Novavax, Inc.

Ladies and gentlemen, thank you for standing by and welcome to the NOVAVAC second quarter 2023 financial results and operational highlights conference call. At this time, all participant lines are in the listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, press star, then 1, your touchstone phone. To withdraw from the question queue, please press star, then 2. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Erica Schultz. You may begin.

Good morning, and thank you all for joining us today to discuss our second quarter 2023 operational highlights and financial results. A press release announcing our results is currently available on our website at Novavax.com, and an audio archive of this conference call will be available on our website later today. Please turn to slide two. Before we begin with prepared remarks, I need to remind you that this presentation includes forward-looking statements, including information relating to the future of Novavax, its key strategic priorities, operating plans, objectives, and prospects, full year 2023 financial guidance, its future financial or business performance conditions or strategies, its partnerships, anticipated timing and outcome, of future regulatory filings and actions, and the ongoing development of its vaccine candidates, the global market opportunities for our vaccine candidates, our manufacturing capacity and the future availability of our vaccine candidates, and key upcoming milestones. Each forward-looking statement contained in this presentation is subject to risks and uncertainties that can cause actual results to differ materially from those projected in such statements. Additional information regarding these factors appears under the heading Cautionary Note Regarding Forward-Looking Statements in the slide deck we issued this morning and under the heading Risk Factors in our most recent form, 10-K, and subsequent form, 10-Q, filed with the Securities and Exchange Commission and available at www.sec.gov and on our website at novavax.com, as well as subsequent filings with the SEC. The forward-looking statements in this presentation speak as of the original date of this presentation, and we undertake no obligation to update or revise any of these statements. Please turn to slide three. This presentation also includes references to a non-GAAP financial measure, which is forward-looking information for R&D and SG&A expenses as adjusted to exclude one-time restructuring costs as described on this slide. Please turn to slide four. Joining me today is John Jacobs, our President and CEO, who will provide an update on our progress during the quarter for the three key priorities. Additionally, John Trezino, Chief Commercial Officer and Chief Business Officer, will provide an update on our commercial activities, and Dr. Philip Dabowski, President of Research and Development, will discuss our COVID clinical development and pipeline. Finally, Jim Kelly, Chief Financial Officer and Treasurer, will provide an overview of our financial results. Rick Crowley, Chief Operations Officer, will be also available for the Q&A section at the end of today's call. I would now like to hand over the call to John Jacobs. Please turn to slide five.

Thank you, Erica, and thank you, everyone, for joining us today to discuss our second quarter 2023 financial results and operational highlights. Since our last earnings call, the entire organization has continued to focus on our three priorities for the year. First, delivering an updated product for the upcoming fall season. Second, reducing our rate of spend, managing our cash flow, and evolving our scale and structure. And third, deriving additional value from our technology platform and portfolio via the advancement of our pipeline and business development activities. I'm pleased to share with you today the significant progress we've made on all three of these priorities for Novavax. Let's start with our first priority, delivering an updated product for the upcoming 2023 fall vaccination season. Thanks to our comprehensive strain change strategy and commercial readiness efforts, we are well positioned to achieve this objective and reiterate our plan to deliver our updated vaccine on time for the fall season. Importantly, we believe we have a competitive product profile and have produced an ample supply to meet anticipated demand this season. We have initiated our filing for authorization in the US and are preparing to file our submissions in the coming weeks in other key markets. For the US, our commercial team is fully deployed and focused on ensuring our vaccine is widely available and accessible. Outside of the U.S., our sales continue to be driven by existing APAs with committed orders intended for delivery in the fourth quarter of this year. We are confident in our readiness to deliver an updated, differentiated, and competitive vaccine for this fall season. In most of our key target markets, including the U.S., our vaccine, if authorized, would be the only non-mRNA protein-based option available and we're excited about the potential to offer our vaccine as an important alternative to consumers around the world. John Truzzino will share more about our commercial readiness later in the call. So let's move on to priority number two, which is to reduce our rate of spend, manage our cash flow, and evolve our scale and structure. We continue to make significant progress towards strengthening our financial position during the second quarter, with the intent of building a solid financial foundation for long-term value creation. Commercial execution is an important contributor to our financial health, and for the second quarter we recorded total revenue of $424 million, which brings us to over $500 million in revenue for the first half of the year. During the quarter, we also successfully executed and amended APA with Canada, a long-term valued customer. This agreement established a foundation for ongoing supply of our COVID vaccine and negotiated up to $350 million in cash payments to Novavax for 2023, further strengthening our cash position as we head into the fall season. The enhanced partnership with SK Bioscience that we announced earlier today includes an $85 million equity investment in Novavax at a 59% premium to the stock's 90-day volume-weighted average price. This mutually beneficial arrangement evolves our relationship with SK from a contract manufacturing organization to a strategic business partnership, extending SK Biosciences commercialization rights in certain markets, providing Novavax with a milestone payment and future royalties for product sales in key APAC markets, and it significantly improves our financial position by eliminating a $195 million outstanding liability from our balance sheet in 2023. We are also on track with the global restructuring and cost reduction plans announced last quarter, and as of today, have reduced current liabilities in 2023 by over $1 billion, ending the second quarter with over $900 million in cash and receivables. You will hear more today about our cost management, liability management, cash flow, and full-year 2023 outlook from Jim Kelly later in the call. Finally, let's discuss priority number three, which is to leverage our technology platform, our capabilities, and our portfolio of assets to drive additional value beyond Nuvaxavit alone, starting with our pipeline. As COVID evolves into a seasonal public health challenge, along with other respiratory viruses, we are keenly aware of the emerging need for combination vaccines. Therefore, as a first step, Novavax has made it a strategic priority to develop our combination vaccine for COVID and influenza. Based on what we see as a robust emerging need and market opportunity, our improving balance sheet, and recent progress on our corporate priorities, we've decided to make strategic stage-gate investments in 2023 and 2024 to independently prepare this new product candidate for late-stage development. and importantly can do so in line with our stated financial targets. In parallel, we will continue to evaluate the potential to partner this program and look forward to sharing updates with you as the program progresses. Moving on to Matrix-M collaborations. Our Matrix-M adjuvant is one of the keys to our unique technology platform and continues to offer potential value for both Novavax and our business partners. The R21 Matrix M adjuvanted malaria vaccine developed by Oxford University and manufactured by Serum Institute of India has received authorizations in multiple countries this year and has the potential to be an important tool in the fight against malaria around the globe. As part of this arrangement, Novavax expects to supply and receive payment for Matrix M in support of launch readiness and will be eligible to receive royalties on future product sales. We also recently announced a new collaboration with the Bill and Melinda Gates Medical Research Institute for use of our MatrixM adjuvant in preclinical vaccine research. We have also expanded our discussions to explore the use of our MatrixM adjuvant in clinical development programs, and we look forward to our continued partnership and important work towards our shared goal of improving global public health. As I have said since I joined Novavax as CEO in late January of this year, We intend to share our successes and opportunities, as well as our challenges and risks, with you in a transparent manner. So let me be clear. While we are all excited about the progress we've achieved year-to-date on our key priorities, I want to be clear that there is still significant execution risk for our business ahead of us as we seek regulatory authorizations for our first updated version of NUVAXivit and prepare to compete in the U.S. market as it converts to a commercial model for the first time. Our success as a company will depend in a large part on our continued ability to deliver on these priorities and on the emerging opportunity for COVID vaccination around the globe as the pandemic enters an endemic phase. As we continue to prepare for what should be an exciting opportunity this fall season, I am personally encouraged by the commitment and energy of our management team and all of our employees and sincerely grateful for the support of our loyal investors. you have our continued commitment to give you our best effort and our focus on the key priorities we've outlined. Now I would like to hand it over to additional members of the team to discuss our results from the quarter and in more detail, beginning with John Trezino to discuss our commercial updates.