cash stock-based compensation

—

—

77,602

—

—

—

77,602
Stock issued under incentive programs

1,884,399

19

35,689

—

(38,624)

—

(2,916)
Issuance of common stock, net of issuance costs of $5,870

29,035,137

290

450,663

—

—

—

450,953
Unrealized gain on marketable securities

—

—

—

—

—

18

18
Foreign currency translation adjustment

—

—

—

—

—

7,495

7,495
Net loss

—

—

—

(240,695)

—

—

(240,695)
Balance at September 30, 2020

63,318,888

$
633

$
1,848,644

$
(1,696,635)

$
(41,207)

$
(4,995)

$
106,440

Balance at December 31, 2018

19,245,302

$
192

$
1,144,621

$
(1,299,107)

$
(2,450)

$
(11,191)

$
(167,935)
Non-cash stock-based compensation

—

—

12,803

—

—

—

12,803
Stock issued under incentive programs

173,873

2

1,122

—

(132)

—

992
Fractional shares purchased in stock split

—

—

—

—

(1)

—

(1)
Issuance of common stock, net of issuance costs of $1,273

6,156,403

62

67,768

—

—

—

67,830
Unrealized gain on marketable securities

—

—

—

—

—

5

5
Foreign currency translation adjustment

—

—

—

—

—

(2,668)

(2,668)
Net loss

—

—

—

(100,864)

—

—

(100,864)
Balance at September 30, 2019

25,575,578

$
256

$
1,226,314

$
(1,399,971)

$
(2,583)

$
(13,854)

$
(189,838)


	Common Stock			Additional Paid-in Capital		Accumulated Deficit		Treasury Stock		Other Comprehensive Income (Loss)		Stockholders' Equity (Deficit)
	Shares	Amount

Balance at December 31, 2020	71,350,365	$	714	$	2,535,476	$	(1,874,199)	$	(41,806)	$	7,024	$	627,209
Non-cash stock-based compensation	—	—		106,183		—				—		106,183
Stock issued under incentive programs	743,019	7		30,593		—		(5,399)		—		25,201
Issuance of common stock, net of issuance costs of $7,292	2,578,967	26		564,833		—		—		—		564,859
Unrealized loss on marketable securities	—	—		—		—		—		(9)		(9)
Foreign currency translation adjustment	—	—		—		—		—		(2,845)		(2,845)
Net loss	—	—		—		(575,036)		—		—		(575,036)
Balance at June 30, 2021	74,672,351	$	747	$	3,237,085	$	(2,449,235)	$	(47,205)	$	4,170	$	745,562

Balance at December 31, 2019	32,399,352	$	324	$	1,260,551	$	(1,431,801)	$	(2,583)	$	(12,508)	$	(186,017)
Preferred stock beneficial conversion feature	—	—		24,139		(24,139)				—		0
Non-cash stock-based compensation	—	—		11,897		—		—		—		11,897
Stock issued under incentive programs	350,054	3		9,007		—		(55)		—		8,955
Issuance of common stock, net of issuance costs of $5,145	28,513,226	285		393,478		—		—		—		393,763
Unrealized loss on marketable securities	—	—		—		—		—		44		44
Foreign currency translation adjustment	—	—		—		—		—		(731)		(731)
Net loss	—	—		—		(43,385)		—		—		(43,385)
Balance at June 30, 2020	61,262,632	$	612	$	1,699,072	$	(1,499,325)	$	(2,638)	$	(13,195)	$	184,526

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

Table of Contents

NOVAVAX, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)


	Six Months Ended June 30,
	2021		2020

Operating Activities:
Net loss	$	(575,036)	$	(43,385)
Reconciliation of net loss to net cash used in operating activities:
Depreciation and amortization	4,727		1,905

Non-cash stock-based compensation	106,183		11,897
Right-of-use assets written off	12,707		0
Other	3,855		(1,081)
Changes in operating assets and liabilities:
Receivables, prepaid expenses and other assets	193,004		(61,079)
Accounts payable and accrued expenses	115,212		27,094
Deferred revenue	946,845		157,173
Net cash provided by operating activities	807,497		92,524

Investing Activities:
Capital expenditures	(28,932)		(3,884)
Acquisition of Novavax CZ, net of cash required	0		(164,204)
Purchases of marketable securities	(2,167)		(107,608)
Proceeds from maturities and sale of marketable securities	159,807		29,750
Net cash provided by (used in) investing activities	128,708		(245,946)

Financing Activities:
Net proceeds from sale of preferred stock	0		199,822
Net proceeds from sales of common stock	564,859		393,763
Net proceeds from the exercise of stock-based awards	26,903		8,955
Finance lease payments	(53,618)		0
Net cash provided by financing activities	538,144		602,540
Effect of exchange rate on cash, cash equivalents and restricted cash	(348)		276
Net increase in cash, cash equivalents and restricted cash	1,474,001		449,394
Cash, cash equivalents and restricted cash at beginning of period	648,738		82,180
Cash, cash equivalents and restricted cash at end of period	$	2,122,739	$	531,574

Supplemental disclosure of non-cash activities:

Right-of-use assets from new lease agreements	$	28,826	$	0
Capital expenditures included in accounts payable and accrued expenses	$	11,037	$	2,753

Supplemental disclosure of cash flow information:
Cash interest payments	$	10,046	$	6,094
Cash paid for income taxes	$	3,017	$	0

Nine Months Ended


September 30,



2020

2019


Operating Activities:

Net loss

$
(240,695)

$
(100,864)

Reconciliation of net loss to net cash used in operating activities:

Depreciation and amortization

3,091

4,744

Loss on disposal of property and equipment

—

88

Gain on Catalent transaction

—

(9,016)

Amortization of debt issuance costs

1,068

1,068

Non-cash stock-based compensation

77,602

12,803

Write off of right-of-use assets

187,193

—

Other

(4,119)

1,269

Changes in operating assets and liabilities:

Receivables, prepaid expenses and other assets

(78,788)

1,326

Accounts payable and accrued expenses

60,540

(16,882)

Deferred revenue

80,135

(7,416)

Net cash provided by (used in) operating activities

86,027

(112,880)

Investing Activities:





Capital expenditures

(12,610)

(1,641)

Acquisition of Novavax CZ, net of cash acquired

(164,204)

―

Proceeds from Catalent transaction

—

18,333

Purchases of marketable securities

(266,330)

(17,484)

Proceeds from maturities of marketable securities

96,488

39,500

Net cash (used in) provided by investing activities

(346,656)

38,708

Financing Activities:





Net proceeds from sale of preferred stock

199,822

—

Net proceeds from sales of common stock

447,070

67,220

Proceeds from the exercise of stock-based awards

35,708

992

Treasury stock related to tax withholding on stock-based awards

(37,024)

—

Finance lease payments

(65,424)

—

Net cash provided by financing activities

580,152

68,212

Effect of exchange rate on cash, cash equivalents and restricted cash

33

(69)

Net increase (decrease) in cash, cash equivalents and restricted cash

319,556

(6,029)

Cash, cash equivalents and restricted cash at beginning of period

82,180

81,959

Cash, cash equivalents and restricted cash at end of period

$
401,736

$
75,930

Supplemental disclosure of non-cash activities:





Sale of common stock under the Sales Agreement not settled at quarter-end

$
3,883

$
610

Capital expenditures included in accounts payable and accrued expenses

$
6,189

$
183

Right-of-use assets from new lease agreements

$
188,362

$
—

Supplemental disclosure of cash flow information:

Cash interest payments

$
12,188

$
12,188

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

Table of Contents

NOVAVAX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~September~~

June 30, ~~2020~~

2021

(unaudited)

Note 1 – Organization

Novavax, Inc. (“Novavax,” and together with its wholly owned subsidiaries, including Novavax AB and Novavax CZ, ~~(formerly, Praha Vaccines a.s.),~~ the “Company”) is a ~~late-stage~~ biotechnology company that promotes improved ~~global~~ health globally through the discovery, development and commercialization of innovative vaccines to prevent serious infectious ~~diseases and address urgent, global health needs.~~diseases. The Company’s vaccine candidates, including both its coronavirus vaccine candidate, NVX-CoV2373, and its lead influenza vaccine candidate, NanoFlu^TM™, are genetically engineered, three-dimensional nanostructures of recombinant proteins critical to disease pathogenesis and may elicit differentiated immune responses, which may be more efficacious than naturally occurring immunity or traditional vaccines. ~~The Company’s technology targets a variety~~NVX-CoV2373 and NanoFlu™ include the use of ~~infectious diseases. The Company is also developing~~the Company's proprietary immune stimulating saponin-based adjuvants at Novavax AB, its wholly owned Swedish subsidiary. The Company’s lead adjuvant, Matrix-M™, has been shown to enhance immune responses and has been well-tolerated in multiple clinical trials.

Matrix-M™

adjuvant.

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 balance sheet as of ~~September~~June 30, ~~2020,~~2021, the consolidated statements of operations and the consolidated statements of comprehensive loss for the three and ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, the consolidated statements of changes in stockholders’ equity (deficit) for the three and ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019~~2020 and the consolidated statements of cash flows for the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019~~2020 are unaudited, but include all adjustments (consisting of normal recurring adjustments) that the Company considers necessary for a fair presentation of the financial position, operating results, comprehensive loss, changes in stockholders’ equity (deficit) and cash flows, respectively, for the periods presented. Although the Company believes that the disclosures in these unaudited consolidated financial statements are adequate to make the information presented not misleading, certain information and footnote information normally included in consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted as permitted under the rules and regulations of the United States Securities and Exchange Commission (“SEC”).

The unaudited consolidated financial statements include the accounts of Novavax, Inc. and its wholly owned subsidiaries, including Novavax AB and Novavax CZ. All intercompany accounts and transactions have been eliminated in consolidation.

The accompanying unaudited consolidated financial statements are presented in U.S. dollars. The functional currency of Novavax AB, which is located in Sweden, is the local currency (Swedish Krona), and the functional currency of Novavax CZ, which is located in the Czech Republic, is the local currency (Czech Koruna). The translation of assets and liabilities of these subsidiaries to U.S. dollars is made at the exchange rate in effect at the consolidated balance sheet date, while equity accounts are translated at historical rates. The translation of the statement of operations data is made at the average exchange rate in effect for the period. The translation of operating cash flow data is made at the average exchange rate in effect for the period, and investing and financing cash flow data is translated at the exchange rate in effect at the date of the underlying transaction. Translation gains and losses are recognized as a component of accumulated other comprehensive ~~loss~~income in the accompanying unaudited consolidated balance sheets. ~~The~~Accumulated other comprehensive income included a foreign currency translation ~~adjustment~~ balance ~~included in accumulated other comprehensive loss was $5.0~~of $4.2 million and ~~$12.5~~$7.0 million as of ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively.

The accompanying unaudited consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, ~~2019.~~2020. 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~~1 business segment.

Table of Contents

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.

Cash and Cash Equivalents

Cash and cash equivalents consist of highly liquid investments with maturities of three months or less from the date of purchase. Cash and cash equivalents consist of the following at (in thousands):

September 30,

December 31,


2020

2019
Cash

$
126,505

$
15,863
Money market funds

79,950

42,960
Government-backed securities

43,250

20,000
Treasury securities

24,998

—
Corporate debt securities

59,468

—
Cash and cash equivalents

$
334,171

$
78,823


	June 30, 2021		December 31, 2020
Cash	$	82,563	$	122,312
Money market funds	238,028		96,116
Government-backed securities	57,250		44,250
Treasury securities	199,990		44,052
Corporate debt securities	1,386,056		246,668
Agency securities	110,993		0
Cash and cash equivalents	$	2,074,880	$	553,398

Cash equivalents are recorded at cost, which approximate fair value due to their short-term nature.

Marketable Securities

~~Marketable~~

The Company invests in marketable securities that generally consist of debt securities with maturities greater than three months from the date of purchase that include commercial paper, government-backed securities, treasury securities, corporate notes and agency securities. Classification of marketable securities between current and non-current is dependent upon the maturity date at the balance sheet date taking into consideration the Company's ability and intent to hold the investment to maturity.

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

The Company classifies its marketable securities with readily determinable fair values as “available-for-sale.” Investments in securities that are classified as available-for-sale are measured at fair market value in the consolidated balance sheets, and unrealized gains and losses on marketable securities are reported as a separate component of stockholders' ~~deficit~~equity (deficit) until realized. Marketable securities are evaluated periodically to determine whether a decline in value is “other-than-temporary.” The term “other-than-temporary” is not intended to indicate a permanent decline in value. Rather, it means that the prospects for a ~~near term~~near-term recovery of value are not necessarily favorable, or that there is a lack of evidence to support fair values equal to, or greater than, the carrying value of the security. Management reviews criteria, such as the magnitude and duration of the decline, as well as the Company's ability to hold the securities, including whether the Company will be required to sell a security prior to recovery of its amortized cost basis, the investment issuer's financial condition and business outlook to predict whether the loss in value is other-than-temporary. Realized gains and losses and declines in value determined to be other-than-temporary are recorded as other income (expense) in the consolidated statements of operations. ~~The cost of securities sold is based on the specific identification method.~~

Restricted Cash

The Company’s current and non-current restricted cash includes payments received under the Coalition for Epidemic Preparedness Innovations (“CEPI”) funding agreements, ~~(see Note 12),~~ payments received under the Bill & Melinda Gates Foundation (“BMGF”) grant agreements (see Note 12), escrow funds paid in connection with the acquisition of Novavax CZ (see Note 5), escrow funds received in connection with a transaction in 2019 with Catalent Maryland, Inc. (formerly Paragon Bioservices, Inc.), a unit of Catalent Biologics (“Catalent”), and cash collateral accounts under letters of credit that serve as security deposits for certain facility leases. The Company will utilize the CEPI and BMGF funds as it incurs expenses for services performed under these agreements.

Table of Contents

As of ~~September~~June 30, 2021, the restricted cash balances (both current and non-current) consisted of $1.2 million for payments received from BMGF, $45.2 million of payments under the CEPI funding agreements and $1.5 million of security deposits. As of December 31, 2020, the restricted cash balances (both current and non-current) consisted of ~~$9.1~~$1.5 million for payments received from BMGF, ~~$46.3~~$92.4 million of payments under the CEPI funding agreements ~~$11.7 million held in escrow that was paid by the Company in connection with the Novavax CZ acquisition~~ and ~~$0.4~~$1.5 million of security deposits. As of December 31, 2019, the restricted cash balances (both current and non-current) consisted of $1.4 million for payments received from BMGF, $1.5 million held in escrow received in connection with the Catalent transaction and $0.4 million of security deposits.

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


	June 30, 2021		December 31, 2020
Cash and cash equivalents	$	2,074,880	$	553,398
Restricted cash current	46,398		93,880
Restricted cash non-current	1,461		1,460
Cash, cash equivalents and restricted cash	$	2,122,739	$	648,738

September 30,

December 31,


2020

2019
Cash and cash equivalents

$
334,171

$
78,823
Restricted cash current

67,154

2,947
Restricted cash non-current

411

410
Cash, cash equivalents and restricted cash

$
401,736

$
82,180

Revenue Recognition

~~Acquisitions~~

The Company ~~applies~~has various arrangements that include a right for a third party to use the ~~acquisition method~~Company's intellectual property as a functional license.These licensing arrangements include sales-based royalties, as well as certain development and commercial milestone payments, and the license is deemed to be the predominant item to which the sales-based royalties or milestone payments relate. For arrangements that include a development or regulatory milestone payment, the Company evaluates whether the associated event is considered probable of ~~accounting~~achievement and estimates the amount to ~~business combinations~~be included in ~~accordance with Accounting Standards Codification (“ASC”) Topic 805,~~ ~~Business Combinations~~~~. The Company’s consolidated financial statements include~~ the ~~operating~~transaction price using the most likely amount method. Milestone payments that are not within the Company or licensee's control, such as those dependent upon receipt of regulatory approval, are not considered probable of achievement until the triggering event occurs. At the end of each reporting period, the Company reevaluates the probability of achievement of each milestone and any related constraint, and if necessary, adjusts its estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis and affect revenue and results of an acquired entity from the date on which it obtains control of the business acquired. The Company recognizes and measures the identifiable assets acquired and liabilities assumed, as of the acquisition date, based on their estimated fair value with the excess purchase consideration, if any, recognized as goodwill. In determining fair value, the Company uses various recognized valuation methods, including the cost and market approaches. The Company initially performs these valuations based on preliminary estimates and assumptions by management or independent valuation specialists under Company supervision, where appropriate, and makes revisions as estimates and assumptions are finalized. The final determination of fair values must be completed no later than the first anniversary of the date of acquisition. The Company expenses acquisition related costs as incurred. See Note 5 for further discussion around the Company’s recent acquisition of Novavax CZ.

~~Lease Accounting~~

The Company determines at the inception of a contract if an arrangement is, or contains, a lease, which exists when the contract conveys the right to control the use of identified property or equipment for a period of time in exchange for consideration. Depending on the contract, the lease commencement date, defined as the date on which the lessor makes the underlying asset available for use by the lessee, may be different than the inception date of the contract. Leases are classified as either operating or finance leases based on the economic substance of the agreement.

The Company enters into non-cancelable lease agreements for office space and certain equipment. Further, the Company enters into supply agreements with contract manufacturing organizations and contract development and manufacturing organizations to manufacture its vaccine candidates. Certain of these supply agreements include the use of identified manufacturing facilities and equipment that are controlled by the Company and may qualify as an embedded lease. Supply agreements that contain a lease are treated as lease arrangements in their entirety.

For leases that have a lease term of more than 12 months at the lease commencement date, the Company recognizes lease liabilities, which represent the Company’s obligation to make lease payments arising from the lease, and corresponding right-of-use (“ROU”) assets, which represent the right to use an underlying asset for the lease term, based on the present value of the fixed future payments over the lease term. The Company calculates the present value of future payments using the discount rate implicit in the lease, if available, or the Company’s incremental borrowing rate. For all leases that have a lease term of 12 months or less at the commencement date (referred to as “short-term” leases), the Company has elected to apply the practical expedient in ASC Topic 842, ~~Leases~~ (“ASC 842”), to not recognize a lease liability or ROU asset but instead, recognize lease payments as an expense on a straight-line basis over the lease term and variable lease payments that do not depend on an index or rate, as an expenseoperations in the period inof adjustment. For arrangements that include sales-based royalties, including milestone payments based upon the achievement of a certain level of product sales, wherein the license is deemed to be the sole or predominant item to which the ~~variable lease costs are incurred based on performance or usage in accordance with contractual agreements. In determining~~payments relate, the ~~lease period, the Company evaluates facts and circumstances that could affect the period over which it is reasonably certain to~~

~~Table of Contents~~

use the underlying asset while taking into consideration the non-cancelable period over which it has the right to use the underlying asset and any option period to extend or terminate the lease if it is reasonably certain to exercise the option. The Company reevaluates short-term leases that are modified and if they no longer meets the requirements to be treated as short-term leases, recognizes and measures the lease liability and ROU asset as if the date of the modification is the lease commencement date.

For operating leases, the Company recognizes lease expense related to fixed payments on a straight-line basis over the lease term and lease expense related to variable payments as incurred based on performance or usage in accordance with the contractual agreements. For finance leases, the Company recognizes the amortization of the ROU asset over the shorter of the lease term or useful life of the underlying asset. The Company expenses ROU assets acquired for research and development activities under ASC Topic 730, ~~Research and Development~~~~, if they do not have an alternative future~~ ~~use, in research and development projects or otherwise.~~

The Company uses significant assumptions and judgment in evaluating its lease contracts and other agreements under ASC 842, including the determination of whether an agreement is or contains a lease, whether a lease represents an operating or finance lease, the discount rate used to determine the present value of lease obligations and the term of a lease embedded in its supply agreements.

~~Revenue Recognition~~

The Company performs research and development under government funding, grant, license and clinical development agreements. The revenue primarily consists of funding under U.S. government contracts and other arrangements to advance the clinical development and manufacturing of NVX-CoV2373. The Company’s U.S. government contracts are with the U.S. Department of Defense (the “DoD”) and its participation in Operation Warp Speed (“OWS”) (see Note 12). Other funding arrangements primarily include a grant and forgivable loan funding from CEPI (see Note 12).

At contract inception, the Company analyzes the revenue arrangement to determine the appropriate accounting under U.S. GAAP. Currently, the Company’s revenue arrangements represent customer contracts within the scope of ASC Topic 606, ~~Revenue from Contracts with Customers (Topic 606)~~ ~~(“ASC 606”) or are contributions under the scope of ASC Topic 958-605,~~ ~~Not-for-Profit Entities – Revenue Recognition~~ (“ASC 958-605”.) The Company recognizes revenue from arrangements within the scope of ASC 606 following the five-step model: (i) identify the contract(s) with a customer; (ii) identify the performance obligation(s) in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligation(s) in the contract; and (v) recognize revenue when (or as) it satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that it will collect the consideration it is entitled to in exchange for the goods or services it transfers to its customer. The Company recognizes contribution revenue within the scope of ASC 958-605 when the funder-imposed conditions have been substantially met. Contributions are recorded as deferred revenue until the period in which research and development activities are performed that satisfy the funder-imposed conditions.

Under the U.S. government contracts, the Company is entitled to receive funding of up to $1.66 billion, on a reimbursable-cost or reimbursable-cost-plus-fixed-fee basis, to support certain activities related to the development, manufacture and delivery of NVX-CoV2373 to the U.S. government. The Company analyzed these contracts and determined that they are within the scope of ASC 606. The obligations under each of the contracts are not distinct in the context of the contract as they are highly interdependent or interrelated and, as such, they are accounted for as a single performance obligation. The transaction price under these arrangements is the consideration the Company is expecting to receive and consists of the funded contract amount and the unfunded variable amount to the extent that it is probable that a significant reversal of revenue will not occur. The Company recognizes revenue for these contracts over time as the Company transfers control over the goods and services and satisfies the performance obligation. The Company measures progress toward satisfaction of the performance obligation using an Estimate-at-Completion (“EAC”) process, which is a cost-based input method that reviews and monitors the progress towards the completion of the Company’s performance obligation. Under this process, management considers the costs that have been incurred to-date, as well as projections to completion using various inputs and assumptions, including, but not limited to, progress towards completion, labor costs and productivity, material and subcontractor costs and identified risks. Estimating the total allowable cost at completion of the performance obligation under a contract is subjective and requires the Company to make assumptions about future activity and cost drivers. Changes in these estimates can occur for a variety of reasons and, if significant, may impact the timing of revenue and fee recognition on the Company’s contracts. Allowable contract costs include direct costs incurred

~~Table of Contents~~

on the contract and indirect costs that are applied in the form of rates to the direct costs. Billings under the contracts are initially based on provisional indirect billing rates, agreed upon between the Company and the U.S. government. These indirect rates are subject to audit on an annual basis. The Company records the impact of changes in the indirect billing rates in the period when such changes are identified. These changes reflect the difference between actual indirect costs incurred compared to the estimated amounts used to determine the provisional indirect billing rates agreed upon with the U.S. government. The Company recognizes revenue on the ~~U.S government contracts based~~satisfaction (or partial satisfaction) of its performance obligation to which some or all of the payment has been allocated, which is normally on ~~reimbursable allowable contract costs incurred in~~ the ~~period up to~~occurrence of the ~~transaction price. For reimbursable-cost-plus-fixed-fee contracts,~~related sales. As a practical expedient, the Company ~~recognizes~~has elected not to disclose the ~~fixed-fee based on the proportion~~aggregate amount of reimbursable contract costs incurred to total estimated allowable contract costs expected to be incurred on completion of the underlying performance obligation as determined under the EAC process. The Company recognizes changes in estimates related to the EAC process in the period when such changes are made on a cumulative catch-up basis.~~The Company includes~~ the transaction price ~~comprising both funded and unfunded portions of customer contracts, in this estimate. As of September 30, 2020, $1.62 billion of~~for the ~~total~~variable consideration that represents a sales-based royalties under the licensing arrangements. Consideration for optional goods and/or services is excluded from the transaction price ~~of $1.66 billion was not yet satisfied~~at contract inception. During the three and six months ended June 30, 2021, the Company ~~had a contract asset~~recognized sales-based royalties of ~~$3.8 million and a contract liability of $26.5~~$23.5 million.

Income Taxes

The ~~Company’s other funding agreements currently include funding from CEPI of $399.5 million~~Company accounts for income taxes in ~~the form of a grant of $257.0 million (“CEPI Grant Funding”) and one or more forgivable no interest term loans of $142.5 million (“CEPI Forgivable Loan Funding”)~~accordance with ASC Topic 740, Income Taxes. Under the Company’s grant funding arrangements, including the CEPI Grant Funding, the Company is primarily entitled to reimbursement for costs that support development related activities of NVX-CoV2373. The CEPI Forgivable Loan Funding is designatedliability method, deferred income taxes are recognized for the prepayment of certain manufacturing activities. The Company analyzed these other funding arrangements and determined that they are not within the scope of ASC 606 as they do not provide a direct economic benefitfuture tax consequences attributable to the grantor. Payments received under the grant funding arrangements are considered conditional contributions under the scope of ASC 958-605 and are recorded as deferred revenue until the period in which such research and development activities are actually performed that satisfy the funder-imposed conditions. Payments received under the CEPI Forgivable Loan Funding agreements are only repayable if the proceeds of sales to one or more third parties of NVX-CoV2373 cover the Company’s costs of manufacturing such vaccine candidate, not including manufacturing costs funded by CEPI. Asdifferences between the financial ~~risk remains with CEPI, the Company determined that the use~~statement carrying amounts of ~~the CEPI Forgivable Loan Funding is outside the scope of ASC Topic 470,~~ ~~Debt.~~ ~~The research~~existing assets and ~~development risk is considered substantive, such that it is not yet probable that the development will be successful. Therefore, the Company has concluded that ASC 730 is considered applicable~~liabilities and ~~most appropriate. Given the financial risk associated with the research~~their respective tax basis and development activities lies with CEPI because repayment of any funds provided by CEPI depends solely on the results of the research and development activities having future economic benefit, the Company has accounted for the obligation under the CEPI Forgivable Loan Funding as a contract to perform research and development for others. operating loss carryforwards.

The Company has ~~determined that payments received under these agreements should~~historically generated significant federal, state and foreign tax net operating losses, which may be ~~recorded~~subject to limitation in future periods. Management has fully reserved the related deferred tax assets with a valuation allowance in the current reporting period as ~~revenue under ASC 958-605 rather~~more likely than ~~a reduction~~not the related benefit will not be realized. The Company is currently subject to ~~research~~examination in all open tax years.

During the three and ~~development expenses. This is consistent with the Company’s policy of presenting such amounts as revenue. In reaching this determination,~~six months ended June 30, 2021, the Company ~~considered a number~~recognized $3.5 million and $6.6 million, respectively, of ~~factors, including whether it is principal under the arrangement, and whether the arrangement is significant~~income tax expense related to ~~and part of, the Company’s core operations. The Company will record revenue as it performs the contractual research and development services.~~foreign withholding tax on royalties.

Net Loss per Share

Net loss per share is computed using the weighted average number of shares of common stock outstanding. As of ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, the Company had outstanding stock options, stock appreciation rights (“SARs”) and unvested restricted stock units (“RSUs”) totaling ~~6,623,466~~6,092,983 and ~~5,041,526,~~7,797,651, respectively. In addition, as of September 30, 2020, the Company had 438,885 shares outstanding of its newly designated Series A Convertible Preferred Stock , which are convertible into 4,388,850 shares of the Company’s common stock.

As of ~~September~~June 30, ~~2020,~~2021, the Company’s Notes (see Note 8)7) would have been convertible into approximately 2,385,800 shares of the Company’s common stock assuming a common stock price of $136.20 or higher. These shares, after giving effect to the add back of interest expense and unamortized debt issuance costs on the Notes and any shares due to the Company upon settlement of its capped call transactions, are excluded from the computation, as their effect is antidilutive.

Table of Contents

Recent Accounting Pronouncements

~~Recently Adopted~~

~~In January 2017, the FASB issued Accounting Standards Update (“ASU”) No. 2017-04,~~ ~~Intangibles-Goodwill and Other (Topic 350)~~ (“ASU 2017-04”), which will simplify the goodwill impairment calculation by eliminating Step 2 from the current goodwill impairment test. The new standard does not change how a goodwill impairment is identified. The Company will continue to perform its quantitative goodwill impairment test by comparing the fair value of its reporting unit to its carrying amount, but if the Company is required to recognize a goodwill impairment charge, under the new standard, the amount of the charge will be calculated by subtracting the reporting unit's fair value from its carrying amount. Under the current standard, if the Company is required to recognize a goodwill impairment charge, Step 2 requires it to calculate the implied value of goodwill by assigning the fair value of a reporting unit to all of its assets and liabilities as if that reporting unit had been acquired in a business combination and the amount of the charge is calculated by subtracting the reporting unit's implied fair value of goodwill from the goodwill carrying amount. The standard was effective January 1, 2020 for the Company and will be applied prospectively from the date of adoption. The adoption of ASU 2017-04 did not have a material impact on the Company’s historical financial statements.

Not Yet Adopted

In August 2020, the ~~FASB~~Financial Accounting Standards Board ("FASB") issued ASU No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity(“ (“ASU 2020-06”), which will simplify the accounting for certain financial instruments with characteristics of liabilities and equity, including certain convertible instruments and contracts onin an entity’s own equity. Specifically, the new standard will remove the separation models required for convertible debt with cash conversion features and convertible instruments with beneficial conversion features. It will also remove certain settlement conditions that are currently required for equity contracts to qualify for the derivative scope exception and will simplify the diluted earnings per share calculation for convertible instruments. ASU 2020-06 will be effective January 1, 2022 for the Company and may be applied using a full or modified retrospective approach. ~~Early adoption is permitted, but no earlier than January 1, 2021 for the Company.~~ Management ~~is evaluating~~has evaluated the impact of adopting ASU 2020-06 and ~~whether~~has determined that it will not have a material impact on the Company’s consolidated financial statements.

Note 3 – Fair Value Measurements

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


	Fair Value at June 30, 2021						Fair Value at December 31, 2020
Assets	Level 1		Level 2		Level 3		Level 1		Level 2		Level 3
Money market funds(1)	$	238,028	$	0	$	0	$	96,116	$	0	$	0
Government-backed securities(1)	0		57,250		0		0		44,250		0
Treasury securities(2)	0		199,990		0		0		54,088		0
Corporate debt securities(3)	0		1,386,056		0		0		373,681		0
Agency securities(4)	0		110,993		0		0		20,600		0
Total cash equivalents and marketable securities	$	238,028	$	1,754,289	$	0	$	96,116	$	492,619	$	0
Liabilities
Convertible notes payable	$	0	$	580,405	$	0	$	0	$	407,238	$	0

(1)

Fair Value at September 30, 2020

Fair Value at December 31, 2019
Assets

Level 1

Level 2

Level 3

Level 1

Level 2

Level 3
Money market funds(1)

$
79,950

$
―

$
—

$
42,960

$
—

$
—
Government-backed securities(2)

―

43,250

―

―

20,000

―
Treasury securities(3)

—

65,093

—

—

—

—
Corporate debt securities(4)

―

148,583

―

―

—

―
Agency securities

$
―

40,651

—

—

—

—
Total cash equivalents and marketable securities

$
79,950

$
297,577

$
—

$
42,960

$
20,000

$
—
Liabilities












Convertible notes payable

$
―

$
389,217

$
—

$
—

$
125,811

$
—

Classified as cash and cash equivalents as of June 30, 2021 and December 31, 2020, respectively, on the consolidated balance sheets.

~~(1)~~

~~Classified as cash and cash equivalents as of September 30, 2020 and December 31, 2019, respectively, on the consolidated balance sheets.~~

~~(2)~~

~~Includes $43,250 and $20,000 classified as cash and cash equivalents as of September 30, 2020 and December 31, 2019, respectively, on the consolidated balance sheets.~~

~~(3)~~

~~Includes $24,998 classified as cash and cash equivalents as of September 30, 2020 on the consolidated balance sheets.~~

~~(4)~~

~~Includes $59,468 classified as cash and cash equivalents as of September 30, 2020 on the consolidated balance sheets.~~

(2)Includes $199,990 and $44,052 classified as cash and cash equivalents as of June 30, 2021 and December 31, 2020, respectively, on the consolidated balance sheets.

(3)Includes $1,386,056 and $246,668 classified as cash and cash equivalents as of June 30, 2021 and December 31, 2020, respectively, on the consolidated balance sheets.

(4)Includes $110,993 classified as cash and cash equivalents as of June 30, 2021 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, e.g., interest rates and yield curves observable at

~~Table of Contents~~

commonly quoted intervals and credit spreads, bids provided by brokers or dealers or quoted prices of securities with similar characteristics. Pricing of the Company's Notes (see Note 8)7) has been estimated using other observable inputs, including the price of the Company's common stock, implied volatility, interest rates and credit spreads among others.

During the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019~~,2020, the Company did not have any transfers between levels.

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

Table of Contents

Note 4 – Marketable Securities

Marketable securities classified as available-for-sale as of ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019~~2020 were comprised of (in thousands):


	June 30, 2021								December 31, 2020
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Treasury securities	$	0	$	0	$	0	$	0	$	10,038	$	0	$	(2)	$	10,036
Corporate debt securities	0		0		0		0		127,003		13		(3)		127,013
Agency securities	0		0		0		0		20,599		1		0		20,600
Total marketable securities	$	0	$	0	$	0	$	0	$	157,640	$	14	$	(5)	$	157,649

September 30, 2020

December 31, 2019

Gross

Gross

Gross

Gross


Amortized

Unrealized

Unrealized



Amortized

Unrealized

Unrealized


Cost

Gains

Losses

Fair Value

Cost

Gains

Losses

Fair Value
Treasury securities

$
40,093

$
2

$
—

$
40,095

$
—

$
—

$
—

$
—
Corporate debt securities

89,104

12

(2)

89,114

—

—

—

—
Agency securities

40,645

6

—

40,651

—

—

—

—
Total

$
169,842

$
20

$
(2)

$
169,860

$
—

$
—

$
—

$
—

The primary objective of the Company's investment policy is the preservation of capital; thus, the Company's investment policy limits investments to certain types of instruments with high-grade credit ratings, places restrictions on maturities and concentrations in certain industries and requires the Company to maintain a certain level of liquidity.

~~Note 5 – Acquisition~~ As of ~~Novavax CZ~~

On May 27, 2020 (the “Acquisition Date”), the Company entered into a Share Purchase Agreement (the “Deed”) by and among Novavax AB, the Company’s wholly-owned Swedish subsidiary (the “Buyer”), and De Bilt Holdings B.V., Poonawalla Science Park B.V., and Bilthoven Biologicals B.V. (collectively, the “Sellers”) and, solely as guarantors, each of Serum International B.V. and the Company. Pursuant to the terms and conditionsJune 30, 2021, all of the ~~Deed, the Buyer acquired all the issued~~Company's investments were in securities classified as cash and outstanding shares of Novavax CZ (formerly, Praha Vaccines a.s.), a vaccine manufacturing company (the “Acquisition”). The assets of Novavax CZ acquired as part of the Acquisition include a biologics manufacturing facility and associated assets in Bohumil, Czech Republic and will be used by the Company to expand its manufacturing capacity.

The Purchase Price includes €10.0 million (approximately $11.1 million at the time of the Acquisition), which was placed in an escrow account and subsequently paid to the Sellers after September 30, 2020. The Deed and ancillary agreements contain customary warranties and post-completion covenants, as well as indemnities by each of the parties thereto.

~~Preliminary Allocation of Purchase Price to Assets Acquired and Liabilities Assumed~~

The Company has accounted for the Acquisition as a business combination using the acquisition method of accounting, with the Company as the acquirer. The acquisition method requires the Company to record the assets acquired and liabilities assumed at fair value. The amount by which the purchase price exceeds the fair value of net assets acquired is recorded as goodwill. The Company has commenced the appraisal process necessary to assess the fair values of the assets acquired and liabilities assumed to determine the amount of goodwill to be recognized as of the Acquisition Date. These appraisals are not yet complete and therefore, the amounts recorded for certain assets and liabilities are preliminary and are subject to adjustment as additional information is obtained about the facts and circumstances that existed as of the Acquisition Date. The final determination of the fair value of certain assets and liabilities will be completed within the measurement period of up to one year from the Acquisition Date. The final values may also result in changes to depreciation and amortization expense related to certain assets such as buildings and equipment. Any potential adjustments made could be material in relation to the preliminary values presented in the table below.

cash equivalents.

~~Table of Contents~~

The table below summarizes the preliminary allocation of the Purchase Price based upon the fair values of assets acquired and liabilities assumed at the Acquisition Date, adjusted for an increase in the Purchase Price of $0.2 million in the three months ended ended September 30, 2020 for a customary working capital adjustment. The preliminary allocation is based upon information that was available to management at the time the consolidated financial statements were prepared and is subject to change prior to completion of the measurement period (in thousands):

Prepaid expense and other current assets

$
326
Property and equipment

96,739
Goodwill

70,662
Accounts payable

(1,193)
Accrued expenses

(205)
Other non-current liabilities

(813)
Purchase Price, net of cash acquired

$
165,516

The fair value of the assets acquired and liabilities assumed were preliminarily determined using market and cost valuation methodologies. The fair value measurements are based on significant unobservable inputs that were developed by the Company using publicly available information, market participant assumptions, and cost and development assumptions. Because of the use of significant unobservable inputs, the fair value measurements represent a Level 3 measurement as defined in ASC 820, ~~Fair Value Measurement and Disclosures~~. The market approach is a valuation technique that uses prices and other relevant information generated by market transactions involving identical or comparable assets, liabilities, or a group of assets or liabilities. The cost approach estimates value by determining the current cost of replacing an asset with another of equivalent utility. The cost to replace a given asset reflects the estimated reproduction or replacement cost for the property, less an allowance for loss in value due to depreciation.

The cost approach was the primary approach used to value fixed assets, including the real property. Fixed assets are depreciated on a straight-line basis over their expected remaining useful lives, ranging from 4 to 25 years. The carrying value and expected lives of the fixed assets may change upon finalizing the purchase price allocation as valuation and engineering reports are finalized.

The Company recorded $70.7 million in goodwill related to the Acquisition representing the Purchase Price that was in excess of the fair value of the assets acquired and liabilities assumed. The goodwill generated from the Acquisition is not expected to be deductible for U.S. federal income tax purposes. The goodwill recognized is attributable to intangible assets that do not qualify for separate recognition, such as the assembled workforce of Novavax CZ.

~~Current assets and current liabilities were recorded at their contractual or historical acquisition amounts, which approximate their fair value.~~

Determining the fair value of assets acquired and liabilities assumed requires the exercise of significant professional judgment. Use of different estimates and judgments could yield different results.

~~Impact to Financial Results for the Three and Nine Months Ended September 30, 2020~~

The results of operations from Novavax CZ have been included in the consolidated financial statements since the Acquisition Date. As a result, the consolidated financial results for the nine months ended September 30, 2020 does not reflect a full nine months of Novavax CZ results. From the Acquisition Date through September 30, 2020, Novavax CZ has not recognized any revenue and recorded a net loss of $4.3 million from Novavax CZ’ operations.

The Company incurred approximately $0.7 million and $2.7 million of costs related to the Acquisition in the three months and nine months ended September 30, 2020, respectively, which are included within general and administrative expenses in the consolidated statements of operations.

~~Supplemental Pro Forma Financial Information (Unaudited)~~

The unaudited pro forma financial information for the periods set forth below gives effect to the Acquisition as if it had occurred as of January 1, 2019. The pro forma financial information is presented for informational purposes only and is not necessarily indicative of the results of operations that would have been achieved had the Acquisition been consummated as of that time. The unaudited pro forma financial information combines the historical results of operations

~~Table of Contents~~

~~of the Company and Novavax CZ for the periods presented below and reflects the application of certain pro forma adjustments (in thousands, except per share amounts):~~

Three Months Ended

Nine Months Ended

September 30, 2020

September 30,


2020

2019

2020

2019

Revenue

$
157,024

$
2,507

$
195,939

$
9,846
Net loss

(196,590)

(19,982)

(242,411)

(107,349)
Basic and diluted net loss per share

(3.19)

(0.45)

(4.21)

(2.51)

Pro forma adjustments include the recognition of depreciation expense based on the Acquisition Date fair value and remaining useful lives of Novavax CZ’ fixed assets (net of historical depreciation expense) and the elimination of costs related to the Acquisition, which are non-recurring in nature.

Note 65 – Goodwill and Other Intangible Assets

Goodwill

The change in the carrying amounts of goodwill for the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 was as follows (in thousands):


	Amount
Balance at December 31, 2020	$	135,379
Currency translation adjustments	(1,085)
Balance at June 30, 2021	$	134,294

Amount

Balance at December 31, 2019

$
51,154

Goodwill resulting from the acquisition of Novavax CZ

70,662

Currency translation adjustments

5,116

Balance at September 30, 2020

$
126,932

Identifiable Intangible Assets

Purchased intangible assets consisted of the following as of ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019~~2020 (in thousands):


	June 30, 2021						December 31, 2020
	Gross Carrying Amount		Accumulated Amortization		Intangible Assets, Net		Gross Carrying Amount		Accumulated Amortization		Intangible Assets, Net
Finite-lived intangible assets:
Proprietary adjuvant technology	$	8,741	$	(3,460)	$	5,281	$	9,099	$	(3,374)	$	5,725
Collaboration agreements	3,947		(3,947)		0		4,109		(4,109)		0
Total identifiable intangible assets	$	12,688	$	(7,407)	$	5,281	$	13,208	$	(7,483)	$	5,725

September 30, 2020

December 31, 2019


Gross





Gross




Carrying

Accumulated

Intangible

Carrying

Accumulated

Intangible

Amount

Amortization

Assets, Net

Amount

Amortization

Assets, Net
Finite-lived intangible assets:

Proprietary adjuvant technology

$
8,309

$
(2,977)

$
5,332

$
7,985

$
(2,562)

$
5,423
Collaboration agreements

3,752

(3,752)

—

3,606

(3,448)

158
Total identifiable intangible assets

$
12,061

$
(6,729)

$
5,332

$
11,591

$
(6,010)

$
5,581

Amortization expense for the ~~nine~~six months ended ~~September~~June 30, 2021 and 2020 was $0.2 million and ~~2019 was $0.5 million.~~

$0.3 million, respectively.

Estimated amortization expense for existing intangible assets for the remainder of ~~2020~~2021 and for each of the five succeeding years ending December 31 will be as follows (in thousands):


Year	Amount
2021 (remainder)	$	219
2022	437
2023	437
2024	437
2025	437
2026	437

Year

Amount
2020

$
104
2021

415
2022

415
2023

415
2024

415
2025

415

Table of Contents

Note 76 - Leases

During the ~~three months ended September 30, 2020, there were no material new or modified real estate lease arrangements.~~

~~During~~second quarter of 2021, the three months ended September 30, 2020, the Company entered into multiple supply agreements with contract manufacturing organizations and contract development and manufacturing organizations to manufacture the Company’s COVID-19 vaccine candidate, NVX-CoV2373. The agreements include the use of identified manufacturing facilities, contain fixed or minimum commitments and include variable costs related to production and material costs in excess of the fixed or minimum commitment specified in the agreements. The Company evaluated the impact of changes in facts and circumstances on its Contract Manufacturing Organizations and Contract Development and Manufacturing Organizations agreements ~~at inception and~~that had previously been determined ~~that certain of these arrangements contain an~~to represent embedded lease ~~under ASC 842~~arrangements. The Company concluded that the impact resulted in the modification of existing leases and, in accordance with its policy, the Company remeasured and reallocated the remaining consideration in the contracts and reassessed the lease classification as ~~it has the exclusive use of, and control over, a portion~~ of the ~~manufacturing facility and equipment~~effective date of the ~~supplier during~~modification. As a result, the ~~contractual term of the arrangement. The~~ Company recognized a ~~financing~~Right-Of-Use ("ROU") asset and a corresponding long-term operating lease liability ~~and~~ ~~ROU~~ ~~asset~~ of ~~$187.2~~$11.4 million ~~related to~~on the remeasurement of one of its long-term supply agreements using ~~the Company’s Incremental Borrowing Rate~~an incremental borrowing rate of ~~6.6%~~6.5%. The Company used significant judgment and estimates, including the estimated value of the underlying leased asset and financial profile of comparable companies to analyze the credit spread as on the date of the lease inception. The Company expensed the ROU asset assince it ~~represents an asset acquired for~~relates to research and development activities ~~related to~~for the development of NVX-CoV2373 ~~that currently~~for which the Company does not have an alternative future use.

~~Supplemental balance sheet information for embedded~~ Modifications to leases ~~in supply agreements entered into by the Company during the three months ended September 30, 2020 is as follows (in thousands, except weighted-average remaining lease term and discount rate):~~

Lease Liabilities

Classification

Amount
Current operating lease liabilities

Other current liabilities

$
3,868
Current portion of finance lease liabilities

Current portion of finance lease liabilities

55,860
Non-current finance lease liabilities

Non-current finance lease liabilities

63,099

Weighted-average remaining lease term (years):

Operating lease

1.1
Finance lease

4.9

Weighted-average discount rate:

Operating lease

6.5%
Finance lease

6.6%

Lease expense for the operating, finance and short-term embedded leases related to the supply agreements entered into by the Company during the three months ended September 30, 2020 was as follows (in thousands):

Three Months Ended September 30, 2020
Operating lease expense:

Fixed lease expense
$
16
Finance lease expense:

Fixed lease expense

65,424
Interest expense

1,041
Short-term expense

19,390
Total lease expense
$
85,871

~~Table of Contents~~

~~Supplemental cash flow information related to the embedded leases for three months ended September 30, 2020 was as follows (in thousands):~~

Cash paid for amounts included in the measurement of lease liabilities:

Amount
Financing cash flows from finance lease
$
65,424

~~As of September 30, 2020, maturities of embedded lease liabilities were as follows (in thousands):~~

Year

Operating

Finance
2021
$
3,900
$
62,623
2022

-

65,235
Total minimum lease payments

3,900

127,858
Less: Imputed interest

(32)

(8,899)
Total lease liabilities
$
3,868
$
118,959

~~As of September 30, 2020, the Company had one agreement that contains an embedded finance lease for a manufacturing arrangement that is expected to commence in the fourth quarter of 2020~~ with a lease term of 12 months or less at the commencement date did not result in a change in lease classification and, in accordance with the Company's election to apply the practical expedient in ASC Topic 842, Leases (“ASC 842”), it did not recognize a ROU asset or lease liability but instead, lease payments are recognized as an expense on a straight-line basis over the modified lease term and variable lease payments that do not depend on an index or rate, are recognized as an expense in the period in which the variable lease costs are incurred based on performance or usage in accordance with contractual agreements.

During the three and six months ended June 30, 2021, the Company recognized a short-term lease expense of $86.6 million and $214.2 million, respectively, related to its embedded leases, including a new lease that commenced during the first quarter of 2021. The Company did 0t recognize a short-term lease expense related to embedded leases during the three and six months ended June 30, 2020.

During the three and six months ended June 30, 2021, the Company recognized $1.8 million and $4.0 of interest expenses, respectively, on its finance lease liabilities. The Company did 0t recognize any interest expense related to finance lease liabilities during the three and six months ended June 30, 2020.

During the second quarter of 2021, the Company extended the term of certain of its existing research and development facility and offices leases by two years to five years, giving rise to additional ROU assets and related long-term operating lease liabilities of approximately ~~5 years.~~

$7.2 million.

Note 87 – Long-Term Debt

Convertible Notes

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

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


	June 30, 2021		December 31, 2020
Principal amount of Notes	$	325,000	$	325,000
Unamortized debt issuance costs	(2,254)		(2,965)
Total convertible notes payable	$	322,746	$	322,035

September 30,

December 31,

2020

2019
Principal amount of Notes

$
325,000

$
325,000
Unamortized debt issuance costs

(3,321)

(4,389)
Total convertible notes payable

$
321,679

$
320,611

~~Interest~~

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


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Coupon interest at 3.75%	$	3,047	$	3,047	$	6,094	$	6,094
Amortization of debt issuance costs	356		356		712		712
Total interest expense on Notes	$	3,403	$	3,403	$	6,806	$	6,806

Three Months Ended

Nine Months Ended


September 30,

September 30,


2020

2019

2020

2019

Coupon interest at 3.75%

$
3,047

$
3,047

$
9,141

$
9,141

Amortization of debt issuance costs

356

356

1,068

1,068

Total interest expense on Notes

$
3,403

$
3,403

$
10,209

$
10,209

Table of Contents

Note 98 – ~~Preferred Stock~~

InStockholders' Equity

During the six months ended June 30, 2021 and 2020, the Company ~~entered into a redeemable Series A Convertible Preferred Stock Subscription Agreement (“Subscription Agreement”), pursuant to which the Company agreed to issue~~sold 2.6 million and ~~sell in a private placement 438,885~~28.5 million, respectively, of shares of its ~~newly designated redeemable Series A Convertible Preferred Stock, par value $0.01 per share (“Preferred Stock”), at a purchase price of $455.70 per share, for total gross~~common stock resulting in net proceeds of ~~$200.0~~approximately $565 million (the “Preferred Private Placement”). Under the terms of the Preferred Stock, any holder thereof has the right to redeem shares of the Preferred Stock at the original purchase price if the Company fails to meet certain SEC filing requirements and file and maintain for at least one year a registration statement for the resale of the shares of common stock underlying the Preferred Stock. Because certain of these features are outside of the Company's control, the Company has classified the Preferred Stock outside of permanent equity.

Each share of Preferred Stock is convertible into 10 shares of common stock. The conversion price is equal to $45.57 and is subject to adjustment based on standard anti-dilution provisions. Holders of Preferred Stock are not entitled to cumulative dividends, are not entitled to vote on matters submitted to common stockholders and have a liquidation preference over common stockholders equal to the greater of the original purchase price, plus declared and unpaid Preferred Stock dividends, and the amount that would be payable in respect of common stock assuming the Preferred Stock converted immediately prior to the liquidation. The Company recognized a beneficial conversion feature of approximately $24.1$392 million, ~~that was recorded within additional paid-in capital and accumulated deficit as the Preferred Stock issuance is only contingently redeemable and convertible at any time at the option of the holder.~~

respectively, under its various At Market Issuance Sales agreements.

~~Note 10 – Stockholders' Equity (Deficit)~~

In June 2020, in advance of David M. Mott joining the Company’s Board of Directors, the Company agreed to sell 32,916 shares of common stock to him at a purchase price of $45.57 per share, reflecting the closing price of the Company’s common stock on the trading date prior to the date the parties’ agreement regarding the sale, for total gross proceeds of $1.5 million. Mr. Mott joined the Company’s Board of Directors later in the same month.

~~In May 2020,~~2021, the Company entered into an At Market Issuance Sales Agreement ~~("May 2020~~(the "June 2021 Sales Agreement"), which allows it to issue and sell up to ~~$250~~$500 million in gross proceeds of shares of its common ~~stock. During the nine months ended September 30, 2020, the Company sold 2.8 million shares of common~~ stock, under the May 2020 Sales Agreement resulting in $160.3 million in net proceeds (this amount excludes $3.9 million received in the fourth quarter of 2020 for shares traded in late September 2020). From October 1, 2020 through November 3, 2020, the Company sold 0.7 million shares of common stock resulting in $74.1 million in net proceeds, leaving $8.7 million remaining under the May 2020 Sales Agreement.

~~In March 2020, the Company entered into an~~and terminated its existing At Market Issuance Sales ~~Agreement (“March 2020 Sales Agreement”), which allowed it to issue and sell up to $150 million in gross proceeds~~agreement. As of ~~its common stock. During the six months ended~~ June 30, ~~2020, the Company~~2021, 0 shares had been sold ~~8.6 million shares of common stock~~ under the ~~March 2020~~June 2021 Sales ~~Agreement resulting in $148.1 million in net proceeds. The March 2020 Sales Agreement was fully utilized at that time.~~

In January 2020, the Company entered into an At Market Issuance Sales Agreement ("January 2020 Sales Agreement"), which allowed it to issue and sell up to $100 million in gross proceeds of its common stock. During the first quarter of 2020, the Company sold 10.5 million shares of common stock under the January 2020 Sales Agreement resulting in $98.7 million in net proceeds. The January 2020 Sales Agreement was fully utilized at that time.

In December 2018, the Company entered into an At Market Issuance Sales Agreement (“December 2018 Sales Agreement”), which allowed it to issue and sell up to $100 million in gross proceeds of its common stock. During the nine months ended September 30, 2019, the Company sold 3.6 million shares of common stock under the December 2018 Sales Agreement, of which 1.7 million shares of common stock were sold in the first quarter of 2019, resulting in $29.3 million in net proceeds. In January 2020, the Company sold 7.2 million shares of common stock under the December 2018 Sales Agreement resulting in $38.5 million in net proceeds. The December 2018 Sales Agreement was fully utilized at that time.

In December 2017, the Company entered into an At Market Issuance Sales Agreement (“December 2017 Sales Agreement”), which allowed it to issue and sell up to $75 million in gross proceeds of its common stock. During the three months ended March 31, 2019, the Company sold 2.5 million shares of common stock under the December 2017 Sales

Agreement.

~~Table of Contents~~

~~Agreement resulting in $37.9 million in net proceeds. The December 2017 Sales Agreement was fully utilized at that time.~~

Note 119 – Stock-Based Compensation

~~Stock Options~~

Equity Plans

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

The 2015 Plan authorizes the issuance of up to ~~10,900,000~~12.4 million shares of common stock under equity awards granted under the 2015 Plan, ~~which includes~~including an increase of ~~7,100,000~~1.5 million shares approved for issuance under the 2015 Plan at the Company's ~~2020~~2021 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.

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

The 2015 Plan permits and the 2005 Plan permitted the grant of stock options (including incentive stock options), restricted stock, stock appreciation rights and restricted stock units. In addition, under the 2015 Plan, unrestricted stock, stock units and performance awards may be granted. Stock options and stock appreciation rights generally have a maximum term of ~~10 year~~sten years and may be or were granted with an exercise price that is no less than 100% of the fair market value of the Company's common stock at the time of grant. Grants of stock options are generally subject to vesting over periods ranging from one to four years.

Stock Options and Stock Appreciation Rights

The following is a summary of stock options and ~~stock appreciation rights~~SARs activity under the 2015 Plan and 2005 Plan for the ~~nine~~six months ended ~~September~~June 30, ~~2020:~~

2015 Plan

2005 Plan




Weighted-



Weighted-

Average

Average

Stock

Exercise

Stock

Exercise

Options

Price

Options

Price
Outstanding at January 1, 2020

3,388,750

$
35.64

501,780

$
64.19
Granted

3,110,566

$
31.16

—

$
—
Exercised

(874,586)

$
31.08

(189,378)

$
44.14
Canceled

(80,366)

$
50.29

(23,329)

$
51.92
Outstanding at September 30, 2020

5,544,364

$
33.66

289,073

$
78.32
Shares exercisable at September 30, 2020

771,002

$
86.28

289,073

$
78.32
Shares available for grant at September 30, 2020

2,814,405

~~In 2019, the Company granted 192,400 stock appreciation rights, with a weighted-average exercise price of $5.95, under the 2015 Plan.~~

Additionally, in 2019, due to limitations on the equity awards available under the 2015 Plan, the Company granted to certain employees 1,014,200 stock options, with a weighted-average exercise price of $5.95, under the 2015 Plan that were subject to approval of an increase in the number of shares under the 2015 Plan at the Company's 2020 annual meeting of stockholders. Furthermore, in April 2020, due to limitations on the equity awards available under the 2015 Plan, the Company granted to all of its employees collectively 2,501,600 stock options, with a weighted-average exercise price of $19.08, and 326,050 restricted stock units under the 2015 Plan that include a performance requirement related to its NVX-CoV2373 program that were also subject to approval of an increase in the number of shares under the 2015 Plan at the Company's 2020 annual meeting of stockholders. Since the proposal to increase the number of shares under the 2015 Plan was approved at the Company’s 2020 annual meeting of stockholders, as discussed in the “~~Stock Options~~~~” section above, the Company began to record stock-based compensation expense for these awards at that time.~~

2021:


	2015 Plan			2005 Plan
	Stock Options and SARs	Weighted-Average Exercise Price		Stock Options	Weighted-Average Exercise Price
Outstanding at January 1, 2021	5,420,463	$	38.05	214,186	$	88.11
Granted	47,458	$	148.49	0	$	0
Exercised	(598,441)	$	44.14	(35,401)	$	106.49
Canceled	(50,881)	$	121.33	0	$	0
Outstanding at June 30, 2021	4,818,599	$	37.50	178,785	$	84.47
Shares exercisable at June 30, 2021	692,187	$	70.17	178,785	$	84.47
Shares available for grant at June 30, 2021	2,360,263

~~Table of Contents~~

The fair value of stock options granted under the 2015 Plan was estimated at the date of grant ~~or the date upon which the 2015 Plan was approved by the Company’s stockholders for stock options discussed above~~ using the Black-Scholes option-pricing model with the following assumptions:

Table of Contents

Three Months Ended

Nine Months Ended

September 30,

September 30,


2020

2019

2020

2019

Weighted average Black-Scholes fair value of stock options and SARs granted

$102.41

$4.91

$78.78

$5.42

Risk-free interest rate

0.2%-0.4%

1.5%-1.6%

0.2%-1.5%

1.5%-2.6%

Dividend yield

0%

0%

0%

0%

Volatility

135.4%-152.2%

128.0%-133.8%

116.0%-152.2%

111.6%-133.8%

Expected term (in years)

4.0-5.3

4.0-4.4

4.0-7.6

4.0-4.5

Expected forfeiture rate

0%

0%

0%

0%


	Three Months Ended June 30,		Six Months Ended June 30,
	2021	2020	2021	2020
Weighted average Black-Scholes fair value of stock options granted	$166.66	$77.41	$131.66	$76.99
Risk-free interest rate	0.6%-1.1%	0.3%-0.6%	0.5%-1.1%	0.3%-1.5%
Dividend yield	0%	0%	0%	0%
Volatility	126.2%-142.0%	116.0%-151.5%	124.7%-142.0%	116.0%-151.5%
Expected term (in years)	4.1-6.1	3.9-7.6	4.1-6.1	3.9-7.6

The total aggregate intrinsic value and weighted-average remaining contractual term of stock options and ~~stock appreciation rights~~SARs outstanding under the 2015 Plan and 2005 Plan as of ~~September~~June 30, ~~2020~~2021 was ~~$446.5~~approximately $865 million and ~~8.5~~8.1 years, respectively. The total aggregate intrinsic value and weighted-average remaining contractual term of stock options and ~~stock appreciation rights~~SARs exercisable under the 2015 Plan and 2005 Plan as of ~~September~~June 30, ~~2020~~2021 was ~~$43.3~~approximately $121 million and ~~5.3~~5.5 years, respectively. 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 ~~stock appreciation rights)~~SARs) that would have been received by the holders had all stock option and ~~stock appreciation rights~~SAR holders exercised their stock options and stock appreciation rights on ~~September~~June 30, ~~2020.~~2021. 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 vesting of restricted stock awards for the ~~nine~~six months ended ~~September~~June 30, 2021 and 2020 ~~and 2019~~ was ~~$164.3~~approximately $115 million and ~~$0.1~~$8 million, respectively.

Employee Stock Purchase Plan

The Employee Stock Purchase Plan, as amended (the “ESPP”), was approved at the Company's annual meeting of stockholders in June 2013. The ESPP currently authorizes an aggregate of 600,000 shares of common stock to be purchased. The ESPP allows employees to purchase shares of common stock of the Company at each purchase date through payroll deductions of up to a maximum of 15% of their compensation, at 85% of the lesser of the market price of the shares at the time of purchase or the market price on the beginning date of an option period (or, if later, the date during the option period when the employee was first eligible to participate). As of ~~September~~June 30, ~~2020,~~2021, there were ~~255,596~~212,876 shares available for issuance under the ESPP.

The ESPP is considered compensatory for financial reporting purposes. As such, the fair value of ESPP shares was estimated at the date of grant using the Black-Scholes option-pricing model with the following assumptions:


	Three Months Ended June 30,		Six Months Ended June 30,
	2021	2020	2021	2020
Range of Black-Scholes fair values of ESPP shares granted	$128.70-$238.85	$2.87-$21.80	$128.70-$238.85	$2.57-$35.00
Risk-free interest rate	0.1%	1.5%-2.6%	0.1%	1.5%-2.6%
Dividend yield	0%	0%	0%	0%
Volatility	120.4%-159.4%	66.6%-150.9%	120.4%-159.4%	66.6%-154.4%
Expected term (in years)	0.5-2.0	0.5-2.0	0.5-2.0	0.5-2.0

Three Months Ended

Nine Months Ended

September 30,

September 30,


2020

2019

2020

2019

Range of Black-Scholes fair values of ESPP shares granted

$3.08-$92.67

$2.57-$35.00

$2.57-$92.67

$2.57-$35.00

Risk-free interest rate

0.2%-2.5%

1.3%-2.6%

0.2%-2.6%

1.2%-2.6%

Dividend yield

0%

0%

0%

0%

Volatility

77.5%-189.7%

59.7%-171.6%

66.6%-189.7%

52.2%-171.6%

Expected term (in years)

0.5-2.0

0.5-2.0

0.5-2.0

0.5-2.0

Expected forfeiture rate

0%

0%

0%

0%

Table of Contents

Restricted Stock Units

The following is a summary of restricted stock units activity for the ~~nine~~six months ended ~~September~~June 30, ~~2020:~~

2021:


	Number of Shares	Per Share Weighted- Average Fair Value
Outstanding and Unvested at January 1, 2020	1,044,980	$	72.59
Restricted stock units granted	134,099	$	178.71
Restricted stock units vested	(66,457)	$	79.20
Restricted stock units forfeited	(17,023)	$	128.59
Outstanding and Unvested at June 30, 2021	1,095,599	$	84.30

Per Share

Weighted-

Number of

Average

Shares

Fair Value
Outstanding and Unvested at January 1, 2020

1,102,311

$
5.95
Restricted stock units granted

508,854

$
82.02
Restricted stock units vested

(781,812)

$
6.74
Restricted stock units forfeited

(39,324)

$
45.73
Outstanding and Unvested at September 30, 2020

790,029

$
52.17

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


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Research and development	$	24,779	$	4,098	$	48,569	$	6,005
General and administrative	28,344		3,834		57,614		5,892
Total stock-based compensation expense	$	53,123	$	7,932	$	106,183	$	11,897

Three Months Ended

Nine Months Ended


September 30,

September 30,


2020

2019

2020

2019

Research and development

$
28,730

$
723

$
34,735

$
6,347

General and administrative

36,975

1,901

42,867

6,456

Total stock-based compensation expense

$
65,705

$
2,624

$
77,602

$
12,803

As of ~~September~~June 30, ~~2020,~~2021, there was approximately ~~$311~~$230 million of total unrecognized compensation expense related to unvested stock options, SARs, restricted stock units and the ESPP. The increase in unrecognized compensation expense is primarily due to the ~~awards that were subject to approval of an increase in the number of shares under the 2015 Plan at the Company's 2020 annual meeting of stockholders, as discussed in the "~~~~Stock Options~~~~" section above, and the~~ significant increase in the Company's common stock price starting in 2020. This unrecognized non-cash compensation expense is expected to be recognized over a weighted-average period of ~~1.4 years,~~one year, and will be allocated between research and development and general and administrative expenses accordingly. This estimate does not include the impact of other possible stock-based awards that may be made during future periods and awards that require approval by the stockholders.

Note 1210 –Contingencies

In February 2021, a Novavax stockholder filed a derivative complaint against certain members of the Company's board of directors and certain members of senior management in the Delaware Court of Chancery with Novavax as a nominal defendant. The plaintiff challenges two sets of 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 certain board members or members of senior management allegedly possessed undisclosed positive material information concerning the Company. The complaint asserts claims for breach of fiduciary duty, waste, and unjust enrichment. The plaintiff seeks an award of damages to the Company, an order rescinding the April 2020 and June 2020 awards or requiring disgorgement, and an award of attorneys’ fees incurred in connection with the litigation. On May 10, 2021, the defendants moved to dismiss the complaint in its entirety. On June 17, 2021, the Company’s stockholders voted FOR ratification of the April 2020 awards and ratification of the June 2020 awards. Details of the ratification proposals are set forth in the Company’s Definitive Proxy Statement filed with the SEC on May 3, 2021. The results of the vote were disclosed in the Company’s Current Report on Form 8-K filed with the SEC on June 24, 2021. Should the plaintiff elect to move forward with his claims, the defendants intend to move for summary judgment on ratification grounds while continuing to pursue dismissal. As such, the Company is not expecting any material estimable financial impact of the plaintiff's claim.

Note 11 – ~~U.S. Government Agreements, Grants~~Revenue

During the three and ~~Licenses~~

~~Operation Warp Speed~~

~~In July~~six months ended June 30, 2021 and 2020, the Company ~~entered into a Project Agreement (the “Project Agreement”)~~performed research and development under government contracts and grant, license and clinical development agreements. The Company's revenue primarily

Table of Contents

consisted of funding under U.S. government contracts and the Company's funding arrangement with CEPI to advance the clinical development and manufacturing of NVX-CoV2373.

The Company recorded revenue as follows (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Government contracts
OWS	$	239,493	$	0	$	603,053	$	0
DoD	1,041		311		20,185		311
Grants and other
CEPI	31,955		34,246		93,516		36,504
BMGF	0		159		2,628		414
Other	2,071		822		2,407		1,686
Royalties	23,457		0		23,457		0
Total	$	298,017	$	35,538	$	745,246	$	38,915

Government Contracts and Grants

The Company’s U.S. government contracts comprise an agreement with Advanced Technology International ~~Inc.~~ (“ATI”), the Consortium Management Firm acting on behalf of the Medical CBRN Defense Consortium in connection with ~~OWS. OWS is~~the partnership formerly known as Operation Warp Speed (“OWS”) and a ~~partnership among components of the U.S. Department of Health and Human Services and~~contract with the U.S. Department of Defense ~~working to accelerate~~(the “DoD”). As of June 30, 2021, the development, manufacturing and distribution of COVID-19 vaccines, therapeutics and diagnostics. The Project Agreement relates to the Base Agreement the Company entered into with ATI in June 2020 (the “Base Agreement”, together with the Project Agreement, the “OWS Agreement”). Under theCompany's OWS ~~Agreement, the Company is entitled to receive funding of~~agreement was fully funded up to ~~$1.6~~$1.75 billion to support certain activities related to the development of NVX-CoV2373 and the manufacture and delivery of 100 million doses of the vaccine candidate to the U.S. Government. Pursuant to the OWS Agreement, the Company is currently authorized to make expenditures or incur obligations of up to $800 million, and the parties have committed to negotiate a definitive agreement by December 2020 that provides for aggregate costs payable to the Company up to but not in excess of the approved budget of $1.6 billion. If the parties have not agreed on definitive pricing or other terms by December 2020, or any extension of such target date granted by thegovernment. The U.S. ~~Government, the U.S. Government~~government has ~~the discretion to unilaterally determine a fair and reasonable price for completion of the definitive agreement.~~

~~The OWS Agreement requires~~recently instructed the Company to ~~conduct certain clinical, regulatory and other activities, including a pivotal Phase 3 clinical trial to determine the safety and efficacy of NVX-CoV2373, and to manufacture and deliver to~~prioritize alignment with the U.S. ~~Government 100 million doses of~~Food and Drug Administration on the ~~vaccine candidate. Funding~~Company's analytic methods before conducting additional U.S. manufacturing and further indicated that the U.S. government will not fund additional U.S. manufacturing until such agreement has been made. The U.S. government also instructed the Company to proceed with work under the OWS Agreement related to all other activities, including ongoing clinical trials and nonclinical studies, regulatory interactions, analytics/assays and characterization of manufactured vaccine and project management. The Company’s revenue from CEPI comprises grant and forgivable loan funding. The latter is ~~payable~~repayable if the proceeds from the sales of NVX-CoV2373 to one or more third parties cover the Company’s costs of manufacturing the vaccine, not including manufacturing costs funded by CEPI.

Collaboration and License Agreements

In February 2021, the Company finalized an expanded collaboration and license agreement with SK bioscience to manufacture and commercialize NVX-CoV2373 for sale to the ~~Company for various development, clinical trial, manufacturing, regulatory and other activities. The OWS Agreement contains terms and conditions that are customary for U.S. Government agreements~~government of ~~this nature, including provisions giving the U.S. Government the right to terminate the Base Agreement and/or the Project Agreement based on a~~

~~Table of Contents~~

~~reasonable determination that the funded project will not produce beneficial results commensurate~~Korea. Concurrently, SK bioscience finalized an advance purchase agreement with the ~~expenditure of resources and that termination would be in the U.S. Government’s interest. If the Project Agreement is terminated prior~~Korean government to completion, the Company is entitled to be paid for work performed and costs or obligations incurred prior to termination and consistent with the terms of the OWS Agreement. The performance period under the Project Agreement extends from July 2020 through December 2021, subject to early termination by the U.S. Government or extension by mutual agreement of the parties. During the three months ended September 30, 2020, the Company recognized revenue from the OWS Agreement of $39.4 million.

~~U.S. Department of Defense~~

In June 2020, the Company entered into a letter contract (the “DoD Contract”) with the DoD Joint Program Executive Office for Chemical, Biological, Radiological and Nuclear Defense (“JPEO-CRBND-EB”), under which JPEO-CRBND-EB agreed to provide funding of up to $60.0 million to the Company to support the manufacture of NVX-CoV2373. Under the DoD Contract, the Company is currently authorized to make expenditures or incur obligations up to $30.0 million, and the Company and the DoD have committed to negotiate a definitive cost-reimbursement contract by December 2020 that provides for costs payable by the DoD not to exceed $60.0 million. If the Company and the DoD have not agreed on pricing or terms by December 2020, or any extension of such target date granted by the DoD, the DoD has the discretion to determine a reasonable price or fee for completion of the contract.

~~Under the DoD Contract, the Company is expected to deliver 10~~supply 40 million doses of NVX-CoV2373 to the ~~DoD.~~Republic of Korea beginning in 2021. The 10agreement is in addition to the Company's existing manufacturing arrangement with SK bioscience entered into in August 2020. Under the collaboration agreement, SK bioscience was granted an exclusive license to develop, manufacture and commercialize NVX-CoV2373 in the Republic of Korea. SK bioscience expanded its capacity to manufacture the antigen component of NVX-CoV2373 for use in the final drug product globally, including product distributed by the COVAX Facility. SK bioscience will also purchase a certain quantity of NVX-CoV2373 directly from the Company, subject to approval by relevant regulatory authority, and sufficient doses of Matrix-M™ adjuvant to manufacture the remainder of the 40 million doses of NVX-CoV2373 ~~may be used in Phase 2/3 clinical trials or under an Emergency Use Authorization, if approved by the U.S. Food and Drug Administration (“FDA”). Pursuant~~it expects to sell to the ~~DoD Contract, if NVX-CoV2373 is approved by~~Korean government. SK bioscience will pay the ~~FDA,~~Company a tiered royalty in the ~~DoD is entitled~~low to ~~most-favored customer status for a period~~middle double-digit range on the sale of ~~five years from~~NVX-CoV2373. The Company recognized royalties of $23.5 million during the ~~award~~three and six months ended June 30, 2021 related to SK bioscience's sale of the ~~DoD Contract, meaning that~~antigen component of NVX-CoV2373 to the Company cannot give any comparable commercial client in the United States more favorable pricing than the DoD under similar transactional circumstances. During the three months and nine months ended September 30, 2020, the Company recognized revenue from the DoD Contract of $3.6 million and $3.9 million, respectively.

~~Coalition for Epidemic Preparedness Innovations~~

Korean government. In May ~~2020,~~2021, the Company entered ~~into~~ a ~~restated funding agreement which was modified in November 2020 (the “CEPI Funding Agreement”~~non-binding Memorandum of Understanding ("MOU") with ~~CEPI, under which CEPI agreed~~the Ministry of Health and Welfare of Korea and SK bioscience to ~~provide funding of up to $399.5 million to the Company to support~~explore further cooperation in the development and manufacturing of NVX-CoV2373, in addition to the $3.9 million of funding CEPI provided to the Company pursuant to an initial funding agreement entered into between the Company and CEPI in March 2020. The CEPI Funding Agreement provides up to $257.0 million in Grant Funding and up to $142.5 million in Forgivable Loan Funding, which loans are in the form of one or more forgivable no interest term loans in order to prepay certain manufacturing activities and are not subject to restrictive or financial covenants. The Company is only required to repay any CEPI Forgivable Loan Funding under certain circumstances to the extent it sells doses of NVX-CoV2373, produced with the funds provided and included in such loan(s), to a third party.

vaccines, including NVX-CoV2373. Under the terms of the CEPI Funding Agreement, among other things, the Company and CEPI agreed on the importance of global equitable access to any vaccines produced pursuant to the CEPI Funding Agreement. Any such vaccines, if approved, are expected to be procured and allocated through global mechanisms under discussion as part of the Access to COVID-19 Tools (ACT) Accelerator, an international initiative launched by the World Health Organization (“WHO”), Gavi the Vaccine Alliance, CEPI and other global non-governmental organizations and governmental leaders in 2020.

~~Table of Contents~~

The scope and continuation of the CEPI Funding Agreement may be modified depending on ongoing developments of the COVID-19 outbreak and the success of NVX-CoV2373 relative to other third-party COVID-19 vaccine candidates or treatments. If the WHO, CEPI or a regulatory authority having jurisdiction over a clinical trial of NVX-CoV2373 determines that a third-party product candidate has substantially greater potential than a Company vaccine product, the Company must cease its clinical trial in the relevant region, and will be reimbursed for any costs incurred as a result thereof. In addition, CEPI has the right to unilaterally terminate the CEPI Funding Agreement if CEPI reasonably determines that (i) there are material safety, regulatory or ethical issues with the development of NVX-CoV2373, (ii) NVX-CoV2373 development should be limited in scope or terminated, (iii) the Company becomes unable to discharge its obligations under the agreement, (iv) the Company fails to meet certain milestones, or (v) the Company commits fraud or a financial irregularity.

~~Bill & Melinda Gates Foundation~~

~~In support of the Company's development of ResVax~~^TM, in September 2015, the Company entered into the grant agreement with BMGF (the “BMGF Grant Agreement”), under which it was awarded a grant totaling up to $89.1 million (the “Grant”). The Grant supports ResVax development activities, including the Company's global Phase 3 clinical trial in pregnant women in their third trimester and other regulatory efforts. Unless terminated earlier by BMGF, the BMGF Grant Agreement will continue in effect until the end of 2021. The Company concurrently entered into a Global Access Commitments Agreement (“GACA”) with BMGF as a part of the BMGF Grant Agreement. Under the terms of the GACA, among other things,MOU, the Company agreed to ~~make a certain amount~~potentially explore the development of ResVax available and accessible at affordable pricing to people in certain low- and middle-income countries. Unless terminated earlier by BMGF, the GACA will continue in effect until the later of 15 years from its effective date, new vaccine products with SK bioscience, including COVID-19 variant vaccines, and/or ~~10 years after the first sale of a product under defined circumstances. The term of the GACA may be extended in certain circumstances, by a period of up to~~ an influenza/COVID-19 combination vaccine.

~~five~~ ~~additional years.~~

In ~~July 2020,~~February 2021, the Company ~~entered into~~finalized a ~~grant~~collaboration agreement ~~with BMGF (the “BMGF SA Grant Agreement”) under which it was awarded a grant of $15.0 million to support a Phase 2b clinical trial~~previously announced in ~~the Republic of South Africa to evaluate the safety, immunogenicity, and potential efficacy of NVX-CoV2373.~~

Payments received in advance that are related to future performance are deferred and recognized as revenue when the research and development activities are performed. Cash payments received under the BMGF Grant Agreement and the BMGF SA Grant Agreement are restricted as to their use until expenditures contemplated in the agreements are incurred. During the nine months ended September 30, 2020, the Company recognized revenue from the BMGF Grant Agreement of less than $0.1 million and $0.4 million, respectively, and has recognized approximately $82 million in revenue since the inception of the agreement. During the three months ended September 30, 2020, the Company recognized revenue from the BMGF SA Grant Agreement of $2.4 million.

~~Serum Institute of India Private Limited~~

In July 2020, the Company entered into a supply and license agreement with Serum Institute of India Private Limited (“SIIPL”), as amended by the parties in September 2020, under which the Company granted exclusive and non-exclusive licenses to SIIPL for the development, co-formulation, filling and finishing, registration and commercialization by SIIPL of NVX-CoV2373. SIIPL has agreed to purchase Matrix-M adjuvant from the Company and the Company has granted SIIPL a non-exclusive license to manufacture the antigen drug substance component of NVX-CoV2373 in SIIPL’s licensed territory solely for use in the manufacture of NVX-CoV2373 under the terms of the agreement. The parties will equally split the revenue from sale of NVX-CoV2373 by SIIPL in its licensed territory, net of agreed costs. The Company granted to SIIPL (i) an exclusive license in India during the agreement, and (ii) a non-exclusive license (a) during the “Pandemic Period” (as declared by the World Health Organization), in all countries other than specified countries designated by the World Bank as upper-middle or high-income countries, with respect to which the Company retains rights, and (b) after the Pandemic Period, in only those countries designated as low or middle-income by the World Bank. Following the Pandemic Period, the Company may notify SIIPL of any bona fide opportunities for the Company

~~Table of Contents~~

to license NVX-CoV2373 to a third party in such low and middle-income countries and SIIPL would have an opportunity to match or improve such third party terms, failing which, the Company would have the discretion to remove one or more non-exclusive countries from SIIPL’s license.

~~Takeda Pharmaceutical Company Limited~~

In August 2020, ~~the Company announced a partnership~~ with Takeda Pharmaceutical Company Limited (“Takeda”) for the exclusive development, manufacturing and commercialization of NVX-CoV2373 in Japan. Under the agreement, the Company will transfer technology and supply the Matrix-M™ adjuvant to Takeda, which will manufacture the antigen component of NVX-CoV2373. Takeda will receive funding from the Government

Table of Contents

of Japan’s Ministry of Health, Labour and Welfare to support the technology transfer, establishment of infrastructure and scale-up of manufacturing. The Company will be entitled to receive ~~payments~~royalties based on the achievement of certain development and commercial milestones, as well as on a portion of ~~proceeds~~net profits from the sale of the vaccine.

~~UK SARS-CoV-2~~

Vaccine Supply ~~Agreement~~

~~In October 2020,~~Agreements

During the six months ended June 30, 2021, the Company entered into ~~a SARS-CoV-2 vaccine supply~~various Advanced Purchase Agreements ("APAs"), including an agreement with Her Majesty the Queen in Right of Canada as represented by the Minister of Public Works and Government Services to supply 52 million doses of NVX-CoV2373. The ~~Secretary of State~~Company will submit an application for ~~Business, Energy~~regulatory approval in Canada following its first submission for regulatory approval in another priority market and ~~Industrial Strategy, acting on behalf~~the Canada authority will provide reasonable assistance to the Company with obtaining such regulatory approval. As part of the ~~United Kingdom (“UK”) government (the “Authority”) under which~~agreement, Canada will have the ~~Authority agreed~~option to purchase up to 60an additional 24 million doses of ~~NVX-CoV2372, plus such additional orders as~~NVX-CoV2373. In February 2021, the ~~Authority may make from time~~Company reached a MOU with the Canadian government to ~~time.~~produce NVX-CoV2373 in Canada. The Company ~~agreed~~plans to ~~continue to conduct~~produce NVX-CoV2373 at the National Research Council’s Biologics Manufacturing Centre in Montreal once both the vaccine candidate and the facility receive Health Canada approvals.

In May 2021, the Company finalized an APA with Gavi, the Vaccine Alliance ("Gavi") building upon its ~~UK-based Phase 3 clinical trial of NVX-CoV2373, establish a committed supply chain for NVX-CoV2373~~MOU previously announced in ~~the UK and seek regulatory approval for NVX-CoV2373 in the UK.~~

~~Pursuant to~~February 2021. Under the terms of the agreement, 1.1 billion doses of NVX-CoV2373 are to be made available to countries participating in the COVAX Facility, which was established to allocate and distribute vaccines equitably to participating countries and economies. The Company ~~agreed~~expects to ~~supply the initial 60~~manufacture and distribute 350 million doses of NVX-CoV2373 to countries participating under the ~~Authority on~~COVAX Facility. Under a ~~priority supply basis~~separate purchase agreement with Gavi, Serum Institute of India Private Limited ("SIIPL") is expected to manufacture and deliver the balance of the 1.1 billion doses of NVX-CoV2373 for low- and middle-income countries participating in the COVAX Facility. The Company expects to deliver doses with antigen and adjuvant manufactured at facilities directly funded under the Company's funding agreement with CEPI. The Company expects to supply ~~any~~significant doses that Gavi would allocate to low-, middle- and high-income countries, subject to certain limitations, utilizing a tiered pricing schedule and Gavi may prioritize such doses to low- and middle- income countries, at lower prices. Additionally, the Company may provide additional ~~orders~~doses of NVX-CoV2373, to the ~~Authority on~~extent available from CEPI funded manufacturing facilities, in the event that SIIPL cannot materially deliver expected vaccine doses to the COVAX Facility. Together with SIIPL, the Company expects to initiate delivery of doses following receipt of appropriate regulatory authorizations. Under the agreement, the Company received an ~~equal priority basis with other third parties. The Authority has certain termination rights, or rights~~upfront payment from Gavi of $350 million during the second quarter of 2021 and expects to ~~reduce or cancel orders,~~receive an additional payment of $350 million if the ~~Authority's supply~~Company secures emergency use listing for NVX-CoV2373 by the World Health Organization ("WHO").

During the six months ended June 30, 2021, changes in the Company's accounts receivables, unbilled services and deferred revenue balances were as follows (in thousands):


	December 31, 2020		Additions		Deductions		June 30, 2021
Accounts receivable	$	262,012	$	1,309,924	$	(1,521,947)	$	49,989
Unbilled services	0		499,239		(477,865)		21,374
Deferred revenue	273,228		1,192,483		(245,638)		1,220,073

As of June 30, 2021, the deferred revenue of $1.2 billion primarily comprised of approximately $1.1 billion related to upfront payments under APAs.

The aggregate amount of the transaction price allocated to performance obligations that were unsatisfied (or partially unsatisfied) was $7.0 billion as at June 30, 2021. The Company expects to fulfil its unsatisfied performance obligations within 12 months.

Note 12 – Subsequent Events

In August 2021, the Company announced that it finalized the terms of an APA with the European Commission, which the parties expect to execute during the third quarter of 2021, for the purchase of up to 100 million initial doses of NVX-CoV2373, ~~is materially interrupted, delayed or deferred.~~

~~Note 13~~ – ~~CARES Act~~

~~On March 27, 2020, Congress enacted~~with the ~~Coronavirus Aid, Relief and Economic Security Act ("CARES Act") to provide certain relief as a result~~option of the ~~COVID-19 pandemic. Amongst other items,~~European Commission to purchase an additional 100 million doses through 2023.

In August 2021, the ~~CARES Act lifts certain interest expense deduction limitations originally imposed by~~Company filed regulatory submissions in partnership with SIIPL for emergency use authorization in multiple markets. Regulatory submissions were filed with the ~~Tax Cuts~~Drugs Controller General of India, as well as regulatory agencies in Indonesia and ~~Jobs Act of 2017. The enactment of~~ the ~~CARES Act did not result in any material adjustments~~Philippines. In addition to these filings, the Company expects to file a submission to the ~~Company's income tax provision or net deferred tax assets~~WHO for ~~the nine months ended September 30, 2020.~~

~~Note 14~~ – ~~Subsequent Events~~

~~In October 2020, the Company entered into a lease for approximately 170,000 square feet~~emergency use listing in August of ~~space for premises located at 700 Quince Orchard Road Gaithersburg, MD. The Company intends to use the premises for manufacturing, research and development and offices. The term~~2021.

Table of the lease is approximately 15 years with options to extend the lease. The lease provides for an annual base rent of $5.8 million that is subject to future rent increases, and obligates the Company to pay building operating costs. The Landlord will contribute an aggregate of $30.6 million toward tenant improvements.

Contents

In addition, in October 2020, the Company purchased a parcel of land at 14 Firstfield Road, Gaithersburg, MD that the Company plans to develop in the future to accommodate growth of the Company. The purchase price of the parcel of land was $14.5 million.

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 about expectations, beliefs, plans, objectives, assumptions or future events or performance of Novavax, Inc. (“Novavax,” together with its wholly owned subsidiaries Novavax AB and Novavax CZ, the “Company,” “we” or “us”) are not historical facts and are forward-looking statements. Such forward-looking statements include, without limitation, statements about our capabilities, goals, expectations regarding future revenue and expense levels and capital raising activities; our operating plans and prospects; potential market sizes and demand for our product candidates; the efficacy, safety and intended utilization of our product candidates; the development of our clinical-stage product candidates and our recombinant vaccine and adjuvant technologies; the development of our

~~Table of Contents~~

preclinical product candidates; the conduct, timing and potential results from clinical trials and other preclinical studies; plans for and potential timing of regulatory filings; our expectation of manufacturing capacity, timing, production and delivery for NVX-CoV2373; our expectations with respect to the anticipated ongoing development and potential commercialization or licensure of NVX-CoV2373 and ~~NanoFlu™~~NanoFlu™; the expected timing and content of regulatory actions; funding from the U.S. government partnership formerly known as Operation Warp Speed (“OWS”), the U.S. Department of Defense (“DoD”) and the Coalition for Epidemic Preparedness Innovations (“CEPI”), and payments from the Bill & Melinda Gates Foundation (“BMGF”); funding under our advance purchase agreements and supply agreements; 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 to differ materially from those expressed or implied in the statements. Any or all of our forward-looking statements in this Quarterly Report may turn out to be inaccurate or materially different from actual results.

~~Risk factors discussed in this Quarterly Report, identified in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019, and those of which we are not currently aware,~~ could cause actual results or outcomes to differ materially from those expressed or implied in any forward-looking statements, ~~made by or on behalf of us,~~and, therefore, you should not place ~~undue~~considerable reliance on any such forward-looking statements. ~~We have included important factors that could cause results~~Such risks and uncertainties include, without limitation, challenges satisfying, alone or together with partners, various safety, efficacy, and product characterization requirements, including those related to ~~differ~~process qualification and assay validation, necessary to satisfy each applicable regulatory authority, like the U.S. Food and Drug Administration (“FDA”), World Health Organization (“WHO”), UK Medicines and Healthcare Products Regulatory Agency (“MHRA”), the European Medicines Agency (“EMA”), the Republic of Korea’s Ministry of Food and Drug Safety (“MFDS”), or Japan’s Ministry of Health, Labour and Welfare (“MHLW”); difficulty obtaining scarce raw materials; resource, including human capital and manufacturing capacity, constraints on our ability to pursue these regulatory pathways, alone or with partners, in ~~the cautionary statements included in this Quarterly Report, particularly those~~multiple jurisdictions simultaneously, leading to staggering of regulatory filings and potential regulatory actions; challenges meeting contractual requirements under agreements with multiple commercial, governmental, and other entities; and other risks and uncertainties identified in Part II, Item 1A “Risk Factors” of this Quarterly Report and in Part I, Item 1A “Risk Factors” of our Annual Report on Form ~~10-K. These and other risks~~10-K, which may ~~also~~ be detailed and modified or updated in ~~our reports and~~ other documents filed with the United States Securities and Exchange Commission (“SEC”) from time to ~~time.~~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.

Overview

~~We are~~

Novavax, Inc., together with our wholly-owned subsidiaries, Novavax AB and Novavax CZ, is a ~~late-stage~~ biotechnology company promoting improved global health through the discovery, development and commercialization of innovative vaccines to prevent serious infectious diseases and address urgent, global health needs. Our vaccine candidates, including both our coronavirus vaccine candidate ~~NVX-CoV2373,~~(“NVX-CoV2373”) and our seasonal quadrivalent influenza vaccine candidate (“NanoFlu™”), are genetically engineered, three-dimensional nanostructures of recombinant proteins critical to disease pathogenesis. We believe that our ~~protein-based~~protein-subunit-based candidates elicit differentiated immune responses that may be more efficacious than naturally occurring immunity or other ~~more traditional~~ vaccine approaches. ~~Our technology may be used to target a variety of infectious diseases. We are also developing proprietary immune stimulating saponin-based adjuvants at Novavax AB,~~Additionally, our ~~wholly owned Swedish subsidiary. Our lead~~Matrix-M™ adjuvant ~~Matrix-M™,~~ has been shown to enhance functional immune responses and has been well-tolerated in multiple clinical trials.

To date, we have formulated many of the vaccine candidates in our pipeline with our Matrix-M™ adjuvant, including NVX-CoV2373 and NanoFlu™.

Table of Contents

~~Product~~Near-term Clinical Development Pipeline


~~Program~~		~~Current Development Stage~~
~~Coronavirus~~
● ~~NVX-CoV2373~~⁽¹⁾⁽²⁾		~~Phase 3~~⁽³⁾
● ~~Middle East Respiratory Syndrome (“MERS”)~~		~~Preclinical~~
● ~~Severe Acute Respiratory Syndrome (“SARS”)~~		~~Preclinical~~

~~Seasonal Influenza~~
● ~~NanoFlu (Older Adults)~~⁽¹⁾		~~Pre-BLA~~

~~Respiratory Syncytial Virus~~ Our development pipeline encompasses vaccine candidates addressing therapeutic areas including coronavirus, seasonal influenza, respiratory syncytial virus (“RSV”)
● ~~ResVax~~⁽⁴⁾ ~~(Infants via Maternal Immunization)~~		~~Phase 3~~
● ~~Older Adults~~⁽¹⁾		~~Phase 2~~
● ~~Pediatrics~~		~~Phase 1~~

~~Combination Vaccines~~
● ~~NanoFlu/NVX-CoV2373~~⁽¹⁾		~~Preclinical~~
● ~~NanoFlu/RSV~~⁽¹⁾		~~Preclinical~~

~~Ebola Virus (“EBOV”)~~⁽¹⁾		~~Phase 1~~

~~(1)~~

~~Includes Matrix-M adjuvant~~

~~(2)~~

~~Supported by funding from OWS, DoD, CEPI and BMGF~~

~~(3)~~

~~Ongoing U.S. Phase 2 and South Africa Phase 2b; initiated UK Phase 3 in September 2020; initiation of U.S. Phase 3 expected by the end of November 2020~~

~~(4)~~

~~Supported by a grant from BMGF~~

~~A summary~~ and ~~status~~other emerging infectious diseases. At the forefront of our pipeline is NVX-CoV2373. We have advanced NVX-CoV2373 through two Phase 3 clinical trials, which have demonstrated high efficacy against the original COVID-19 strain and commonly circulating variants of COVID-19 with a favorable safety profile. We have also advanced our NanoFlu™ vaccine program through a Phase 3 clinical trial, which demonstrated positive top-line results and achieved statistical significance in key secondary endpoints. We continue to evaluate the viability of certain combination vaccines, including combinations of our NanoFlu™, NVX-CoV2373 and respiratory syncytial virus fusion (F) protein nanoparticle vaccine candidate (“RSV F Vaccine”).

We remain focused on bringing our NVX-CoV2373 vaccine candidate to market following global regulatory approvals. Through ongoing crossover and booster studies in our clinical trials, as well as the development of our COVID-19 variant strain vaccine candidates, we continue to collect data to characterize and optimize vaccine performance. We expect to leverage these clinical insights to advance our booster strategy given the evolving COVID-19 pandemic.

In addition to our COVID-19 clinical development, NanoFlu™ continues to be a priority for our team, especially as it relates to development of our NanoFlu™ / NVX-CoV2373 combination vaccine candidate (“qNIV/CoV2373”).

Although NVX-CoV2373 and NanoFlu™ are our near-term priorities, we remain optimistic that the additional programs ~~follows:~~

~~Coronavirus~~

~~Coronaviruses (“CoV”), so named~~in our pipeline, including our vaccine candidates for ~~their “crown-like” appearance,~~RSV and other emerging infectious diseases, present viable opportunities for future development.

The pipeline chart below summarizes the clinical and preclinical development programs that we are a large family of viruses, some of which are believed to have spread from animals to humans. These viruses cause human diseases such as MERS and SARS, and COVID-19, the disease resulting from the SARS CoV-2 coronavirus. COVID-19 first emerged in late 2019 in China, and, as of March 2020, the World Health Organization declared it a global pandemic. No vaccines proven to prevent COVID-19 have been approved for salefocusing on in the ~~U.S., United Kingdom (“UK”), Japan, or European Union, although a range~~near-term.

(1)Supported by funding from OWS, DoD, CEPI and BMGF

Table of ~~vaccine candidates are under development.~~

~~NVX-CoV2373~~

We have successfully produced NVX-CoV2373, designed to provide protection against SARS-CoV-2. We engineered NVX-CoV2373 from the genetic sequence of SARS-CoV-2 using our recombinant nanoparticle technology to generate the antigen derived from the coronavirus spike (S) protein. NVX-CoV2373 includes our proprietary Matrix-M adjuvant.

~~Clinical Development~~

~~In October 2020, we announced we expect to begin~~Contents

(2)Ongoing PREVENT-19, a Phase 3 clinical trial in the U.S. and ~~Mexico by~~Mexico; Ongoing PREVENT-19 pediatric expansion in the ~~end of November 2020. This pivotal~~U.S.; Ongoing Phase 3 clinical trial in the UK; Ongoing Phase 2b clinical trial in South Africa

(3)Reflects malaria vaccine candidate (“R21”) created by the University of Oxford and formulated with Matrix-M™

adjuvant; Ongoing Phase 3 clinical trial in Africa; R21 is licensed to Serum Institute of India Private Limited ("SIIPL"); Novavax will have commercial rights to sell and distribute R21 in certain countries, primarily in travelers' and military vaccine markets

(4)Reflects malaria transmission blocking vaccine candidate (“R0.6C”) manufactured by Statens Serum Institut; Ongoing Phase 1 clinical trial in the Netherlands to evaluate R0.6C, Matrix-M™ adjuvant and common aluminum hydroxide adjuvant

Matrix-M™ Adjuvant

Our proprietary Matrix-M™ adjuvant has demonstrated potent and well-tolerated efficacy by stimulating the entry of antigen presenting cells (“APCs”) into the injection site and enhancing antigen presentation in local lymph nodes, which in turn activates T-cell, B-cell, and APC populations, thereby boosting immune response. Our Matrix-M™ adjuvant has been shown to increase neutralizing antibodies and induces long-lasting memory B cells, which enhances B-cell immunity and recruits and increases the frequency of CD4+ and CD8+ T cells to enhance T-cell immunity in preclinical models. The potent immune-stimulating mechanism of action enables a lower dose of antigen required to achieve the desired immune response, ultimately contributing to increased supply and manufacturing capacity. These immune-boosting and dose-sparing capabilities contribute to the adjuvant’s highly unique profile. Our Matrix-M™ adjuvant is being ~~conducted~~evaluated in combination with ~~support~~several other vaccine antigens produced by other manufacturers.

Coronavirus

NVX-CoV2373 Clinical Development

We have evaluated NVX-CoV2373 in various preclinical and clinical trials, including two Phase 3 trials, one Phase 2b trial, and one Phase 1/2 trial. Through our clinical development program to date, we confirmed the use of a 5-microgram dose of NVX-CoV2373 with Matrix-M™ adjuvant for late-stage development. We have also collected data that indicates a reassuring safety profile and high levels of efficacy for NVX-CoV2373 against original COVID-19 strain and commonly circulating variants. A summary and status of our clinical development of NVX-CoV2373 follows:

PREVENT-19 Pediatric Expansion

In June 2021, we completed enrollment of the pediatric expansion of our PREVENT-19 Phase 3 trial in the U.S. that was initiated in April 2021. The pediatric expansion is a placebo-controlled study to evaluate efficacy, safety, and immunogenicity of NVX-CoV2373 in 2,248 adolescent participants aged 12 to 17 across up to 75 sites in the U.S. Participants will randomly receive either the vaccine candidate or placebo in two doses, administered 21 days apart. Two-thirds of participants will receive intramuscular injections of the vaccine and one-third will receive placebo. All primary doses have been administered and a blinded crossover is planned to take place in August 2021 to ensure that all trial participants receive active vaccine before the start of the 2021-2022 school year. Participants will be monitored for safety for up to two years following the final administered dose.

PREVENT-19 Phase 3 U.S. and Mexico

In June 2021, we announced results from the ~~U.S. Government through OWS. The~~final analysis of our PREVENT-19 Phase 3 trial ~~is expected to enroll up to 30,000 participants~~ in the U.S. and Mexico initiated in December 2020. The final analysis was conducted on events accrued prior to participants receiving crossover vaccine. In the final analysis, NVX-CoV2373 achieved its primary efficacy endpoint with ~~proportional representation among diverse populations most vulnerable to COVID-19 distributed across race/ethnicity, age~~an overall efficacy of 90.4% despite over half the illness cases being caused by Variants of Interest ("VoI") and Variants of Concern ("VoC"). Additionally, NVX-CoV2373 demonstrated 100% protection against moderate and severe disease, including those living with co-morbidities. In November 2020, we announced that the U.S. Food and Drug Administration’s (“FDA”) granted NVX-CoV2373 Fast Track designation, which is intended for products that treat serious or life-threatening diseases or conditions and that demonstrate the potential to address unmet medical needs for such diseases or conditions. The program is designed to facilitate development and expedite review of drugs to treat serious and life-threatening conditions so that approved products can reach the market expeditiously. Specifically, Fast Track designation facilitates meetings to discuss

caused by variants.

~~Table of Contents~~

all aspects of development to support licensure and provides the opportunity to submit sections of a U.S. biologics license application (“BLA”) on a rolling basis as data become available. This permits the FDA to review modules of the BLA as they are received instead of waiting for the entire BLA submission.

~~In September 2020, we initiated our first Phase 3 study in the UK, in partnership with the UK Government’s Vaccines Taskforce. The trial is~~PREVENT-19 was a randomized, placebo-controlled, observer-blinded ~~study~~trial to evaluate the efficacy, safety, and immunogenicity of NVX-CoV2373 in ~~subjects~~29,960 participants aged 18 ~~to 84 years. In October 2020, we expanded enrollment from 10,000 to 15,000 volunteers, some of whom have been recruited through~~years or older across 119 sites in the ~~National Health Service Vaccine Registry.~~U.S. and Mexico. Enrollment for PREVENT-19 emphasized recruiting high-risk groups most impacted by COVID-19. The ~~increased enrollment is likely to facilitate assessment of safety and efficacy in a shorter time period than originally anticipated. Half~~participant trial population was composed of the following: 22% Latin American, 12% African American, 7% Native American, 4% Asian American, 37% with underlying medical co-morbidities and 13% older adults aged 65 years and older. The trial design was harmonized to align with other Phase 3 trials conducted under the auspices of OWS, including the use of a single external, independent Data and Safety Monitoring Board to evaluate safety. The trial’s primary endpoint was the first occurrence of PCR-confirmed, symptomatic (mild, moderate or severe) COVID-19 with onset at least seven days after the second study

Table of Contents

vaccination in participants ~~will~~who had not been previously infected with SARS-CoV-2. Two-thirds of the participants were assigned to randomly receive two intramuscular injections of NVX-CoV2373 comprising 5 micrograms of antigen with 50 micrograms of Matrix-M™ adjuvant, administered 21 days apart, while one-third of the trial participants received placebo. The primary efficacy analysis was event-driven, based on the number of participants with symptomatic mild, moderate, or severe COVID-19 disease.

Efficacy endpoints were accrued from January 25, 2021, through April 30, 2021, at a time when the Alpha (B.1.1.7) variant strain became the predominant strain in the U.S. Other strains, including VoI and VoC, were also on the rise during the PREVENT-19 endpoint accrual window. PREVENT-19 met a key secondary endpoint, demonstrating 100% efficacy against variants not considered VoC/VoI. NVX-CoV2373 also demonstrated 92.6% efficacy against VoC/VoI, achieving a key exploratory endpoint of the study. Among high-risk populations (participants over age 65, under age 65 with certain comorbidities, or having life circumstances with frequent COVID-19 exposure), NVX-CoV2373 demonstrated 91.0% efficacy. Preliminary safety data showed NVX-CoV2373 to be generally well-tolerated, with serious and severe adverse events low in number and balanced between vaccine and placebo groups. Participants will be followed for 24 months following the second injection. PREVENT-19 was conducted with support and funding from OWS.

Phase 3 United Kingdom (“UK”)

In June 2021, the final analysis of our Phase 3 UK trial was published in the New England Journal of Medicine. The publication of the final analysis highlights the robust safety and efficacy data for NVX-CoV2373. The final analysis confirmed 89.7% overall efficacy, with over 60% of the cases caused by the Alpha (B.1.1.7) variant strain. The analysis also confirmed 96.4% efficacy against non-Alpha (non-B.1.1.7) variant strains, which represents strains most similar to the original COVID-19 virus. The final analysis also demonstrated that initial vaccine side effects were mostly mild and transient, and that no imbalance was seen in more serious adverse events compared with the placebo arm. The final analysis builds upon the interim analysis conducted in January 2021 and updated analysis announced in March 2021. The trial was a randomized, observer-blinded, placebo-controlled study that enrolled 15,203 adults aged 18 to 84. Half of the trial participants received two intramuscular injections of NVX-CoV2373 comprising 5 micrograms of antigen with 50 micrograms of Matrix-M™ adjuvant, administered 21 days apart, while the other half of the trial participants ~~will receive~~received placebo. The trial ~~is designed to enroll~~was conducted in partnership with the UK government Vaccines Taskforce and led by researchers at ~~least 25 percent~~St George’s, University of London and St George’s Hospital, London.

Phase 3 UK Co-Administration Sub-Study

In June 2021, we announced data from the co-administration sub-study of NVX-CoV2373 and an approved influenza vaccine, conducted as part of our Phase 3 UK trial. In this study, 431 participants ~~over the age of 65 as well as to prioritize groups that are most affected by COVID-19. Additionally, up to 400 participants will also receive a licensed~~enrolled in our Phase 3 UK trial received an approved seasonal influenza vaccine ~~as part~~(Seqirus, adjuvanted, trivalent seasonal influenza vaccine or a cell-based quadrivalent seasonal influenza vaccine). Approximately half of the participants in the study were also co-vaccinated with NVX-CoV2373, while the remainder received placebo. Results demonstrated a ~~co-administration sub-study. The primary endpoint is first occurrence~~robust immune response and a favorable safety and reactogenicity profile. Immunogenicity of ~~PCR-confirmed symptomatic COVID-19~~the influenza vaccine was preserved with ~~onset at least seven days after~~concomitant administration, while a modest decrease in the ~~second study vaccination in volunteers who have not been previously infected with SARS-CoV-2. The primary efficacy analysis will be~~immunogenicity of NVX-CoV2373 was found. There was an ~~event-driven analysis based on the~~adequate number of participants aged 18 to 64 to confirm an efficacy trend of 87.5% against COVID-19. The majority of local and systemic reactogenicity events were absent or mild, with ~~symptomatic or moderate/~~small increases in pain and tenderness at the injection site and muscle aches being elevated amongst participants who were co-vaccinated with NVX-CoV2373 and influenza vaccine. Rates of severe adverse events ("SAEs") were low in all groups, and there were no additional early safety concerns associated with co-administration. Rates of unsolicited adverse events (“AEs”), medically attended AEs, and SAEs were low and balanced between the groups. Data from this study have been submitted for peer review and are available ahead of publication via the preprint server on medRxiv. The co-administration sub-study represents the first study of a SARS-CoV-2 vaccine candidate and an approved influenza vaccine, and was led by researchers at St George’s, University of London and St George’s Hospital, London.

Phase 2b South Africa

In May 2021, results from the initial primary analysis of our Phase 2b South Africa trial were published in the New England Journal of Medicine. The publication of the initial primary analysis, which was previously announced in January 2021, highlights NVX-CoV2373’s cross-protection against the Beta (B.1.351) variant strain prevalent in South Africa during the study.

The Phase 2b South Africa trial was a randomized, observer-blinded, placebo-controlled study that enrolled 4,404 participants. Half of the trial participants received two intramuscular injections of NVX-CoV2373 comprising 5 micrograms of antigen with 50 micrograms of Matrix-M™ adjuvant, administered 21 days apart, while the other half of the trial participants received placebo.

Table of Contents

In the complete analysis announced in March 2021, NVX-CoV2373 demonstrated 55.4% efficacy for the prevention of mild, moderate and severe COVID-19 ~~disease. The~~disease in the 95% of the trial ~~protocol calls~~population that was HIV-negative. Overall efficacy, including both HIV-positive and HIV-negative participants, was 48.6% predominantly against the Beta (B.1.351) variant strain, with the complete analysis showing that NVX-CoV2373 achieved its primary efficacy endpoint in the overall trial population. During the efficacy analysis, the Beta (B.1.351) variant strain circulating in South Africa accounted for ~~unblinding~~approximately 93% of ~~data once 152 participants have achieved mild, moderate or~~sequenced cases in our Phase 2b trial. There were no cases of severe ~~endpoints. Two~~disease in the NVX-CoV2373 group, and all hospitalization and death occurred in the placebo group. This trial also showed that the vaccine is well-tolerated, with low levels of SAEs through day 35, balanced between vaccine and placebo groups.

While the interim analysis ~~are planned once 66 and 110 endpoints have occurred. As of November 9, 2020, we have enrolled over 9,000 participants~~announced in ~~this trial. We expect this trial to be fully enrolled~~January 2021 reported that prior infection with the original COVID-19 strain may not completely protect against subsequent infection by the ~~end~~variant predominantly circulating in South Africa, the complete analysis indicated that there may be a late protective effect of ~~November 2020, and dependent on~~prior exposure with the ~~overall~~original COVID-19 ~~attack~~strain. In placebo recipients, at 90 days the illness rate ~~interim data~~was 8.0% in ~~this event-driven trial are expected as soon as early first quarter 2021. These data are expected to serve as~~baseline seronegative participants, with a rate of 5.9% in baseline seropositive participants. CEPI funded the ~~basis~~manufacturing of doses of NVX-CoV2373 for ~~global licensure.~~

~~In August 2020, we initiated a~~this Phase 2b clinical trial, in South Africa to evaluate the efficacy of NVX-CoV2373. The trial includes two cohorts. In October 2020, we expanded enrollment from 2,665 to 4,404. One cohort evaluates efficacy, safety and immunogenicity in approximately 4,164 healthy adults. The second cohort evaluates safety and immunogenicity in approximately 240 medically stable, HIV-positive adults. This allows for evaluation of the vaccine across a diverse, representative study population. The Phase 2b clinical trial iswhich was also supported in part by a $15.0 million grant from BMGF.

NVX-CoV2373 Booster and Crossover Studies

Novavax-Led Crossover Studies

In April 2021, we initiated crossover arms in our Phase 3 UK, Phase 2b South Africa and PREVENT-19 Phase 3 trials. In June 2021, we completed crossover arms in our Phase 3 UK trial. As of August 2021, our Phase 2b South Africa and PREVENT-19 crossover arms are ongoing.

In our Phase 3 UK and PREVENT-19 trials, participants were offered the ~~BMGF.~~

opportunity to receive an additional round of injections. Participants who elected to do so received an additional two-dose regimen of either vaccine for those who originally received placebo or placebo for those who originally received vaccine. In our Phase 2b South Africa trial, participants will receive either active vaccine for those who initially received placebo or a booster dose of active vaccine for those who initially received active vaccine. Throughout our crossover arms, participants in all of our trials will remain blinded to their courses of treatment to preserve the ability to assess clinical data in an unbiased manner.

Novavax-Led Booster Study

In August ~~2020,~~2021, we announced ~~positive preliminary immunogenicity and safety results~~data from our six-month booster study in the Phase 12 portion of ~~the~~our U.S. and Australia Phase 1/2 ~~clinical~~ trial, ~~of NVX-CoV2373~~which we initiated in ~~May 2020. The Phase 1 portion was a randomized, observer-blinded, placebo-controlled trial~~March 2021. In this booster study, select participants in ~~131 participants at two sites in Australia. The trial was designed to evaluate~~ the ~~immunogenicity and safety of NVX-CoV2373, both adjuvanted with Matrix-M and unadjuvanted. The protocol’s two-dose trial regimen assessed two~~5 microgram dose ~~sizes (5 and 25 micrograms) with Matrix-M and without. Results~~cohort from ~~this trial showed that NVX-CoV2373 was generally well-tolerated, elicited robust antibody responses numerically superior to that seen in human convalescent sera and induced robust polyfunctional CD4~~⁺ ~~T cell responses. In September 2020, the Phase 1 portion clinical results were published in The New England Journal of Medicine. In August 2020, we initiated~~ the Phase 2 portion of the Phase 1/2 ~~clinical trial.~~trial received a third 5 microgram dose (a booster dose) at six months to examine the functional immune response of our vaccine candidate. Results from this study showed that twenty-eight days following boosting, anti-spike IgG increased approximately 4.6-fold compared to the peak response seen after the second dose (Day 217 GMEU = 200,408 (95% CI: 159,796; 251,342)). This boosted value represents a 3.7 to 4.4-fold increase in anti-spike IgG values that were associated with protection in our PREVENT-19 and Phase 3 UK trials. Similarly, wild-type neutralization responses increased approximately 4.3-fold compared to the peak response seen after Dose 2 (IC50 neutralization titers = 6,231 (95% CI: 4,738; 8,195)). This boosted value represents a 4.6 to 5.5-fold increase over the neutralization response associated with protection in our PREVENT-19 and Phase 3 UK trials. The ~~Phase 2 portion~~data showed that functional hACE-2 inhibitory antibodies were induced with primary vaccination against Alpha (B.1.1.7), Beta (B.1.351) and Delta and that these levels increased 6- to 10-fold following a single 6-month boost with prototype vaccine. Additionally, functional ACE-2 binding inhibition antibodies cross-reactive with the Delta (B.1.617.2) variant strain were more than 6-fold higher than the primary vaccination series. The administration of booster doses was generally well-tolerated. Local and systemic reactogenicity increased between dose one, dose two, and dose three, with 90% of symptoms rated as mild or moderate after the third dose.

Mix-and-Match COVID-19 Vaccine Booster Trial ("Cov-Boost")

In July 2021, enrollment was completed in Cov-Boost, a mix-and-match (vaccine interchangeability) COVID-19 vaccine booster trial, for which we announced our participation in May 2021. The trial, which was initiated in June 2021, enrolled 2,886 participants aged 30 years and older. NVX-CoV2373 is ~~designed~~one of seven COVID-19 vaccines that is being studied to evaluate the potential for providing a booster dose from different manufacturers to individuals who have previously received two doses of an authorized vaccine. Of the 2,886 participants enrolled, 230 participants received a full dose of NVX-CoV2373, while 216 participants received a half volume dose of NVX-CoV2373. The trial assesses the safety and ~~immunogenicity~~immune response against COVID-19 provided by the various vaccine schedules. The trial is led by the University Hospital Southampton NHS

Table of Contents

Foundation Trust and other UK National Institute for Health Research sites. Cov-Boost is receiving support from the UK government Vaccines Taskforce and Department of Health and Social Care.

Comparing COVID-19 Vaccine Schedule Combinations - Stage 2 ("Com-COV2")

In May 2021, enrollment was completed in Com-COV2, a newly expanded investigator-initiated Phase 2 clinical trial, for which we announced our participation in April 2021. The trial enrolled 1,072 adults aged 50 years and older who received their first vaccination during the previous 8-12 weeks. NVX-CoV2373 is one of four COVID-19 vaccines that is being studied to evaluate the potential for combined regimens that mix vaccines from different manufacturers to achieve immune protection against COVID-19. Participants received one of four different vaccines as a second dose, 359 of whom were administered NVX-CoV2373. The trial compares the immune system responses from those who receive a heterologous regimen to those who receive a homologous regimen. Participants in this non-inferiority study are followed for reactogenicity (safety) and immune responses. The trial is conducted by the University of Oxford and supported by the UK government Vaccines Taskforce. The MHRA and Joint Committee on Vaccination and Immunisation formally assesses the safety and efficacy of any new vaccination regiment before it is made available to the public.

NVX-CoV2373 Clinical Development Conducted by Partners

Phase 2/3 India

In March 2021, SIIPL initiated a Phase 2/3 clinical trial of NVX-CoV2373 ~~with Matrix-M~~ in India. The initial cohort was fully enrolled in April 2021 and the total study includes approximately 1,600 participants aged 18 to 8465 years. ~~The secondary objectives of the~~

Phase 1/2 ~~portion include preliminary evaluation of efficacy. The Phase 2 portion will assess two dose levels (5 and 25 micrograms), each with 50 micrograms of Matrix-M. We~~Japan

In March 2021, Takeda Pharmaceutical Company Limited (“Takeda”) completed enrollment of ~~1,288 healthy volunteers~~a Phase 1/2 clinical trial of NVX-CoV2373 in ~~October 2020, with approximately 50 percent~~Japan. This placebo-controlled trial will evaluate the immunogenicity and safety of NVX-CoV2373 in 200 participants 60aged 20 years and older.

Variant Strain (Monovalent and/or Bivalent) Vaccine Development

Our nanoparticle vaccine technology is purpose-built to rapidly address evolving infectious disease threats. In January 2021, we initiated development of ~~age~~new constructs against the emerging strains of COVID-19, and ~~older, at up~~in February 2021, we selected variant strain vaccines for preclinical evaluation. We are currently evaluating multiple variant strain vaccine candidates, including a recombinant spike protein antigen based on the Beta (B.1.351) virus lineage (“rS-B.1.351”).

COVID-19 Beta (B.1.351) Variant Strain Vaccine ("rS-B.1.351")

In June 2021, we announced data from three complementary non-clinical studies of our rS-B.1.351 variant strain vaccine. The studies compared rS-B.1.351 to ~~40 sites~~NVX-CoV2373 as standalone, in combination, and as a heterologous prime boost vaccine. The data showed that rS-B.1.351 demonstrated strong immunogenicity and protection against the Alpha (B.1.1.7) variant strain, Beta (B.1.351) variant strain and the original COVID-19 virus in animal studies. The findings also showed a broad array of cellular and humoral responses in animal models against all virus strains evaluated. Data from these studies have been submitted for peer review and are available ahead of publication via the preprint server on bioRxiv. We expect to initiate clinical evaluation of rS-B.1.351 in the ~~U.S.~~fall of 2021.

In one study, thirty randomly selected human serum samples from Phase 2 clinical trial participants after their second dose of NVX-CoV2373 were assayed and ~~Australia.~~ analyzed for their ability to neutralize Alpha (B.1.1.7) and Beta (B.1.351) variant strains. The trial participants’ sera demonstrated a neutralizing capacity of the Alpha (B.1.1.7) variant strain equal to NVX-CoV2373, with a modest reduction in neutralizing capacity again the Beta (B.1.351) variant strain. These findings support the initial development and evaluation of a B.1.351-directed vaccine as a booster or in a combination vaccine approach.

In ~~late October 2020, we reported favorable preliminary reactogenicity~~an additional preclinical study, mice were immunized with NVX-CoV2373 or rS-B.1.351 alone, in combination, or as a heterologous prime boost. Preclinical data from this study demonstrated that rS-B.1.351 was highly immunogenic and produced neutralizing antibodies.

In another preclinical study, non-human primates (“NHPs”) that were originally immunized with NVX-CoV2373 were boosted approximately one year later with one or two doses of rS-B.1.351. Preclinical data from this study showed that NHPs

Table of Contents

boosted with rS-B.1.351 induced strong neutralizing immune responses to the ~~Phase 2 portion~~original COVID-19 strain, as well as Alpha (B.1.1.7) and Beta (B.1.351) variant strains. Data from this preclinical study builds upon initial data announced in May 2021.

NVX-CoV2373 Regulatory and Licensure

As of August 2021, we continue to work to complete various Chemistry, Manufacturing and Controls ("CMC") requirements, which ensure that our manufacturing processes are in accordance with regulatory standards (see further discussion of our manufacturing activities below under the heading "NVX-CoV2373 Manufacturing and Supply"). Below is a summary and status of our regulatory processes through the date of filing this Form 10-Q.

In August 2021, we filed regulatory submissions in partnership with SIIPL for emergency use authorization ("EUA") in multiple markets. Regulatory submissions were filed with the Drugs Controller General of India ("DCGI"), as well as regulatory agencies in Indonesia and the Philippines. In addition to these filings, we expect to file a submission to the WHO for emergency use listing ("EUL") in August of 2021.

In April 2021, SK bioscience Ltd. ("SK bioscience") initiated the regulatory submission process in collaboration with Novavax to the MFDS for authorization of NVX-CoV2373.

We expect to file for authorization with the MHRA in the third quarter of 2021. We expect to complete additional filings for authorization within weeks of filing with the MHRA, including with EMA, Australian Therapeutic Goods Administration, Health Canada, and New Zealand Medsafe.

We are actively engaged in communications with the FDA through submissions to our open investigational new drug application (“IND”) and discussions on various aspects of the ~~trial during~~program required to support the ~~Centers~~regulatory approval process. We plan to file submissions for ~~Disease Control~~EUA with the FDA in the fourth quarter of 2021.

COVID-19 Vaccine Funding

We have secured critical funding throughout 2020 and ~~Prevention Advisory Committee on Immunization Practices meeting.~~

~~Funding~~

~~In July 2020, we were selected~~into 2021 to ~~participate in OWS, a U.S. government sponsored program working to accelerate~~support the development ~~manufacturing~~of NVX-CoV2373. Through the date of filing this Form 10-Q, funding for NVX-CoV2373 encompasses over $2 billion from sources including the BMGF, CEPI, the DoD, and ~~distribution of COVID-19 vaccines, therapeutics and diagnostics. Through a~~OWS.

In April 2021, our Base Agreement and a Project Agreement (together, as amended and supplemented, the “OWS Agreement”) entered into with Advanced Technology International, Inc., the Consortium Management Firm acting on behalf of the Medical CBRN Defense Consortium in connection with OWS, ~~we are entitled~~was amended to ~~receive funding~~fully fund the agreement up to ~~$1.6~~$1.75 billion to support certain activities related to the development of ~~NVX-CoV2373, and~~NVX-CoV2373. This includes the manufacture and delivery of 100 million doses of NVX-CoV2373 to the U.S. ~~government as early as late 2020.~~government. We expect this funding will assist in rapidly developing our large-scale manufacturing capacity and transitioning into ongoing production, including the capability to stockpile and distribute large quantities of NVX-CoV2373 for use in clinical trials and potentially for commercial sale, if authorized for emergency use or licensed. ~~We anticipate~~

~~Table of Contents~~

~~that the~~The OWS Agreement ~~will fund~~is funding the late-stage clinical studies necessary to determine the safety and efficacy of NVX-CoV2373, including ~~a pivotal Phase 3 clinical trial with up to 30,000 subjects expected to begin by the end of November 2020.~~PREVENT-19. Funding under the OWS Agreement is ~~also~~ expected to support our plans to file submissions for EUA and licensure with the FDA.

Accepted analytical methods that we can use to demonstrate our vaccine’s purity, potency and consistent lot manufacturing are critical to attaining licensure in all the territories we intend to sell our vaccine. In ~~June 2020, we were awarded a contract~~the U.S., these analytical methods will be reviewed and approved by the FDA. The U.S. ~~DoD (the “DoD Contract”) under which we are entitled~~government has recently instructed us to ~~receive funding of up~~prioritize alignment with the FDA on our analytic methods before conducting additional U.S. manufacturing and further indicated that the U.S. government will not fund additional U.S. manufacturing until such agreement has been made. The U.S. government also instructed us to ~~$60.0 million for the manufacturing of NVX-CoV2373.~~

~~In May 2020, we signed a restated funding agreement which was modified in November 2020,~~proceed with CEPI (the “CEPI Funding Agreement”), under which we are entitled to receive funding of up to $399.5 million, in addition to the $3.9 million of funding CEPI provided in March 2020, to be used by us for the development of NVX-CoV2373. Pursuant to the CEPI Funding Agreement, if approved, a portion of the NVX-CoV2373 supply produced by us, other than vaccine manufacturedwork under the OWS Agreement ~~is expected~~related to ~~be procured~~all other activities including ongoing clinical trials and ~~allocated through the COVAX Facility component~~nonclinical studies, regulatory interactions, analytics/assays and characterization of ~~the Access to~~manufactured vaccine and project management.

A summary and status of our historical COVID-19 Tools (ACT) Accelerator, an international equitable vaccine purchasing initiative launched by the World Health Organization, Gavi the Vaccine Alliance, CEPI and other global non-governmental organizations and governmental leaders in 2020.

funding developments follows:

Table of Contents

NVX-CoV2373 Manufacturing and Supply

~~To date, we~~

We have ~~increased our projected~~established a global manufacturing capacity for NVX-CoV2373 to over two billion annualized doses when we are at full capacity, which we expect to occur in mid-2021. The antigen component of NVX-CoV2373 is being manufactured at Novavax CZ and ~~at the following partnered manufacturing sites:~~

●

~~Biofabri S.L. in Spain~~

●

~~FUJIFILM Diosynth Biotechnologies (“FDB”) in North Carolina and Texas in the United States~~

●

~~FDB in the UK~~

●

~~Serum Institute of India Private Limited (“SIIPL”) in India~~

●

~~SK Bioscience Co., Ltd. (“SK bioscience”) in the Republic of Korea~~

●

~~Takeda Pharmaceutical Company Limited (“Takeda”) in Japan~~

~~Matrix-M adjuvant is being manufactured at Novavax AB and the following partnered manufacturing sites:~~

●

~~AGC Biologics in the United States and Denmark~~

●

~~PolyPeptide Group (will manufacture two key intermediaries used in Matrix-M) in the U.S. and Sweden~~

In November 2020, we signed a Heads of Terms with the Australian Federal Government to supply up to 40 million doses of NVX-CoV2373 beginning as early as the first half of 2021, subject to the successful completion of the Phase 3 clinical trial program and approval of NVX-CoV2373 by the Therapeutic Goods Administration.

In October 2020, we entered into a SARS-CoV-2 vaccine supply agreement with The Secretary of State for Business, Energy and Industrial Strategy, acting on behalf of the government of the UK (the “Authority”), for the purchase of up to 60 million doses of NVX-CoV2373, plus such additional orders as the Authority may make from time to time. We agreed to continue to conduct a UK-based Phase 3 clinical trial of NVX-CoV2373 to assess the efficacy of NVX-CoV2373 in the UK population, establish a dedicated supply chain ~~for NVX-CoV2373 in~~to support the UK and seek regulatory approval for the NVX-CoV2373 in the UK. FDB’s UK site is expected to produce up to 180 million doses annually. We expect to supply up to 60 million doses of NVX-CoV2373 to the UK beginning as early as the first quarter of 2021. Excess supply of antigen manufactured at the FDB’s site in Billingham, Stockton-on-Tees may be available for us to sell to additional markets outside the UK.

~~In August 2020, we reached an agreement in principle with the Government of Canada to supply up to 76 million doses~~commercialization of NVX-CoV2373. WeWith significant progress made throughout 2020 and ~~Canada expect to finalize an advance purchase agreement under which we will supply~~

~~Table of Contents~~

~~doses of NVX-CoV2373 to Canada beginning as early as~~through the second quarter of 2021, our global supply chain spans over ten countries and includes Novavax-owned facilities in the Czech Republic and Sweden, as well as partnerships with contract manufacturing organizations around the world. In the second quarter of 2021, we remained focused on readying our global supply chain for commercialization in order to ensure we promptly deliver NXV-CoV2373 upon anticipated regulatory authorizations.

We expect our global manufacturing capacity of NVX-CoV2373 to be approximately 100 million doses per month by the end of the third quarter of 2021. ~~This purchase arrangement~~We anticipate the remainder of our manufacturing capacity will be ~~subject~~ready by the end of the fourth quarter of 2021, which we expect will support total global manufacturing capacity of approximately 150 million doses per month. Of this anticipated capacity, approximately one billion annualized doses will be manufactured by SIIPL.

A summary and status of key manufacturing and supply developments during the second quarter of 2021 follows:

In June 2021, we announced the completion of construction of the National Research Council of Canada’s Biologics Manufacturing Centre and ongoing technology transfer for the production of NVX-CoV2373. Technology transfer to ~~licensure~~establish a step-by-step process of producing NVX-CoV2373 byat the Biologics Manufacturing Centre began in April 2021 following a collaboration agreement entered into with the National Research Council of Canada in March 2021. These developments build upon a Memorandum of Understanding (“MOU”) entered into in February 2021 with the Canadian government to produce

Table of Contents

NVX-CoV2373 at the Biologics Manufacturing Centre in Canada. Large-scale GMP production is expected to begin once the facility has received Health ~~Canada.~~

Canada approval.

In ~~August 2020,~~May 2021, we entered ~~into~~a non-binding MOU with the MOHW and SK bioscience to explore further cooperation in the development and manufacturing of vaccines, including NVX-CoV2373. Under the agreement, we agreed to potentially explore the development of new vaccine products with SK bioscience, including COVID-19 variant vaccines, and/or an influenza/COVID-19 combination vaccine. We will continue to collaborate with SK bioscience in manufacturing of the vaccines utilizing SK bioscience’s facility, with support from the Korean government. The MOU builds upon previous agreements entered with SK bioscience, including a development and supply agreement ~~with~~entered into in August 2020 and a collaboration and license agreement entered into in February 2021, whereby we granted SK bioscience ~~for the antigen component of~~an exclusive license to develop, manufacture and commercialize NVX-CoV2373 ~~for supply to global markets including the COVAX Facility. In addition, we and SK bioscience signed a letter of intent with~~in the Republic of ~~Korea’s Ministry~~Korea.

In May 2021, the MHLW announced it was in contract discussions to potentially order 150 million doses of ~~Health and Welfare to work toward broad and equitable access to NVX-CoV2373 for~~our COVID-19 vaccine candidate from Takeda. This development follows the ~~global market as well as to make the vaccine available in South Korea. Under the terms of the~~exclusive license agreement ~~SK bioscience will manufacture NVX-CoV2373 for use in the final drug product globally during the COVID-19 pandemic.~~

~~In August 2020,~~ we ~~announced a partnership~~entered into with Takeda in February 2021 for the ~~exclusive~~ development, manufacturing and commercialization of NVX-CoV2373 in Japan. We anticipate Takeda will receive funding from the Government of Japan’s Ministry of Health, Labour and Welfare to support the technology transfer, establishment of infrastructure and scale-up of manufacturing. We anticipate that Takeda hashave a manufacturing capacity of ~~over~~ 250 million doses per year. ~~We will be entitled to receive payments~~Takeda is in process of establishing vaccine procurement based on technology transfer by Novavax of NVX-CoV2373. Distribution of NVX-CoV2373 in Japan by Takeda is expected to begin in late 2021 or early 2022. Takeda is responsible for regulatory submission to Japan’s Pharmaceutical and Medical Devices Agency (“PMDA”).

NVX-CoV2373 Supply Agreements

We expect our global supply chain will enable us to deliver upon our supply commitments around the world. We have entered into advance purchase agreements (referred to as "APAs" or "supply agreements" throughout this Form 10-Q), as well as multiple supply and license agreements with strategic partners. The APAs 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. Such upfront payments generally become non-refundable upon our achievement of certain development and commercial ~~milestones, as well as a portion~~milestones.

A summary and status of ~~proceeds from vaccine sales.~~

key supply agreements executed since the beginning of the second quarter of 2021 and through the date of filing this Form 10-Q follows:

In ~~July 2020,~~May 2021, we finalized an APA with Gavi, the Vaccine Alliance ("Gavi"), building upon our MOU previously announced ~~a manufacturing partnership with FDB allowing for the large-scale contract production of NVX-CoV2373~~ in ~~connection with our OWS Agreement, beginning at FDB’s North Carolina facility.~~

Also in July 2020, we entered into a supply and license agreement with SIIPL, as amended by the parties in September 2020, under which we granted exclusive and non-exclusive licenses to SIIPL for the development, co-formulation, filling and finishing, registration and commercialization by SIIPL of NVX-CoV2373. SIIPL has agreed to purchase Matrix-M adjuvant from us and we have granted SIIPL a non-exclusive license to manufacture the antigen drug substance component of NVX-CoV2373 in SIIPL’s licensed territory solely for use in the manufacture of NVX-CoV2373 underFebruary 2021. Under the terms of the agreement. We will equally split with SIIPL the revenue from SIIPL’s sale of NVX-CoV2373 in its licensed territory, net of agreed costs. We granted to SIIPL (i) an exclusive license in India during the agreement, and (ii) a non-exclusive license (a) during the “Pandemic Period” (as declared by the World Health Organization), in all countries other than specified countries designated by the World Bank as upper-middle or high-income countries, with respect to which we retain rights, and (b) after the Pandemic Period, in only those countries designated as low or middle-income by the World Bank. Following the Pandemic Period, we may notify SIIPL of any ~~bona fide~~ opportunities for us to license NVX-CoV2373 to a third party in such low and middle-income countries and SIIPL would have an opportunity to match or improve such third party terms, failing which, we would have the discretion to remove one or more non-exclusive countries from SIIPL’s license. We anticipate SIIPL to manufacture approximately one1.1 billion doses of NVX-CoV2373 are to be made available to countries participating in ~~2021.~~

~~MERS/SARS~~

~~Historically, we developed~~the COVAX Facility, which was established to allocate and distribute vaccines equitably to participating countries and economies. We expect to manufacture and distribute 350 million doses of NVX-CoV2373 to countries participating under the COVAX Facility. Under a ~~vaccine candidate against MERS, a novel coronavirus first identified in 2012,~~separate purchase agreement with Gavi, SIIPL is expected to manufacture and ~~a vaccine candidate against SARS in 2005. In 2012, within weeks of obtaining~~deliver the ~~sequence~~balance of the ~~circulating MERS strain,~~1.1 billion doses of NVX-CoV2373 for low- and middle-income countries participating in the COVAX Facility. We expect to deliver doses with antigen and adjuvant manufactured at facilities directly funded by the investments previously received from CEPI (the "CEPI Funding Agreement"). We expect 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 may prioritize such doses to low- and middle-income countries at lower prices. Additionally, we ~~successfully produced a~~may provide additional doses of NVX-CoV2373, to the extent available from CEPI-funded manufacturing facilities, in the event that SIIPL cannot materially deliver expected vaccine ~~candidate designed~~doses to ~~provide protection. Our MERS candidate was based on~~ the ~~major surface spike protein, which~~COVAX Facility. Together with SIIPL, we ~~had previously identified as~~expect to initiate delivery of doses following receipt of appropriate regulatory authorizations. Under the ~~antigen~~agreement, we received an upfront payment from Gavi of ~~choice~~$350 million during the second quarter of 2021 and expect to receive an additional payment of $350 million if we secure EUL for NVX-CoV2373 by the WHO.

We expect to sign additional APAs or supply agreements that are currently in ~~our work with our SARS vaccine candidate. In 2014,~~active discussions and negotiations. For example, in ~~collaboration~~August 2021, we announced that we finalized the terms of an APA with the ~~University~~European Commission, which the parties expect to execute during the third quarter of ~~Maryland, School~~2021, for the purchase of ~~Medicine,~~up to 100 million initial doses of NVX-CoV2373, with the option of the European Commission to purchase an additional 100 million doses through 2023.

In addition to our supply agreements, we ~~published results that showed~~have committed 110 million doses of NVX-CoV2373 to the U.S. government under the OWS Agreement and our MERS and SARS vaccine candidates both blocked infection in laboratory studies. Although not in active development, our MERS and SARS vaccine candidates remain viable opportunities to potentially develop independently or in conjunctioncontract with ~~other coronavirus development activities.~~

the DoD (the "DoD Contract").

Table of Contents

Seasonal Influenza

NanoFlu™ Vaccine Program (Older Adults)

~~Influenza is~~

To date, we have advanced NanoFlu™ through a world-wide infectious disease with serious illness generally occurring in more susceptible populations such as children under 18 years old and older adults, but also occurring in the general population. According to a 2019 Global Data forecast of influenza vaccines, the market for seasonal influenza vaccines is expected to grow from approximately $4.6 billion in 2018 to approximately $6.5 billion in 2028 (in the countries comprising the eight major markets). Recent flu seasons have shown an increase in the influenza disease burden. For the 2017-18 flu season, the

~~Table of Contents~~

Centers for Disease Control and Prevention estimates that influenza in the U.S. resulted in 48.8 million illnesses, 959,000 hospitalizations and 79,400 deaths, a dramatic increase across all categories compared to previous years.

~~In March 2020, we announced positive top-line results from our~~ Phase 3 clinical trial ~~of our nanoparticle seasonal quadrivalent influenza vaccine candidate,~~in which ~~includes our proprietary Matrix-M adjuvant (“NanoFlu”). This positive data will support a BLA, which BLA will include process performance qualification~~NanoFlu™ achieved all primary endpoints and ~~a lot consistency clinical trial, and licensure~~achieved statistical significance in key secondary endpoints. In 2020, we took steps to ensure the continued advancement of NanoFlu ~~using the FDA accelerated approval pathway.~~

~~In October 2020, we announced the formation of~~™ in parallel with our COVID-19 activities and formed a leadership team ~~within the Company focused on advancing~~solely dedicated to our NanoFlu ~~to regulatory licensure. The leadership team will establish a separate~~™ vaccine program. This NanoFlu™ vaccine development unit ~~within our Company, which we expect to benefit~~benefits from joint shared services with key cross-functional departments ~~within the Company~~ and ~~to build~~builds on the Company’s established knowledge base in the discovery and development of innovative ~~vaccines to prevent serious infectious diseases.~~

~~Respiratory Syncytial Virus (RSV)~~

~~Currently, there is no approved RSV~~vaccines. Our NanoFlu™ vaccine ~~available to combat the estimated 64 million RSV infections that occur globally each year. We have identified three susceptible target populations that we believe could benefit from the development of~~team remains focused on advancing our ~~respiratory syncytial virus fusion (F) protein nanoparticle~~combination NanoFlu™ / NVX-CoV2373 vaccine candidate, ~~(“RSV F Vaccine”) in different formulations: (1) infants via maternal immunization, (2) older adults (60 years and older) and (3) children six months~~qNIV/CoV2373, to five years old (“pediatrics”). With our current estimates of the annual global cost burden of RSV in excess of $88 billion, we believe our RSV F Vaccine represents a multi-billion dollar worldwide opportunity.

~~ResVax Program (Infants via Maternal Immunization)~~

ResVax is our adjuvanted RSV F Vaccine for infants via maternal immunization. RSV is the most common cause of lower respiratory tract infections (“LRTI”) and the leading viral cause of severe lower respiratory tract disease in infants and young children worldwide. In the U.S., RSV is the leading cause of hospitalization of infants and, globally, is second only to malaria as a cause of death in children under one year of age.

In February 2019, we announced data from our Prepare trial, initiated in December 2015. The Prepare trial was conducted to determine whether ResVax reduced incidence of medically significant RSV-positive LRTI in infants through a minimum of the first 90 days of life and up through the first six months of life. While the data did not meet the trial’s primary efficacy endpoint, it did demonstrate efficacy against a secondary objective by reducing RSV LRTI hospitalizations in treated infants. In July 2020, these data were published in the New England Journal of Medicine. BMGF supported the Prepare trial for ResVax through a grant of up to $89.1 million pursuant to a grant agreement we entered into with BMGF in September 2015 (the “BMGF Grant Agreement”), including our efforts to conduct certain follow-on analyses of the Phase 3 data. We are assessing opportunities to bring ResVax to market, in conjunction with our pursuit of a regulatory licensure approach for the U.S., the European Union and other geographies.

~~RSV Older Adults Program~~

Older adults (60 years and older) are at increased risk for RSV disease due in part to immunosenescence, the age-related decline in the human immune system. RSV infection can also lead to exacerbation of underlying co-morbidities such as chronic obstructive pulmonary disease, asthma and congestive heart failure. In the U.S. alone, a reported RSV incidence rate of 5.5% in older adults would account for approximately 2.5 million infections per year. We estimate that approximately 900,000 medical interventions are caused by RSV disease in this U.S. population each year. We followed up the 2016 Phase 3 clinical trial of our RSV F Vaccine, which failed to meet its pre-specified primary or secondary efficacy objectives, with a 2017 Phase 2 clinical trial in older adults, to assess safety and immunogenicity of one and two dose regimens of our RSV F Vaccine, with and without aluminum phosphate or our proprietary Matrix-M adjuvant. Immunogenicity results from the 2017 trial indicate that both adjuvants increase the magnitude, duration and quality of the immune response versus the non-adjuvanted RSV F Vaccine. We continue to assess the development opportunities for our RSV F Vaccine in older adults.

development.

~~Table of Contents~~

~~RSV Pediatrics Program~~

By the age of five, essentially all children will have been exposed to RSV and will likely develop natural immunity against the virus; however, children under five remain vulnerable to RSV disease, offering a strong rationale for a pediatric vaccine that could offer enhanced protection. In 2015, we announced positive results in our Phase 1 clinical trial evaluating the safety and immunogenicity of our RSV F Vaccine in healthy children between two and six years of age. We continue to assess the development opportunities for our RSV F Vaccine for pediatrics.

Combination Vaccines

With the ongoing development of NanoFlu™, NVX-CoV2373 and our RSV F Vaccine, a strong rationale exists for developing ~~two~~ combination respiratory vaccines designed to protect susceptible populations against these diseases. Although testing is at an early stage, we believe that athe combination ~~vaccine against both~~of influenza ~~in combination~~ with COVID-19, influenza with RSV, and influenza ~~in combination~~ with both RSV and COVID-19 may be achievable, ~~since both~~as these vaccines ~~are created using~~all use our recombinant nanoparticle technology and include our proprietary Matrix-M™ adjuvant.

~~Ebola Virus~~

~~EBOV~~

NanoFlu™/NVX-CoV2373 Combination Vaccine ("qNIV/CoV2373")

In May 2021, we announced data from a preclinical study of qNIV/CoV2373 to assess its immunogenicity and protective efficacy in animal models. Preclinical data from this study showed that qNIV/CoV2373 induced functional influenza and COVID-19 antibody responses, with hemagglutination inhibition and ACE2 receptor-inhibiting titers that were comparable between immunization with the combination vaccine and with its respective component vaccines. qNIV/CoV2373 also induced elevated levels of SARS-CoV-2 anti-S IgG two weeks after the first immunization, which increased significantly after the second dose, with levels comparable to animals that received NVX-CoV2373 alone. Human ACE2 receptor inhibiting antibody levels responded similarly. qNIV/CoV2373 also induced antibodies against SARS-CoV-2 neutralizing epitopes that are common between the original COVID-19 strain and the Beta (B.1.351) variant strain. When challenged with SARS-CoV-2, examination of viral load in the upper and lower respiratory tract showed little or no virus was detected four days after infection in animals immunized with either qNIV/CoV2373 or with NVX-CoV2373 alone. Data from this study are available ahead of publication via the preprint server for biology on bioRxiv. We expect to initiate clinical evaluation of qNIV/CoV2373 later in 2021.

Malaria

R21 - Malaria Vaccine

R21 is a filovirus that produces severe, often fatal illness in humans. Within the last decade, it has produced two large outbreaks in Sub-Saharan Africa with high mortality. There are currently two vaccines licensed to prevent EBOV.

~~We developed an EBOV glycoprotein~~malaria vaccine candidate ~~(“Ebola GP Vaccine”) expressed~~created by the Jenner Institute, University of Oxford, and formulated with our Matrix-M™ adjuvant. The University of Oxford has partnered with SIIPL for commercial development of R21 and has granted them a license for the vaccine. We expect to manufacture and supply the Matrix-M™ adjuvant component of R21 to SIIPL. SIIPL has committed to manufacture at least 200 million doses per year of R21 after licensure. Additionally, SIIPL has rights to use Matrix-M™ adjuvant in ~~insect cells, using our core recombinant baculovirus technology. Although not~~the vaccine in ~~active development, our Ebola GP~~regions where the disease is endemic and will pay royalties to us on its market sales of the vaccine. We will have commercial rights to sell and distribute the SIIPL-manufactured vaccine in certain countries, primarily in the travelers’ and military vaccine markets.

R21 Clinical Development

In May 2021, the first doses were administered in a Phase 3 licensure trial of R21 to assess the efficacy and safety of the malaria vaccine candidate. This double-blinded, randomized, controlled Phase 3 trial includes 4,800 participants aged five to 36 months across five sites in Burkina Faso, Kenya, Mali and Tanzania. Participants will receive three vaccinations four weeks apart and a booster vaccination one year later.

In April 2021, we announced the pre-print publication of data in Preprints with The Lancet from a Phase 2b clinical trial evaluating R21. The Phase 2b randomized, controlled, double-blind trial was conducted at the Clinical Research Unit of Nanoro / Institut de Recherche en Sciences de la Santé in Africa and recruited 450 participants aged five to 17 months from the catchment area of Nanoro, Burkina Faso. In three study arms, participants received 5 micrograms of R21 with either 25 micrograms of Matrix-M™ adjuvant, 50 micrograms of Matrix-M™ adjuvant, or a rabies vaccine as a control. R21 demonstrated

Table of Contents

77% efficacy in the higher adjuvant dose group and 71% efficacy in the lower adjuvant dose group. Both adjuvant dose levels were well tolerated in young children, with no severe reactions to the vaccine reported.

R0.6C - Malaria Transmission Blocking Vaccine

R0.6C is a ~~viable development opportunity~~novel malaria transmission blocking vaccine candidate manufactured by Statens Serum Institut that has been formulated in a preclinical study with our Matrix-M™ adjuvant. R0.6C is a vaccine candidate based on the protective epitopes of the Pfs48/45 protein. Development of R0.6C is supported by grants from the European Union’s Horizon 2020 research and innovation program and funded by PATH’s Malaria Vaccine Initiative.

R0.6C Clinical Development

In June 2021, a Phase 1 clinical trial for R0.6C was initiated at Radboud University Medical Center in the ~~event~~Netherlands. The trial enrolled healthy, adult volunteers and will assess the safety and immunogenicity of ~~dedicated funding or~~R0.6C. The trial will also evaluate our Matrix-M™ adjuvant and the common aluminum hydroxide adjuvant. This Phase 1 trial follows a ~~partnership arrangement.~~

~~Sale~~preclinical study of ~~Preferred~~R0.6C formulated with our Matrix-M™ adjuvant, which showed greater than 80% reduction of transmission of the parasite that causes malaria.

Sales of Common Stock

During the six months ended June 30, 2021 and 2020, we ~~entered into an agreement to sell 438,885~~sold 2.6 million and 28.5 million, respectively, of shares of newly designated Series A Convertible Preferred Stock, par value $0.01 per share (“Preferred Stock”), at a purchase price of $455.70 per share, convertible into 4,388,850 shares of common stock, to an investment fund affiliated with RA Capital Management (“RA Capital”) in a private placement, at an effective purchase price per share of common stock equal to the June 12, 2020 closing price of our common ~~stock. Upon closing, we received gross~~stock resulting in net proceeds of approximately ~~$200 million. Holders of Preferred Stock are not entitled to cumulative dividends, are not entitled to vote on matters submitted to common stockholders~~$565 million and ~~have a liquidation preference over common stockholders (see “Note 9 – Preferred Stock” included in~~$392 million, respectively, under our ~~Notes to Consolidated Financial Statements).~~

various At Market Issuance Sales ~~of Common Stock~~

agreements.

In ~~May 2020,~~June 2021, we entered into an At Market Issuance Sales Agreement ~~(“May 2020~~(the "June 2021 Sales ~~Agreement”~~Agreement"), which allows us to issue and sell up to ~~$250~~$500 million in gross proceeds of shares of our common ~~stock. During the nine months ended September 30, 2020, we sold 2.8 million shares of common~~ stock, under the May 2020 Sales Agreement resulting in $160.3 million in net proceeds (this amount excludes $3.9 million received in the fourth quarter of 2020 for shares traded in late September 2020). From October 1, 2020 through November 3, 2020, we sold 0.7 million shares of common stock resulting in $74.1 million in net proceeds, leaving $8.7 million remaining under the May 2020 Sales Agreement.

~~In March 2020, we entered into an~~and terminated our existing At Market Issuance Sales ~~Agreement (“March 2020 Sales Agreement”), which allowed us to issue and sell up to $150 million in gross proceeds~~agreement. As of ~~our common stock. During the six months ended~~ June 30, ~~2020, we~~2021, no shares had been sold ~~8.6 million shares of common stock~~ under the ~~March 2020~~June 2021 Sales ~~Agreement resulting in $148.1 million in net proceeds. The March 2020 Sales Agreement was fully utilized at that time.~~

In January 2020, we entered into an At Market Issuance Sales Agreement (“January 2020 Sales Agreement”), which allowed us to issue and sell up to $100 million in gross proceeds of our common stock. During the first quarter of 2020, we sold 10.5 million shares of common stock under the January 2020 Sales Agreement resulting in $98.7 million in net proceeds. The January 2020 Sales Agreement was fully utilized at that time.

Agreement.

~~Table of Contents~~

In December 2018, we entered into an At Market Issuance Sales Agreement (“December 2018 Sales Agreement”), which allowed us to issue and sell up to $100 million in gross proceeds of our common stock. In January 2020, we sold 7.2 million shares of common stock under the December 2018 Sales Agreement resulting in $38.5 million in net proceeds. The December 2018 Sales Agreement was fully utilized at that time.

Critical Accounting Policies and Use of Estimates

~~The discussion and analysis of our financial condition and results of operations~~

There 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~~no material changes to make estimates, assumptions and judgments that affect the reported amounts of assets, liabilities and equity and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. These estimates, assumptions and judgments particularly in relation to revenue recognition (discussed in greater detail below), lease accounting (discussed in greater detail below) and impairment of long-lived assets have a material impact on our consolidated financial statements and are discussed in detail throughout our analysis of the results of operations discussed below. For additional discussion of our critical accounting policies ~~and estimates, see~~as described in Item 7 inof our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2019,~~2020, as filed with the SEC.

~~Revenue Recognition~~

We perform research and development under government funding, grant, license and clinical development agreements. Our revenue primarily consists of funding under U.S. government contracts and other arrangements to advance the clinical development and manufacturing of NVX-CoV2373. Our U.S. government contracts include the DoD Contract and the OWS Agreement. Other funding arrangements primarily include a grant and forgivable loan funding from CEPI.

At contract inception, we analyze our revenue arrangements to determine the appropriate accounting under U.S. GAAP. Currently, our revenue arrangements represent customer contracts within the scope of ASC Topic 606, ~~Revenue from Contracts with Customers (Topic 606)~~ ~~(“ASC 606”) or are contributions under the scope of Accounting Standards Codification (ASC) Topic 958-605,~~ ~~Not-for-Profit Entities – Revenue Recognition~~ (“ASC 958-605”). We recognize revenue from arrangements within the scope of ASC 606 following the five-step model: (i) identify the contract(s) with a customer; (ii) identify the performance obligation(s) in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) we satisfy a performance obligation. We only apply the five-step model to contracts when it is probable that we will collect the consideration we are entitled to in exchange for the goods or services we transfer to our customer. We recognize contribution revenue within the scope of ASC 958-605 when the funder-imposed conditions have been substantially met. Contributions are recorded as deferred revenue until the period in which research and development activities are performed that satisfy the funder-imposed conditions.

Under our U.S government contracts, we are entitled to receive funding, on a reimbursable-cost or reimbursable-cost-plus fixed fee basis to support certain activities related to the development, manufacture and delivery of NVX-CoV2373 to the U.S. Government. We analyzed these contracts and determined that they are within the scope of ASC 606. Our obligations under each of the contracts are not distinct in the context of the contract as they are highly interdependent or interrelated and, as such, they are accounted for as a single performance obligation. The transaction price under these arrangements is the consideration we expect to receive and consists of the funded contract amount and the unfunded variable amount to the extent that it is probable that a significant reversal of revenue will not occur. We recognize revenue for these contracts over time as we transfer control over the goods and services and satisfy our performance obligation. We measure progress toward satisfaction of our performance obligation using an Estimate-at-Completion (“EAC”) process, which is a cost-based input method that reviews and monitors the progress towards the completion of our performance obligation. Under this process, we consider the costs that have been incurred to-date, as well as projections to completion using various inputs and assumptions, including, but not limited to, progress towards completion, labor costs and productivity, material and subcontractor costs, and identified risks. Estimating the total allowable cost at completion of our performance obligation under a contract is subjective and requires us to make assumptions about future activity and cost drivers. Changes in these estimates can occur for a variety of reasons and, if significant, may impact the timing of revenue and fee recognition on our contracts. Allowable contract costs include direct

~~Table of Contents~~

costs incurred on the contract and indirect costs that are applied in the form of rates to the direct costs. Billings under the contracts are initially based on provisional indirect billing rates, agreed upon between us and the U.S. government. These indirect rates are subject to audit on an annual basis. The impact of changes in the indirect billing rates are recorded in the period when such changes are identified and reflect the difference between actual indirect costs incurred compared to the estimated amounts used to determine the provisional indirect billing rates agreed upon with the U.S. government. We recognize revenue on our U.S government contracts based on reimbursable allowable contract costs incurred in the period up to the transaction price. For our reimbursable-cost-plus fixed fee contracts, we recognize the fixed fee based on the proportion of reimbursable contract costs incurred to total estimated allowable contract costs expected to be incurred on completion of the underlying performance obligation as determined under the EAC process. Changes in estimates related to the EAC process are recognized in the period when such changes are made on a cumulative catch-up basis. We include the transaction price comprising both funded and unfunded portions of customer contracts, in this estimate.

Our other funding agreements primarily include the CEPI Grant Funding and CEPI Forgivable Loan Funding. Under our grant funding arrangements including the CEPI Grant Funding, we are entitled to reimbursement for costs that support development related activities of NVX-CoV2373. The CEPI Forgivable Loan Funding is designated for the prepayment of certain manufacturing activities. We analyzed these other funding arrangements and determined that they are not within the scope of ASC 606 as they do not provide a direct economic benefit to the grantor. Payments received under the grant funding arrangements are considered conditional contributions under the scope of ASC 958-605 and are recorded as deferred revenue until the period in which such research and development activities are actually performed that satisfy the funder-imposed conditions. Payments received under the CEPI Forgivable Loan Funding agreements are only repayable if the proceeds of sales to one or more third parties of NVX-CoV2373 cover our costs of manufacturing such vaccine candidate, not including manufacturing costs funded by CEPI. As the financial risk remains with CEPI, we have determined that the use of the CEPI Forgivable Loan Funding is outside the scope of ASC Topic 470, ~~Debt.~~ ~~The research and development risk is considered substantive, such that it is not yet probable that the development will be successful. Therefore, we have concluded that ASC Topic 730,~~ ~~Research and Development~~ is considered applicable and most appropriate. Given the financial risk associated with the research and development activities lies with CEPI because repayment of any funds provided by CEPI depends solely on the results of the research and development activities having future economic benefit, we will account for our obligation under the CEPI Forgivable Loan Funding as a contract to perform research and development for others. We have determined that payments received under these agreements should be recorded as revenue under ASC 958-605 rather than a reduction to research and development expenses. This is consistent with our policy of presenting such amounts as revenue. In reaching this determination, we considered a number of factors, including whether we are principal under the arrangement, and whether the arrangement is significant to, and part of, our core operations. We will record revenue as we perform the contractual research and development services.

~~Lease Accounting~~

We determine at the inception of a contract if an arrangement is, or contains, a lease, which exists when the contract conveys the right to control the use of identified property or equipment for a period of time in exchange for consideration. Depending on the contract, the lease commencement date, defined as the date on which the lessor makes the underlying asset available for use by the lessee, may be different than the inception date of the contract. We classify leases as either operating or finance leases based on the economic substance of the agreement.

We enter into non-cancelable lease agreements for office space and certain equipment. We also enter into supply agreements with contract manufacturing organizations and contract development and manufacturing organizations to manufacture our vaccine candidates. Certain of these supply agreements include the use of identified manufacturing facilities and equipment that are controlled by us and may qualify as an embedded lease. We treat supply agreements that contain a lease as lease arrangements in their entirety.

For leases that have a lease term of more than 12 months at the lease commencement date, we recognize lease liabilities, which represent our obligation to make lease payments arising from the lease, and corresponding right-of-use (“ROU”) assets, which represent the right to use an underlying asset for the lease term, based on the present value of the fixed future payments over the lease term. We calculate the present value of future payments using the discount rate implicit in the lease, if available, or our incremental borrowing rate. For all leases that have a lease term of 12 months or less at the commencement date (referred to as “short-term” leases), we have elected to apply the practical expedient in ASC Topic 842, ~~Leases~~ (“ASC 842”) to not recognize a lease liability or ROU asset but instead, recognize lease payments as an expense on a straight-line basis over the lease term and variable lease payments that do not depend on an index or rate, as an expense in the period in which the variable lease costs are incurred based on performance or usage in

~~Table of Contents~~

accordance with contractual agreements. In determining the lease period, we evaluate facts and circumstances that could affect the period over which we are reasonably certain to use the underlying asset while taking into consideration the non-cancelable period over which we have the right to use the underlying asset and any option period to extend or terminate the lease if we are reasonably certain to exercise the option. We reevaluate short-term leases that are modified and if they no longer meets the requirements to be treated as short-term leases, we recognize and measure the lease liability and ROU asset as if the date of the modification is the lease commencement date.

For operating leases, we recognize lease expense related to fixed payments on a straight-line basis over the lease term and lease expense related to variable payments as incurred based on performance or usage in accordance with the contractual agreements. For finance leases, we recognize the amortization of the ROU asset over the shorter of the lease term or useful life of the underlying asset. We expense ROU assets acquired for research and development activities under ASC Topic 730, ~~Research and Development~~~~, if they do not have an alternative future~~ ~~use, in research and development projects or otherwise.~~

We use significant assumptions and judgment in evaluating our lease contracts and other agreements under ASC 842, including the determination of whether an agreement is or contains a lease, whether a lease represents an operating or finance lease, the discount rate used to determine the present value of lease obligations and the term of embedded leases in our supply agreements.

Recent Accounting Pronouncements Not Yet Adopted

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

Results of Operations

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

Three Months Ended ~~September~~June 30, ~~2020~~2021 and ~~2019~~ ~~(amounts in tables are presented in thousands, except per share information or as otherwise indicated)~~

2020

Revenue:


	Three Months Ended June 30,
	2021		2020		Change
Revenue (in thousands):
Government contracts	$	240,534	$	—	$	240,534
Grants and other	34,026		35,538		(1,512)
Royalties	23,457		—		23,457
Total revenue	$	298,017	$	35,538	$	262,479

Three Months Ended

September 30,

Change 2019

2020

2019

to 2020

Revenue (in thousands):

Total revenue

$
157,024

$
2,507

$
154,517

Revenue for the three months ended ~~September~~June 30, ~~2020~~2021 was ~~$157.0~~$298.0 million as compared to ~~$2.5~~$35.5 million for the same period in ~~2019,~~2020, an increase of ~~$154.5~~$262.5 million. Revenue for the three months ended ~~September~~June 30, 2021 was primarily comprised of

Table of Contents

revenue for services performed under the OWS Agreement and the CEPI Funding Agreement. Revenue for the three months ended June 30, 2020 was primarily comprised of revenue for services performed under the CEPI Funding ~~Agreement, participation in OWS and the DOD contract. Revenue for~~Agreement. During the three ~~months~~month ended ~~September~~June 30, ~~2019 was primarily comprised~~2021, we recognized royalties of ~~revenue for services performed~~$23.5 million under ~~the BMGF Grant Agreement and revenue from Novavax AB.~~our licensing arrangements. The significant increase in revenue was due to increased development activities relating to NVX-CoV2373 under the OWS Agreement and the CEPI Funding ~~Agreement, participation in OWS and the DOD contract.~~

Agreement.

We expect revenue in ~~2020~~2021 to significantly increase as compared with 2020 due to our NVX-CoV2373 program, which we anticipate will continue to be ~~primarily~~ funded by OWS and CEPI ~~DoD~~ and/or other ~~potential non-dilutive funding~~revenue sources.

Further, we anticipate bringing our NVXCoV2373 vaccine candidate to market following global regulatory approvals which, if achieved, should significantly increase revenue. In anticipation, we have entered into various APA, as well as multiple supply and license agreements with strategic partners to supply NVX-CoV2373 in their specified territories under which we are entitled to receive royalties from the sale of NVX-CoV2373 by such partners.

Expenses:


	Three Months Ended June 30,
	2021		2020		Change
Expenses (in thousands):
Research and development	$	570,685	$	34,846	$	535,839
General and administrative	73,161		17,719		55,442
Total expenses	$	643,846	$	52,565	$	591,281

~~Table of Contents~~

~~Expenses:~~

Three Months Ended

September 30,

Change 2019


2020

2019

to 2020

Expenses (in thousands):







Research and development

$
294,087

$
18,611

$
275,476

Gain on Catalent transaction

—

(9,016)

9,016

General and administrative

56,879

7,899

48,980

Total expenses

$
350,966

$
17,494

$
333,472

Research and Development Expenses

Research and development expenses include salaries, stock-based compensation, laboratory supplies, consultants and subcontractors, including external contract research and manufacturing organizations, and other expenses associated with

In the three months ended June 30, 2021, our ~~process development, program-related manufacturing, clinical, regulatory and quality assurance activities for our programs. Indirect costs such as fringe benefits and overhead expenses related to~~ research and development activities ~~are also~~were primarily focused on the development of NVX-CoV2373 and included indirect external research and development ~~expenses.~~ expenses related to NVX-CoV2373 of $497.2 million, primarily comprised of costs related to the following:

•expenses incurred under agreements with contract research organization ("CROs") that conduct our clinical trials and third-party consultants related to the development of NVX-CoV2373;

•expenses incurred on developing and manufacturing the antigen drug substance and Matrix-M™ components of NVX-CoV2373 under agreements that we established with third-party contract manufacturing organizations ("CMOs") and contract manufacturing and development organizations ("CDMOs");

•expenses incurred for the procurement of raw materials, laboratory supplies and equipment; and

•other costs related to preclinical studies and regulatory consulting, as well as related program management activities to support our growing global operations.

Research and development expenses increased to ~~$294.1~~$570.7 million for ~~the~~ three months ended ~~September~~June 30, ~~2020 from $18.6~~2021 as compared to $34.8 million for ~~the same period in 2019,~~three months ended June 30, 2020, an increase of ~~$275.5 million. The increase was~~$535.8 million primarily due to increased development activities relating to NVX-CoV2373, including the write-off of $187.2 million of ROU assets associated with our manufacturing supply agreements for NVX-CoV2373 that we determined do not currently have an alternative future use, and increased employee-related costs, primarily stock-based compensation expense. As of September 30, 2020, we had 433 employees dedicated to our research and development ~~programs versus 127 employees~~of NVX-CoV2373, as summarized in the table below (in millions):


	Three Months Ended June 30,
	2021		2020
NVX-CoV2373	$	497,196	$	17,293
NanoFlu™	3,168		4,611
Other vaccine development programs	210		738
Total direct external research and development expense	500,574		22,642
Employee expenses	24,556		4,794
Stock-based compensation expense	24,779		4,098
Facility expenses	3,410		902
Other expenses	17,366		2,410
Total research and development expenses	$	570,685	$	34,846

Table of ~~September 30, 2019.~~ Contents

For ~~2020,~~2021, we expect research and development expenses to significantly increase ~~significantly~~over 2020 expenses due to our ~~anticipated~~continued development activities for our NVX-CoV2373 program ~~(see discussion on our NVX-CoV2373 program above)~~ and increases in employee-related costs.

~~Expenses by Functional Area~~

~~We track our~~ Following a potential regulatory approval of NVX-CoV2373, we expect products sales will result in certain types of costs that have been previously recorded as research and development in our Consolidated Statement of Operations to be capitalized as inventory and expensed as cost of goods sold when product is delivered. Cost of goods sold expenses ~~according to~~could be significant in 2021 depending on our commercial shipment levels for those shipments in which the ~~type of~~ costs incurred during identification, development, manufacture and testing of vaccine candidates. We evaluate and prioritize our activities according to functional area and therefore believe that project-by-project information would not form a reasonable basis for disclosure to our investors. Historically, we did not account for internal research and development expenses by project, since our employees’ work time is spread across multiple programs and our internal manufacturing clean-room facility produces multiple vaccine candidates.

were recorded into inventory.

~~The following summarizes our research and development expenses by functional area for the three months ended September 30 (in millions):~~

2020

2019
Manufacturing

$
266.4

$
9.7
Vaccine Discovery

2.8

1.4
Clinical and Regulatory

24.9

7.5
Total research and development expenses

$
294.1

$
18.6

We do not provide forward-looking estimates of costs and time to complete our research ~~projects~~programs due to the many uncertainties associated with vaccine development. As we obtain data from preclinical studies and clinical trials, we may elect to discontinue or delay clinical trials in order to focus our resources on more promising vaccine candidates. Completion of clinical trials may take several years or more, but the length of time can vary substantially depending onupon the phase, size of clinical trial, primary and secondary endpoints and the intended use of the vaccine candidate. The cost of clinical trials may vary significantly over the life of a project as a result of a variety of factors, including:

●

~~the number of participants who participate in the clinical trials;~~

●

~~the number of sites included in the clinical trials;~~

●

~~if clinical trial locations are domestic, international or both;~~

•the number of participants who participate in the clinical trials;

~~Table~~•the number of ~~Contents~~sites included in the clinical trials;

●

~~the time to enroll participants;~~

●

~~the duration of treatment and follow-up;~~

●

~~the safety and efficacy profile of the vaccine candidate; and~~

●

~~the cost, timing, and ability to secure, regulatory approvals.~~

•if clinical trial locations are domestic, international or both;

•the time to enroll participants;

•the duration of treatment and follow-up;

•the safety and efficacy profile of the vaccine candidate; and

•the cost and timing of, and the ability to secure, regulatory approvals.

As a result of these uncertainties, we are unable to determine ~~with any significant degree of certainty~~ the duration and completion costs of our research and development projects or when, and to what extent, we will generate future cash flows from our research projects.

General and Administrative Expenses

General and administrative expenses increased to ~~$56.9~~$73.2 million for the three months ended ~~September~~June 30, ~~2020~~2021 from ~~$7.9~~$17.7 million for the same period in ~~2019,~~2020, an increase of ~~$49.0~~$55.4 million. The increase in general and administrative expenses is primarily due to increased employee-related costs, primarily stock-based compensation expense, and ~~increased~~an increase in professional fees ~~relating to the integration~~in support of ~~Novavax CZ and supporting~~ our NVX-CoV2373 program. As of ~~September~~June 30, ~~2020,~~2021, we had 89195 employees dedicated to general and administrative functions ~~versus 41~~as compared with 61 employees as of ~~September~~June 30, ~~2019.~~2020. For ~~2020,~~2021, we expect general and administrative expenses to significantly increase due to increased activities related to supporting our NVX-CoV2373 program and increases in employee-related ~~costs.~~

costs and professional fees.

Other Income (Expense):


	Three Months Ended June 30,
	2021		2020		Change
Other Income (Expense) (in thousands):
Investment income	$	369	$	297	$	72
Interest expense	(5,968)		(3,403)		(2,565)
Other income	2,659		2,612		47
Total other income (expense), net	$	(2,940)	$	(494)	$	(2,446)

Three Months Ended

September 30,

Change 2019


2020

2019

to 2020

Other Income (Expense) (in thousands):







Investment income

$
140

$
342

$
(202)

Interest expense

(4,460)

(3,403)

(1,057)

Other income (expense)

952

5

947

Total other income (expense), net

$
(3,368)

$
(3,056)

$
(312)

We had total other expense, net, of ~~$3.4~~$2.9 million for the three months ended ~~September~~June 30, ~~2020~~2021 as compared to ~~$3.1~~$0.5 million for the same period in ~~2019.~~2020. In the three months ended ~~September~~June 30, ~~2020,~~2021, we also recorded ~~a $1.0 million gain on the intercompany loan with Novavax CZ due to changes in the exchange rates and additional~~ interest expense of ~~$1.1~~$1.8 million for finance leases.

Table of Contents
Income Tax Expense:
During the three months ended June 30, 2021, we recognized $3.5 million of income tax expense related to foreign withholding tax on royalties. We did not recognize any income tax expense for the three months ended June 30, 2020.

Net Loss:

Three Months Ended

September 30,

Change 2019


2020

2019

to 2020

Net Loss (in thousands, except per share information):







Net loss

$
(197,310)

$
(18,043)

$
(179,267)

Net loss per share

$
(3.21)

$
(0.74)

$
(2.47)

Weighted average shares outstanding

61,554

24,327

37,227


	Three Months Ended June 30,
	2021		2020		Change
Net Loss (in thousands, except per share information):
Net loss	$	(352,317)	$	(17,521)	$	(334,796)
Net loss per share	$	(4.75)	$	(0.30)	$	(4.45)
Weighted average shares outstanding	74,118		58,618		15,500

Net loss for the three months ended ~~September~~June 30, ~~2020~~2021 was ~~$197.3~~$352.3 million, or ~~$3.21~~$4.75 per share, as compared to ~~$18.0~~$17.5 million, or ~~$0.74~~$0.30 per share, for the same period in ~~2019.~~2020. The increase in net loss was primarily due to ~~increased~~a significant increase in development activities relating to NVX-CoV2373 ~~including the write off of $187.2 million of ROU assets associated with our manufacturing supply agreements for NVX-CoV2373~~ and ~~increased~~increase in employee-related costs, primarily stock-based compensation expense, partially offset by increased revenue under the ~~CEPI Funding Agreement, the~~ OWS Agreement and ~~the DoD Contract.~~

CEPI Funding Agreement.

The increase in weighted average shares outstanding for the three months ended ~~September~~June 30, ~~2020~~2021 is primarily a result of sales of our common stock in ~~2020~~2021 and ~~2019.~~

2020.

Six Months Ended June 30, 2021 and 2020

Revenue:


	Six Months Ended June 30,
	2021		2020		Change
Revenue (in thousands):
Government contracts	$	623,238	$	—	$	623,238
Grants and other	98,551		38,915		59,636
Royalties	23,457		—		23,457
Total revenue	$	745,246	$	38,915	$	706,331

~~Table of Contents~~

~~Nine Months Ended September 30, 2020 and 2019~~ ~~(amounts in tables are presented in thousands, except per share information or as otherwise indicated)~~

~~Revenue:~~

Nine Months Ended

September 30,

Change 2019

2020

2019

2020
Revenue (in thousands):

Total revenue

$
195,939

$
9,846

$
186,093

Revenue for the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 was ~~$195.9~~$745.2 million as compared to ~~$9.8~~$38.9 million for the same period in ~~2019,~~2020, an increase of ~~$186.1~~$706.3 million. Revenue for the ~~nine~~six months ended ~~September~~June 30, 2021 was primarily comprised of revenue for services performed under the OWS Agreement and CEPI Funding Agreement. Revenue for the six months ended June 30, 2020 was primarily comprised of revenue for services performed under the CEPI Funding Agreement, the OWS Agreement and the DoD Contract. Revenue for the nine months ended September 30, 2019 was primarily comprised of revenue for services performed under the BMGF Grant Agreement and revenue from Novavax AB.Agreement. The significant increase in revenue was due to increased development activities relating to NVX-CoV2373 under the ~~CEPI Funding Agreement, the~~ OWS Agreement and ~~the DoD Contract.~~

CEPI Funding Agreement.

Expenses:


	Six Months Ended June 30,
	2021		2020		Change
Expenses (in thousands):
Research and development	$	1,163,356	$	51,741	$	1,111,615
General and administrative	136,351		27,098		109,253
Total expenses	$	1,299,707	$	78,839	$	1,220,868

Nine Months Ended

September 30,

Change 2019


2020

2019

to 2020
Expenses (in thousands):






Research and development

$
345,828

$
84,502

$
261,326
Gain on Catalent transaction

—

(9,016)

9,016
General and administrative

83,977

26,236

57,741
Total expenses

$
429,805

$
101,722

$
328,083

Table of Contents

Research and Development Expenses

In the six months ended June 30, 2021, our process development, program-related manufacturing, clinical, regulatory and quality assurance activities for our programs. In addition, indirect costs such as fringe benefits and overhead expenses related to research and development activities ~~are also~~were primarily focused on the development of NVX-CoV2373 and included indirect external research and development ~~expenses.~~ expenses related to NVX-CoV2373 of $1.0 billion, primarily comprised of costs related to the following:

•expenses incurred under agreements with CROs that conduct our clinical trials and third-party consultants related to the development of NVX-CoV2373;

•expenses incurred on developing and manufacturing the antigen drug substance and Matrix-M™ components of NVX-CoV2373 under agreements that we established with third-party CMOs and CDMOs;

•expenses incurred for the procurement of raw materials, laboratory supplies and equipment; and

•other costs related to preclinical studies and regulatory consulting, as well as related program management activities to support our growing global operations.

Research and development expenses increased to ~~$345.8 million~~$1.2 billion for the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 from ~~$84.5~~$51.7 million for the same period in ~~2019,~~2020, an increase of ~~$261.3 million. This increase was~~$1.1 billion, primarily due to increased development activities relating to NVX-CoV2373, ~~including~~as summarized in the write off of $187.2 million of ROU assets associated with our manufacturing supply agreements for NVX-CoV2373 that we determined do not currently have an alternative future use, and increased employee-related costs, primarily stock-based compensation expense. As of September 30, 2020, we had 433 employees dedicated to our research and development programs versus 127 employees as of September 30, 2019.

~~Expenses by Functional Area~~

~~The following summarizes our research and development expenses by functional area for the nine months ended September 30~~table below (in millions):

2020

2019
Manufacturing

$
295.3

$
50.6
Vaccine Discovery

7.8

4.9
Clinical and Regulatory

42.7

29.0
Total research and development expenses

$
345.8

$
84.5


	Six Months Ended June 30,
	2021		2020
NVX-CoV2373	$	1,035,320	$	18,851
NanoFlu™	4,294		8,456
Other vaccine development programs	514		1,902
Total direct external research and development expense	1,040,128		29,209
Employee expenses	49,511		9,363
Stock-based compensation expense	48,569		6,005
Facility expenses	6,405		2,090
Other expenses	18,743		5,074
Total research and development expenses	$	1,163,356	$	51,741

~~Table of Contents~~

General and Administrative Expenses

General and administrative expenses increased to ~~$84.0~~$136.4 million for the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 from ~~$26.2~~$27.1 million for the same period in ~~2019,~~2020, an increase of ~~$57.7~~$109.3 million. The increase in general and administrative expenses is primarily due to increased employee-related costs, primarily stock-based compensation expense and ~~increased~~an increase in professional fees ~~relating to the acquisition and integration~~in support of ~~Novavax CZ and supporting~~ our NVX-CoV2373 program. As of ~~September~~June 30, ~~2020,~~2021, we had 89195 employees dedicated to general and administrative functions versus 4161 employees as of ~~September~~June 30, ~~2019.~~

2020.

Other Income (Expense):

Nine Months Ended

September 30,

Change 2019


2020

2019

to 2020
Other Income (Expense) (in thousands):






Investment income

$
872

$
1,236

$
(364)
Interest expense

(11,266)

(10,209)

(1,057)
Other income (expense)

3,565

(15)

3,580
Total other income (expense), net

$
(6,829)

$
(8,988)

$
2,159

Six Months Ended June 30,
2021 2020 Change
Other Income (Expense) (in thousands):
Investment income $ 731 $ 732 $ (1)
Interest expense (10,807) (6,806) (4,001)
Other income (expense) (3,934) 2,613 (6,547)
Total other income (expense), net $ (14,010) $ (3,461) $ (10,549)

We had total other expense, net of ~~$6.8~~$14.0 million for the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 as compared to ~~$9.0~~$3.5 million for the same period in ~~2019.~~2020. In the ~~nine~~six months ended ~~September~~June 30, 2021, we also recorded an interest expense of $4.0 million for finance leases. In the six months ended June 30, 2021 and 2020, ~~we recorded~~other income included a ~~$3.5~~loss of $3.1 million and a gain of $2.7 million, respectively, on the intercompany loan with Novavax CZ due to changes in the exchange ~~rates and additional interest~~rates.

Table of Contents

Income Tax Expense:

During the six months ended June 30, 2021, we recognized $6.6 million of income tax expense ~~of $1.1 million~~related to foreign withholding tax on royalties. We did not recognize any income tax expense for ~~finance leases.~~

the six months ended June 30, 2020.

Net Loss:

Nine Months Ended

September 30,

Change 2019


2020

2019

to 2020
Net Loss (in thousands, except per share information):






Net loss

$
(240,695)

$
(100,864)

$
(139,831)
Net loss per share

$
(4.39)

$
(4.43)

$
0.04
Weighted average shares outstanding

54,810

22,761

32,049


	Six Months Ended June 30,
	2021		2020		Change
Net Loss (in thousands, except per share information):
Net loss	$	(575,036)	$	(43,385)	$	(531,651)
Net loss per share	$	(7.82)	$	(0.84)	$	(6.98)
Weighted average shares outstanding	73,580		51,401		22,179

Net loss for the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 was ~~$240.7~~$575.0 million, or ~~$4.39~~$7.82 per share, as compared to ~~$100.9~~$43.4 million, or ~~$4.43~~$0.84 per share, for the same period in ~~2019.~~2020. The increase in net loss was primarily due to increased development activities relating to NVX-CoV2373, ~~including the write off of $187.2 million of ROU assets associated with our manufacturing supply agreements for NVX-CoV2373 and~~ increased employee-related costs, primarily stock-based compensation expense, partially offset by increased revenue under the ~~CEPI Funding Agreement, the~~ OWS Agreement and ~~the DoD Contract.~~

CEPI Funding Agreement.

The increase in weighted average shares outstanding for the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 is primarily a result of sales of our common stock in ~~2020~~2021 and ~~2019.~~

2020.

~~Table of Contents~~

Liquidity Matters and Capital Resources

Our future capital requirements depend on numerous factors including, but not limited to, our projected activities related to the development of NVX-CoV2373, including significant commitments under various CRO, CMO and ~~progress of our research and development programs,~~CDMO agreements, the progress of preclinical studies and clinical ~~testing,~~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 ~~to have multiple~~developing other vaccines and product candidates, such as NanoFlu™ vaccine and potential combination vaccines candidates, which are in various stages of ~~development, and we~~development. We believe our operating expenses and capital requirements will fluctuate depending upon the timing of events, such as the progress of our NVX-CoV2373 clinical trials and approval for the use of NVX-CoV2373 in the U.S. and internationally, as well as the scope, initiation ~~rate~~ and progress of our preclinical studies and clinical trials ~~and~~related to other research and development activities.

We have entered into APAs or supply agreements with various countries globally that, if our product candidate is approved, are expected to result in the delivery of approximately 550 million doses, including Gavi, of NVX-CoV2373 throughout 2021 and into the first half of 2022. The APAs or 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. Such upfront payments generally become non-refundable upon our achievement of certain development and commercial milestones. We expect to sign additional APAs or supply agreements that are currently in active discussions and negotiations.

In May 2021, we finalized an APA with Gavi, building upon our MOU previously announced in February 2021. Under the terms of the agreement, 1.1 billion doses of NVX-CoV2373 are to be made available to countries participating in the COVAX Facility, which was established to allocate and distribute vaccines equitably to participating countries and economies. We expect to manufacture and distribute 350 million doses of NVX-CoV2373 to countries participating under the COVAX Facility. Under a separate purchase agreement with Gavi, SIIPL is expected to manufacture and deliver the balance of the 1.1 billion doses of NVX-CoV2373 for low- and middle-income countries participating in the COVAX Facility. We expect to deliver doses with antigen and adjuvant manufactured at facilities directly funded by the investments previously received from CEPI. We expect 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 may prioritize such doses to low- and middle- income countries, at lower prices. Additionally, we may provide additional doses, to the extent available from CEPI-funded manufacturing facilities, in the event that SIIPL cannot materially deliver expected vaccine doses to the COVAX Facility. Together with SIIPL, we expect to initiate delivery of doses following receipt of appropriate regulatory authorizations. Under the agreement, we received an upfront payment of $350 million from Gavi during the second quarter of 2021 and expect to receive an additional payment of $350 million if we secure EUL for NVX-CoV2373 by the WHO.

Table of Contents

We have also entered into supply and license agreements with strategic partners to supply NVX-CoV2373 in their specified territories under which we are entitled to receive royalties primarily from the sale of NVX-CoV2373 by our partners. During the three and six months ended June 30, 2021, we received royalties of $23.5 million under these licensing arrangements.

In the six months ended June 30, 2021, we funded our ~~recent~~ operations with cash and marketable securities on hand, upfront payments under APAs, proceeds from the sale of common stock ~~and preferred stock in equity offerings,~~together with revenue under the OWS Agreement and CEPI Funding Agreement ~~OWS Agreement and the DoD Contract.~~that support our NVX-CoV2373 vaccine development activities. We anticipate our future operations to be ~~additionally~~ funded by our cash, cash equivalents and marketable securities, upfront payments under our APAs, revenue under our OWS Agreement and CEPI ~~DoD~~Funding Agreement, and following any potential global regulatory approvals, revenue from product sales, royalties under licensing arrangements with our strategic partners and/or other potential ~~non-dilutive~~ funding sources.

As of ~~September~~June 30, ~~2020,~~2021, we had ~~$571.6 million~~$2.1 billion in cash and cash equivalents, marketable securities and restricted cash as compared to ~~$82.2~~$806.4 million as of December 31, ~~2019.~~2020. These amounts consisted of ~~$334.2~~$2.1 billion in cash and cash equivalents and $47.9 million in restricted cash as of June 30, 2021 as compared to $553.4 million in cash and cash equivalents ~~$169.8~~$157.6 million in marketable securities and ~~$67.6 million in restricted cash as of September 30, 2020 as compared to $78.8 million in cash and cash equivalents and $3.4~~$95.3 million in restricted cash as of December 31, ~~2019.~~

2020.

The following table summarizes cash flows for the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019~~2020 (in thousands):


	2021		2020		Change
Net cash provided by (used in):
Operating activities	$	807,497	$	92,524	$	714,973
Investing activities	128,708		(245,946)		374,654
Financing activities	538,144		602,540		(64,396)
Effect on exchange rate on cash, cash equivalents and restricted cash	(348)		276		(624)
Net increase in cash, cash equivalents and restricted cash	1,474,001		449,394		1,024,607
Cash, cash equivalents and restricted cash at beginning of period	648,738		82,180		566,558
Cash, cash equivalents and restricted cash at end of period	$	2,122,739	$	531,574	$	1,591,165

Nine Months Ended

September 30,

2019 to


2020

2019

2020

Summary of Cash Flows (in thousands):







Net cash (used in) provided by:







Operating activities

$
86,027

$
(112,880)

$
198,907

Investing activities

(346,656)

38,708

(385,364)

Financing activities

580,152

68,212

511,940

Effect on exchange rate on cash, cash equivalents and restricted cash

33

(69)

102

Net increase (decrease) in cash, cash equivalents and restricted cash

319,556

(6,029)

325,585

Cash, cash equivalents and restricted cash at beginning of period

82,180

81,959

221

Cash, cash equivalents and restricted cash at end of period

$
401,736

$
75,930

$
325,806

Net cash provided by operating activities increased to ~~$86.0~~$807.5 million for the ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, as compared ~~cash used in operating activities~~ to ~~$112.9~~$92.5 million for the same period in ~~2019.~~2020. The increase in cash provided is primarily due to payments ~~received~~ under ~~the CEPI Funding Agreement and OWS Agreement,~~APAs recorded as deferred revenue and the timing of payments to third-parties.

During the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, our investing activities consisted primarily of ~~purchases~~maturities and ~~maturities~~sale of marketable securities, net of purchases, our acquisition of Novavax CZ in 2020 ~~proceeds from the Catalent transaction in 2019~~ and, to a much lesser extent, capital expenditures. Capital expenditures for the ~~nine~~six months ended ~~September~~June 30, 2021 and 2020 ~~and 2019~~ were ~~$12.6~~$28.9 million and ~~$1.6~~$3.9 million, ~~respectively.~~respectively, and the increase in capital expenditures was primarily due to the build out of our facilities and related capital expenditures to support NVX-CoV2373. For ~~2020,~~2021, we expect ~~a significant~~an increase in our capital expenditures due to ~~our~~further development activities for our NVX-CoV2373 ~~program.~~

program, including the additional build-out of research and development and manufacturing facilities and related equipment, and the build-out of our new corporate office facility to accommodate anticipated increases in headcount.

Our financing activities consisted primarily of sales of our common stock under our At Market Issuance Sales Agreements, ~~and issuance of preferred stock in a private placement,~~ payments of finance lease liabilities and ~~to a lesser extent, stock option exercises and purchases under our Employee Stock Purchase Plan.~~exercise of stock-based awards. In the ~~nine~~six months ended ~~September~~June 30, 2021 and 2020, we received net proceeds of ~~$445.6~~approximately $565 million and $392 million, respectively, from selling shares of common stock through our At Market Issuance Sales Agreements and $200.0 million through the issuance of preferred stock in a private placement. In the nine months ended September 30, 2019, we received net proceeds of $67.2 million from selling shares of common stock through our At Market Issuance Sales Agreements.

Based on our most recent cash flow forecast, we believe our current capital is sufficient to fund our operating plans for a minimum of twelve months from the date that this Quarterly Report was filed. Additional capital may be

~~Table of Contents~~

~~required in the future to develop our vaccine candidates through clinical development, manufacturing and commercialization.~~

Our ability to fund the Company’s operations is dependent upon management’s plans, which include receiving non-dilutive funding from domestic and international sources, raising additional capital in the near term primarily through a combination of equity and debt financings, collaborations, strategic alliances and marketing, distribution or licensing arrangements and in the longer term, from revenue related to product sales, to the extent our product candidates receive marketing approval and can be commercialized. New financings may not be available to the Company on commercially acceptable terms, or at all. Also, any collaborations, strategic alliances and marketing, distribution or licensing arrangements may require 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.

Off-Balance Sheet Arrangements

We did not have any material off-balance sheet arrangements as of ~~September~~June 30, ~~2020.~~

2021.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

The primary objective of our investment activities is preservation of capital, with the secondary objective of maximizing income. As of ~~September~~June 30, ~~2020,~~2021, we had cash and cash equivalents of ~~$334.2 million, $169.9 million in marketable securities, all of which are current, $67.6~~$2.1 billion, $47.9 million in restricted cash and working capital of ~~$432.0~~$703.5 million.

Table of Contents

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

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

We are headquartered in the U.S. where we conduct the vast majority of our business activities. We have two foreign consolidated subsidiaries, Novavax AB, which is located in Sweden, and Novavax CZ, ~~(formerly Praha Vaccines a.s.),~~ which is located in the Czech Republic. A 10% decline in the exchange rate between the U.S. dollar and Swedish Krona would result in a decline of stockholders’ equity ~~(deficit)~~ of approximately ~~$3.3~~$8 million as of ~~September~~June 30, ~~2020.~~2021. A 10% decline in the exchange rate between the U.S. dollar and Czech Koruna would result in a decline of stockholders’ equity ~~(deficit)~~ of approximately ~~$10.1~~$5 million as of ~~September~~June 30, ~~2020.~~

2021.

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

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management, with the assistance of our chief executive officer and chief financial officer, has reviewed and evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of ~~September~~June 30, ~~2020.~~2021. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Our disclosure controls and procedures are designed to provide reasonable assurance of achieving such control objectives. Based on the evaluation of our disclosure controls and procedures as of ~~September~~June 30, ~~2020,~~2021, our chief executive officer and chief financial officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.

~~Table of Contents~~

Changes in Internal Control over Financial Reporting

Our management, including our chief executive officer and chief financial officer, has evaluated any changes in our internal control over financial reporting that occurred during the quarterly period ended ~~September~~June 30, ~~2020,~~2021, and has concluded that there was no change that occurred during the quarterly period ended ~~September~~June 30, ~~2020~~2021 that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Management’s assessment of and conclusion on the effectiveness of disclosure controls and procedures and internal controls over financial reporting did not include the internal controls related to the operations acquired in the acquisition of Novavax CZ that are included in our ~~September~~June 30, ~~2020~~2021 consolidated financial ~~statements.~~statements through May 27, 2021. Our audit of internal control over financial reporting also did not include an evaluation of the internal control over financial reporting of Novavax ~~CZ.~~

CZ through May 27, 2021.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

On February 26, 2021, a Novavax stockholder named Thomas Golubinski filed a derivative complaint against certain members of the Novavax board of directors and certain members of senior management in the Delaware Court of Chancery. Novavax is a nominal defendant. The plaintiff challenges two sets of 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 certain board members or members of senior management allegedly possessed undisclosed positive material information concerning the Company. The complaint asserts claims for breach of fiduciary duty, waste, and unjust enrichment. The plaintiff seeks an award of damages to the Company, an order rescinding the April 2020 and June 2020 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,

Table of Contents

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 on Schedule 14A filed with the SEC on May 3, 2021. The results of the vote were disclosed in the Company’s Current Report on Form 8-K filed with the SEC on June 24, 2021. Should the plaintiff elect to move forward with his claims, the defendants intend to move for summary judgment on ratification grounds while continuing to pursue dismissal.

Item 1A. Risk Factors

~~Other than~~

You should carefully consider the ~~additional~~following risk factors ~~disclosed below, there~~in evaluating our business. A number of risks could cause our actual results to differ materially from those that are ~~no material changes~~indicated by forward-looking statements. Some risks relate principally to our business and the industry in which we operate. Others relate principally to the ~~Company’s risk~~securities market and ownership of our common stock. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties of which we are unaware, or that we currently deem immaterial, also may become important factors ~~as described in Item 1A~~that affect us. Any of the ~~Company’s Annual~~following risks could result in material adverse impacts on our business, financial condition or results of operations. You also should consider the other information included in this Quarterly Report on Form ~~10-K for~~10-Q as well as our other filings with the ~~fiscal year ended December 31, 2019.~~

SEC.

~~Although there has been rapid progress,~~

Summary of Risk Factors

Our business is subject to numerous risks. The following is a summary of the principal risk factors described in this section:

•We have a history of losses and our future profitability is uncertain.

•We will continue to require significant funding to maintain our current level of operations and fund the further development of our vaccine candidates.

•Because our vaccine product development efforts depend on new and rapidly evolving technologies, our efforts may not succeed.

•The regulatory and commercial success of our COVID-19 vaccine candidate, NVX-CoV2373, remains uncertain. We may be unable to obtain regulatory approval or produce a successful vaccine in a timely manner, if at all.

•We are a biotechnology company and face significant risk in developing, manufacturing and commercializing our products.

•Because we depend on third-parties to conduct some of our laboratory testing and clinical trials, and a significant amount of our vaccine manufacturing and distribution, we may encounter delays in or lose some control over our efforts to develop and supply products.

•Many of our competitors have significantly greater resources and experience, which may negatively impact our commercial opportunities and those of our current and future licensees.

•There is significant competition in the development of a vaccine against COVID-19, influenza, and RSV and we may never see returns on the significant resources we are devoting to our vaccine candidates.

•We have not completed the development of vaccine products, and we may not succeed in obtaining the FDA licensure necessary to sell such vaccine products.

•The regulatory pathway for NVX-CoV2373 is continually evolving, and may result in unexpected or unforeseen challenges.

•We are conducting, and plan to conduct in the future, a number of clinical trials for NVX-CoV2373 at sites outside the United States and the FDA may not accept data from trials conducted in such locations.

Table of Contents

•Even if regulatory approval is received for our vaccine candidates, the later discovery of previously unknown problems with a product, manufacturer or facility may result in restrictions, including withdrawal of the product from the market.

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

•Our business may be adversely affected if we do not successfully execute our business development initiatives.

•Servicing our 3.75% convertible senior unsecured notes due 2023 (the “Notes”) requires a significant amount of cash, and we may not have sufficient cash flow resources to pay our debt.

•Because our stock price has been and will likely continue to be highly volatile, the market price of our common stock may be lower or more volatile than expected.

•Litigation could have a material adverse impact on our results of operation and financial condition.

We or the third parties upon whom we depend may be adversely affected by natural or man-made disasters or public health emergencies, such as the COVID-19 pandemic.

Risks Related to Our Financial Condition and Capital Requirements

We have a history of losses and our future profitability is uncertain.

Our expenses have exceeded our revenue since our formation in 1987, and our accumulated deficit at June 30, 2021 was $2.4 billion. Our revenues and expenses fluctuate significantly from period to period.For most of our history our expenses have exceeded our revenues, which may occur during most periods in the foreseeable future. Our net losses for the last three fiscal years were $418.3 million in 2020, $132.7 million in 2019 and $184.7 million in 2018.

Historically, our losses have resulted predominantly from research and development expenses for our vaccine candidates, manufacturing-related expenses, expenses associated with efforts to obtain regulatory approvals, costs related to protection of our intellectual property and other general and administrative operating expenses, a significant portion of which have been noncash. Our expenses have exceeded our revenue since inception, and we believe our expenses will fluctuate over time, and may substantially increase in some years, as a result of continuing efforts to develop, test, manufacture, and make regulatory filings for our vaccine candidates, and, if our product candidates are approved, commercialization efforts.

As of the end of the second quarter of 2021, our investment in the development and manufacture of NVX-CoV2373 has been substantial, and we expect such levels of investment to continue for the rest of 2021 and beyond, although the precise magnitude of our total investment will depend on the duration of the COVID-19 pandemic, the competitive landscape, the timing and results of our applications for regulatory approvals, the availability of funding, and whether and what booster shot protocols are recommended by governments, regulatory authorities, and healthcare providers. If we are unable to timely commercialize a vaccine against COVID-19, we likely would never recoup our investments. We expect to continue to incur significant operating expenses and anticipate significant losses over time as we seek to:

•conduct additional clinical trials and seek regulatory approvals for NVX-CoV2373 and other potential vaccine candidates;

•conduct preclinical studies for other potential vaccine candidates;

•expand our global manufacturing and distribution capacity; and

•maintain, expand and protect our intellectual property portfolio.

As a result, we expect our cumulative operating losses to increase until such time, if ever, that product sales, licensing fees, royalties, milestones, contract research and other sources generate sufficient revenue to fully fund our operations. We may never achieve profitability and may not sustain profitability, if achieved.

Table of Contents

We will continue to require significant funding to maintain our current level of operations and fund the further development of our vaccine candidates.

We do not currently generate sufficient revenue from product sales, licensing fees, royalties, milestones, contract research or other sources to fully fund our operations. We, therefore, will use our cash resources, and expect to require additional funds, to maintain our operations, continue our research and development programs, commence future preclinical studies and clinical trials, seek regulatory approvals and manufacture and market any products that are approved for commercialization.

To date, we have financed our operations primarily through the sale of equity and debt securities, government funding and grant agreements, and additionalfunding may not be available to us on favorable terms, or at all. Although we have entered into supply agreements for NVX-CoV2373 that include prepayments from the purchasers, until we can generate sufficient product revenue in amounts sufficient to fully fund our operations, which we may never do, we expect to finance our cash needs through a combination of additional public or private equity or debt financings, as well as existing cash, potential collaborations, strategic alliances and marketing, distribution or licensing arrangements, funding from governmental and non-governmental funding entities, and potentially other sources. While we may continue to apply for contracts or grants from academic institutions, non-profit organizations and governmental entities, we may not be successful. Adequate additional funding may not be available to us on acceptable terms, if at all. Furthermore, negative interpretations of clinical trial data or setbacks, or perceived setbacks, with respect to manufacturing ability and/or capacity or regulatory filing timelines for NVX-CoV2373 or our other vaccine candidates, as well as the competitive landscape posed by other COVID-19 vaccines, may impair our ability to raise additional financing on favorable terms, or at all. If we cannot raise the additional funds required for our anticipated operations, we may be required to delay significantly, reduce the scope of or eliminate one or more of our research or development programs, downsize our organization, or seek alternative measures to avoid insolvency, including arrangements with collaborative partners or others that may require us to relinquish rights to certain of our technologies or vaccine candidates. If we raise additional funds through future offerings of shares of our common stock or other securities, such offerings would cause dilution of current stockholders’ percentage ownership in the Company, which could be substantial. Future offerings also could have a material and adverse effect on the price of our common stock.

Economic uncertainty may adversely affect our access to capital, cost of capital and ability to execute our business plan as scheduled.

Generally, worldwide economic conditions remain uncertain, particularly due to the COVID-19 pandemic. Access to capital markets is critical to our ability to operate. Traditionally, biotechnology companies have funded their research and development expenditures by raising capital in the equity markets. Declines and uncertainties in these markets in the past have severely restricted raising new capital and have affected companies’ ability to continue to expand or fund existing development, manufacturing, regulatory and commercialization efforts. We require significant capital for our current and expected operations. The general economic and capital market conditions, both in the U.S. and worldwide, have been volatile in the past and at times have adversely affected our access to capital and increased the cost of capital. The capital and credit markets may not be available to support future capital raising activity on favorable terms. If economic conditions decline, our future cost of equity or debt capital and access to the capital markets could be adversely affected. In addition, if we are unable to access the capital markets on favorable terms, our ability to execute our business plan as contemplated would be compromised. Moreover, we rely and intend to rely on third-parties, including clinical research organizations, contract manufacturing organizations and other important vendors and consultants. Global economic conditions may result in a disruption or delay in the performance of our third-party contractors and suppliers. If such third-parties are unable to adequately satisfy their contractual commitments to us in a timely manner, our business could be adversely affected.

Our existing funding and supply agreements do not assure success of our vaccine candidates or that we will be able to fully fund our vaccine candidates.

The OWS Agreement, the DoD Agreement and the CEPI funding agreement each reimburse a portion of the expenses associated with the development and commercialization of NVX-CoV2373. To the extent funding commitments in such agreements are conditioned on our meeting certain milestones or conditions, including regulatory approval in applicable jurisdictions, we may not ultimately receive the full amount of committed funds and could be exposed to urgent need for additional funding to support our NVX-CoV2373 development, manufacturing and distribution activities. For example, in connection with the OWS Agreement, the USG has instructed us to prioritize alignment with the FDA on our analytic methods before conducting additional U.S. manufacturing and further indicated that the USG will not fund additional U.S. manufacturing until such agreement has been made. The OWS Agreement includes provisions giving the USG termination rights based on a determination that the funded project will not produce beneficial results commensurate with the expenditure of resources and that termination would be in the USG’s interest. Such a determination would result in the loss of funding under that agreement and could result in other actions by the U.S. government. The CEPI funding agreement provides CEPI certain “march-in” rights in the event of certain breaches of that agreement. We may be unable to timely obtain additional government or private funding, if at all. Additionally, we have entered into, and plan to continue entering into, supply agreements for NVX-

Table of Contents

CoV2373 that include prepayments from the purchasers. In the event we are unable to successfully develop and commercialize NVX-CoV2373 or fail to meet certain product volume or delivery timing obligations under our supply agreements, we may be required to refund significant portions of the prepayments, which could have a material and adverse effect on our financial condition. Our inability to succeed with key clinical or development activities could jeopardize our ability to obtain licensure from the FDA or other regulatory authorities to sell NVX-CoV2373. As a result, our existing funding and supply agreements may be insufficient to fund our commercial launch.

Risks Related to Product Development and Commercialization

Because our vaccine product development efforts depend on new and rapidly evolving technologies, our efforts may not succeed.

Our vaccine development efforts depend on new, rapidly evolving technologies and on the marketability and profitability of our products. Our development efforts and, if those are successful, commercialization of NVX-CoV2373 and our other vaccines could fail for a variety of reasons, including if:

•our recombinant nanoparticle vaccine technologies, any or all of the products based on such technologies or our proprietary manufacturing process prove ineffective or unsafe;

•new strains of COVID-19 evolve, with respect to which NVX-CoV2373 proves less effective;

•we or our third-party manufacturer facilities fail to reproducibly scale-up manufacturing with sufficiently high yields at reasonable cost and on projected timelines, or such manufacturing fails to generate product that consistently satisfies purity, potency, quality, stability, and shelf-life standards necessary for obtaining regulatory approvals or achieving commercial viability;

•the products are difficult to manufacture on a large-scale or uneconomical to market;

•our in-house or third-party manufacturing facilities fail regulatory inspections;

•proprietary rights of third-parties prevent us or our collaborators from exploiting technologies, and manufacturing or marketing products; or

•third-party competitors achieve and maintain greater market share due to earlier approvals or superior marketing capabilities.

The regulatory and commercial success of our COVID-19 vaccine candidate, NVX-CoV2373, remains uncertain. We may be unable to obtain regulatory approval or produce a successful vaccine in a timely manner, if at all.

In response to the outbreak of COVID-19, we are pursuing the development and manufacture of our vaccine candidate, ~~NVX-CoV2373, which is currently in Phase 3 of clinical testing.~~NVX-CoV2373. Even though we ~~observed~~have reported positive ~~results in pre-clinical~~data from Phase 1, 2 and ~~early~~3 clinical trials, such results may not be ~~predictive of future clinical trial results and whether they will be~~ sufficient to support regulatory ~~approval,~~submissions, authorizations and approvals, accelerated or ~~otherwise. We may be unable to produce a vaccine that successfully prevents COVID-19 in a timely manner,~~otherwise, on our projected timelines, if at all.

Additionally, ~~our ability to develop an effective vaccine to respond to COVID-19~~even if NVX-CoV2373 receives regulatory approval, successful commercialization depends on our ability to effectively scale up manufacturing capabilities at our own locations and those of our manufacturing partners and contractors. ~~We recently~~In May 2020, we acquired Novavax CZ (formerly Praha Vaccines, a.s.) including its vaccine manufacturing facility in Bohumil, Czech Republic and approximately 150 of its employees. Strategic transactions, such as our acquisition of Novavax CZ, involve many risks, including, among others, those related to diversion of management’s attention from other business concerns, unanticipated expenses and liabilities, and increased complexity of our operations, which could prevent us from effectively exploiting acquired facilities, successfully integrating the acquired business and personnel, or fully realizing expected synergies. We also are ~~also~~ actively entering into agreements with third parties to manufacture the antigen component of NVAX-CoV2373 and our proprietary Matrix-M™ adjuvant, as well as to distribute NVX-CoV2373. Reliance on third parties involves many risks, including risks that such third parties may not complete manufacturing or distribution activities on schedule, in compliance with regulatory requirements, within budget or in accordance with our quality standards. Our reliance on third-party manufacturers and distributors may adversely affect our operations or result in unforeseen delays or other problems beyond our control. Because of contractual restraints and the limited number of third-party manufacturers with the expertise, required regulatory approvals and facilities to manufacture NVX-CoV2373 ~~on a potentially~~and its components at commercial scale, replacement of a manufacturer may be expensive and time-consuming and may cause interruptions in production. Manufacturing of NVX-CoV2373 and its components involves a complicated process that will require significant investments of time and financial resources to ~~implement. In addition, we~~implement, and our efforts to establish manufacturing capabilities may ~~have~~not meet expectations as to ~~enter into technical transfer agreements~~timing, scale-up, reproducibility, yields, purity, cost, potency or quality. Shortages of raw materials and ~~share~~supplies also negatively impact our ~~know-how with the third-party manufacturers, which can be time-consuming and~~manufacturing efforts. We may ~~result in further delays. We cannot guarantee that we will~~not be able to timely and effectively produce NVX-CoV2373 in adequate quantities to ~~meet~~address global demand.

~~The Company has~~

We have not previously had a commercial launch of any vaccine product, and doing so in a pandemic environment with an urgent, critical global need creates additional challenges. In addition to scaling up our manufacturing capabilities, we ~~will~~

Table of Contents

need to develop global distribution channels and form partnerships with third parties ~~worldwide.~~worldwide, as well as hire, train and integrate additional management, administrative and sales and marketing personnel. Rapid and significant growth may strain our administrative and operational infrastructure, imposing significant additional responsibilities on our organization, and our efforts to establish these

~~Table of Contents~~

capabilities may not meet ~~initial~~ expectations as to timing, scale-up, ~~yield,~~reproducibility, yields, purity, cost, potency or quality. If we ~~are unable~~fail to successfully manage our growth and the increased complexity of our operations, our business, financial position, results of operations and prospects may be materially and adversely affected.

We are a biotechnology company and face significant risk in developing, manufacturing and commercializing our products.

We focus our research and development activities on vaccines, an area in which we believe we have particular strengths and a technology that appears promising. The outcome of any research and development program is highly uncertain. Only a small fraction of biopharmaceutical development programs ultimately result in commercial products or even product candidates and a number of events could delay our development efforts and negatively impact our ability to make regulatory submissions or obtain regulatory approval for, and to manufacture, market and sell, NVX-CoV2373 or any other vaccine on our projected timelines, if at all. Vaccine candidates that initially appear promising often fail to yield successful products, and we may not ultimately be able to demonstrate the safety, potency, purity, stability and efficacy necessary to obtain regulatory authorization to market our product candidates. In many cases, preclinical studies or clinical trials will show that a product candidate is not efficacious or that it raises safety concerns or has other side effects that outweigh its intended benefit. Success in preclinical or early clinical trials may not translate into success in large-scale clinical trials. Further, success in clinical trials often leads to increased investment, accelerating cumulative losses. Even if clinical trial results appear positive, regulatory approval may not be obtained if the FDA does not agree with our interpretation of the results, and we may face challenges when scaling-up the production process to commercial levels. Even after a product is approved and launched, general usage or post-marketing clinical trials may identify safety or other previously unknown problems with the product, or manufacturing issues may emerge, either of which may result in regulatory approvals being suspended, limited to narrow the scope of the approval, or revoked, which may otherwise prevent successful commercialization. Intense competition in the vaccine industry could also limit the successful commercialization of any products for which we receive commercial approval.

Because we depend on third-parties to conduct some of our laboratory testing and clinical trials, and a significant amount of our vaccine manufacturing and distribution, we may encounter delays in or lose some control over our efforts to develop and supply products.

We are highly dependent on third-party organizations to conduct some of our laboratory testing and clinical trials and a significant amount of our vaccine manufacturing activities and distribution. If we are unable to obtain any necessary services on acceptable terms, we may not complete our product development or commercialization efforts in a timely manner. We may lose control over these activities or become too dependent upon these parties. These third-parties may not complete testing, manufacturing or distribution activities on schedule, or in satisfaction of regulatory or commercial requirements. Certain of our facilities are also contracted for defined time frames and through association with OWS and CEPI, and we may not be able to access those facilities for sufficient periods of time to provide adequate supply.

We are responsible for confirming that each of our clinical trials is conducted in accordance with its general investigational plan and protocol. Moreover, the FDA and foreign regulatory agencies require us to comply with regulations and standards, commonly referred to as good clinical practices, for conducting, recording and reporting the results of clinical trials to assure that data and reported results are credible and accurate and that the rights, safety and welfare of clinical trial participants are adequately protected. The FDA and foreign regulatory agencies also require us to comply with good manufacturing practices. Our reliance on third-parties does not relieve us of these responsibilities and requirements. These third-parties may not successfully carry out their contractual duties or regulatory obligations. Furthermore, if a third-party manufacturer is producing materials or products for themselves or other companies, that manufacturer is exposed to regulatory risks for the production of such materials and products. As a result, failure to meet the regulatory requirements for the production of those materials and products may generally affect the regulatory status of the third-party manufacturer’s facility, which could impact its ability to produce our materials and products. Any of our third-party service providers may need to be replaced, the quality or accuracy of the data they obtain may be compromised, the services provided to us may be delayed, or the product they manufacture may be contaminated due to the failure to adhere to our clinical and manufacturing protocols, regulatory requirements or for other reasons. In any such event, our preclinical development activities or clinical trials may be extended, delayed, suspended or terminated, and we may not be able to obtain regulatory approval of, or successfully commercially manufacture on a timely basis, our vaccine candidates.

The results from the Prepare trial, including that ResVax failed to meet the primary endpoint of the trial, will likely create challenges, some of which may be significant, around further development of that vaccine.

While the Prepare results suggest that ResVax is safe and is likely efficacious in more serious manifestations of RSV disease, the trial failed to achieve its primary clinical endpoint. Not achieving the primary clinical endpoint has been viewed negatively by our investors. Although the failure to achieve the primary endpoint in the trial is not evidence that the vaccine is

Table of Contents

ineffective, it means that regulatory agencies like the FDA and EMA are likely to require additional clinical trial data prior to licensure. This development may be viewed negatively by our potential collaborators and partners, which may make the ongoing development of ResVax, and any other RSV F Vaccine candidates, more challenging.

We may have product liability exposure.

The administration of drugs or vaccines to humans, whether in clinical trials or after marketing approval, can result in product liability claims. We maintain product liability insurance coverage for our current clinical programs, including our NVX-CoV2373 trials. If and when we obtain marketing approval for any vaccine candidate, we intend to expand our insurance coverage to include the sale of commercial products; however, we may not be able to obtain or maintain insurance coverage on commercially reasonable terms, at a reasonable cost or in sufficient amounts to protect us against losses due to liability. Furthermore, such insurance coverage and our resources may not be sufficient to satisfy all liabilities that result from product liability claims. A successful claim may prevent us from obtaining adequate product liability insurance in the future on commercially desirable terms, if at all. Even if a claim is not successful, defending such a claim would be time- consuming and expensive, may damage our reputation in the marketplace and would likely divert management’s attention.

In addition, because we are developing NVX-CoV2373 in response to the outbreak of COVID-19, a global pandemic, we may have a widely used vaccine as an investigational vaccine or a product authorized for temporary or emergency use prior to our receipt of marketing approval. Unexpected safety issues in these circumstances could lead to product liability claims and our existing insurance may not be adequate for such claims.

Regardless of merit or eventual outcome, liability claims may result in:

•decreased demand for our products;

•withdrawal of regulatory approvals;

•voluntary or mandatory recalls of our products;

•necessity for additional nonclinical or clinical studies, changes in labeling, or changes to manufacturing processes, specifications and/or facilities;

•impairment of our business reputation and negative media attention;

•withdrawal of clinical trial participants;

•costs of related litigation;

•substantial monetary awards to participants or other claimants;

•loss of revenue; and

•inability to commercialize our vaccine candidates.

In the United States, the PREP Act, provides immunity for manufacturers from all claims under state or federal law for "loss" arising out of the administration or use of a “covered countermeasure.” However, injured persons may still bring a suit for "willful misconduct" against the manufacturer under some circumstances. "Covered countermeasures" include security countermeasures and "qualified pandemic or epidemic products", including products intended to diagnose or treat pandemic or epidemic disease, such as pandemic vaccines, as well as treatments intended to address conditions caused by such products. For these immunities to apply, the Secretary of DHHS must issue a declaration in cases of public health emergency or “credible risk” of a future public health emergency. On March 17, 2020, the Secretary of DHHS issued a declaration under the PREP Act and has issued subsequent amendments thereto to provide liability immunity for activities related to certain countermeasures against the ongoing COVID-19 pandemic. While we believe our products would be covered under the provisions of the PREP Act, this cannot be assured. Also, the Secretary of the HHS may not make other declarations in the future that cover any of our other product candidates, and the U.S. Congress may reduce coverage under the PREP Act or repeal it altogether. Product liability lawsuits may result in substantial liabilities and may require us to limit commercialization of our product candidates.

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

Table of Contents

Completion of our clinical trials and commercialization of our vaccine candidates require access to, or development of, facilities to effectively manufacture our 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 recently increased our projected global manufacturing capacity for NVX-CoV2373, our efforts to establish manufacturing capabilities may not meet expectations as to timing, scale-up, reproducibility, yields, purity, cost, potency or quality. The antigen component of NVX-CoV2373 is currently being manufactured at Novavax CZ, as well as numerous partnered manufacturing sites, including FUJIFILM in the United States, SIIPL in India and Takeda in Japan, among others.Challenges manufacturing either the antigen component or the adjuvant, or issues in later manufacturing stages, could compromise production of NVX-CoV2373.

Manufacturing our vaccine candidates involves a complicated process with which we have limited experience. We are highly dependent on third-party organizations to conduct a significant amount of our vaccine manufacturing activities. If we and our third-party manufacturing organizations are unable to manufacture our vaccine candidates in clinical quantities or, if and when necessary, in commercial quantities and at sufficient yields and at required specifications, then commercialization will be delayed, and we will need to identify and reach supply arrangements with additional third-parties. Third-party manufacturers also must receive FDA or equivalent foreign regulatory body approval before they can produce clinical material or commercial product. Our 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 our 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. We and our third-party manufacturers may also encounter production challenges related to:

•costs, scale up, and yields;

•shortages of raw materials and supplies;

•quality control and assurance;

•contamination, lot consistency, potency, and purity;

•shortages of qualified personnel and other capacity constraints;

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

•capital funding.

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

We must identify vaccines for development with our technologies and establish successful third-party relationships.

The near and long-term viability of our vaccine candidates depend in part on our ability to successfully establish new strategic collaborations with pharmaceutical and biotechnology companies, non-profit organizations and government agencies. Establishing strategic collaborations and obtaining government funding is difficult and time-consuming. Potential collaborators may reject collaborations based upon their assessment of our financial, regulatory or intellectual property position or based on their internal pipelines; government agencies may reject contract or grant applications based on their assessment of public need, the public interest, our products’ ability to address these areas, or other reasons beyond our expectations or control. Collaborators also may seek to modify or terminate relationships.Past success in establishing strategic collaborations with pharmaceutical and biotechnology companies, non-profit organizations and government agencies in the past is no guarantee of future success in entering into new relationships or in performing under existing relationships. If we fail to establish a sufficient number of collaborations or government relationships on acceptable terms, or fail to perform under collaborations or

Table of Contents

relationships to the satisfaction of counter-parties, we may not be able to commercialize our vaccine candidates or generate sufficient revenue to fund further research and development efforts.

The collaborations we have established or may establish may not result in the successful development or commercialization of any vaccine candidates for several reasons, including the fact that:

•we may not have the ability to control the activities of our partners and cannot provide assurance that they will fulfill their obligations to us, including with respect to the license, development and commercialization of vaccine candidates, in a timely manner or at all;

•such partners may not devote sufficient resources to our vaccine candidates or properly maintain or defend our intellectual property rights;

•our partners could independently develop, or develop with third parties, products that compete directly or indirectly with our vaccine candidates if such partners believe that competitive products are more likely to be successfully developed or can be commercialized under terms that are more economically attractive than ours;

•any failure on the part of our partners to perform or satisfy their obligations to us could lead to delays in the development or commercialization of our vaccine candidates and affect our ability to realize product revenue; and

•disagreements, including disputes over the ownership of technology developed with such collaborators, could result in litigation, which would be time consuming and expensive, and may delay or terminate research and development efforts, regulatory approvals and commercialization activities.

If we or our collaborators fail to maintain our existing agreements or in the event we fail to establish agreements as necessary, we could be required to undertake research, development, manufacturing and commercialization activities solely at our own expense. These activities would significantly increase our capital requirements and, given our lack of sales, marketing and distribution capabilities, significantly delay the commercialization of our vaccine candidates.

Even if licensed to market, our vaccine products may not be initially or ever profitable.

Whether we make a profit from the sale of our vaccine products is dependent on a number of variables, including the costs we incur manufacturing, testing and releasing, packaging and shipping such vaccine product. Additionally, the CEPI funding agreement necessitates that we allocate a certain number of doses of NVX-CoV2373 to certain middle and lower income countries, and the Grant Agreement with BMGF necessitates that we commit to a specific amount of sales in certain specified middle and lower income countries, which may impact negatively our ability to generate profit. We cannot predict when, if at all, our approved vaccine products will be profitable to the Company.

Even if we successfully commercialize any of our vaccine candidates, either alone or in collaboration, we face uncertainty with respect to pricing, third-party reimbursement and healthcare reform, all of which could adversely affect any commercial success of our vaccine candidates.

Our ability to collect revenue from the commercial sale of our vaccines may depend on our ability, and that of any current or potential future collaboration partners or customers, to obtain adequate levels of approval, coverage and reimbursement for such products from third-party payers such as:

•government health administration authorities such as the Advisory Committee for Immunization Practices of the Centers for Disease Control and Prevention;

•private health insurers;

•managed care organizations;

•pharmacy benefit management companies; and

•other healthcare related organizations.

Third-party payers are increasingly challenging the prices charged for medical products and may deny coverage or offer inadequate levels of reimbursement if they determine that a prescribed product has not received appropriate clearances from the FDA, or foreign equivalent, or other government regulators; is not used in accordance with cost-effective treatment

Table of Contents

methods as determined by the third-party payer; or is experimental, unnecessary or inappropriate. Prices could also be driven down by managed care organizations that control or significantly influence utilization of healthcare products.

In both the U.S. and some foreign jurisdictions, there have been a number of legislative and regulatory proposals and initiatives to change the health care system in ways that could affect our ability to sell vaccines and could adversely affect the prices that we receive for our vaccine candidates, if approved. Some of these proposed and implemented reforms could result in reduced pharmaceutical pricing or reimbursement rates for medical products, and while we have no current vaccines available for commercial sale, the impact of such reform could nevertheless adversely affect our business strategy, operations and financial results. For example, the Affordable Care Act (“ACA”) contained several cost containment measures that could adversely affect our future revenue, including, for example, increased drug rebates under Medicaid for brand name prescription drugs, extension of Medicaid rebates to Medicaid managed care organizations, and extension of so-called 340B discounted pricing on pharmaceuticals sold to certain healthcare providers. Additional provisions of the healthcare reform laws that may negatively affect our future revenue and prospects for profitability include the assessment of an annual fee based on our proportionate share of sales of brand name prescription drugs to certain government programs, including Medicare and Medicaid. The ACA also established a Medicare Part D coverage gap discount program, in which manufacturers must agree to offer 70% point-of-sale discounts off negotiated prices of applicable branded on drugs (including vaccines) to eligible beneficiaries during their coverage gap period (the so-called “donut hole”), as condition for the manufacturer’s outpatient drugs to be covered under Medicare Part D. Other aspects of healthcare reform, such as expanded government enforcement authority and heightened standards that could increase compliance-related costs, could also affect our business.

Further, we face uncertainties because of occasional political, legislative, and administrative efforts to substantially modify or invalidate some or all of the provisions of the ACA. For example, in 2017, the Trump administration withheld the cost-sharing subsidies paid to ACA health insurance exchange plans serving low-income enrollees. The Tax Cut and Jobs Act (“TCJA”) was also enacted at the end of 2017 and included provisions that affected healthcare insurance coverage and payment, such as the elimination of the tax penalty for individuals who do not maintain sufficient health insurance coverage beginning in 2019 (the so-called “individual mandate”).

More recently, the Biden administration, through the American Rescue Plan Act of 2021, increased subsidies for coverage purchased through ACA health insurance exchanges and extended eligibility for subsidies to higher income levels. On December 14, 2018, a U.S. District Court Judge in the Northern District of Texas ruled that the individual mandate is a critical and inseverable feature of the ACA, and therefore, because it was repealed as part of the TCJA, the remaining provisions of the ACA are invalid as well. On December 18, 2019, the U.S. Court of Appeals for the 5th Circuit ruled that the individual mandate was unconstitutional but remanded the case back to the District Court to determine whether the remaining provisions of the ACA are invalid as well. On March 2, 2020, the U.S. Supreme Court granted the petitions for writs of certiorari to review the case, and oral arguments were heard on November 10, 2020. On June 17, 2021, the U.S. Supreme Court dismissed the most recent judicial challenge to the ACA brought by several states without specifically ruling on the constitutionality of the ACA. Separately, President Biden issued an Executive Order to initiate a special enrollment period from February 15, 2021 through August 15, 2021 for purposes of obtaining health insurance coverage through the ACA marketplace. The Executive Order also instructed certain governmental agencies to review and reconsider their existing policies and rules that limit access to healthcare, including among others, reexamining Medicaid demonstration projects and waiver programs that include work requirements, and policies that create unnecessary barriers to obtaining access to health insurance coverage through Medicaid or the ACA. It is also unclear how these and other healthcare reform measures of the Biden administration or other efforts, if any, to challenge, repeal or replace the ACA, will impact our business.

Other legislative changes have been proposed and adopted since the ACA was enacted. These changes include aggregate reductions to Medicare payments to providers of 2% per fiscal year pursuant to the Budget Control Act of 2011 and subsequent laws, which began in 2013 and, due to subsequent legislative amendments, will stay in effect through 2030 unless additional Congressional action is taken. In January 2013, the American Taxpayer Relief Act of 2012 was signed into law, which, among other things, further reduced Medicare payments to several types of providers, including hospitals, imaging centers and cancer treatment centers, and increased the statute of limitations period for the government to recover overpayments to providers from three to five years. New laws may result in additional reductions in Medicare and other healthcare funding, which may materially adversely affect customer demand and affordability for our products and, accordingly, the results of our financial operations. Additionally, the pharmaceutical industry has also been the subject of significant publicity in recent years regarding the pricing of pharmaceutical products, including publicity and pressure resulting from prices charged by pharmaceutical companies for new products as well as price increases by pharmaceutical companies on older products that some people have deemed excessive. As a result, pharmaceutical product prices have been the focus of increased scrutiny by the U.S. government, including certain state attorneys general, members of congress, presidential candidates and the United States Department of Justice. If reforms in the health care industry make reimbursement for our potential products less likely, the market for our potential products will be reduced, and we could lose potential sources of revenue. The existence or threat of cost control measures could cause our corporate collaborators to be less willing or able to pursue research and development programs related to our vaccine candidates. Further, it is also possible that additional governmental action is taken in response to the COVID-19 pandemic. We cannot predict the ultimate content, timing or effect of any healthcare reform legislation or the impact of potential legislation on us.

Table of Contents

Even if we receive regulatory approvals for our vaccine candidates, including NVX-CoV2373, coverage and reimbursement may be subject to unique regulatory policies. For example, under the ACA preventive care mandate, non-grandfathered group health plans and health insurance coverage offered in the individual or group market typically have at least one year before they must provide first-dollar coverage for a newly issued preventive care requirement or guideline. However, pursuant to the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), non-grandfathered group health plans and health insurance coverage offered in the individual or group market must cover any qualifying coronavirus preventive service 15 business days after the United States Preventive Services Task Force, or Advisory Committee on Immunization Practices (ACIP) designates such service as preventive. Further, third-party reimbursement for providers administering COVID-19 vaccines may affect market acceptance of NVX-CoV2373, if we receive regulatory approval. Currently, the CARES Act and its implementing regulations state that (i) providers that participate in the U.S. Centers for Disease Control and Prevention’s COVID-19 Vaccination Program must administer a COVID-19 immunization regardless of an individual’s ability to pay or health insurance coverage status, (ii) providers may not seek any reimbursement, including through balance billing, from an immunization recipient, (iii) coverage is required, without cost-sharing, for the administration of the immunization even if a third party, such as the federal government, pays for the cost of the immunization, and (iv) private health insurance plans must cover COVID-19 immunizations and their administration even when provided by out-of-network providers for the duration of the public health emergency for COVID-19. Even if we receive regulatory approvals for NVX-CoV237, there is no guarantee payors will provide coverage and reimbursement for our product after the termination of the public health emergency, nor can we guarantee that even if coverage is provided, the reimbursement amount will be high enough to allow us to establish or maintain pricing sufficient to realize a sufficient return on our investment. We cannot predict continued prevalence of COVID-19, whether herd immunity will be achieved (which would affect the need for future administration of COVID-19 vaccines), or whether NVX-CoV2373 will be effective against continuing mutations or variants of the SARS-CoV-2 virus.

We have limited marketing capabilities, and if we are unable to enter into collaborations with marketing partners or develop our own sales and marketing capability, we may not be successful in commercializing any approved products.

Although we have initiated preliminary activities in anticipation of commercialization of our vaccine candidates, we currently have limited dedicated sales, marketing or distribution capabilities. As a result, we depend on collaborations with third-parties that have established distribution systems and sales forces, including our collaboration with SIIPL, among others. To the extent that we enter into co-promotion or other licensing arrangements, our revenue will depend upon the efforts of third-parties, over which we may have little or no control. If we are unable to reach and maintain agreements with one or more pharmaceutical companies or collaborators, we may be required to market our products directly. Developing a marketing and sales force is expensive and time-consuming and could delay a product launch. We may not be able to attract and retain qualified sales personnel or otherwise develop this capability.

Our vaccine candidates may never achieve market acceptance even if we obtain regulatory approvals.

Even if we receive regulatory approvals for the commercial sale of our vaccine candidates, the commercial success of these vaccine candidates will depend on, among other things, their acceptance by physicians, patients and third-party payers, such as health insurance companies and other members of the medical community, as a vaccine and cost-effective alternative to competing products. If our vaccine candidates fail to gain market acceptance, we may be unable to earn sufficient revenue to continue our business. Market acceptance of, and demand for, any product that we may develop and commercialize will depend on many factors, including:

•our ability to provide acceptable evidence of safety and efficacy (including against emerging COVID-19 variants);

•the prevalence and severity of adverse side effects;

•whether our vaccines are differentiated from other vaccines;

•availability, relative cost and relative efficacy of alternative and competing treatments;

•the effectiveness of our marketing and distribution strategy;

•publicity concerning our products or competing products and treatments; and

•our ability to obtain sufficient third party insurance coverage or reimbursement.

If our vaccine candidates do not become widely accepted by physicians, patients, third-party payers and other members of the medical community, our business, financial condition and results of operations could be materially and adversely affected.

We may not be able to secure sufficient supplies of a key component of our adjuvant technology.

Table of Contents

Because an important component of our adjuvant technology is extracted from a species of soap-bark tree (Quillaja saponaria) grown in Chile, we need long term access to quillaja extract with a consistent and sufficiently high quality. We need a secure supply of raw material, as well as back-up suppliers, or our adjuvant products may be delayed and we may not be able to meet our obligations under our various collaboration and supply agreements.

Current or future regional relationships may hinder our ability to engage in larger transactions.

We have entered into regional collaborations to develop, manufacture and distribute our vaccine candidates in certain parts of the world, and we anticipate entering into additional regional collaborations. Our relationships with SIIPL, Cadila and BMGF are examples of these regional relationships. These relationships often involve the licensing of our technology to our partner or entering into a distribution agreement, frequently on an exclusive basis. Generally, exclusive agreements are restricted to certain territories. Because we have entered into exclusive license and distribution agreements, larger companies may not be interested, or able, to enter into collaborations with us on a worldwide-scale. Also, these regional relationships may make us an unattractive target for an acquisition.

Our product candidates are sensitive to shipping and storage conditions, which could subject our vaccine candidates to risk of loss or damage.

Our vaccine candidates are sensitive to storage and handling conditions. Loss in vaccine candidates could occur if the product or product intermediates are not stored or handled properly. It is possible that our vaccine candidates could be lost due to expiration prior to use. If we do not effectively maintain our supply logistics, then we may experience an unusual number of returned or out of date products. Failure to effectively maintain our supply logistics, by us or third parties, could lead to additional manufacturing costs and delays in our ability to supply required quantities for clinical trials or otherwise.

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

The FDA and similar foreign governmental authorities have the authority to require the recall of certain vaccine candidates. Manufacturers may, under their own initiative, recall a product if any material deficiency in a product is found. A government-mandated or voluntary recall by us or our strategic collaborators could occur as a result of manufacturing errors, design or labeling defects or other deficiencies and issues. Recalls of any of our vaccine candidates would divert managerial and financial resources and have an adverse effect on our financial condition and results of operations. A recall announcement could harm our reputation with customers and negatively affect our sales, if any.

Risks Related to Our Industry and Competition

Many of our competitors have significantly greater resources and experience, which may negatively impact our commercial opportunities and those of our current and future licensees.

The biotechnology and pharmaceutical industries are subject to intense competition and rapid and significant technological change. We have many potential competitors, including major pharmaceutical companies, specialized biotechnology firms, academic institutions, government agencies and private and public research institutions. Many of our competitors have significantly greater financial and technical resources, experience and expertise in:

•research and development;

•preclinical testing;

•designing and implementing clinical trials;

•regulatory processes and approvals;

•production and manufacturing; and

•sales and marketing of approved products.

Principal competitive factors in our industry include:

•the quality and breadth of an organization’s technology;

Table of Contents

•management of the organization and the execution of the organization’s strategy;

•the skill and experience of an organization’s employees and its ability to recruit and retain skilled and experienced employees;

•an organization’s intellectual property portfolio;

•the range of capabilities, from target identification and validation to drug discovery and development to manufacturing and marketing; and

•the availability of substantial capital resources to fund discovery, development and commercialization activities.

Large and established companies, such as Merck & Co., Inc., GlaxoSmithKline plc, CSL Ltd, Sanofi Pasteur, SA, Pfizer Inc., Johnson & Johnson, AstraZeneca, and Moderna, among others, compete in the vaccine market. In particular, these companies have greater experience and expertise in securing government contracts and grants to support their research and development efforts, conducting testing and clinical trials, obtaining regulatory approvals to market products, manufacturing such products on a broad scale and marketing approved products.

Regardless of the disease, smaller or early-stage companies and research institutions also may prove to be significant competitors, particularly through collaborative arrangements with large and established pharmaceutical companies. As these companies develop their technologies, they may develop proprietary positions, which may prevent or limit our product development and commercialization efforts. We will also face competition from these parties in recruiting and retaining qualified scientific and management personnel, establishing clinical trial sites and participant registration for clinical trials and in acquiring and in-licensing technologies and products complementary to our programs or potentially advantageous to our business. If any of our competitors succeed in obtaining approval from the FDA or other regulatory authorities for their products sooner than we do or for products that are more effective or less costly than ours, our commercial opportunity could be significantly reduced.

In order to effectively compete, we will have to make substantial investments in development, testing, manufacturing and sales and marketing or partner with one or more established companies. We may not be successful in gaining significant market share for any vaccine. Our technologies and vaccines also may be rendered obsolete or non-competitive as a result of products introduced by our competitors to the marketplace more rapidly and at a lower cost.

There is significant competition in the development of a vaccine against COVID-19, influenza, and RSV and we may never see returns on the significant resources we are devoting to ~~NVX-CoV2373.~~

our vaccine candidates.

We may be unable to produce a successful COVID-19 vaccine, and establish a competitive market share for our vaccine before ~~a competitor, or before~~ the COVID-19 outbreak is contained or significantly diminished. A large number of vaccine manufacturers, academic institutions and other organizations ~~currently~~ have ~~programs to develop~~developed COVID-19 vaccines or are developing COVID-19 vaccine candidates. ~~While we are not aware of all of our competitors’ efforts, there are reports that~~In particular, Moderna, Pfizer/BioNTech, and Johnson & ~~Johnson/Janssen, Pfizer, GlaxoSmithKline, Moderna, Sanofi, Inovio, AstraZeneca~~Johnson have received emergency use authorizations for their COVID-19 vaccines in the U.S. and other countries, and many other companies, including AstraZeneca, Sinovac Biotech, Sinopharm, and Inovio are ~~all~~ in various stages of developing and obtaining marketing authorization for COVID-19 vaccine ~~candidates against COVID-19.~~candidates. Despite funding provided to us to date, many of our competitors pursuing vaccine candidates have significantly greater product candidate development, manufacturing and marketing resources than we do. Larger pharmaceutical and biotechnology companies have extensive experience in clinical testing and obtaining regulatory approval for their products and may have the resources to heavily invest to accelerate discovery and development of their vaccine candidates. ~~Our business could be materially~~The success of our COVID-19 vaccine will depend, in part, on its relative safety, efficacy (including against emerging variant strains), side effect profile, convenience, and ~~adversely affected if competitors develop and commercialize one or more~~cost. COVID-19 vaccines ~~before we can complete development and seek approval for~~approved prior to our vaccine ~~candidate, or if they develop~~satisfy a portion of the demand for initial vaccinations, and ~~commercialize one or more~~we no longer have access to that opportunity. In addition, COVID-19 vaccines ~~that are safer, more effective, have fewer or less severe side effects, have broader~~approved prior to our vaccine may develop broad market acceptance ~~are more convenient or are less expensive than any vaccine candidate~~ that we ~~may develop.~~are challenged to overcome. Furthermore, if any competitors are successful in producing a more efficacious vaccine or other treatment for COVID-19 (including against emerging variant strains), or if any competitors are able to manufacture and distribute any such vaccines or treatments with greater efficiency there may be a diversion of potential governmental and other funding away from us and toward such other parties.

We are working toward the large-scale development, manufacturing and distribution of NVX-CoV2373 through a variety of government and private funding sources. For instance, we entered into funding agreements with CEPI to fund up to $399.5 million for clinical development and manufacturing activities for NVX-CoV2373 and we entered into the OWS Agreement to fund up to $1.6 billion, of which we are currently authorized to make expenditures or incur obligations of up to $800 million, to support the development, manufacture and delivery of NVX-CoV2373 to the U.S. Government. To the extent pricing negotiations are ongoing, however, such funding sources have discretion over the distribution of funding commitments, and to the extent funding commitments in such agreements are conditioned on our meeting certain milestones, we may not ultimately receive the full amount of committed funds and could be exposed to urgent needs for additional funding to support our NVX-CoV2373 development, manufacturing and distribution activities and there can be no assurance that we will be able to timely obtain additional government or private funding, if at all. For example, our agreement with CEPI requires that we adhere to certain equitable access principles regarding allocation and pricing, which may impact our ability to make profits. Future third-party investors and strategic partners, if any, may also impose restrictions on or mandate input as to our conduct of clinical trials, manufacturing activities or distribution activities, which may cause delays in the event of disagreement. We can make no assurance that the OWS Agreement or the funding agreements with CEPI will have a positive impact on our financial results.

We are allocating significant financial and personnel resources to the development of NVX-CoV2373, which may cause delays in or otherwise negatively impact our other development programs. Our business could be negatively impacted by our allocation of significant resources to ~~combatting~~combating a global health threat that is unpredictable or against which our vaccine, if ~~developed, may not be partially or fully effective, and~~commercialized, may ultimately prove unsuccessful or unprofitable.

Many seasonal influenza vaccines are currently approved and marketed. Competition in the sale of these seasonal influenza vaccines is intense. Therefore, newly developed and approved products must be differentiated from existing vaccines

Table of Contents

in order to have commercial success. In order to show differentiation in the seasonal influenza market, a product may need to be more efficacious, particularly in older adults, and/or be less expensive or quicker to manufacture. Many competitors are working on new products and new generations of current products, intended to be more efficacious than those currently marketed. Our ~~ability~~nanoparticle seasonal influenza vaccine candidate may not prove to ~~produce a successful~~be more efficacious than current products or products under development by our competitors. Further, our in-house or third-party manufacturing arrangements may not provide enough savings of time or money to provide the required differentiation for commercial success.

We are also aware that there are multiple companies with active RSV vaccine programs at various stages of development. Thus, while there is no RSV vaccine currently on the market, there is likely to be significant and consistent competition as these active programs mature. Different RSV vaccines may work better for different segments of the population, so it may be ~~curtailed~~difficult for a single RSV vaccine manufacturer to provide vaccines that are marketable to multiple population segments. Geographic markets are also likely to vary significantly, which may make it difficult to market a single RSV vaccine worldwide. Even if a manufacturer brings an RSV vaccine to license, it is likely that competitors will continue to work on new products that could be more efficacious and/or less expensive. Our RSV vaccine candidate may not be as far along in development as other active RSV vaccine programs about which we are not aware, nor as efficacious as products under development by competing companies. Even if our RSV vaccine candidate receives regulatory approval, it may not achieve significant sales if other, more effective vaccines under development by our competitors are also approved.

Risks Related to Regulatory and Compliance Matters

We have not completed the development of vaccine products, and we may not succeed in obtaining the FDA licensure or foreign regulatory approvals necessary to sell such vaccine products.

The development, manufacture and marketing of our pharmaceutical and biological products are subject to government regulation by the U.S. FDA and regulatory authorities in other jurisdictions, including the European Medicines Agency EMA, the State Institute for Drug Control (SUKL) with respect to our manufacturing facility in the Czech Republic and the Swedish Medical Products Agency (Läkemedelsverket, LV) with respect to our adjuvant product being developed in Sweden, as well as other country authorities into which active pharmaceutical ingredients and excipients are imported and/or manufactured by us or our sub-contracted manufacturers. In the U.S. and most foreign countries, we must complete rigorous preclinical testing and extensive clinical trials that demonstrate the safety and efficacy of a product in order to apply for regulatory approval to market the product. Additionally, we must demonstrate that our manufacturing facilities, processes and controls are adequate with respect to such product to assure safety, purity and potency. None of our vaccine candidates has yet gained regulatory approval in the U.S. or elsewhere. We also have vaccine candidates in clinical trials and preclinical laboratory or animal studies. The steps generally required by the FDA before our proposed investigational products may be marketed in the U.S. include:

•performance of preclinical (animal and laboratory) tests;

•submission to the FDA of an IND, which must become effective before clinical trials may commence;

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

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

•submission to the FDA of a BLA or a NDA; and

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

These processes are expensive and can take many years to complete, and we may not be able to demonstrate the safety, purity, potency and efficacy of our vaccine candidates to the satisfaction of regulatory authorities. The start of clinical trials can be delayed or take longer than anticipated for many and varied reasons, many of which are out of our control. Safety concerns may emerge that could lengthen the ongoing clinical trials or require additional clinical trials to be conducted. Promising results in early clinical trials may not be replicated in subsequent clinical trials. Regulatory authorities may also require additional testing, and we may be required to demonstrate that our proposed products represent an improved form of treatment over existing therapies, which we may be unable to do without conducting further clinical trials. Moreover, if the FDA grants regulatory approval of a product, the approval may be limited to specific indications or limited with respect to its distribution. Expanded or additional indications for approved products may not be approved, which could limit our revenue. Foreign regulatory authorities may apply similar limitations or may refuse to grant any approval. Consequently, even if we believe that preclinical and clinical data are sufficient to support regulatory approval for our vaccine candidates, the FDA and foreign regulatory authorities ultimately may not grant approval for commercial sale in any jurisdiction, or may impose regulatory

Table of Contents

requirements that make further pursuit of approval uneconomical in one or more ~~government actions~~jurisdictions. If our vaccine candidates are not approved, our ability to generate revenue will be limited, and our business will be adversely affected.

We may fail to obtain regulatory approval for our products on a timely basis or ~~interventions,~~comply with our continuing regulatory obligations after approval is obtained.

Delays in obtaining regulatory approval can be extremely costly in terms of lost sales opportunities, loss of any potential marketing advantage of being early to market and increased clinical trial costs. The speed with which we begin and complete our preclinical studies necessary to begin clinical trials, clinical trials and our applications for marketing approval will depend on several factors, including the following:

•our ability to scale-up manufacturing capability that reproducibly generates consistent yields of product with required purity,potency and quality; that such scale-up occurs on a timely basis; and that we have access to sufficient quantities of materials for use in necessary preclinical studies and clinical trials;

•regulatory agency review and approval of proposed clinical trial protocols;

•approval of clinical trials protocols and informed consent forms by institutional review boards responsible for overseeing the ethical conduct of the trial;

•the rate of participant enrollment and retention, which is a function of many factors, including the size of the participant population, the proximity of participants to clinical sites, the eligibility criteria for the clinical trial and the nature of the protocol;

•unfavorable test results or side effects experienced by clinical trial participants;

•analysis of data obtained from preclinical and clinical activities, which are susceptible to varying interpretations and which interpretations could delay, limit, result in the suspension or termination of, or prevent further conduct of clinical studies or regulatory approval;

•the availability of skilled and experienced staff to conduct and monitor clinical trials and to prepare the appropriate regulatory applications; and

•changes in the policies of regulatory authorities for drug or vaccine approval during the period of product development.

We have limited experience in conducting and managing the preclinical studies and clinical trials necessary to obtain regulatory marketing approvals. We may not be permitted to continue or commence additional clinical trials. We also face the risk that the results of our clinical trials may be ~~more likely during~~inconsistent with the results obtained in preclinical studies or clinical trials of similar products or that the results obtained in later phases of clinical trials may be inconsistent with those obtained in earlier phases. A number of companies in the biotechnology and product development industry have suffered significant setbacks in advanced clinical trials, even after experiencing promising results in early animal and human testing.

Regulatory agencies may require us or our collaborators to delay, restrict or discontinue clinical trials on various grounds, including a ~~global~~finding that the participants are being exposed to an unacceptable health ~~crisis such as COVID-19.~~

~~Given~~risk. In addition, we or our collaborators may be unable to submit applications to regulatory agencies within the ~~significant global impact~~time frame we currently expect. Once submitted, applications must be approved by various regulatory agencies before we or our collaborators can commercialize the product described in the application. All statutes and regulations governing the conduct of clinical trials are subject to change in the ~~COVID-19 pandemic, it is possible that one or more government entities may take actions, including the U.S. Government under the Defense Production Act of 1950, as amended,~~future, which could ~~directly~~affect the cost of such clinical trials. Any unanticipated costs or indirectly have the effect of diminishing some of our rights or opportunities with respect to NVX-CoV2373 and the economic value of a COVID-19 vaccine to us could be limited. In addition, during a global health crisis, such as the COVID-19 pandemic, where the spread of a disease needs to be controlled, closed or heavily regulated national borders will create challenges and potential delays in our ~~development~~clinical trials or regulatory submissions could delay our ability to generate revenue and ~~production activities~~harm our financial condition and ~~may~~

results of operations.

Failure to obtain regulatory approval in foreign jurisdictions would prevent us from marketing our products internationally.

~~Table of Contents~~

~~necessitate that we pursue strategies~~We intend to ~~develop and produce~~have our vaccine candidates ~~within self-contained national~~marketed outside the U.S. In furtherance of this objective, we have entered into supply agreements with various foreign governments and international distribution agreements with commercial entities. In order to market our products in the European Union, United Kingdom, India, Asia and many other non-U.S. jurisdictions, we must obtain separate regulatory approvals and comply with numerous and varying regulatory requirements. The approval procedure varies among countries and can involve additional testing and data review. The time required to obtain foreign

Table of Contents

regulatory approval may differ from that required to obtain FDA approval. The foreign regulatory approval process may include all of the risks associated with obtaining FDA approval. We may not obtain foreign regulatory approvals on a timely basis, if at all. Approval by one regulatory agency does not ensure approval by regulatory agencies in other jurisdictions. However, a failure or ~~international borders, at potentially much greater expense and with longer timeframes for public distribution.~~

delay in obtaining regulatory approval in one jurisdiction may have a negative effect on the regulatory approval process in other jurisdictions, including approval by the FDA. The failure to obtain regulatory approval in foreign jurisdictions could harm our business.

The regulatory pathway for NVX-CoV2373 is continually evolving and may result in unexpected or unforeseen challenges.

The regulatory pathway for NVX-CoV2373 is evolving and failure by us to comply with any laws, rules and standards, some of which may not exist yet or are subject to interpretation and may be subject to change, could result in a variety of adverse consequences, including penalties, fines and delays in vaccine licensure. Efforts to comply with evolving laws, regulations and standards have resulted in, and are likely to continue to result in, increased general and administrative expenses and a diversion of management time and attention to regulatory compliance activities. For example, the rules, regulations and standards governing OWS are uncertain and may evolve as the program progresses. Such rules or standards may adversely affect our plans to develop NVX-CoV2373 and failure by us to comply with any laws, rules or standards, some of which may not exist yet or may change, could result in a range of adverse consequences, such as penalties, fines or failure to receive funding.

The speed at which ~~all parties~~multiple stakeholders are moving to create, test and approve ~~a vaccine~~vaccines for COVID-19 is highly unusual and may increase the risks associated with traditional vaccine development, which typically takes between eight and ten years. Given this accelerated timeline, we and regulators, ~~including~~such as the FDA, the EMA, and the MHRA may make decisions more rapidly than is typical. Evolving or changing plans or priorities at the FDA or other regulatory bodies, including based on new knowledge of COVID-19 and how the disease affects the human body, and new variants of the virus, may significantly affect the regulatory pathway for NVX-CoV2373. Results from clinical testing may raise new questions and require us to redesign proposed clinical trials, including revising proposed endpoints or adding new clinical trial sites or cohorts of subjects. In addition, the FDA’s or other regulators’ analysis of clinical data may differ from our interpretation, or regulators’ requirements and expectations for vaccine authorization or approval may change over time, with the result that the FDA or other regulators may require that we conduct additional clinical trials or non-clinical studies. ~~There can be no guarantee that the~~The evolving regulatory pathway ~~will not~~may impede the development, commercialization and/or licensure of NVX-CoV2373.

In addition, ~~since~~because the path to licensure of any vaccine against COVID-19 is unclear, we may have a widely used vaccine in circulation in ~~the U.S. or another country~~certain countries as an investigational vaccine or a product authorized for temporary or emergency use prior to our receipt of full marketing approval. Unexpected safety issues in these circumstances could lead to significant reputational damage for Novavax and our technology platform going forward and other issues, including delays in our other programs, the need for re-design of our clinical trials and the need for significant additional financial resources.

We are conducting, and plan to conduct in the future, a number of clinical trials for NVX-CoV2373 at sites outside the United States and the FDA may not accept data from trials conducted in such locations.

We are currently conducting several clinical trials of NVX-CoV2373 at sites outside the U.S., including a Phase 3 trial in the U.K., a Phase 2b trial in South Africa, and a Phase 1/2 trial partially in Australia. We also plan in the future to conduct (or collaborate to conduct) a Phase 2/3 trial in India, Phase 2 trial in the Czech Republic, and Phase 1/2 trial in Japan. Although the FDA may accept data from clinical trials conducted outside the U.S., acceptance of these data is subject to conditions imposed by the FDA. For example, the clinical trial must be well designed and conducted and be performed by qualified investigators in accordance with ethical principles. The trial population must also adequately represent the U.S. population, and the data must be applicable to the U.S. population and U.S. medical practice in ways that the FDA deems clinically meaningful. In addition, while these clinical trials are subject to the applicable local laws, FDA acceptance of the data will depend on its determination that the trials also complied with all applicable U.S. laws and regulations. If the FDA does not accept the data from any trial that we conduct outside the U.S., it could result in delay pending completion of our trials conducted in the U.S. or result in the need for additional trials, which would be costly and time-consuming and could delay or permanently halt our development of NVX-CoV2373.

Even if regulatory approval is received for our vaccine candidates, the later discovery of previously unknown problems with a product, manufacturer or facility may result in restrictions, including withdrawal of the product from the market.

Even after a product gains regulatory approval, the product and the manufacturer of the product will be subject to continuing regulatory review, including adverse event reporting requirements and the FDA’s general prohibition against promoting products for unapproved uses. Failure to comply with any post-approval requirements can, among other things, result in warning letters, product seizures, recalls, substantial fines, injunctions, suspensions or revocations of marketing licenses, operating restrictions and criminal prosecutions. Any such enforcement actions, any unanticipated changes in existing

Table of Contents

regulatory requirements or the adoption of new requirements, or any safety issues that arise with any approved products, could adversely affect our ability to market products and generate revenue and thus adversely affect our ability to continue our business.

We also may be restricted or prohibited from marketing or manufacturing a product, even after obtaining product approval, if previously unknown problems with the product or its manufacture are subsequently discovered. We cannot provide assurance that newly discovered or developed safety issues will not arise following regulatory approval. With the use of any vaccine by a wide patient population, serious adverse events may occur from time to time that did not arise in the clinical trials of the product or that initially appeared to be unrelated to the vaccine itself and only with the collection of subsequent information were found to be causally related to the product. Any such safety issues could cause us to suspend or cease marketing of our approved products, possibly subject us to substantial liabilities, and adversely affect our ability to generate revenue and our financial condition.

Our ability to produce a successful vaccine may be curtailed by one or more government actions or interventions, which may be more likely during a global health crisis such as COVID-19.

Given the significant global impact of the COVID-19 pandemic, it is possible that one or more government entities may take actions, including under the U.S. Government under the Defense Production Act of 1950, as amended, that directly or indirectly have the effect of diminishing some of our rights or opportunities with respect to NVX-CoV2373, and the economic value of a COVID-19 vaccine to us could be limited. In addition, during a global health crisis, such as the COVID-19 pandemic, where the spread of a disease needs to be controlled, closed or heavily regulated national borders create challenges and delays in our development, production and distribution activities and may necessitate that we pursue strategies to develop, produce and distribute our vaccine candidates within self-contained national or international borders or with additional safety measures or checks in place, at potentially much greater expense and with longer timeframes for public distribution.

Inadequate funding for the FDA, the SEC and other government agencies could hinder their ability to hire and retain key leadership and other personnel, or otherwise perform their normal functions on which the operation of our business may rely, which could negatively impact our ability to develop or commercialize new products or services, access capital markets, or otherwise operate our business.

The ability of the FDA to review and approve new products is affected by a variety of factors, including government budget and funding levels, ability to hire and retain key personnel and accept the payment of user fees, and statutory, regulatory and policy changes. Average review times at the agency have fluctuated in recent years as a result. In addition, government funding of the SEC and other government agencies on which our operations may rely, including those that fund research and development activities, is subject to the political process, which is inherently fluid and unpredictable.

Disruptions at the FDA and other agencies may also slow the time necessary for new drugs to be reviewed and approved by necessary government agencies, which would adversely affect our business. For example, over the last several years, the U.S. government has shut down several times and certain regulatory agencies, such as the FDA and the SEC, have had to furlough employees and stop or slow the pace of critical activities. If a prolonged government shutdown occurs, it could significantly impact the ability of the FDA to timely review and process our regulatory submissions, which could have a material adverse effect on our business. Further, in our operations as a public company, future government shutdowns could impact our ability to access the public markets and obtain necessary capital in order to properly capitalize and continue our operations.

Fast Track Designation by the FDA or other regulatory acceleration options may not actually lead to a faster development or regulatory review or approval process and does not assure approval.

If a drug is intended for the treatment of a serious or life-threatening condition and the drug demonstrates the potential to address an unmet medical need for this condition, the drug sponsor may apply for FDA Fast Track Designation or similar fast track processes with other regulatory agencies, such as conditional marketing authorizations from the EMA. However, Fast Track Designation does not ensure that the drug sponsor will receive marketing approval or that approval will be granted within any particular timeframe. The FDA granted Fast Track Designation for NVX-CoV2373 in November 2020 and for NanoFlu™, our recombinant quadrivalent seasonal influenza vaccine candidate, in January 2020. We may also seek Fast Track Designation for more of our other vaccine candidates. If we do seek Fast Track Designation for our other vaccine candidates, we may not receive it, and even if we receive Fast Track Designation, we may not experience a faster development process, review or approval compared to conventional FDA procedures. In addition, the FDA may withdraw Fast Track designation if it believes that the designation is no longer supported by data from our clinical development program. Fast Track Designation alone does not guarantee qualification for the FDA’s priority review procedures.

Obtaining a Fast Track Designation does not change the standards for product approval, but may expedite the development or approval process. Even though the FDA has granted such designation for NVX-CoV2373 and NanoFlu™, it

Table of Contents

may not actually result in faster clinical development or regulatory review or approval. Furthermore, such a designation does not increase the likelihood that NVX-CoV2373 or NanoFlu™ will receive marketing approval in the U.S.

Because we are subject to environmental, health and safety laws, we may be unable to conduct our business in the most advantageous manner.

We are subject to various laws and regulations relating to safe working conditions, laboratory and manufacturing practices, the experimental use of animals, emissions and wastewater discharges, and the use and disposal of hazardous or potentially hazardous substances used in connection with our research, including infectious disease agents. We also cannot accurately predict the extent of regulations that might result from any future legislative or administrative action. Any of these laws or regulations could cause us to incur additional expense or restrict our operations.

Our facilities in Maryland are subject to various local, state and federal laws and regulations relating to safe working conditions, laboratory practices, the experimental use of animals and the use and disposal of hazardous or potentially hazardous substances, including chemicals, microorganisms and various hazardous compounds used in connection with our research and development activities. In the U.S., these laws include the Occupational Safety and Health Act, the Toxic Test Substances Control Act and the Resource Conservation and Recovery Act. Similar national and local regulations govern our facilities in Sweden and the Czech Republic. We cannot eliminate the risk of accidental contamination or discharge or injury from these materials. Federal, state and local laws and regulations govern the use, manufacture, storage, handling and disposal of these materials. We could be subject to civil damages in the event of an improper or unauthorized release of, or exposure of individuals to, these hazardous materials. In addition, claimants may sue us for injury or contamination that results from our use or the use by third-parties of these materials, and our liability may exceed our total assets. Compliance with environmental laws and regulations may be expensive, and current or future environmental regulations may impair our research, development or production efforts.

Although we have general liability insurance, these policies contain exclusions from insurance against claims arising from pollution from chemicals or pollution from conditions arising from our operations. Our collaborators are working with these types of hazardous materials in connection with our collaborations. In the event of a lawsuit or investigation, we could be held responsible for any injury we or our collaborators cause to persons or property by exposure to, or release of, any hazardous materials. However, we believe that we are currently in compliance with all material applicable environmental and occupational health and safety regulations.

For our product candidates, we will be subject to additional healthcare laws and our failure to comply with those laws could have a material adverse effect on our results of operations and financial conditions.

Within the U.S. (and within foreign countries), if we obtain approval for any of our product candidates and begin commercializing them, our operations may be directly, or indirectly through our arrangements with third-party payors and customers, subject to additional healthcare regulation and enforcement by the federal and state governments (or the regulatory bodies or governments of foreign countries), which may constrain the business or financial arrangements and relationships through which we sell, market and distribute our products. These laws and regulations may restrict or prohibit a wide range of pricing, discounting, marketing and promotion, structuring and commission(s), certain customer incentive programs and other business arrangements generally. Activities subject to these laws also involve the improper use of information obtained in the course of patient recruitment for clinical trials. The applicable U.S. federal and state healthcare laws and regulations (which may be comparable to foreign laws existing in foreign countries) that may affect our ability to operate include:

•the Federal Food, Drug and Cosmetic Act, which among other things, strictly regulates drug product marketing and promotion and prohibits manufacturers from marketing such products for unapproved uses;

•the federal Anti-Kickback Statute, which prohibits, among other things, persons from knowingly and willfully soliciting, receiving or providing remuneration, directly or indirectly, to induce the referral for an item or service or the purchasing or ordering of a good or service, for which payment may be made under federal healthcare programs such as Medicare and Medicaid;

•federal false claims laws, including the FCA, which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, information or claims for payment from Medicare, Medicaid, or other third-party payers that are false or fraudulent;

•manufacturers can be held liable under the FCA even when they do not submit claims directly to government payors if they are deemed to “cause” the submission of false or fraudulent claims; the FCA also permits a private individual

Table of Contents

acting as whistleblower to bring actions on behalf of the federal government alleging violations of the FCA and to share in any monetary recovery;

•federal laws that require pharmaceutical manufacturers to report certain calculated product prices to the government or provide certain discounts or rebates to government authorities or private entities, often as a condition of reimbursement under government healthcare programs;

•the federal Physician Payment Sunshine Act and its implementing regulations, which require manufacturers of drugs, devices, biologicals, and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program (with certain exceptions) to report annually to the DHHS information related to payments or other transfers of value made to physicians (defined to include doctors, dentists, optometrists and chiropractors) and teaching hospitals, as well as ownership and investment interests held by physicians and their immediate family members; effective January 1, 2022, these reporting obligations will extend to include transfers of value made to certain non-physician providers such as physician assistants and nurse practitioners;

•the federal law known as HIPAA, which, in addition to privacy protections applicable to healthcare providers and other entities, prohibits executing a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters;

•federal consumer protection and unfair competition laws, which broadly regulate marketplace activities and activities that potentially harm consumers;

•state law equivalents of the above federal laws, such as anti-kickback and false claims laws which may apply to items or services reimbursed by any third-party payer, including commercial insurers, and state gift ban and transparency laws, many of which state laws differ from each other in significant ways and often are not preempted by federal laws, thus complicating compliance efforts; and

•state laws restricting interactions with healthcare providers and other members of the healthcare community or requiring pharmaceutical manufacturers to implement certain compliance standards.

Because of the breadth of these laws and the narrowness of the statutory exceptions and safe harbors available, it is possible that some of our business activities could be subject to challenge under one or more of such laws. If our operations are found to be in violation of any of such laws or any other governmental regulations that apply to us, we may be subject to, on a corporate or individual basis, penalties, including civil and criminal penalties, damages, fines, the curtailment or restructuring of our operations, the exclusion from participation in federal and state healthcare programs and even imprisonment, any of which could materially adversely affect our ability to operate our business and our financial results. In addition, the cost of implementing sufficient systems, controls, and processes to ensure compliance with all of the aforementioned laws could be significant. Any action for violation of these laws, even if successfully defended, could cause us to incur significant legal expenses and divert management’s attention from the operation of the company’s business. If any of the physicians or other healthcare providers or entities with whom we expect to do business is found not to be in compliance with applicable laws, that person or entity may be subject to criminal, civil or administrative sanctions, including exclusions from government funded healthcare programs. Prohibitions or restrictions on sales or withdrawal of future marketed products could materially affect business in an adverse way.

It is not always possible to identify and deter employee misconduct, and the precautions we take to detect and prevent inappropriate conduct may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws or regulations. Efforts to ensure that our business arrangements will comply with applicable healthcare laws may involve substantial costs. It is possible that governmental and enforcement authorities will conclude that our business practices may not comply with current or future statutes, regulations or case law interpreting applicable fraud and abuse or other healthcare laws and regulations. If any such actions are instituted against us and we are not successful in defending ourselves or asserting our rights those actions, our business may be impaired.

Risks Related to our Intellectual Property

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

Our success in large part depends on our ability to maintain the proprietary nature of our technology and other trade secrets. To do so, we must prosecute and maintain existing patents, obtain new patents and pursue trade secret and other

Table of Contents

intellectual property protection. We also must operate without infringing the proprietary rights of third-parties or allowing third-parties to infringe our rights. We currently have or have rights to over 450 U.S. patents and corresponding foreign patents and patent applications covering our technologies. However, patent issues relating to pharmaceuticals and biologics involve complex legal, scientific and factual questions. To date, no consistent policy has emerged regarding the breadth of biotechnology patent claims that are granted by the U.S. Patent and Trademark Office (“USPTO”) or enforced by the federal courts. Therefore, we do not know whether any particular patent applications will result in the issuance of patents, or that any patents issued to us will provide us with any competitive advantage. We also cannot be sure that we will develop additional proprietary products that are patentable. Furthermore, there is a risk that others will independently develop or duplicate similar technology or products or circumvent the patents issued to us.

There is a risk that third-parties may challenge our existing patents or claim that we are infringing their patents or proprietary rights. We could incur substantial costs in defending patent infringement suits or in filing suits against others to have their patents declared invalid or claim infringement. It is also possible that we may be required to obtain licenses from third-parties to avoid infringing third-party patents or other proprietary rights. We cannot be sure that such third-party licenses would be available to us on acceptable terms, if at all. If we are unable to obtain required third-party licenses, we may be delayed in or prohibited from developing, manufacturing or selling products requiring such licenses.

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

Third parties may claim we infringe their intellectual property rights.

Our research, development and commercialization activities, including any vaccine candidates resulting from these activities, may be found to infringe patents owned by third-parties and to which we do not hold licenses or other rights. There may be rights we are not aware of, including applications that have been filed, but not published that, when issued, could be asserted against us. These third-parties could bring claims against us, and that may cause us to incur substantial expenses and, if successful against us, could cause us to pay substantial damages. Further, if a patent infringement suit were brought against us, we could be forced to stop or delay research, development, manufacturing or sales of the product or biologic drug candidate that is the subject of the suit.

As a result of patent infringement claims, or in order to avoid potential claims, we may choose or be required to seek a license from the third-party. These licenses may not be available on acceptable terms, or at all. Even if we are able to obtain a license, the license would likely obligate us to pay license fees or royalties or both, and the rights granted to us might be non- exclusive, which could result in our competitors gaining access to the same intellectual property. Ultimately, we could be prevented from commercializing a product, or be forced to cease some aspect of our business operations, if, as a result of actual or threatened patent infringement claims, we are unable to enter into licenses on acceptable terms. All of the issues described above could also impact our collaborators, which would also impact the success of the collaboration and therefore us.

There has been substantial litigation and other proceedings regarding patent and other intellectual property rights in the pharmaceutical and biotechnology industries.

We may become involved in litigation to protect or enforce our patents or the patents of our collaborators or licensors, which could be expensive and time-consuming.

Competitors may infringe our patents or the patents of our collaborators or licensors. As a result, we may be required to file suit to counter infringement for unauthorized use. This can be expensive and time-consuming. In addition, in an infringement proceeding, a court may decide that a patent of ours is not valid or is unenforceable, or may refuse to stop the other party from using the technology at issue on the grounds that our patents do not cover its technology. An adverse determination of any litigation or defense proceeding could put one or more of our patents at risk of being invalidated or interpreted narrowly and could put our patent applications at the risk of not issuing.

Even if we are successful, litigation may result in substantial costs and distraction to our management. Even with a broad portfolio, we may not be able, alone or with our collaborators and licensors, to prevent misappropriation of our proprietary rights, particularly in countries where the laws may not protect such rights as fully as in the U.S.

Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during this type of litigation. In addition, during the course of litigation, there could be public announcements of the results of hearings, motions or

Table of Contents

other interim proceedings or developments. If investors perceive these results to be negative, the market price for our common stock could be significantly harmed.

The scope, validity, and ownership of our patent claims may be challenged in various venues and, if we do not prevail, our ability to exclude competitors may be harmed, potentially reducing our ability to succeed commercially.

We may be subject to a variety of challenges from third-parties that relate to the scope of the claims or to their validity. Such challenges can be mounted in post-grant review, ex parte re-examination, and inter partes review proceedings before the USPTO, or similar adversarial proceedings in other jurisdictions. If we are unsuccessful in any such challenge, the scope of our claims could be narrowed or could be invalidated. Any such outcome could impair our ability to exclude competitors from the market in those countries, potentially impacting our commercial success.

Our patents may be subject to various challenges related to ownership and inventorship, including interference or derivation proceedings. Third-parties may assert that they are inventors on our patents or that they are owners of the patents. While we perform inventorship analyses to insure that the correct inventors are listed on our patents, we cannot be certain that a court of competent jurisdiction would arrive at the same conclusions we do. If we are unsuccessful in defending against ownership or inventorship challenges, a court may require us to list additional inventors, may invalidate the patent, or may transfer ownership of the patent to a third-party. Any of these outcomes may harm our ability to exclude competitors and potentially impact our commercial success. Further, if ownership is transferred to a third-party we may be required to seek a license to those rights to preserve our exclusive ability to practice the invention. Such a license may not be available on commercially reasonable terms, or at all. If we are unable to obtain a license, we may be required to expend time, effort, and other resources to design around the patent. Any such license may be non-exclusive and if a competitor is able to obtain a license from the third-party, our ability to exclude that competitor from the market may be negatively impacted.

Even if we are ultimately successful, defending any such challenges may cause us to incur substantial expenses and may require us to divert substantial financial and management resources that we would otherwise be able to devote to our business.

We may need to license intellectual property from third-parties and, if our right to use the intellectual property we license is affected, our ability to develop and commercialize our vaccine candidates may be harmed.

We have in the past, and we expect in the future to license intellectual property from third-parties and that these licenses will be material to our business. We will not own the patents or patent applications that underlie these licenses, and we may not control either the prosecution or the enforcement of the patents. Under such circumstances, we may be forced to rely upon our licensors to properly prosecute and file those patent applications and prevent infringement of those patents.

While many of the licenses under which we have rights provide us with rights in specified fields, the scope of our rights under these and other licenses may be subject to dispute by our licensors or third-parties. In addition, our rights to use these technologies and practice the inventions claimed in the licensed patents and patent applications are subject to our licensors abiding by the terms of those licenses and not terminating them. Any of our licenses may be terminated by the licensor if we are in breach of a term or condition of the license agreement, or in certain other circumstances.

Further, any disputes regarding obligations in licenses may require us to take expensive and time-consuming legal action to resolve, and, even if we are successful, may delay our ability to commercialize products and generate revenue. Further, if we are unable to resolve license issues that arise we may lose rights to practice intellectual property that is required to make, use, or sell products. Any such loss could compromise our development and commercialization efforts for current or future product candidates and/or may require additional effort and expense to design around.

Our vaccine candidates and potential vaccine candidates will require several components that may each be the subject of a license agreement. The cumulative license fees and royalties for these components may make the commercialization of these vaccine candidates uneconomical.

If patent laws or the interpretation of patent laws change, our competitors may be able to develop and commercialize our discoveries.

Important legal issues remain to be resolved as to the extent and scope of available patent protection for biopharmaceutical products and processes in the U.S. and other important markets outside the U.S., such as Europe and Japan. In addition, foreign markets may not provide the same level of patent protection as provided under the U.S. patent system. Litigation or administrative proceedings may be necessary to determine the validity and scope of certain of our and others’ proprietary rights. Any such litigation or proceeding may result in a significant commitment of resources in the future and could force us to do one or more of the following: cease selling or using any of our products that incorporate the challenged intellectual property, which would adversely affect our revenue; obtain a license from the holder of the intellectual property right alleged to have been infringed, which license may not be available on reasonable terms, if at all; and redesign our products

Table of Contents

to avoid infringing the intellectual property rights of third-parties, which may be time-consuming or impossible to do. In addition, changes in, or different interpretations of, patent laws in the U.S. and other countries may result in patent laws that allow others to use our discoveries or develop and commercialize our products. We cannot provide assurance that the patents we obtain or the unpatented technology we hold will afford us significant commercial protection.

If we do not obtain patent term extension and/or patent term adjustment in the United States under the Hatch- Waxman Act and similar extensions in foreign countries, our ability to exclude competitors may be harmed.

In the United States, the patent term is 20 years from the earliest U.S. non-provisional filing date. Extensions of patent term may be available under certain circumstances. Depending upon the timing, duration and conditions of FDA marketing approval of our product candidates, we may be able to extend the term of one patent that covers a marketed product under the Drug Price Competition and Patent Term Restoration Act of 1984, (the “Hatch-Waxman Amendments”) and similar legislation in the European Union.

The Hatch-Waxman Amendments permit patent term extension of up to five years for a patent covering an approved product as compensation for effective patent term lost during product development and the FDA regulatory review process. We may not receive any extension if we fail to apply within applicable deadlines, fail to apply prior to expiration of relevant patents or otherwise fail to satisfy applicable requirements. Moreover, the length of the extension could be less than we request. If we are unable to obtain patent term extension or the term of any such extension is less than we request, the period during which we can enforce our patent rights for that product will be shortened and our competitors may obtain approval to market competing products sooner.

Patent term covering our products may also be extended for time spent during the prosecution of the patent application in the USPTO. This extension is referred to as Patent Term Adjustment (“PTA”). The laws and regulations governing how the USPTO calculates the PTA is subject to change and changes in the law can reduce or increase any such PTA. Further, the PTA granted by the USPTO may be challenged by a third-party. If we do not prevail under such a challenge, the PTA may be reduced or eliminated, shortening the patent term, which may negatively impact our ability to exclude competitors.

Risks Related to Employee Matters, Managing Growth and Information Technology

Our business may be adversely affected if we do not successfully execute our business development initiatives.

We anticipate growing through both internal development projects, as well as external opportunities, which include the acquisition, partnering and in-licensing of products, technologies and companies or the entry into strategic alliances and collaborations. The availability of high quality opportunities is limited, and we may fail to identify candidates that we and our stockholders consider suitable or complete transactions on terms that prove advantageous. In order to pursue such opportunities, we may require significant additional financing, which may not be available to us on favorable terms, if at all. Even if we are able to successfully identify and complete acquisitions, like our business combinations with Novavax CZ (formerly Praha Vaccines) and Novavax AB, strategic transactions involve many risks, including, among others, those related to diversion of management’s attention from other business concerns, unanticipated expenses and liabilities, and increased complexity of our operations, which could prevent us from effectively exploiting acquired facilities, successfully integrating the acquired business and personnel, or fully realizing expected synergies.

To effectively manage our current and future potential growth, we will need to continue to enhance our operational, financial and management processes and to effectively expand, train and manage our employee base. Supporting our growth initiatives will require significant expenditures and management resources, including investments in research and development, manufacturing in-house and through third-party manufacturers and other areas of our business. Furthermore, we are in process of implementing a new enterprise resource planning system, which is intended to increase efficiency, but may result in disruptions or delays to our operations during its implementation. If we do not successfully manage our growth and do not successfully execute our growth initiatives, then our business and financial results may be adversely impacted, and we may incur asset impairment or restructuring charges.

Security breaches and other disruptions could compromise our information and expose us to liability, and our failure to comply with data protection laws and regulations could lead to government enforcement actions, which would cause our business and reputation to suffer.

In the ordinary course of our business, we and many of our current and future strategic partners, vendors, contractors, and consultants collect and store sensitive data, including intellectual property, our proprietary business information and data about our clinical participants, suppliers and business partners and personally identifiable information. The secure maintenance of this information is critical to our operations and business strategy. Some of this information could be an attractive target of criminal attack by malicious third parties with a wide range of motives and expertise, including nation-states, organized criminal groups, “hacktivists,” patient groups, disgruntled current or former employees and others. Hacker attacks are of ever-increasing levels of sophistication, and despite our security measures, our information technology and infrastructure may be

Table of Contents

vulnerable to such attacks or may be breached due to employee error or malfeasance. In 2020, several domestic and foreign security agencies announced that government actors or government-affiliated actors were specifically targeting organizations engaging in COVID-19 vaccine development and research. Our profile as an OWS recipient and progress on NVX-CoV2373 may result in greater risk of cyber attack. Any such breach could compromise our networks, our enterprise resource planning software and the information stored there could be accessed, publicly disclosed, lost or stolen. Furthermore, if our systems become compromised, we may not promptly discover the intrusion. Like other companies in our industry, we have experienced attacks to our data and systems, including malware and computer viruses. Attacks could have a material impact on our business, operations or financial results. Any access, disclosure or other loss of information could result in legal claims or proceedings, liability under laws that protect the privacy of personal information, disrupt our operations, and damage our reputation, which could adversely affect our business. In addition, privacy and data protection laws may be interpreted and applied differently from country to country and may create inconsistent or conflicting requirements, which can increase the costs incurred by us in complying with such laws. The European Union’s GDPR, which greatly increases the jurisdictional reach of European Union law and became effective in May 2018, adds a broad array of requirements for handling personal data including the public disclosure of significant data breaches, and imposes substantial penalties for non-compliance of up to the greater of €20 million or 4% of global annual revenue for the preceding financial year. Our efforts to comply with GDPR and other privacy and data protection laws may impose significant costs and challenges that are likely to increase over time, and we could incur substantial penalties or litigation related to violations of existing or future data privacy laws and regulations.

The GDPR imposes strict rules on the transfer of personal data to countries outside the European Economic Area (“EEA”), including the United States and, in response, the EU and United States agreed in 2016 to a transfer framework for data transferred from the European Union to the United States, called the EU-US Privacy Shield. On July 16, 2020, however, the Court of Justice of the European Union issued a decision that declared the Privacy Shield framework, one of the primary mechanisms U.S. companies used to import personal information from Europe, invalid, and raised questions about whether the European Commission’s Standard Contractual Clauses (“SCCs”), an alternative to the Privacy Shield, can lawfully be used for cross-border data transfers. On June 4, 2021, the European Commission adopted new SCCs under the GDPR for personal data transfers outside of the EEA. Under this legal mechanism, we may have obligations to conduct transfer impact assessments for such cross-border data transfers and implement additional security measures. As we incorporate the new SCCs into our contractual arrangements, we may be required to expend significant resources to update our contractual arrangements and to comply with such obligations. If we are unable to implement a valid compliance mechanism for cross-border personal information transfers, we may face increased exposure to regulatory actions, substantial fines and injunctions against processing or transferring personal information from Europe. Inability to import personal information from Europe to the United States may significantly and negatively impact our business operations, including by limiting our ability to conduct clinical trials activities in Europe; limiting our ability to collaborate with contract research organizations, service providers, contractors and other companies subject to the GDPR; or requiring us to increase our data processing capabilities in Europe at significant expense.

Additionally, the CCPA, which became effective January 1, 2020, substantially expands privacy obligations of many businesses. The CCPA requires new disclosures to California consumers, imposes new rules for collecting or using information about minors, and affords consumers new abilities, such as the right to know whether the data is sold or disclosed and to whom, the right to request that a company delete personal information collected, the right to opt-out of the sale of personal information and the right to non-discrimination in terms of price or service when a consumer exercises a privacy right. If we fail to comply with these regulations, we could be subject to civil sanctions, including fines and penalties for noncompliance. The CCPA provides for civil penalties for violations, as well as a private right of action for data breaches that is expected to increase data breach litigation. Moreover, a newly passed ballot initiative, the California Privacy Rights Act (“CPRA”), which will become operational in 2023, expands on the CCPA, creating new consumer rights and protections, including the right to correct personal information, the right to opt out of the use of personal information in automated decision making, the right to opt out of “sharing” consumer’s personal information for cross-context behavioral advertising, and the right to restrict use of and disclosure of sensitive personal information, including geolocation data to third parties. We will need to evaluate and potentially update our privacy program to ensure compliance with the CPRA and may incur additional costs and expenses in our effort to comply.

Collaborations and contracts of our wholly owned subsidiaries Novavax AB and Novavax CZ, with regional partners, such as SIIPL and Cadila, as well as with international providers, expose us to additional risks associated with doing business outside the U.S.

Swedish-based Novavax AB and Czech Republic-based Novavax CZ are wholly owned subsidiaries of Novavax, Inc. We also have established a manufacturing and distribution agreement with SIIPL, formed a joint venture with Cadila in India and have entered into other agreements and arrangements with foreign governments and companies in other countries. We plan to continue to enter into collaborations or partnerships with companies, non-profit organizations and local governments in various parts of the world. Risks of conducting business outside the U.S. include negative consequences of:

Table of Contents

•the costs associated with seeking to comply with multiple regulatory requirements that govern our ability to develop, manufacture and sell products in local markets;

•failure to comply with anti-bribery laws such as the U.S. Foreign Corrupt Practices Act and similar anti-bribery laws in other jurisdictions;

•new or changes in interpretations of existing trade protections measures, including tariffs, embargoes and import and export licensing requirements;

•difficulties in and costs of staffing, managing and operating our international operations;

•changes in environmental, health and safety laws;

•fluctuations in foreign currency exchange rates;

•new or changes in interpretations of existing tax laws;

•political instability and actual or anticipated military or potential conflicts;

•economic instability, inflation, recession and interest rate fluctuations;

•minimal or diminished protection of intellectual property in many jurisdictions; and

•possible nationalization and expropriation.

These risks, individually or in the aggregate, could have a material adverse effect on our business, financial conditions, results of operations and cash flows.

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

We depend on our senior executive officers, as well as key scientific and other personnel. The loss of these individuals could harm our business and significantly delay or prevent the achievement of research, development or business objectives. Turnover in key executive positions resulting in lack of management continuity and long-term history with our Company could result in operational and administrative inefficiencies and added costs.

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

We also rely from time to time on outside advisors who assist us in formulating our research and development and clinical strategy. We may not be able to attract and retain these individuals on acceptable terms, which could delay our development efforts.

Risks Related to Our Convertible Senior Notes

Servicing our 3.75% convertible senior unsecured notes due 2023 requires a significant amount of cash, and we may not have sufficient cash flow to pay our debt.

In 2016, we issued $325 million aggregate principal amount of Notes. Our ability to make scheduled payments of the principal of, to pay interest on, or to refinance our indebtedness, including the Notes, depends on our future performance, which is subject to economic, financial, competitive and other factors beyond our control. We do not expect our business to be able to generate cash flow from operations sufficient to service our debt and make necessary capital expenditures and may therefore be required to adopt one or more alternatives, such as selling assets, restructuring debt or obtaining additional equity capital on terms that may be onerous or highly dilutive. Our ability to refinance our indebtedness, which is non-callable and matures in 2023, will depend on the capital markets and our financial condition at such time. We may not be able to engage in any of these activities or engage in these activities on desirable terms, which could result in a default on our debt obligations, and limit our flexibility in planning for and reacting to changes in our business.

Table of Contents

We may not have the ability to raise the funds necessary to repurchase the Notes as required upon a fundamental change, and our future debt may contain limitations on our ability to repurchase the Notes.

Holders of the Notes will have the right to require us to repurchase their Notes for cash upon the occurrence of a fundamental change at a fundamental change repurchase price equal to 100% of the principal amount of the Notes to be repurchased, plus accrued and unpaid interest, if any. A fundamental change may also constitute an event of default or prepayment under, and result in the acceleration of the maturity of, our then-existing indebtedness. We cannot assure that we will have sufficient financial resources, or will be able to arrange financing, to pay the fundamental change repurchase price in cash with respect to any Notes surrendered by holders for repurchase upon a fundamental change. In addition, restrictions in our then existing credit facilities or other indebtedness, if any, may not allow us to repurchase the Notes upon a fundamental change. Our failure to repurchase the Notes upon a fundamental change when required would result in an event of default with respect to the Notes which could, in turn, constitute a default under the terms of our other indebtedness, if any. If the repayment of the related indebtedness were to be accelerated after any applicable notice or grace periods, we may not have sufficient funds to repay the indebtedness and repurchase the Notes.

Capped call transactions entered into in connection with our Notes may affect the value of our common stock.

In connection with our Notes, we entered into capped call transactions (the “capped call transactions”) with certain financial institutions. The capped call transactions are expected to generally reduce the potential dilution upon conversion of the Notes into shares of our common stock.

In connection with establishing their initial hedges of the capped call transactions, these financial institutions or their respective affiliates entered into various derivative transactions with respect to our common stock and/or to purchase our common stock. The financial institutions, or their respective affiliates, may modify their hedge positions by entering into or unwinding various derivatives with respect to our common stock and/or purchasing or selling our common stock or other securities of ours in secondary market transactions prior to the maturity of the Notes. This activity could also cause or avoid an increase or a decrease in the market price of our common stock or the Notes, which could affect the value of our common stock.

Risks Related to Ownership of Our Common Stock

Because our stock price has been and will likely continue to be highly volatile, the market price of our common stock may be lower or more volatile than expected.

Our stock price has been highly volatile. From January 1, 2021 through July 31, 2021, the closing sale price of our common stock has been as low as $112.98 per share and as high as $319.93 per share. The stock market in general and the market for biotechnology companies in particular have experienced extreme volatility that has often been unrelated to the operating performance of particular companies. These broad market fluctuations may cause the market price of our common stock to be lower or more volatile than expected.

Furthermore, given the global focus on the COVID-19 pandemic and our investment in developing a COVID-19 vaccine, information in the public arena on this topic, whether or not accurate, has had and will likely continue to have an outsized impact (positive or negative) on our stock price. Information related to our development, manufacturing, regulatory and commercialization efforts with respect to NVX-CoV2373, or information regarding such efforts by competitors with respect to their COVID-19 vaccines and vaccine candidates, may meaningfully impact our stock price. As a result of this volatility, you may not be able to sell your common stock at or above your initial purchase price. The market price of our common stock may be influenced by many other factors, including:

•future announcements about us or our collaborators or competitors, including the results of testing, technological innovations or new commercial products;

•clinical trial results;

•delays in making regulatory submissions;

•depletion of our cash reserves;

•sale of equity securities or issuance of additional debt;

•announcement by us of significant strategic partnerships, collaborations, joint ventures, capital commitments or acquisitions;

Table of Contents

•changes in government regulations;

•impact of competitor successes and in particular development success of vaccine candidates that compete with our own vaccine candidates;

•developments in our relationships with our collaboration and funding partners;

•announcements relating to health care reform and reimbursement levels for new vaccines and other matters affecting our business and results, regardless of accuracy;

•sales of substantial amounts of our stock by us or existing stockholders (including stock by insiders or 5% stockholders);

•development, spread or new announcements related to pandemic diseases;

•litigation;

•public concern as to the safety of our products;

•significant set-backs or concerns with the industry or the market as a whole;

•regulatory inquiries, reviews and potential action, including from the FDA or the SEC;

•recommendations by securities analysts or changes in earnings estimates; and

•the other factors described in this Risk Factors section.

In the past, following periods of volatility in the market price of a company’s securities, securities class-action litigation often has been instituted against that company. Such litigation, if instituted against us, could cause us to incur substantial costs to defend such claims and divert management’s attention and resources, which could seriously harm our business, financial condition, and results of operations, and prospects.

Raising additional capital by issuing securities or through collaboration and licensing arrangements may cause dilution to existing stockholders or require us to relinquish rights to our technologies or vaccine candidates.

If we are unable to partner with a third-party to advance the development of one or more of our vaccine candidates, we will need to raise money through additional debt or equity financings. To the extent that we raise additional capital by issuing equity securities, our stockholders will experience immediate dilution, which may be significant. There is also a risk that such equity issuances may cause an ownership change under the Internal Revenue Code of 1986, as amended, and similar state provisions, thus limiting our ability to use our net operating loss carryforwards and credits. To the extent that we raise additional capital through licensing arrangements or arrangements with collaborative partners, we may be required to relinquish, on terms that may not be favorable to us, rights to some of our technologies or vaccine candidates that we would otherwise seek to develop or commercialize ourselves. In addition, economic conditions may also negatively affect the desire or ability of potential collaborators to enter into transactions with us. They may also have to delay or cancel research and development projects or reduce their overall budgets.

Provisions of our Second Amended and Restated Certificate of Incorporation and Amended and Restated By-Laws and Delaware law could delay or prevent the acquisition of the Company, even if such acquisition would be beneficial to stockholders, and could impede changes in our Board.

Provisions in our organizational documents could hamper a third-party’s attempt to acquire, or discourage a third-party from attempting to acquire control of, the Company. Stockholders who wish to participate in these transactions may not have the opportunity to do so. Our organizational documents also could limit the price investors are willing to pay in the future for our securities and make it more difficult to change the composition of our Board in any one year. For example, our organizational documents provide for a staggered board with three classes of directors serving staggered three-year terms and advance notice requirements for stockholders to nominate directors and make proposals.

As a Delaware corporation, we are also afforded the protections of Section 203 of the Delaware General Corporation Law, which will prevent us from engaging in a business combination with a person who acquires at least 15% of our common

Table of Contents

stock for a period of three years from the date such person acquired such common stock, unless advance board or stockholder approval was obtained.

Any delay or prevention of a change of control transaction or changes in our Board or management could deter potential acquirers or prevent the completion of a transaction in which our stockholders could receive a substantial premium over the then current market price for their shares.

We have never paid dividends on our capital stock, and we do not anticipate paying any such dividends in the foreseeable future.

We have never paid cash dividends on our common stock. We currently anticipate that we will retain all of our earnings for use in the development of our business and do not anticipate paying any cash dividends in the foreseeable future. As a result, capital appreciation, if any, of our common stock would be the only source of gain for stockholders until dividends are paid, if at all.

General Risk Factors

Litigation could have a material adverse impact on our results of operation and financial condition.

In addition to intellectual property litigation, from time to time, we may be subject to other litigation. Regardless of the merits of any claims that may be brought against us, litigation could result in a diversion of management’s attention and resources and we may be required to incur significant expenses defending against these claims. If we are unable to prevail in litigation, we could incur substantial liabilities. Where we can make a reasonable estimate of the liability relating to pending litigation and determine that it is probable, we record a related liability. As additional information becomes available, we assess the potential liability and revise estimates as appropriate. However, because of uncertainties relating to litigation, the amount of our estimates could be wrong.

We or the third parties upon whom we depend may be adversely affected by natural or man-made disasters or public health emergencies, such as the COVID-19 pandemic.

Our operations, and those of our clinical research organizations, contract manufacturing organizations, vendors of materials needed in manufacturing, collaboration partners, distributors and other third parties upon whom we depend, could be subject to fires, extreme weather conditions, earthquakes, power shortages, telecommunications failures, water shortages, floods, hurricanes, typhoons, war, political unrest, sabotage or terrorism and other natural or man-made disasters, as well as public health emergencies, such as the COVID-19 pandemic. The occurrence of any of these business disruptions could prevent us from using all or a significant portion of our facilities and it may be difficult or impossible for us to continue certain activities for a substantial period of time. The disaster recovery and business continuity plans we have in place may prove inadequate in the event of a serious disaster or similar event and we may incur substantial expenses and delays as a result. Our ability to manufacture our product candidates and obtain necessary clinical supplies for our product candidates could be disrupted if the operations of our contract manufacturing organizations or suppliers are affected by a natural or man-made disaster, or a public health emergency.

The outbreak of COVID-19 may materially and adversely affect our business and our financial results.

The COVID-19 pandemic continues to present substantial global economic and public health challenges, which may materially and adversely impact our business, financial condition and results of operations. In response to COVID-19, various aspects of our business operations have been, and could continue to be, disrupted. We continue to implement a work from home policy, with our administrative employees working outside of our offices, and on-site staff restricted to only those required to execute certain laboratory and related support activities. Working remotely could increase our cybersecurity risk, create data accessibility concerns, and make us more susceptible to communication disruptions, any of which could adversely impact our business operations. In addition, as a result of state or local restrictions, our on-site staff conducting research and development may not be able to access our laboratories, and these core activities may be significantly limited or curtailed, possibly for extended periods of time. Travel restrictions and other governmental measures may also result in a disruption or delay in the performance of our third-party contractors and suppliers. If such third parties are unable to adequately satisfy their contractual commitments to us in a timely manner, our business could be adversely affected.

Furthermore, while some jurisdictions have recently started to phase out restrictions imposed on commercial activities at varying degrees, a resurgence of COVID-19, coupled with a potential surge in variant strains of COVID-19, in certain geographies could result in restrictions being reinstated.

Our clinical trials, whether planned or ongoing, may be affected by the COVID-19 pandemic. Study procedures (particularly any procedures that may be deemed non-essential), site initiation, participant recruitment and enrollment, participant dosing, shipment of our product candidates, distribution of clinical trial materials, study monitoring, site inspections and data analysis may be paused or delayed due to changes in hospital or research institution policies, federal, state or local

Table of Contents

regulations, prioritization of hospital and other medical resources toward efforts to treat or prevent COVID-19, or other reasons related to the pandemic. In addition, there could be a potential effect of COVID-19 to the operations of the FDA or other health authorities, which could result in delays of reviews and approvals, including with respect to

~~Table of Contents~~

our product candidates. Any prolongation or de-prioritization of our clinical trials or delay in regulatory review resulting from such disruptions could materially affect the development and study of our product candidates.

The trading prices for our common stock and that of other biopharmaceutical companies have been highly volatile due to the COVID-19 pandemic, especially as a result of investor concerns and uncertainty related to the impact of the outbreak on the economies of countries worldwide. These broad market and industry fluctuations, as well as general economic, political and market conditions, may negatively impact the market price of shares of our common stock.

The COVID-19 pandemic continues to rapidly evolve. The extent to which the outbreak impacts our business, preclinical studies and clinical trials will depend on future developments, which are highly uncertain and cannot be predicted with confidence, such as the ultimate geographic spread of the disease, the emergence of variant strains, the duration of the pandemic, travel restrictions and social distancing in the U.S. and other countries, business closures or business disruptions and the effectiveness of actions taken in the U.S. and other countries to contain and treat the disease.

The United Kingdom’s withdrawal from the European Union could result in increased regulatory and legal complexity, which may make it more difficult for us to do business in the UK and/or Europe and impose additional challenges in securing regulatory approval of our product candidates in the UK and/or Europe.

The United Kingdom’s exit from the European Union as of January 31, 2020, with a transitional period up to December 31, 2020, commonly referred to as “Brexit”, has caused political and economic uncertainty, including in the regulatory framework applicable to our operations and vaccine candidates in the United Kingdom and the European Union, and this uncertainty may persist for years. Brexit could, among other outcomes, disrupt the free movement of goods, services and people between the United Kingdom and the European Union, and result in increased legal and regulatory complexities, as well as potential higher costs of conducting business in Europe. As one of the Brexit consequences, the EMA has relocated from the United Kingdom to the Netherlands. This has led to a significant reduction of the EMA workforce, which has resulted and could further result in significant disruption and delays in its administrative procedures, such as granting clinical trial authorization or opinions for marketing authorization, disruption of importation and export of active substance and other components of new drug formulations, and disruption of the supply chain for clinical trial product and final authorized formulations. As any European Union marketing authorization for NVX-CoV2373 would be issued after January 1, 2021, if at all, it would not be grandfathered in the UK. We therefore must seek to obtain a separate marketing authorization for the UK, increasing our regulatory burden.

The cumulative effects of the disruption to the regulatory framework may add considerably to the development lead time to marketing authorization and commercialization of products in the European Union and/or the ~~third parties upon whom we depend may~~United Kingdom. It is possible that there will be ~~adversely affected by natural or man-made disasters or public health emergencies, such as~~increased regulatory complexities, which can disrupt the ~~COVID-19 pandemic.~~

~~Our operations, and those~~timing of our clinical ~~research organizations, contract manufacturing organizations, vendors of materials needed~~trials and regulatory approvals. In addition, changes in, ~~manufacturing, collaboration partners, distributors~~ and ~~other third parties upon whom we depend, could be subject~~legal uncertainty with regard to, ~~fires, extreme weather conditions, earthquakes, power shortages, telecommunications failures, water shortages, floods, hurricanes, typhoons, war or terrorism~~national and other natural or man-made disasters, as well as public health emergencies, such as the COVID-19 pandemic. The occurrence of any of these business disruptions could prevent us from using all or a significant portion of our facilitiesinternational laws and itregulations may be difficult or impossible for us to continue certain activities for a substantial period of time. The disaster recovery and business continuity plans we have in place may prove inadequate in the event of a serious disaster or similar event and we may incur substantial expenses and delays as a result. Our ability to manufacture our product candidates and obtain necessary clinical suppliespresent difficulties for our ~~product candidates could be disrupted if the operations of our contract manufacturing organizations~~clinical and regulatory strategy. Any delay in obtaining, or ~~suppliers are affected by a natural or man-made disaster, or a public health emergency.~~

~~We have a history of losses and our future profitability is uncertain.~~

Our expenses have exceeded our revenue since our formation in 1987, and our accumulated deficit as of December 31, 2019 was $1.4 billion. Our revenue for the last three fiscal years was $18.7 million in 2019, $34.3 million in 2018, and $31.2 million in 2017. Though we have received or anticipate receiving a significant amount of funding from OWS, the DoD and CEPI in connection with the development and potential commercialization of NVX-CoV2373, we may be unablean inability to ~~produce a successful vaccine in a timely manner, if at all. Our net losses for the last three fiscal years were $132.7 million in 2019, $184.7 million in 2018, and $183.8 million in 2017.~~

Historically, our losses have resulted predominantly from research and development expenses for our vaccine candidates, manufacturing-related expenses, costs related to protection of our intellectual property and other general and administrative operating expenses, a significant portion of which have been noncash. Our expenses have exceeded our revenue since inception, and we believe our expenses will fluctuate over time, and may substantially increase in some years,obtain, any marketing approvals, as a result of ~~continuing research and development efforts to support our vaccine development efforts, and, if~~Brexit or otherwise, would prevent us from commercializing our product candidates ~~are approved, future commercialization efforts.~~

~~By the end of fiscal year 2020, we expect our total investment~~ in the development and manufacture of NVX-CoV2373 to be significant and to continue through 2021 and beyond, although the precise magnitude of our investment will be subject to clinical trial data results, the duration of the COVID-19 pandemic and other factors, including our competitive landscape and regulatory outcomes. If we are unable to timely commercialize a vaccine against COVID-19, we may never recoup this investment. Although certain specified costs associated with the development of NVX-CoV2373 are expected to be reimbursed under the OWS Agreement, the DoD Contract and the CEPI Funding Agreement, we expect to continue to incur significant operating expenses and anticipate significant losses over time as we seek to:

●

~~conduct clinical trials and seek regulatory approval for NVX-CoV2373 and other potential vaccine candidates;~~

●

~~conduct preclinical studies for other potential vaccine candidates;~~

~~Table of Contents~~

●

~~expand our global manufacturing and distribution capacity; and~~

●

~~maintain, expand and protect our intellectual property portfolio.~~

As a result, we expect our cumulative operating losses to increase until such time, if ever, that product sales, licensing fees, royalties, milestones, contract research and other sources generate sufficient revenue to fund our operations. We may never achieve profitability and may not sustain profitability, if achieved.

~~Our existing funding agreements with the U.S. government and CEPI do not assure success of NVX-CoV2373 or that we will be able to fully fund NVX-CoV2373~~

The OWS Agreement, the DoD Agreement and the CEPI Funding Agreement each reimburse a portion of the expenses associated with the development and potential commercialization of NVX-CoV2373. However, we remain fully responsible for conducting these development and commercialization activities, not all of which may be reimbursed. Furthermore, none of the OWS Agreement, the DoD Agreement, United Kingdom and/or the ~~CEPI Funding Agreement guarantees that any of these activities will be successful. Our inability to succeed with key clinical or development activities could jeopardize~~European Union and restrict our ability to ~~obtain licensure from~~generate revenues and achieve and sustain profitability.

In addition, as a result of Brexit, other European countries may seek to conduct referenda with respect to their continuing membership with the ~~FDA or other regulatory authorities to sell NVX-CoV2373.~~

~~Collaborations~~European Union. Given these possibilities and ~~contracts of our wholly owned subsidiaries Novavax AB and Novavax CZ, with regional partners,~~others we may not anticipate, as well as ~~with international providers, expose us to additional risks associated with doing business outside~~ the ~~U.S.~~

~~Swedish-based Novavax AB~~absence of comparable precedent, it is unclear what financial, regulatory and its wholly-owned subsidiary Novavax CZ are wholly-owned subsidiaries of Novavax, Inc. We also have formed a joint venture with Cadila Pharmaceuticals Limited in India, established clinical development agreements with CEPI and BMGF and entered into other agreements and arrangements with international companies, including SIIPL in India, among others. We plan to continue to enter into collaborations or partnerships with companies, non-profit organizations and national and local governments in various partslegal implications the withdrawal of the ~~world, particularly~~United Kingdom from the European Union will have, how such withdrawal will affect us, and the full extent to ~~expand our global manufacturing and distribution capacity with respect to NVX-CoV2373. Risks of conducting business outside the U.S. include negative consequences of:~~

●

The complexity and costs associated with seeking to comply with separate regulatory requirements that govern our ability to develop, manufacture, license and commercialize our vaccine candidates in local markets;

●

~~the impacts of the COVID-19 pandemic on specific countries or regions;~~

●

~~failure to comply with anti-bribery laws such as the U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act and similar anti-bribery laws in other jurisdictions;~~

●

~~new or changes in interpretations of existing trade protections measures, including tariffs, embargoes and import and export licensing requirements;~~

●

~~increased legal and compliance burden associated with establishing, maintaining and operating legal entities in foreign countries;~~

●

~~difficulties in and costs of staffing, managing and operating our international operations;~~

●

~~changes in environmental, health and safety laws;~~

●

~~fluctuations in foreign currency exchange rates;~~

●

~~new or changes in interpretations of existing tax laws;~~

●

~~political instability and actual or anticipated military or potential conflicts;~~

●

~~economic instability, inflation, recession and interest rate fluctuations;~~

●

~~minimal or diminished protection of intellectual property in many jurisdictions; and~~

●

~~possible nationalization and expropriation.~~

~~These risks, individually or in the aggregate, could have a material adverse effect on~~which our business ~~financial conditions, results of operations and cash flows.~~

could be adversely affected.

~~Table of Contents~~

~~We may have product liability exposure.~~

The administration of drugs or vaccines to humans, whether in clinical trials or after marketing approval, can result in product liability claims. We maintain product liability insurance coverage for our current clinical programs, including our NVX-CoV2373 trials; however, we may not be able to maintain insurance coverage at a reasonable cost or in sufficient amounts to protect us against losses due to liability. Furthermore, coverage is relatively expensive, and the market pricing fluctuates significantly. We may not be able to maintain our existing insurance coverage or obtain coverage for the use of our other products in the future. This insurance coverage and our resources may not be sufficient to satisfy all liabilities that result from product liability claims. A successful claim may prevent us from obtaining adequate product liability insurance in the future on commercially desirable terms, if at all. Even if a claim is not successful, defending such a claim would be time-consuming and expensive, may damage our reputation in the marketplace and would likely divert management’s attention.

In addition, because we are developing NVX-CoV2373 in response to the outbreak of COVID-19, a global pandemic, we may have a widely used vaccine in the U.S. and other countries as an investigational vaccine or a product authorized for temporary or emergency use prior to our receipt of marketing approval. Unexpected safety issues in these circumstances could lead to product liability claims and our existing insurance may not be adequate for such claims.

~~Regardless of merit or eventual outcome, liability claims may result in:~~

●

~~decreased demand for our products;~~

●

~~impairment of our business reputation;~~

●

~~withdrawal of clinical trial participants;~~

●

~~costs of related litigation;~~

●

~~substantial monetary awards to participants or other claimants;~~

●

~~loss of revenue; and~~

●

~~inability to commercialize our vaccine candidates.~~

We are increasingly a target for public scrutiny, and our business may be impacted by unfavorable publicity.

Given that COVID-19 represents an unprecedented urgent public health crisis, that we are developing NVX-CoV2373 as a COVID-19 vaccine candidate, and that we have received significant funding from the U.S. ~~government~~and foreign governments and other sources to support the development and potential commercialization of NVX-CoV2373, we have observed and are likely to continue to face significant public attention and scrutiny over the complex decisions we have made and will be making regarding the development, testing, ~~and~~ manufacturing, ~~and potential~~ allocation and pricing of NVX-CoV2373. If we are unable to successfully manage these risks, we could face significant reputational harm, which could negatively affect our stock price. The intense public interest, including speculation by the media, in the development of NVX-CoV2373 has caused significant volatility in our stock price, which we expect to continue as data and other information from our ongoing clinical trials become publicly available. If concerns should arise about the actual or anticipated ~~clinical outcomes regarding the~~ efficacy or safety of any of our product candidates, such concerns could adversely affect the market’s perception of these candidates, which could lead to a decline in investors’ expectations and a decline in the price of our common stock.

Table of Contents

The increasing use of social media platforms presents new risks and challenges to our business.

Social media is increasingly being used to communicate about pharmaceutical companies’ research, product candidates, and the diseases such product candidates are being developed to prevent. Social media practices in the pharmaceutical industry continue to evolve and regulations relating to such use are not always clear. This evolution creates uncertainty and risk of noncompliance with regulations applicable to our business, resulting in potential regulatory actions against us. For example, subjects may use social media channels to comment on their experience in an ongoing blinded clinical trial or to report an alleged adverse event. When such ~~disclosures~~events occur, there is a risk that we fail to monitor and comply with applicable adverse event reporting obligations or we may not be able to defend our business or the public’s legitimate interests in the face of the political and market pressures generated by social media due to restrictions on what we may say about our investigational product candidates. There is also a risk of inappropriate disclosure of sensitive information or negative or inaccurate posts or comments about us on any social media or networking website. If any of these events were to occur or we otherwise fail to comply with applicable regulations, we could incur liability, face regulatory actions, or incur reputational or other harm to our business.

Table of Contents

Item 6. Exhibits


3.1		Second Amended and Restated Certificate of Incorporation of the Registrant (Incorporated by reference to Exhibit 3.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2015, filed on August 10, 2015 (File No. 000-26770))

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

3.3		Amended and Restated By-Laws of the Registrant (Incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8 -K filed on June 24 , 20 21 (File No. 000-26770))

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

~~3.4~~ 10.1*		Employment Agreement, dated April 12, 2021, between Novavax, Inc. and Gregory F. Covino

10.2*		Form of Amendment to Employment Agreement, dated June 17, 2021, between Novavax, Inc. and each of Stanley C. Erck, Gregory M. Glenn, John J. Trizzino and John A. Herrmann, III

10.3		Amended and Restated ~~By-Laws of the Company~~Novavax, Inc. 2015 Stock Incentive Plan (Incorporated by reference to ~~Exhibit 3.2 to~~Appendix A of the ~~Company's Annual Report on Form 10-K for the year ended December 31, 2012,~~Registrant’s Definitive Proxy Statement filed on ~~March 12, 2013~~May 3, 2021 in connection with the Annual Meeting held on June 17, 2021 (File No. 000-26770))

~~10.1±~~ 10.4		~~Base Agreement, entered into June 25, 2020, between the Company~~Novavax, Inc. Amended and ~~Advanced Technology International~~Restated Change in Control Severance Benefit Plan

10.210.5±		Advance Purchase Agreement, dated May 5, 2021, between Novavax, Inc. and the Gavi Alliance

10.6*±		Modification No. 07 to Undefinitized Project Agreement No. 1, ~~entered into July 6, 2020,~~dated April 23, 2021, between ~~the Company~~Novavax, Inc. and Advanced Technology International

10.310.7±		Modification No. 0108 to Undefinitized Project Agreement No. ~~01, entered into July 9, 2020,~~1, dated June 4, 2021, between ~~the Company~~Novavax, Inc. and Advanced Technology International

~~10.4±~~ 31.1		~~Supply and License Agreement, entered into July 30, 2020, between the Company and Serum Institute of India Private Limited~~

~~10.5*±~~	~~Amendment to Supply and License Agreement, entered into September 11, 2020, between the Company and Serum Institute of India Private Limited~~

~~10.6*±~~	Amendment of Solicitation/Modification of Contract, entered into September 16, 2020, between the Company and the U.S. Department of Defense Joint Program Executive Office for Chemical, Biological, Radiological and Nuclear Defense

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

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

~~Table of Contents~~

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

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

101						The following financial information from our Quarterly Report on Form 10-Q for the quarter ended ~~September~~June 30, ~~2020,~~2021, formatted in Inline Extensible Business Reporting Language (Inline XBRL): (i) the Consolidated Balance Sheets as of ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, (ii) the Consolidated Statements of Operations for the ~~three~~three- and ~~nine-month~~six-month periods ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, (iii) the Consolidated Statements of Comprehensive Loss for the ~~three~~three- and ~~nine-month~~six-month periods ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, (iv) the Consolidated Statements of Changes in Stockholders’ Equity (Deficit) for the ~~three~~three- and ~~nine-month~~six-month periods ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, (v) the Consolidated Statements of Cash Flows for the ~~nine-month periods~~six-month period ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, and (vi) the Notes to Consolidated Financial Statements.

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

*Filed or furnished herewith.

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


		NOVAVAX, INC.

Date: ~~November 10, 2020~~ August 5, 2021		By:	/s/ Stanley C. Erck
			Stanley C. Erck
	President and Chief Executive Officer
	(Principal Executive Officer)

Date: ~~November 10, 2020~~ August 5, 2021		By:	/s/ John J. Trizzino
			John J. Trizzino
	Executive Vice President, Chief Commercial Officer, Chief Business Officer and Interim Chief Financial Officer ~~and Treasurer~~
	(Principal Financial and Accounting Officer)



☒	~~QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~
	~~For the quarterly period ended~~ ~~September 30, 2020~~
OR
☐	~~TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~
	~~For the transition period from to .~~


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


	September 30,		December 31,
	2020		2019
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	334,171	$	78,823
Marketable securities		169,860		—
Restricted cash		67,154		2,947
Accounts receivable		12,355		7,500
Unbilled services		3,826		—
Prepaid expenses and other current assets		83,851		7,977
Total current assets		671,217		97,247
Restricted cash		411		410
Property and equipment, net		131,834		11,445
Intangible assets, net		5,332		5,581
Goodwill		126,932		51,154
Other non-current assets		8,294		7,120
Total assets	$	944,020	$	172,957

LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accounts payable	$	15,097	$	2,910
Accrued expenses		78,812		14,867
Accrued interest		2,031		5,078
Deferred revenue		81,814		1,678
Current portion of finance lease liabilities		55,860		—
Other current liabilities		5,604		1,262
Total current liabilities		239,218		25,795
Deferred revenue		2,500		2,500
Convertible notes payable		321,679		320,611
Non-current finance lease liabilities		63,099		—
Other non-current liabilities		11,262		10,068
Total liabilities		637,758		358,974

Commitments and contingencies

Preferred stock, $0.01 par value, 2,000,000 shares authorized; 438,885 shares of redeemable Series A Convertible Preferred Stock issued and outstanding at September 30, 2020 and 0 shares issued and outstanding at December 31, 2019		199,822		—

Stockholders' equity (deficit):
Common stock, $0.01 par value, 600,000,000 shares authorized at September 30, 2020 and December 31, 2019; and 63,318,888 shares issued and 62,927,485 shares outstanding at September 30, 2020 and 32,399,352 shares issued and 32,352,416 shares outstanding at December 31, 2019		633		324
Additional paid-in capital		1,848,644		1,260,551
Accumulated deficit		(1,696,635)		(1,431,801)
Treasury stock, 391,403 shares, cost basis at September 30, 2020 and 46,936 shares, cost basis at December 31, 2019		(41,207)		(2,583)
Accumulated other comprehensive loss		(4,995)		(12,508)
Total stockholders’ equity (deficit)		106,440		(186,017)
Total liabilities and stockholders’ equity (deficit)	$	944,020	$	172,957


		For the Three Months Ended			For the Nine Months Ended
		September 30,			September 30,
	2020		2019		2020		2019

Revenue:
Grant and other	$	114,086	$	2,507	$	152,690	$	9,846
Government contract		42,938		—		43,249		—
Total revenue		157,024		2,507		195,939		9,846

Expenses:
Research and development		294,087		18,611		345,828		84,502
Gain on Catalent transaction		—		(9,016)		—		(9,016)
General and administrative		56,879		7,899		83,977		26,236
Total expenses		350,966		17,494		429,805		101,722
Loss from operations		(193,942)		(14,987)		(233,866)		(91,876)
Other income (expense):
Investment income		140		342		872		1,236
Interest expense		(4,460)		(3,403)		(11,266)		(10,209)
Other income (expense)		952		5		3,565		(15)
Net loss	$	(197,310)	$	(18,043)	$	(240,695)	$	(100,864)

Basic and diluted net loss per share	$	(3.21)	$	(0.74)	$	(4.39)	$	(4.43)

Basic and diluted weighted average number of common shares outstanding		61,554		24,327		54,810		22,761


				Additional						Other		Stockholders'
	Common Stock			Paid-in		Accumulated		Treasury		Comprehensive		Equity
	Shares	Amount		Capital		Deficit		Stock		Income (Loss)		(Deficit)

	(in thousands, except share information)
Balances at June 30, 2020	61,262,632	$	612	$	1,699,072	$	(1,499,325)	$	(2,638)	$	(13,195)	$	184,526
Preferred stock beneficial conversion feature	—		—		—		—		—		—		—
Non-cash stock-based compensation	—		—		65,705		—		—		—		65,705
Stock issued under incentive programs	1,534,345		16		26,682		—		(38,569)		—		(11,871)
Issuance of common stock, net of issuance costs of $725	521,911		5		57,185		—		—		—		57,190
Unrealized loss on marketable securities	—		—		—		—		—		(26)		(26)
Foreign currency translation adjustment	—		—		—		—		—		8,226		8,226
Net loss	—		—		—		(197,310)		—		—		(197,310)
Balance at September 30, 2020	63,318,888	$	633	$	1,848,644	$	(1,696,635)	$	(41,207)	$	(4,995)	$	106,440

Balances at June 30, 2019	23,495,466	$	235	$	1,210,941	$	(1,381,928)	$	(2,451)	$	(12,290)	$	(185,493)
Non-cash stock-based compensation	—		—		2,624		—		—		—		2,624
Stock issued under incentive programs	122,485		1		181		—		(132)		—		50
Issuance of common stock, net of issuance costs of $161	1,957,627		20		12,568		—		—		—		12,588
Foreign currency translation adjustment	—		—		—		—		—		(1,564)		(1,564)
Net loss	—		—		—		(18,043)		—		—		(18,043)
Balance at September 30, 2019	25,575,578	$	256	$	1,226,314	$	(1,399,971)	$	(2,583)	$	(13,854)	$	(189,838)


	Nine Months Ended
	September 30,
	2020		2019

Operating Activities:
Net loss	$	(240,695)	$	(100,864)
Reconciliation of net loss to net cash used in operating activities:
Depreciation and amortization		3,091		4,744
Loss on disposal of property and equipment		—		88
Gain on Catalent transaction		—		(9,016)
Amortization of debt issuance costs		1,068		1,068
Non-cash stock-based compensation		77,602		12,803
Write off of right-of-use assets		187,193		—
Other		(4,119)		1,269
Changes in operating assets and liabilities:
Receivables, prepaid expenses and other assets		(78,788)		1,326
Accounts payable and accrued expenses		60,540		(16,882)
Deferred revenue		80,135		(7,416)
Net cash provided by (used in) operating activities		86,027		(112,880)

Investing Activities:
Capital expenditures		(12,610)		(1,641)
Acquisition of Novavax CZ, net of cash acquired		(164,204)		―
Proceeds from Catalent transaction		—		18,333
Purchases of marketable securities		(266,330)		(17,484)
Proceeds from maturities of marketable securities		96,488		39,500
Net cash (used in) provided by investing activities		(346,656)		38,708

Financing Activities:
Net proceeds from sale of preferred stock		199,822		—
Net proceeds from sales of common stock		447,070		67,220
Proceeds from the exercise of stock-based awards		35,708		992
Treasury stock related to tax withholding on stock-based awards		(37,024)		—
Finance lease payments		(65,424)		—
Net cash provided by financing activities		580,152		68,212
Effect of exchange rate on cash, cash equivalents and restricted cash		33		(69)
Net increase (decrease) in cash, cash equivalents and restricted cash		319,556		(6,029)
Cash, cash equivalents and restricted cash at beginning of period		82,180		81,959
Cash, cash equivalents and restricted cash at end of period	$	401,736	$	75,930

Supplemental disclosure of non-cash activities:
Sale of common stock under the Sales Agreement not settled at quarter-end	$	3,883	$	610
Capital expenditures included in accounts payable and accrued expenses	$	6,189	$	183
Right-of-use assets from new lease agreements	$	188,362	$	—

Supplemental disclosure of cash flow information:
Cash interest payments	$	12,188	$	12,188


	Fair Value at September 30, 2020						Fair Value at December 31, 2019
Assets	Level 1		Level 2		Level 3		Level 1		Level 2		Level 3
Money market funds(1)	$	79,950	$	―	$	—	$	42,960	$	—	$	—
Government-backed securities(2)		―		43,250		―		―		20,000		―
Treasury securities(3)		—		65,093		—		—		—		—
Corporate debt securities(4)		―		148,583		―		―		—		―
Agency securities	$	―		40,651		—		—		—		—
Total cash equivalents and marketable securities	$	79,950	$	297,577	$	—	$	42,960	$	20,000	$	—
Liabilities
Convertible notes payable	$	―	$	389,217	$	—	$	—	$	125,811	$	—


	September 30, 2020								December 31, 2019
			Gross		Gross						Gross		Gross
	Amortized		Unrealized		Unrealized				Amortized		Unrealized		Unrealized
	Cost		Gains		Losses		Fair Value		Cost		Gains		Losses		Fair Value
Treasury securities	$	40,093	$	2	$	—	$	40,095	$	—	$	—	$	—	$	—
Corporate debt securities		89,104		12		(2)		89,114		—		—		—		—
Agency securities		40,645		6		—		40,651		—		—		—		—
Total	$	169,842	$	20	$	(2)	$	169,860	$	—	$	—	$	—	$	—


Prepaid expense and other current assets	$	326
Property and equipment		96,739
Goodwill		70,662
Accounts payable		(1,193)
Accrued expenses		(205)
Other non-current liabilities		(813)
Purchase Price, net of cash acquired	$	165,516


	Three Months Ended				Nine Months Ended
	September 30, 2020				September 30,
	2020		2019		2020		2019

Revenue	$	157,024	$	2,507	$	195,939	$	9,846
Net loss		(196,590)		(19,982)		(242,411)		(107,349)
Basic and diluted net loss per share		(3.19)		(0.45)		(4.21)		(2.51)


Year	Amount
2020	$	104
2021		415
2022		415
2023		415
2024		415
2025		415


Lease Liabilities	Classification		Amount
Current operating lease liabilities	Other current liabilities	$	3,868
Current portion of finance lease liabilities	Current portion of finance lease liabilities		55,860
Non-current finance lease liabilities	Non-current finance lease liabilities		63,099

Weighted-average remaining lease term (years):
Operating lease			1.1
Finance lease			4.9

Weighted-average discount rate:
Operating lease			6.5%
Finance lease			6.6%


		Three Months Ended September 30, 2020
Operating lease expense:
Fixed lease expense	$	16
Finance lease expense:
Fixed lease expense		65,424
Interest expense		1,041
Short-term expense		19,390
Total lease expense	$	85,871


Cash paid for amounts included in the measurement of lease liabilities:		Amount
Financing cash flows from finance lease	$	65,424


Year		Operating		Finance
2021	$	3,900	$	62,623
2022		-		65,235
Total minimum lease payments		3,900		127,858
Less: Imputed interest		(32)		(8,899)
Total lease liabilities	$	3,868	$	118,959


	2015 Plan			2005 Plan
		Weighted-			Weighted-
		Average			Average
	Stock	Exercise		Stock	Exercise
	Options	Price		Options	Price
Outstanding at January 1, 2020	3,388,750	$	35.64	501,780	$	64.19
Granted	3,110,566	$	31.16	—	$	—
Exercised	(874,586)	$	31.08	(189,378)	$	44.14
Canceled	(80,366)	$	50.29	(23,329)	$	51.92
Outstanding at September 30, 2020	5,544,364	$	33.66	289,073	$	78.32
Shares exercisable at September 30, 2020	771,002	$	86.28	289,073	$	78.32
Shares available for grant at September 30, 2020	2,814,405


		Per Share
		Weighted-
	Number of	Average
	Shares	Fair Value
Outstanding and Unvested at January 1, 2020	1,102,311	$	5.95
Restricted stock units granted	508,854	$	82.02
Restricted stock units vested	(781,812)	$	6.74
Restricted stock units forfeited	(39,324)	$	45.73
Outstanding and Unvested at September 30, 2020	790,029	$	52.17


	Three Months Ended
	September 30,
					Change 2019
	2020		2019		to 2020
Revenue (in thousands):
Total revenue	$	157,024	$	2,507	$	154,517


	2020		2019
Manufacturing	$	266.4	$	9.7
Vaccine Discovery		2.8		1.4
Clinical and Regulatory		24.9		7.5
Total research and development expenses	$	294.1	$	18.6


	Nine Months Ended
	September 30,
					2019 to
	2020		2019		2020
Summary of Cash Flows (in thousands):
Net cash (used in) provided by:
Operating activities	$	86,027	$	(112,880)	$	198,907
Investing activities		(346,656)		38,708		(385,364)
Financing activities		580,152		68,212		511,940
Effect on exchange rate on cash, cash equivalents and restricted cash		33		(69)		102
Net increase (decrease) in cash, cash equivalents and restricted cash		319,556		(6,029)		325,585
Cash, cash equivalents and restricted cash at beginning of period		82,180		81,959		221
Cash, cash equivalents and restricted cash at end of period	$	401,736	$	75,930	$	325,806