Novavax, Inc.

Good morning and welcome to Novavax First Quarter 2025 Financial Results and Operational Highlights Conference Call. All participants will be in 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, you may press star followed by the number one on your title. on phone. To withdraw your question, please press star followed by the number two. Please note, this event is being recorded. I would now like to turn the conference over to Luis Sanay, Vice President, Investor Relations. Please go ahead.

Good morning and thank you all for joining us today to discuss our first quarter 2025 financial results and operational highlights. 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 but not limited to statements related to Novavax's corporate strategy and operating plans, its strategic priorities, its partnerships, and expectations with respect to potential royalties, milestones, and cost reimbursements, FDA approval of the company's COVID-19 vaccine BLA and alignment on the post-marketing commitment, its expectations regarding manufacturing capacity, timing, production, and delivery for its COVID-19 vaccine, the development of Novavax's clinical and preclinical product candidates, full-year 2025 financial guidance and revenue framework, and Novavax's future financial business performance. Each forward-looking statement contained in this presentation is subject to risks and uncertainties that could 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 presentation we issued this morning and under the heading Risk Factors in our most recent Form 10-K and subsequent Form 10-Qs filed with the Securities and Exchange Commission available at sec.gov and on our website at novavax.com. The forward-looking statements in this presentation speak only 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 non-GAAP financial measures which are total adjusted revenue and adjusted licensing, royalties, and other revenue, and non-GAAP profitability. 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 and highlight our growth strategy. Dr. Aksandra Draghia, head of R&D, will discuss our R&D updates. And finally, Jim Kelly, Chief Financial Officer and Treasurer, will provide an overview of our financial results and 2025 financial guidance and revenue framework. John Trezino, Chief Operating Officer, will be available for the Q&A portion of the call. I would now like to hand over the call to John Jacobs.

Thank you, Louis. I'm pleased to be here with you today, along with members of our executive team, to discuss our financial results and highlight the progress we have made in Q1. This earnings call marks approximately the one-year anniversary of our new corporate growth strategy, which was formed after signing our agreement with Sanofi. Over the course of the past year, we have moved away from our prior focus, which was allocating the majority of our time, energy, and resources on commercializing our COVID-19 vaccine. to a strategy focused on optimizing our existing partnerships and expanding access to our proven technology platform via R&D innovation, organic portfolio expansion, and forging new partnerships and collaborations with other companies. We believe this strategy enables maximum value creation from our cutting-edge technology In parallel, we are creating a significantly leaner infrastructure with continued cost reduction initiatives underway as we drive towards potential non-GAAP profitability as early as 2027. Via our new strategy, we intend to create multiple opportunities for value growth. Important catalysts this year include the potential approval of the BLA for our COVID vaccine and other milestones related to the Sanofi Agreement. preclinical data from our early stage pipeline programs in the second half of this year, and the potential for additional partnerships and collaborations. As an example, we are excited about the progression of our partnership with Takeda, as it significantly improves the financial terms for Novavax in Japan, the third largest healthcare market in the world. This strengthened partnership with Takeda, a globally respected multinational pharmaceutical company further validates the value of our cutting-edge technology platform and our efforts to become a partner of choice. Forging new collaborations and partnerships based on our differentiated tech platform and deep expertise in vaccine development is a top priority for us this year, and we look forward to sharing partnership updates with you as we continue to execute upon this key strategic pillar for Novavax. To guide our work for the remainder of 2025, we remain focused on three strategic priorities. Our first priority is optimizing our partnership with Sanofi. Our partnership with Sanofi is a prime example of how we intend to work with others as we look to become a partner of choice and create long-term value for our stakeholders. As we have said before, this partnership has many important and potentially value-creating elements to it, including milestones and royalties associated with the marketing of our COVID vaccine related to the BLA approval, MAH transfers, tech transfer, and ongoing royalties. Number two, milestones and royalties associated with the development of new combination vaccines that include our COVID vaccine. For example, Sanofi is developing two combination vaccines that include our COVID vaccine and their market-leading flu vaccines. both of which earned fast-track designation from the FDA last year. And finally, milestones and royalties associated with any other new products developed using our MatrixM adjuvant. Regarding our COVID vaccine, we are working constructively with the FDA with the intent of bringing the BLA process to a positive conclusion as soon as possible. FDA feedback on our BLA suggests a pathway to approval upon alignment on study parameters for the post-marketing commitment requested. We believe it's important that a non-mRNA protein-based COVID-19 vaccine option is available as a choice for U.S. consumers. Our second strategic priority is to leverage our proven tech platform and pipeline to drive additional partnerships. Our team has been actively working on developing new partnership opportunities beyond Sanofi and the Material Transfer Agreement, or MTA, with a top-tier pharma company that we announced last fall to explore our matrix M adjuvant with bacterial pathogens. In fact, over the past few months, we have signed new agreements, including an expanded scope of the MTA I just mentioned to now include viral pathogens. We signed another new MTA for MatrixM with a different top tier pharma company, entered a preclinical collaboration with a new partner to explore the application and utility of MatrixM with their cancer vaccine candidate, and as noted earlier, strengthened our existing agreement with Takeda for the COVID market in Japan, including significantly improved financial terms for Novavax. These new agreements represent important steps in our continuing quest to add new partnerships throughout licensing efforts and further highlight the growing interest in our tech platform. We intend to optimize these new agreements with the goal of expanding the scope and value creation opportunity for each of them over time. And we don't intend to stop here. We are actively seeking additional partnerships and collaborations. with the goal of creating multiple growth opportunities in the short, mid, and long term for Novavax. As we stated before, this ongoing effort includes seeking a potential partner to develop and commercialize our late-stage COVID influenza combination vaccine and standalone flu vaccine. And finally, our third strategic priority is to advance our tech platform and early-stage pipeline. We are actively advancing our early-stage pipeline programs using a capital-efficient approach. Our R&D investment strategy should allow us to make disciplined investments in programs aligned to the highest potential value opportunities, both within infectious disease and beyond. Our intent is to partner these assets at early proof-of-concept stages. However, for the right asset, where data and commercial landscape indicate a unique high-value opportunity, we would consider bringing that asset forward ourselves, and we'll make that determination on a case-by-case basis as these assets mature. A bit later in the call, Ruxandra will talk about how we're using translational research and computational medicine to inform these investment decisions. We anticipate sharing some initial data on our new pipeline assets and new data on MatrixM and our technology platform in the second half of the year during an investor day. In summary, over the past few months, we have made significant progress on our new growth strategy, including the addition of new agreements with other companies, the expansion and strengthening of existing agreements with two major pharma companies, the initiation of four new early-stage pipeline programs, and the continued advancement of our partnership with Sanofi. We remain confident that over the long run, our technology has the opportunity to positively impact the lives of billions of people around the world, that our strategy has the potential to drive significant value creation, and that our team has the knowledge, poise, and skill to help carry us forward to an exciting and positive future for Novavax. I would now like to turn the call to Ruxandra to discuss our research and development updates. Ruxandra?

Thank you, John. Please turn to slide six. It has been six months since joining Novavax's innovative R&D team, and this time left me even more excited about the potential of our technology platform and the opportunity we have to strengthen and build on the depth and breadth of our partnerships. As John mentioned before, An important part of our corporate growth strategy is value creation through the advancement of our early stage pipeline and high quality R&D. Value comes in different shapes and sizes. It starts in the lab, advancing programs and learnings in a continuous cycle of generating scientific data, which in turn informs next projects and experiments with a goal of developing new vaccines and positively impacting public health. We have already accomplished a lot in a short timeframe, and I am encouraged and inspired by the depth, expertise, and skills of our team. Since the start of the year, we initiated and advanced four early-stage programs after a rigorous prioritization process, H5N1, RSV combinations, shingles, and C. difficile. Using information from translational models and leveraging artificial intelligence and machine learning. Furthermore, we continued our research into our COVID-19 vaccine and progressed our late stage programs in kick and flu. Please turn to slide seven. We also continue to explore Matrix-M and its potential impact across a variety of vaccine platforms and pathogens, including new formulation of Matrix-M, generating data that demonstrate the utility of our adjuvant and sharing that with potential BD partners. Another example of us leading the way with science. In April, I presented at the World Vaccine Congress on the potential of Novavax's platform technology and MatrixM adjuvant, showcasing attributes related to efficacy and tolerability. Data collected and analyzed from multiple clinical trials show that vaccine adjuvated with MatrixM have a milder reactogenicity profile compared to mRNA vaccines. Please turn to slide eight. Furthermore, we presented the results of the SHIELD-Utah study at the Congress of the European Society of Clinical Microbiology and Infectious Disease Conference. This real-world study demonstrated that our protein-based technology platform outperform one of the mRNA COVID vaccines across all parameters measured. in terms of fewer and less severe reactogenicity symptoms with approximately 39 fewer symptoms on average and reduce the impact of these symptoms on quality of life, such as daily work and family responsibilities. We believe that real-world information showing that a better tolerability and a milder reactogenicity profile will lead people to prefer our protein-based technology over other vaccine platforms when given the choice. In early studies, we are seeking to explore how neuromatrix formulations, different regimens and dosing schedules, and other enhancements to matrix M and its components could lead to improved vaccines, personalized approaches, and advancement in therapeutic areas beyond infectious diseases. As an example, we are currently developing research partnerships and collaboration in immuno-oncology, a field that is rapidly progressing and one where we envision exciting potential opportunities for our technology. By taking targeted risk, We expect to identify specific areas where Matrix-M, either as currently formulated or as a next generation formulation, has the potential to improve rates and duration of antitumor responses. Please turn to slide nine. We have previously reported that we developed a protein nanoparticle in Matrix-M vaccine against highly pathogenic Avian H5N1 virus that is currently undergoing preclinical evaluation. Non-human primate studies have shown our candidate vaccine can produce protective levels of immunity after a single dose in primed animals, a situation like that of the human population which received a flu vaccine or had influenza in the past. A lethal murine challenge model show complete protection in a similar vaccination regimen. Unlike other vaccines, which might require two or more doses for full protection, the possibility to administer a single vaccine dose for protection is important in the context of a pandemic, both in the United States and globally. Furthermore, Additional exploratory data in the context of our COVID vaccine have shown that our technology platform can induce mucosal antibodies. Mucosal protection is important not only for the person receiving the vaccine, but for instance, for reducing virus transmission. Elements of our vaccine platform, its design, scale-up, and manufacturing processes, should make a pandemic flu vaccine from Novavax amenable to rapid deployment as an alternative to mRNA vaccines. We stand ready to join the United States in global health security efforts related to H5N1 and are currently pursuing funding and partnership opportunities for this program. Our new programs across our discovery portfolio are using artificial intelligence and machine learning-enabled structure-driven optimization, rapid antibody testing for epitope assessment, and novel in vitro and in vivo models for rapid preclinical testing. Our early-stage pipelines includes development of an RSV combination vaccine candidate that builds on the company's extensive history in this area. Lessons learned regarding superior protein antigen design, together with a new computational capabilities mentioned before, should allow us to enhance structural stability and immunogenicity and combine multiple different respiratory virus antigens with MatriXM into this program potentially created a competitive, meaningful, and differentiated offering in this key area. For shingles prevention, we believe our technology has the potential to improve on the current standard of care by enabling a more tolerable less reactogenic, equally efficacious vaccine. Many at-risk adults are declining shingles protections or don't complete their vaccination series because of the fear of side effects. By providing a more attractive option regarding tolerability, which we believe our technology has the potential to do, we intend to change this dynamic and address a persistent public health need. We believe our technology may lead to better vaccine candidates for the prevention of C. difficile, morbidity, and mortality. There is no approved vaccine for C. difficile, yet the medical need is large with C. diff-related illness, including recurrent infection. Our technology has the potential to facilitate the development of a multivalent adjuvated vaccine with enhanced activity that could provide a differentiated impact in an underserved patient population. We expect to share some initial data and early learnings on our early stage organic pipeline during the second half of the year. Turning to our late-stage kick and standalone flu programs. In December 2024, we started an initial cohort of a phase three immunogenicity and safety trial for our kick and standalone influenza vaccine candidates in older adults. This trial completed enrollment of approximately 2,000 participants and we are on track to report top-line data mid-year. While not a pivotal study, this data will be essential to inform the design of a subsequent pivotal trial in older adults for both programs. In addition, after further consultation with the U.S. FDA, we determined that seeking an accelerated approval pathway for either of these assets would not be feasible. We intend to partner both vaccine programs and have the potential partner advance and fund all future clinical development, regulatory filing, and commercialization activities. In summary, now with an intense focus on science and readiness for partnering, we intend to advance and optimize our programs and generate initial proof of concept in preclinical evaluation. I'm very much looking forward to sharing with you some of our first data readouts in the second half of this year. I'll turn the call over to Jim to discuss our financial results.

Well, thank you, Alexandra. Please turn to slide 10. This morning, we announced our financial results for the first quarter of 2025. Details of our results can be found in our press release issued today and in our Form 10-Q filed with the SEC. Before reviewing our financial results, I would like to begin by noting that today we are reiterating our financial guidance for full year 2025 combined R&D and SG&A expenses and raising our 2025 revenue framework. Last quarter, we outlined Novavax's path to significant value creation and potential non-GAAP profitability, and we are focused on the execution of this plan. More on these points later in my remarks. Please turn to slide 11. I'll begin with key highlights from our first quarter 2025 financial results. Novavax reported total revenue of $667 million as compared to $94 million in the first quarter of 2024. The $622 million of product sales in the current quarter includes $603 million recognized in connection with the termination of the Canada and New Zealand APA agreements. Both of these agreements are now fully closed, and the revenue recognized relates to cash received in prior years. In addition, we recorded $45 million from licensing, royalties, and other revenue. During the first quarter of 2025, we continued to transform Novavax into a more lean and agile organization. We strengthened our balance sheet, reducing our current liabilities by over 60% compared to year-end 2024, and improved our cost structure by reducing combined R&D and SG&A costs by 24% compared to the same period last year. For 2025, we are reiterating our full-year financial guidance for combined R&D and SG&A expenses of between $475 million and $525 million. At the midpoint, this reflects a 30% reduction when compared to 2024. Of note, we continue to work with FDA on the parameters of the requested post-marketing commitment study related to our BLA. For now, we believe it should be assumed that our multi-year guidance includes the potential impact to Novavax of this post-marketing commitment. If needed, our guidance and operating plan may be updated based upon the outcome of that discussion. In parallel, we are working closely with our partner, Sanofi, to determine the potential approach to funding. We ended the first quarter with just under $800 million in cash and receivables. During 2025, we anticipate earning an additional $225 million in milestones from Sanofi, assuming Nevaxavit approval in the U.S. and Europe, and a $20 million upfront payment in the second quarter from Takeda related to our amended license agreement. These anticipated cash flows from our licensed partners highlight Novavax's potential to create significant shareholder value by monetizing our cutting-edge technology. Based on our current operating plan, including milestone payments royalties and the multi-year expense targets, we have highlighted a path towards our goal of non-GAAP profitability as early as 2027 and maintaining at least a year and a half to two years of cash on hand at all times. Please turn to slide 12 for a detailed view of our first quarter revenue results and disclosures. You will see that beginning this quarter, we are highlighting two categories under product sales, NEVAX AVID, reflects product sales where Novavax is the commercial market lead and records revenue related to the sales and distribution of our COVID-19 vaccine. This is where we historically have recorded our APA and commercial market sales. New, beginning in 2025, is a category called supply sales that includes sales of finished product, matrix and adjuvant, and other supplies to our license partner. Under supply sales, we act as a contract manufacturer to our license partners to support their development and sales of vaccines to customers around the world, leveraging our proven technology. In prior years, we recorded the supply sales under licensing royalties and other as they were less material at that time. For the first quarter of 2025, we recorded a total revenue of $667 million compared to $94 million in the same period in 2024. Product sales for the first quarter of 2025 were $622 million, driven by $603 million of revenue related to the closeout of the Canada and New Zealand APAs. In each case, This resolution allows Novavax to retain cash previously received under these agreements and resolves any outstanding obligation via payments of $28 million and $4 million to Canada and New Zealand, respectively, in the first quarter. The remaining $5 million for Novavax product sales in the first quarter relates to sales in the U.S. and Germany. Our supply sales of $14 million in the first quarter of 2025 were primarily related to MatrixM adjuvant sales to our license partners. We recorded $45 million of licensing, royalties, and other revenue in the first quarter, consisting of $40 million related to our Sanofi agreement and $5 million from royalties from our other license partners. The Sanofi revenue consists of $29 million from the amortization of our upfront payment and database lock milestones, plus $11 million from R&D reimbursements in the period as we support Sanofi in their efforts. Please turn to slide 13 for a detailed view of our first quarter financial results, where I'll focus on our operating expense results and trends. First quarter 2025 combined R&D and SDN expenses were $137 million and reflect a 24% reduction from the same period in 2024. Importantly, our SDNA expense of $48 million is 45% lower than the same period last year and is driven by the decrease in closeout of our global sales and marketing capabilities plus strong execution on our broader cost reduction plans. Research and development expenses of $89 million in the first quarter of 2025 were primarily driven by our investments in the Phase III flu study and support of Sanofi for the upcoming COVID-19 vaccine season. A smaller portion of this trend is presently directed towards our early-stage preclinical programs. We intend to focus our attention on partnering our kick and flu vaccine candidates, and this study reflects the material completion of our intended investments in this program. And finally, we reported net income of $519 million, or $2.93 per diluted share, for the first quarter of 2025. Please turn to slide 14. Our first quarter 2025 results highlight the significant progress we have made this year to improve our balance sheet by reducing current liabilities by $732 million. Since 2022, we have reduced Novavax's current liabilities by $2.1 billion and over 80%. During the first quarter, our change in cash of approximately $250 million included the elimination of many short-term liabilities, and we expect our go-forward expenditures to be lower. Specifically, we anticipate our expenditure rate, which reflects our net spend prior to new cash flows from royalties and milestones, to be in the $140 to $160 million range per quarter and declining over time. We believe this progress places Novavax in a stronger financial position as we execute on our growth strategy. Please turn to slide 15. We are committed to streamlining our operating expenses to enable value creation. For 2025, we are reiterating our full-year combined R&D and SG&A expense guidance of between $475 and $525 million. We intend to invest approximately 70% of this combined spend into R&D to drive shareholder value as we allocate our resources towards what we believe are the highest return activities. During 2025, we expect our operating expenses to be highest in the first half of the year as we conclude our kick flu study and then decline through the second half of the year. Looking forward, we expect to achieve combined R&D and SG&A expenses of approximately $250 million in 2027 and believe we are well on our way to achieving this goal. As mentioned earlier, we continue to work with FDA on the parameters of the requested post-marketing commitment study. For now, it should be assumed that our multi-year guidance includes the potential impact to Novavax of this post-marketing commitment. Reducing our cost structure is an important piece of our drive towards non-GAAP profitability as early as 2027. We define non-GAAP profitability as GAAP operating profit less non-cash items such as stock-based comp and depreciation. Keys to the timing on our path to profitability are the successful development, regulatory approval, and commercialization of products by our partner, Sanofi, under our agreement. Please turn to slide 16. Now turning to our 2025 revenue framework. Today, we are raising our prior revenue framework and now expect to achieve adjusted total revenue of between $975 million and $1.25 billion. Our 2025 revenue framework excludes Sanofi's supply sales, royalties, and influenza COVID-19 combination and Matrix M-related milestones. This means there may be revenue in 2025 that is additive to our expectations for adjusted total revenue for the year. At midpoint, the $675 million increase to our 2025 adjusted total revenue is driven by, first, The addition of 610 million of Nevexavit product sales, that includes our first quarter results, has small amount of sales in the second quarter of 2025. Second, a 15 million increase to adjusted supply sales related to increased demand for Matrix M from serum for the R21 malaria vaccine and from Takeda for COVID-19. And third, A $50 million increase to adjusted licensing royalties and others that has two components. A $30 million increase to other partner revenue driven by a $20 million upfront payment from Takeda in the second quarter and anticipated milestones and royalties from our license partners. And also, a $20 million increase to amortization related to the Sanofi upfront payment and pediatric milestones. This reflects a timing update that shifts amounts into 2025 that were previously anticipated to be recorded in 2026. We look forward to sharing additional updates as we improve Novavax's financial performance, cost structure and strength to deliver shareholder value. With that, I'd like to turn the call back over to John for some closing remarks.

Thank you, Jim. In summary, We intend to drive low-value creation through our corporate growth strategy, and in 2025, we'll continue to focus on our three strategic priorities. Priority one, executing on our Sanofi partnership, and in doing so, successfully demonstrating we are our partner of choice. Priority two, leveraging our technology platform and pipeline to forge additional partnerships. And priority three, advancing our tech platform and early-stage pipeline to help foster additional partnering and growth opportunities. Thank you all for joining us today, and thank you to all of our employees for their continued efforts in advancing our business. I'm proud of our accomplishments to date and excited about the opportunity to drive future value from our strategy in 2025 and beyond. I'd now like to turn the call over to our operator for Q&A. Operator?

Thank you. We will now begin the question and answer session. To ask a question, you may press star followed by the number one on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star followed by the number two. At this time, we will pause momentarily to assemble our roster. Your first question comes from the line of Roger Song of Jefferies. Your line's now open.

Great, good morning. Thanks for the update and taking our question. A couple questions from us. The first one is regarding this post-marketing commitment FDA requested. Can you just comment on the nature of the study, you know, in terms of the efficacy versus safety requirement? And then also, we just... know in two weeks uh verpac gonna host the meeting to select the stream for the 2025-2026 season how do you think this post-marketing commitment going to impact the 2025-2026 season and i have a follow-up question regarding the kick thank you hi roger good to hear from you and thanks for the questions um we we haven't commented publicly on the nature of the post-marketing commitment at this time but we're as we've said

a few times and we'll continue to say today, right now, we continue to work with the FDA diligently and urgently to try to bring this forward as soon as possible to a positive conclusion. And we do see a pathway forward to approval based on the formal comments and questions we've received from FDA. So, you know, we'll keep you posted as that develops. And right now, we're not seeing a direct impact on any discussions VRBPAC may be having on the season. related directly or indirectly to any requests we may have had in our BLA.

Got it. That's fair. And then regarding the mid-year data readout for your CIC program and the flow, what is the target profile you're looking for and then to attract the partnership for the further development and the commercialization? Thank you.

All right, I'll hand that question over to Ruxandra. Arjun, if we heard you right, you were asking about the nature of that data or what we're expecting or hoping to see in that cohort, Ruxandra, of our Phase 3 program.

Thank you, John. So as I have mentioned in my intervention, we have enrolled a first cohort of approximately 2,000 individuals in this kick and flu study. We are looking for immunogenicity and safety data that could complement what we already have from our previous studies that would help design a phase three trial. So this is not an efficacy trial. Let me be very, very clear. It is to generate additional immunogenicity and safety data.

Yeah, it's not a pivotal trial, Roger. It's a learning data set to help further inform what may be required for a full licensure with a partner. And as we've said before, it's our intention to partner both our late-stage kick and flow assets out. That would be our intent.

Got it. Yep. Thank you.

Thank you. Your next question comes from the line of Mayank Mantani from B. Riley Securities. Your line is now open.

Yes. Good morning, team. Thanks for taking our questions and congrats on your progress. Yeah, thanks, Sean. So I was wondering, in context of this Utah Shield study that was published, I was just curious, how much is this quality of life, activities of daily living kind of factored in regulatory science? You know, FDA as well as global regulators think of adjuvanted protein-based vaccines versus mRNA. And I was also curious, You know, this talk on contemporary placebo-controlled study required, like, how does that inform your thinking of what a registration-enabling phase three trial would look like for your wholly-owned K can flu vaccine? And I have a quick follow-up.

Michael, I'll hand your first question over to Roxandra. If we heard you correctly, if we understand your question right, you're asking about the impact that data, from our SHIELD study, that type of data may have on the opinions of regulators around the world. Did we hear you correctly?

That is correct. And how you're thinking of the bigger pivotal study for the kick and flow in context.

Okay. So, Rux, why don't you take the first question, please? Thanks.

Yes. Thank you, John. So let's be clear. The Utah study is an observational study. Yeah. So basically, based on a questionnaire asking about the quality of life of individuals, this is not part of a typical regulatory submission. It is to inform probably much more the consumers rather than the regulators. We cannot speculate how the regulators are going to look at that particular data. They are actually looking at the safety and efficacy of each of the vaccines on their own merit. But after the introduction of any vaccine, actually, not only a COVID vaccine or a flu vaccine in the population, there are a lot of these real-world evidence studies that are looking at different characteristics. So that Utah study is in that particular category.

Thank you, Roxandra. And then Mike, your next question had to do with, were you asking about phase three for our potential late stage asset, like our combination vaccine?

Right.

That's right. And whether or not it would be placebo controlled?

Yeah, just your thinking around what the vaccine efficacy study would look like after, you know, you've generated this immunogenicity data.

We, well, we're going to be, again, as we said, Novavax does not intend to take on ourselves further clinical investment in those late-stage programs. We intend to do that with a partner. So we're currently seeking a partner. And if and when we get a partner, we'll be designing the study with them. And at that time, then, we will be disclosing how that study is designed. When it comes to placebo-controlled, our existing efficacy data for Nuvaxavid was based upon an initial placebo-controlled trial with approximately 30,000 patients. So we've done that before with our products, but any new trial would be designed with a partner. That's our intent.

Yeah, and I ask that also since your partner is conducting a Phase I-II experiment with an active comparative, you know, Sanofi has some data expected in second half. And maybe my follow-up question was on your earlier stage pipeline. You know, if you could comment, Alexandra, back to you on the order of IND filings or human clinical trial stats for these earlier stage programs you've identified. And, you know, Jim can comment on whether, you know, some of these early discussions you're having for the partnered, not the partnered, but programs under MTA that are being reviewed, if any of that is in included in your financial guidance framework. Thanks for taking our questions.

Rox, why don't you take Mayank's question on the early stage programs?

So the definition of an early stage program is that it is early, yeah. We are actually very diligently working on generating very rigorous preclinical data on each of the programs that I have mentioned, and we will be happy to share with you and with the external partners stakeholders, data in the second half of the year. So I cannot comment on each and every one of the programs of exactly where we are. It's preclinical. So by nature, it is evolving practically every day. Sometimes we have results twice a day. So stay tuned for the second half of the year.

And then I think, Mike, you were trying to ask about timing for any INDs that might come out of our early stage program, but we haven't specified that at this time. But I think you'd use normal assumptions on that when you're coming out of the clinic. And I think that'll be more clear also in the second half of the year as we share some initial results on these programs. Go ahead, Jim, on question two.

And, Mike, I think the final piece is you were asking whether or not any yet-to-be-entered-into agreements are factored or included in our revenue framework. And the answer is no. Our revenue framework is based upon our existing agreements. So stay tuned. We're clearly working on that front.

Thanks for taking our questions and look forward to those updates.

Thank you. Your next question comes from the line of Alex Branahan of Bank of America. Your line is now open.

Hey, guys. Thanks for taking our questions. Just two from me. Maybe just starting on the APA revenues that got recognized this quarter. I guess how much of this is maybe cash today versus cash in the future or Is it basically all of it just revenue recognition of prior cash that's been received and then that's going to follow? Jim, you want to take that one?

Yeah, certainly. And certainly a good question. The APA revenue recognition, the $603 million from Canada and New Zealand, is non-cash. We had received that cash under those agreements in prior years. Of course, it was on our balance sheet. And then through the termination and closeout of those agreements, what that meant is that we get to keep that cash under the closeout of those agreements.

Okay. That makes sense. And then maybe just one question around the KIC readout in the middle of this year. Any bars for safety with the KIC that you see as being, you know, maybe key for partnership interest in the program? And is this maybe, you know, more important to view this versus each standalone component on its own or versus, you know, the other kick vaccines that are in development? Thank you. Go ahead, Roxandra.

So as I have mentioned, we have presented the data coming from a multitude of clinical trials that we have undertook with our vaccine platform and with the Matrix-M adjuvant at the World Vaccine Conference. And by and large, the safety, the tolerability, the reactogenicity profile of our vaccines are favorable. Yeah. So in this particular 2,000 individual cohort, aside from the immunogenicity data, we will also supplement our safety data. So for the moment, I think that this is not something that is different from what we have seen in the past. But, of course, data will speak. And, again, we will have in the second half of this year additional data to share with you.

Thank you. Thank you.

Our next question comes from the line of Tom Schrader of PTIG. Your line is now open.

Good morning. Thanks for the detailed call. A very related question to the last one. Is the target profile of the combined vaccine is designed to make the reactogenicity about the same as standalone flu, or is that inherently unrealistic because the COVID antigen is just reactogenic?

Then I have a follow-up. Tom, I wouldn't say we proactively designed a study based on reactogenicity. We designed it to demonstrate, you know, an immune response to both of the pathogens that are being targeted with that vaccine, as you're well aware. And then we'll see how the reactogenicity profile looks. We would expect it to be reasonable based on what we know about our tech. And again, we need to be crystal clear, make sure everyone, what I want everyone to understand is this is a 2000 patient cohort. This is not a pivotal trial. This is not a full phase three program. This is not designed for registration. This is not designed to definitively prove anything long-term about our vaccine. What it is designed to do as a small cohort is to add additional data into our data set to help us think about how to then design with a partner, which is our intent, a study that would be targeted toward registration. So that's the goal. Alexandra, anything you'd add to that?

No, you said it all, John. Perfect. Thank you.

Thank you.

And thanks for the question.

If I can ask a follow-up about the filing for your updated vaccine that's in front of the FDA now. How much human data is in there from the updated vaccine? Is it none or is there a cohort for immunogenicity? What has the FDA seen in terms of data of this exact vaccine in people? Thanks.

Sorry, Tom, we just want to make sure we fully understand your question.

Could you just clarify, just take a shot at clarifying that, and then Roxandra will try to answer you.

So you have a filing in front of the FDA to update your vaccine, right? And the question is, is there any human data in that filing with the updated vaccine so they would have some sense that some number of people have seen the vaccine and probably to monitor immunogenicity, or is there no human data for the actual updated vaccine?

I see. Go ahead, John T. Yeah.

Hi. I think thanks for the clarification. I think it's important to understand what the BLA submission is and what's being reviewed. It's taking the existing product that's in market today under the emergency use authorization and getting a BLA approval for that vaccine. Remember, the basis for that BLA is on the clinical data to date. There's no new clinical data. It's from our phase three efficacy trial and any other updated information that was relative to that filing. We then, after the approval of the BLA and some of the conversations we're having with FDA today, would result in then a readiness for the 25-26 marketplace, which would include strain change. But first step, again, just to be clear, is the BLA for the existing product with no new clinical data relative to the JN1 strain.

So, Tom, assuming, thank you, John, assuming we get the BLA approval and when we have it, we'll have it. Until then, we don't have it. But assuming we get that, then you'd make subsequent filings, to your point, for an updated version of the vaccine to target whatever variant we'd be targeting. And then there's meetings upcoming to advise the government on that. VRBPAC was announced for later this month, et cetera, where they'd make recommendations on that strain selection, and then companies will be making submissions to update their vaccines. Hopefully, we've understood your question clearly, and that was helpful.

Absolutely. Thank you very much.

Again, if you have a question, please press star followed by the number one on your touchstone phone. Your next question comes from the line of Eric Joseph. Your line is now open.

Hi, good morning. Thanks for taking the questions. As a condition of approval for the COVID-19 vaccine, is the discussion with FDA solely focused on the shape of the post-marketing commitment? I just want to be confident that we can rule out additional clinical work being a condition for initial BLA approval. And then secondly, to what extent does the milestone, the approval milestone from Sanofi consider a post-marketing commitment. I guess what I mean to ask there is whether that milestone may be impacted at all if an additional clinical trial is required as a condition of BLA approval. Thank you.

Jim, why don't you take the milestone question first?

Certainly. Eric, the milestone based upon BLA approval is not impacted by a post-marketing commitment. We are still eligible to receive upon a BLA approval, even with a post-marketing commitment, $175 million milestone.

Thank you, Jim. And then, Eric, your other question, we just want to make sure we understand clearly. So are you asking, you know, have we been asked to generate a new clinical study that that would be required prior to a potential BLA approval and afterwards? Is that your question? We just want to make sure we're clear.

It sounds like additional clinical trial work is possibly being requested as a condition of approval. Is that being asked for before approval or is it being asked as a condition?

All I can do is say what we've commented on publicly. Thank you for the question. And if folks have that on their mind, we hope to make it as clear as we can at this moment in time. Based on what we've received to date, formally from FDA, they're asking for a post-marketing commitment. And by definition, it's our understanding that a post-marketing commitment comes after approval and you've begun to market that product. So that's what we can share so far. That's what we've said so far. If anything changes, we'll let everybody know.

Great. Thanks for taking the questions.

Thank you. Your next question comes from the line of Chris Labianco from Ed Securities. Your line's now open.

So thank you for taking our question this morning. First, to the best of your knowledge, is the post-marketing critical trial requirement specific to NOVA VATS's BLI filing? or do you expect FDA will ask all COVID-19 vaccines, including the mRNA vaccines, to generate efficacy data for booster doses in a broad population with preexisting immunity? And then I had one follow-up question. Thank you.

Thank you, Chris, for your question. Good to hear from you. And I'd like to ask the question back to you, because if you know, we'd love to find out. No, but in all seriousness, you know, we really can't speculate on FDA's thoughts. regarding other companies' filings. We know that we have our conversations ongoing with FDA, and that's all we can comment on at this time, Chris.

Great. And then just my follow-up question is, has your confidence in receiving FDA approval of the BLA in 2025 increased, decreased, or remained the same since the Q4 call in February 2025? And is it reasonable to expect an FDA decision near term, i.e., in H1 2025? Thank you.

Yeah, Chris, I'm not going to comment on a score on where our confidence is, but what I can do is share with you what we've already said publicly, which is that we're working right now with FDA and we see a pathway, potential pathway forward for approval based on alignment on our post-marketing commitment.

And as we learn more, we'll let you know. Operator.

Folks, it seems like that was our last question, and we seem to be having technical difficulty. So I would like to thank everyone for joining us today, and note that we'll be ending the call at this time. Thank you again for your time and questions. Have a great day, everyone.