Novavax, Inc.

Good morning and welcome to Novavac's second quarter 2025 Financial Results and Operational Highlights conference call. All participants will be in a 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 then one on your touchtone phone. To withdraw your question, please press star one again. Please note this event is being recorded. I would now like to turn the conference over to Louis Sinet, Vice President of Vestor Relations. Please go ahead.

Good morning and thank you all for joining us today to discuss our second quarter 2025 Financial Results and Operational Highlights. A press release announcing our results is 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 Novavac's corporate strategy and operating plans, its strategic priorities, its partnerships and expectations with respect to potential royalties, milestones, and cost reimbursements, its expectations regarding manufacturing capacity, timing, production, and delivery for its COVID-19 vaccine, the development of Novavax's clinical and preclinical product candidates, the timing and results of our clinical trials, including the Novavax's post-marketing commitment study, full year 2025 financial guidance and revenue framework, and Novavax's future financial or business performance. Each forward-looking statement contained in this presentation is subject to risks and uncertainties that could cause our 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, adjusted licensing royalties and other revenue, combined R&D and SG&A expenses, less partner reimbursements, 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. Ritsandra Draguya, head of R&D, will discuss our R&D updates and Jim Kelly, chief financial officer and treasurer, will review our financial results and 2025 financial guidance and revenue framework. Sylvia Taylor, chief corporate affairs and advocacy officer, will be available for the Q&A portion of the call. I would now like to hand over the call to John.

Thank you, Louis. I'm excited to be here today with members of our executive team to share our second quarter results and the meaningful progress that we've made. Q2 is a strong quarter as we continue to execute on our strategy to expand access to our proven technology platform by advancing R&D innovation and organically growing our portfolio, strengthening existing partnerships while working actively to forge new collaborations. This focused approach is designed to unlock multiple paths to value creation and supports our outlook for potential non-GAAP profitability as early as 2027. During Q2, we remain focused on our three strategic priorities for the year and now I'd like to take a few moments to highlight our progress on each of them during the quarter. Our first strategic priority is optimizing our partnership with Sanofi. During the quarter, we received BLA approval for NUVAXAVID in the US, which triggered a $175 million milestone payment to Novavax to be received in the third quarter. We also completed the transition of commercial activities to Sanofi in the US. This means that for the 25-26 season, Sanofi is now poised to assume the lead commercialization role for NUVAXAVID in select global markets. The Sanofi partnership represents a significant value creation opportunity for Novavax via the multifaceted nature of the agreement, including milestones and royalties associated with the commercialization of our COVID vaccine. As noted, we earned the $175 million milestone for the BLA and in addition, we also received a contract for milestone payments associated with the transfer of the US and EU marketing authorizations and the technology transfer related to NUVAXAVID manufacturing, which are anticipated later this year and in late 2026 respectively. Beyond the economics related to NUVAXAVID, Novavax is eligible to receive milestones and royalties associated with the development of new combination vaccines that include our COVID vaccine. As a reminder, Sanofi is developing two combination vaccine candidates, which include our COVID vaccine and their market leading flu vaccines, both of which received fast-track designation from the FDA last year. We're encouraged by Sanofi's recent comments on the potential of COVID flu combo vaccines. And Sanofi has access to develop vaccines with our proven and unique matrix M adjuvant, for which Novavax is eligible to earn milestones and royalties. Together, we are excited that this partnership has the potential to increase access to our technology and drive long-term value. Our second strategic priority is to enhance our existing partnerships and leverage our technology platform and pipeline to drive additional partnerships. Novavax's cutting-edge tech platform, consisting of our protein-paste nanoparticles and our -a-kind matrix M adjuvant, has the potential to drive the development of both new and improved vaccines that are efficacious and tolerable. This value-creating technology platform has been validated through current marketed products, NUVAXAVID and the R21 matrix M malaria vaccine, our growing clinical data set, and our current partnerships. Let's talk about those partnerships. This quarter, we optimized our partnership with Takeda for the Japanese market through an updated collaboration and exclusive license agreement, which significantly improved the financial terms for Novavax and improved the partnerships operating model. With its advanced infrastructure and strong regulatory environment, Japan is the third largest global health care market, and we believe our continued partnership will help to meet the needs of the COVID market in Japan. Takeda filed for approval of NUVAXAVID in June and is on track to have approval and doses in market in time for the fall respiratory season. Additionally, through our partnership with Serum Institute of India and Oxford University, the R21 matrix M malaria vaccine has made meaningful progress in addressing the urgent and unmet needs of malaria endemic regions since its first administration in Ivory Coast in June of 2024. The R21 matrix M vaccine is helping to expand access to life saving prevention in communities with limited health care infrastructure with rollouts in 12 African countries as of April 2025. In fact, over 20 million doses have been sold to date since launch in mid-24. Malaria historically has killed over 600,000 people annually, with a vast majority of deaths occurring in children under five in sub-Saharan Africa. R21 matrix M as the first low cost, high efficacy malaria vaccine produced at scale represents not only a clinical global public health tool, but also a strategic opportunity in a market where demand significantly exceeds current supply. We are pleased that our active and successful commercial collaborations with Sanofi and Oxford have positioned us as a partner of choice in the vaccine space. With this strong momentum, we're actively pursuing new partnerships that could help to further accelerate the positive global health impact of our technology and unlock additional value for both shareholders and the communities we serve. We believe that our technology platform can play an important role in driving innovation in the global vaccine market that is expected to grow to over $75 billion by 2030. This quarter, we continue to advance strategic opportunities for our matrix M adjuvant. Our unique matrix M adjuvant is well positioned to drive innovation via our own organic portfolio and partnering with potential to generate meaningful future royalty streams for Novavax for years to come. To date, we've signed material transfer agreements with three pharmaceutical companies to explore the utility of matrix M across novel medications, including its potential application in oncology. These arrangements have led to discussions about potential business partnerships to develop new vaccines and improve existing vaccines. In parallel, we continue to explore the potential for government grants to support the development of our pandemic influenza vaccine candidates, reinforcing our commitment to platform diversification and long term value creation. In June, we reported positive data from an initial phase three cohort showing our COVID-19 influenza combination or kick and standalone flu vaccine candidates elicited strong immune responses, similar to licensed comparators and vaccinated and flu zone high dose with over 98% of adverse events rated mild or moderate. These results are important and helpful as we continue to engage in discussions with potential partners for these late stage assets. Roxandra will share additional insights and new data from this program in a few moments. And finally, our third strategic priority is to advance our technology platform and early stage pipeline. We're advancing a focus pipeline of vaccine candidates targeting unmet needs in infectious disease. And we were exploring the utility of matrix M and oncology. Using a capital efficient model grounded in strong science and sharply focused on future commercial potential. We're also applying AI driven insights to accelerate candidate development. At the same time, we're sharpening our strategy to enhance the attractiveness of our technology, particularly matrix M to potential partners. This includes exploring new formulations and additional ideas to unlock its full value. As we've noted before, our primary focus is to out license and or partner vaccine assets, we are developing in our pipeline. But if we discover a significant opportunity via those R&D efforts, we may decide to bring that asset forward on our own. If the value proposition indicates it is best to keep that asset with Novavax. As you can see, this quarter, we continue to progress our growth strategy across all of its core elements, delivering on our existing partnerships, furthering discussions with potential future partners, and advancing our pipeline. Later in the call, Jim will highlight the progress we've made in driving greater operational efficiency as we transition to a more lean and agile business model. Taken together, the progress we're making is well aligned with our corporate growth strategy and continues to strengthen our foundation, fueling the potential for long term value creation and positioning us to deliver meaningful impact on a global scale, potentially improving the lives of millions. I'd now like to turn the call to Roxandra to discuss our R&D updates. Roxandra.

Thank you, John. Please turn to slide seven. Since the last earnings update, we progressed our programs, and I'm excited to share several important developments, starting with new insights from our kit and standalone flu program, followed by promising new data from our H5N1 program. We've also made strong progress across our preclinical pipeline, including our RSV combination, C. difficile and VZV programs. Please turn to slide eight. I'll start with our late stage kick and standalone flu program. In June, we announced results of the initial cohort of our kick and standalone flu trial, where both vaccine candidates induced robust neutralizing antibody responses that were similar to licensed comparators. In vaccine development for diseases like influenza and COVID, we look for differentiated attributes, such as breath of protection against drifted strains and the durability of response. A vaccine that can provide protection for a longer period of time could have a significant impact. During the quarter, we generated new data, including additional analysis of T cell responses, which showed that in both standalone flu and kick arms, increases from baseline in influenza-specific polyfunctional expressing CD4 positive T cells were numerically higher than in the comparator flu zone high dose arm. This is notable as T cells recognize conserved influenza epitopes, which are associated with broader and longer lasting immune responses. T cells also play a key role in viral clearance and contribute to durability of protection. In addition, T cells COVID-specific responses were similar between kick and novaxovid arms. While this immunogenicity and safety trial was not a pivotal trial, the data can inform a future registrational phase three program. We intend to partner both candidates to conduct registrational trials. And as John already mentioned, partnering discussions are underway. Please turn to slide nine. In July, we published new preclinical data in later communications, demonstrating that our H5N1 avian influenza vaccine candidate built on our recombinant protein based platform and matrix M adjuvant generated robust immune responses after a single or two dose intranasal or intramuscular administration in non-human primates. This indicates that we may be able to offer flexible options for consumers. For example, intranasal administration could lower viral loads and potentially result in decreased transmission. In addition, unlike vaccines which might require two or more doses for full protection, the possibility to administer a single vaccine dose is important in the context of a pandemic. These findings reinforce once again the strengths of our technology platform and highlight the potential of our pandemic influenza program. Please turn to slide 10. On the preclinical side, our RSV combination, CDP-CIL and VZV Zoster programs have continued their rapid journey towards development of compelling, differentiated and commercially attractive next generation vaccines. These assessments are executed in carefully thought out in silico, in vitro and animal models that will address dosing regimens and criteria for our predefined target product profiles. Our goal is to rapidly position the programs for the clinic. For the CDC-CIL program, we are initiating and prioritizing animal models to delineate key biology questions on humoral and mucosal immunity and focusing on translational questions. We have incorporated new proteins into our antigens in addition to the main toxins to enhance differentiation, efficacy and cross-variant protection. One of the main challenges for CDP-CIL is that vaccines are not cross-protecting against various bacterial ribotypes. Protection against CDP-CIL and its complication remains a large unmet medical need with no C. diff vaccine available today. For the RSV combination, we are incorporating important lessons learned from our first generation RSV clinical program and our KIK program into a second generation antigen design. Our technology platform facilitates combination vaccines development and this matters as consumers have indicated a preference for combination vaccines. For shingles prevention, we continue to generate key differentiation data in clinical models with the goal of showing similar efficacy with existing vaccines while demonstrating lower reactogenicity. This comes from the observation that at-risk adults are declining shingles protection or don't complete their vaccination series due to fear of adverse effects. Finally, early data shows initial promise in use of matrix beyond conventional vaccines, opening new avenues of research in highly compelling disease use cases. For example, this quarter we generated preliminary positive data using matrix M with an oncology vaccine candidate with potential future applications across several tumor types. As a means to advance our preclinical programs, we also continue to innovate with our technology. We have strategically added to our translational medicine and adjuvant teams to ensure we have the right technological capabilities to continue to build out our next generation of R&D using our existing preclinical programs as a testbed. There will be more to share in the coming months, but two main highlights are number one, use of generative AI methods to inform antigen construct design, tested with expanded high throughput cloning, and second, the use of AI ML approaches to rapidly and cost effectively create and test antibodies, including assessing antigenic epitope integrity of new antigens. This data gives us unprecedented insights into the behavior of antigen and adjuvant drug substance, which helps prepare for clinical positioning. Looking ahead, we are excited to host our Investor Day in the coming quarters, where I will go into greater detail on the programs I've discussed today. As we advance our early stage pipeline, we intend to take a strategic and fiscally disciplined approach, prioritizing programs that address significant unmet medical needs and offer compelling commercial potential. I'll now turn the call to Jim.

Thank you, Roxandra. Please turn to slide 11. This morning, we announced our financial results for the second quarter of 2025. Details of our results can be found in our press release issued today and in our Form 10Q filed with the SEC. Please turn to slide 12. I'll begin with key highlights from our second quarter 2025 financial results. Novavax reported total revenue of $239 million as compared to $415 million in the second quarter of 2024. Total revenue included $175 million milestone earned from Sanofi related to the May 2025 FDA approval of our Novavax Avid BLA in the US. We expect cash receipt of the $175 million milestone in the third quarter of 2025. During the second quarter of 2025, we continue to transform Novavax into a more lean and agile organization. Evidence this quarter includes the 41% reduction in our combined R&D and SG&A costs compared to the same period last year. End of note, we reduced SG&A by 57% as we transferred lead commercial activities to Sanofi and reduced infrastructure. Looking forward, we are updating our full year 2025 revenue framework and financial guidance to reflect the impact of the recently announced FDA post marketing commitment study. Importantly, we do not anticipate the cost of the study to have an impact on our 2025 and 2026 operating profit profile as Sanofi reimbursement is expected to cover the incremental study costs added to our plan. We ended the second quarter with over $850 million in receivables, including the $175 million milestone payment from Sanofi. In addition, we anticipate earning an additional $50 million in milestones from Sanofi in the fourth quarter of 2025 upon the transfer of marketing authorization for the US and Europe. Our goal is to drive financial performance by reaching and growing non-GAAP profitability and maintaining at least a year and a half to two years of cash on hand at all times. Depending on the near term performance of our partners, we see the potential to achieve this profitability mark as early as 2027. Please turn to slide 13 for a detailed review of our second quarter revenue results and disclosures. For the second quarter of 2025, we recorded total revenue of $239 million compared to $415 million in the same period in 2024. Product sales for the second quarter of 2025 of $11 million consisted of $13 million from supply sales and negative $2 million of Novaksovid product sales from the close out of our US market activities and related return reserves. Our second quarter supply sales were primarily from adjuvant sales to our licensed partners. We are encouraged by the increased demand from Matrix M as this enables the company to better reach manufacturing economies of sales and aids the improvement of our margins. Of note, year to date sales of the R21 Matrix M malaria vaccine of 14 million doses already exceeds the 6 million doses sold for the full year 2024 and highlights the steady progress being made by our partner, the Serum Institute, with the launch. We recorded $229 million of licensing royalties and other revenue in the second quarter consisting of $199 million and $27 million related to our Sanofi and Takeda agreements respectively. Please turn to slide 14 for a detailed view of our second quarter financial results where I'll focus on our operating expense results and trends. Second quarter 2025 combined R&D and HDNA expenses were $123 million and reflect a $41.5 percent and $85 million reduction from the same period in 2024. Importantly, our HDNA expenses were 57 percent lower than the same period last year and are driven by the transition of the lead global commercial activities to Sanofi plus strong execution of our broader cost reduction plan. Research and development expenses of $79 million in the second quarter of 2025 were primarily driven by our investment in the Kik flu study and support of Sanofi for the upcoming COVID-19 vaccine season. A smaller portion of this spend is presently directed towards our early stage preclinical programs. And finally, we reported net income of $107 million or $0.62 per diluted share for the second quarter of 2025. Please turn to slide 15. In May 2025, Novavaxivid received US market authorization and with that approval came an FDA request to complete a post marketing commitment study or PMC. Today, we are sharing the specifics around the execution of this study and its impact on Novavax's revenue framework and financial guidance. Importantly, we are sharing that this update is not anticipated to have an impact on our 2025 and 2026 operating profit profile as Sanofi reimbursement is expected to cover the incremental study costs added to our plans. The PMC study is anticipated to occur during 2025 and 2026 with a total cost of between $70 and $90 million. Novavax will conduct this study on behalf of Sanofi and Novavax will be reimbursed 70% of total cost or approximately $55 million midpoint of that range. In the table below, we outline both the specific updates we are making to our revenue framework and financial guidance and introduce a new metric where we show our combined R&D and SG&A expenses less partner reimbursements. This new non-GAAP metric reinforces that we are on track with our previously communicated expense targets through 2027 when adjusting for partner reimbursements. Please turn to slide 16. We are committed to streamlining our operations to enable value creation. Our updated full year 2025 financial guidance for combined R&D and SG&A expenses is now $495 to $545 million to include the addition of the PMC study. We are also sharing our 2026 and 2027 combined R&D and SG&A expenses net of partner reimbursements of $350 million and $250 million respectively. We believe that providing both the gross spend and net of partner reimbursement views provides investors with a better understanding of our core operating cost structure. The resulting lean and agile operating model is focused on targeted investments in R&D to drive value creation. Please turn to slide 17. 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 $1 billion and $1 billion and $50 million. Our 2025 revenue framework excludes Sanofi supply sales, royalties, influenza, COVID 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 $25 million increase to our 2025 adjusted total revenue is driven by a $5 million increase to adjusted supply sales related to increased demand for Matrix M from serum for the R21 Matrix M malaria vaccine and a $20 million increase to adjusted licensing royalties and other revenue that has three components and includes a $20 million increase to Sanofi cost reimbursement related to the PMC study, a $10 million increase to other partner revenue from Takeda based on milestones and royalties under that agreement and a $10 million decrease to amortization related to Sanofi upfront payment and pediatric milestone that we now expect to recognize in 2026. Our year to date 2025 sales of $906 million leaves $119 million to be recognized in the second half of 2025 at the midpoint of our revenue framework for adjusted total revenue. We expect the majority of this remaining amount to occur in the fourth quarter. 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 long-term value creation through our corporate growth strategy and continue to focus on our three strategic priorities. First, executing on our Sanofi partnership and in doing so successfully demonstrating we are a partner of choice. Second, enhancing existing partnerships and leveraging our technology platform and pipeline to forge additional collaborations. And third, advancing our technology platform and early stage pipeline. Thank you all for joining us today and a sincere thank you to our employees for their unwavering dedication to advancing our mission. I'm proud of what we've accomplished and energized by the opportunities ahead as we execute on our strategy to drive meaningful value. 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 then one on your touchtone phone. If you're using a speaker phone, please pick up your handset before pressing the keys. To withdraw your question, please press star one again. At this time, we'll pause momentarily to assemble our roster. And we'll take our first question from Roger Song at Jeffries.

Great. Congrats for all the progress and then thanks for the update and taking our questions. Two from us. One is in terms of the 2025-2026 COVID season supply. Given you will continue to use GAN 1, would you still file for approval for this season for your vaccine and then when the supply will be ready for the fall this season? And then also second question related to the kick and flu partnership discussion. Any additional comments regarding the interest level, the progress and then how should we think about the timeline you will be able to sign a partner to move forward into the pivotal. Thank you.

Jim, you want to take Roger's first question?

Certainly. And good morning, Roger. You know, with respect to the regulatory filings for readiness for our for the fall season, you're right that we had a BLA approval for JM 1, which is our intent to deliver that vaccine, JM 1, this fall. We also, however, in parallel are working to improve the shelf life profile of our vaccine for this fall to a more competitive profile, you know, the expectation being six months at least. And therefore, the regulatory filings we're doing right now for readiness for the fall are really focused on that improvement in shelf life profile and stability. All right. And then I believe your next question related to the combination vaccine potential partnering. Can you just restate one more time?

Yeah, sure. So for the just any comments around the interest level, the progress of the discussion and then what's the timeline we should looking at or expecting for the partnership to move forward?

Good question, Roger. You know, obviously, due to the nature of those types of conversations, we can't give detail or comment on that. But what we did allude to is that we are in conversation with multiple potential partners. And as things develop and we can share, we will. I will say that there's been strong commentary we've been pleased with from our partner, Sanofi. So if you take a look at their statements in their recent earnings discussions, they speak very positively about the potential of combination assets in covid flu moving forward in the future. Both of the assets they're developing with our new vaccine that receive fast track designation from FDA. And we're very excited about the potential of that future. Did you want to add anything else on Roger's question regarding kick flu combination?

So the only thing that I would like to add is, as you might remember, this was the first cohort from the trial where we were assessing the immunogenicity and obviously adding to the safety database. The data that we have generated was to actually strengthen the body of data that we already had. And it was not a registration trial. The registration trial would be undertaken by that potential partner when that partnership would occur.

Got it. Thank you.

We'll move next to Tamiak Mamtami at

B Reilly Securities.

Good morning, team. Thanks for taking the questions and congrats on the progress. So maybe just following up on the prior comment about the new data that was presented regarding the CD4 T cell superiority versus flu zone high dose, including for both kick and the NIV and H1, N1 and N2. Just curious, Rux, would you expect a relatively comparable data set being generated in the Sanofi study? And also wonder how important is the B strain specific immunogenicity in context of understanding the profile of standalone flu and kick when you also obviously talk about what additional strategic are looking for? And then I have a quick follow up.

Rux, do you want to comment on Mayank's question?

Yes. So we cannot comment on Sanofi's progress. Obviously, we are not purviewed to their data. And we can actually just relate our data from our experiments from this first cohort, as I was mentioning. It was very encouraging to see that these CD4 positive T cells, polyfunctional, were actually comparing very favorable, both in the case of T and IV and the kick with a comparator, which is the flu zone high dose. As far as the specific strains, again, that is a little bit speculative because every year, as we know very well in the case of influenza, you have different strains that are circulating. And the data that we have today is indicative of the direction of travel. How each and every one of the strains is going to behave in a particular season is actually to be seen and assessed.

But we're encouraged by the data. Mayank, we're encouraged by the data and we'll keep driving forward with it.

Great. And my follow up was around three MTAs that you talked about. It seems this is growing over time. Could you just touch on how process goes to specific deliverables that lead to a financial transaction? And do you have an understanding of what the new evolved BADA framework is as they consider newer platforms to diversify for things like pandemic preparedness? Thanks again for taking our questions.

Mayank, I want to make sure I fully understand your question. So I think it was two questions and one or two parts to your question. If I understand you correctly, the first part, you're asking about the process from MTAs migrating into a financial transaction. Is that the first part of your question?

Yeah. So that's more industry specific. And then I guess the second part to the broader question is that the BADA framework is evolving also as it looks at different platforms beyond MRNA. So I was just curious how maybe that progress, if any, is ongoing.

All right, Mayank. So take the first question, obviously, as a limit to what I'm able to share here with you today and with everyone today, due to the nature and sensitivity of conversations around business partnership deals. But MTAs are good because it allows potential partners to explore our technology in their own laboratory and see what it's capable of. And if it could solve needs that they have, then those said potential partners might want to discuss with us a potential deal for that or a license deal, et cetera. So that's why we're happy to get those MTAs signed because we believe in our technology. We've done experiments internally in our own lab with multiple vaccines that either exist today and or could exist. And we know what MatrixM is capable of. And we're sharing some of that data under CDA with potential partners. And then if they're doing experiments on their own and proving that out for themselves, that's further evidence that there may be something here for them to explore more deeply and perhaps in a financial arrangement. There's not much more we can say on this until these deals materialize. And then we'll be glad to share. So I think there was another comment about BADA. So let me just pass that over to Sylvia Taylor. And then we may have Roxandra add to that as well. Go ahead, Sylvia.

Hey, Mike. Thanks so much for the question. Certainly, there is a lot right now that is evolving in the policy landscape. And I think as it relates to BADA, look, we're excited about the asset that we have. We are excited about the data that Roxandra talked about for our pandemic influenza asset. We continue to work with BADA on potential funding. Really can't comment too much about what they're looking at in terms of other technology platforms. But we always talk about the importance of having our technology option available. And that's something that I can say is resonating. So as those conversations continue and we have anything to report, we'll definitely keep you posted.

Yeah. And there were news today about contracts getting canceled, Sylvia, right? So maybe that's related to your question, Mike. But we believe there's still interest both from the Europeans and the US authorities in exploring potential with Novavax and our technology for pandemic preparedness. Rox, did you want to add a thought to that before we move on?

So thank you, John. The only thing that I wanted to add is, as we have seen in the past, in every single one of the applications, both for infectious diseases, generally speaking, and for these emerging and pandemic threats, there are a multitude of platforms that can be used to develop safe and efficacious vaccines. We happen to have one of them, which is a protein-based platform with a matrix M adjuvant. And our work that has been just recently published, as I've mentioned, in Nature Communication, has shown that that is a viable alternative, at least for the moment, in non-human primates. Obviously, the work has to be continued in order to give data that is relevant for protection of the general public. But there are many platforms out there, and the fact that we are moving to a platform or another is just a matter of choice and of science.

Thank you, Sylvia and Rox. Thank you, Mike.

We'll go next to Chris Lobianco at TD Securities.

Oh, thank you for taking our questions. First, what is your level of confidence in positive efficacy data from the post-marketing phase four trial, and is there an interim analysis? And second, bigger picture question, is the company evaluating or open to acquiring or in-licensing clinical stage candidates? The company has a great platform, but it also has a highly experienced team and strong cash outlook, which could be a value add for accelerating the development of external clinical stage candidates. Thank you.

Did you repeat the first part of your question, please, Chris?

Are you open to acquiring or in-licensing clinical stage candidates?

Right now, we're focused on external partnering and internal development of our own candidates via our pipeline. So that's the company's focus right now and in generating, first of all, optimizing our existing partnerships with, first and foremost, Sanofi, but also Takeda and with the Takeda, and other organizations that we're proud to partner with, and then investing in our technology platform, where in the coming quarters, we intend to share some initial data that's emerging from those exciting assets that we're working on in very early stage. And we're also exploring beyond infectious disease and seasonal respiratory viral vaccines, we're exploring the potential of matrix M and oncology. So we look forward to sharing some of that data in the coming quarters with you. Jim, did you want to add a little color to that?

Certainly. Thank you, John. So Chris, one of the things that we are emphasizing about how we unlock value from our technology platform is that the more people we can get this differentiated technology into their hands, driving more innovation, more vaccines, we believe that does the best for global health and for value creation. And for that reason, that is why we are so, so focused on ensuring folks understand what matrix M can do to either develop new vaccines or perhaps even improve upon existing. You saw earlier in our remarks, we see an industry that last year, vaccines was over 57 billion, that McKinsey study notes it's going to grow over 75 and even beyond. We have a platform that has utility across multiple modalities. And we believe we've got the ability to really be a driver of growth in this industry. And that's where we're focused.

Yeah, Jim, well said. And Chris, that's a great question. Another way to look at our technology platform is it has utility, as Jim said, across multiple other vaccine platforms, could potentially have utility as a therapeutic, could potentially have utility beyond respiratory and infectious disease. So the way we see our matrix M platform is that we haven't really yet begun to tap even the full potential at all of this platform. And we see it potentially being involved in multiple vaccines across multiple partners and coming out of Novavax

for years to come.

We'll go next to Alex Sternahan at Bank of America.

Hey, guys. Thanks for the questions. Two from us. First, on the PMC, appreciate the color Jim provided on the cost reimbursement. I guess what information can you share on the design, the size, the timing of the requested PMC? And second, how does the shifting winds at the FDA with RFK pulling mRNA Vax funding maybe provide a tailwind for you guys with potential partners? Thanks.

Rox, did you want to provide just a brief bit of color on the size scope scale of the PMC?

Yeah. Thank you, John. So as you know, and as we have previously discussed, this is a post-marketing commitment. So basically a study that occurs after the marketing authorization that could provide additional insights in a specific age population and looking at very clear endpoints. We do work towards starting the study as fast as possible and generating that data per the agreement with the regulatory agency. So we hope to start the study as soon as at the end of this year and obviously generate the data in the next quarter, since thereafter.

And Alec, you can see the estimated cost is $70 to $90 million. So that probably tells you a lot about the scope and scale and whatever type of burden that may be. Post-marketing commitments are not uncommon, and this is something we can handle. And I think Jim put it in a good perspective. Jim, anything to add on that?

Just that we'll continue to support Sanofi and all of our partners to advance their interests. As you're seeing in this case, Sanofi is picking up the vast majority of expenses as we keep the momentum, right, and the vaccine advancing in the marketplace.

And Alec, your second question was about a tailwind, right? I found that very interesting, when you see the news today about some grant funding being pulled from mRNAs by the current administration. What we are encouraged by, actually, is what we've seen is the continued investment in vaccines by peer companies and by large companies. You've seen a recent acquisition of a vaccine platform by Sanofi, a partner that we have here at Novavax. You've seen investment being made with our partner Sanofi in their combination vaccines, both of which were fast-tracked, right? You see other companies investing in vaccine platforms and technologies. You see a company like Pfizer in their earnings call mention vaccines as a top three priority of investment go forward for the company, right? So companies that have been in vaccines for a long time who understand the value of vaccines for public health and for their bottom line are continuing to make those investments. So we see that from ourselves, excited about the future. Our peers seem steady and excited about the future. And Asilvi, you may want to comment on any potential tailwind based on the news today.

Yeah, John, I mean, totally agree with what you said. I think when you're talking about vaccines, you're talking about different platforms. And I think certainly there have been a lot of questions as we saw about the news that John mentioned yesterday in terms of BARDA pulling funding for RNA. We think that there's potential impact for us and of course, for our partner Sanofi in a couple of areas. I mean, one, I think is development of pandemic influenza candidates. We've already talked about the fact that we have an asset. We're working with BARDA to explore the potential for funding. And there is the potential opportunity for us, particularly since other platforms may be taken out of consideration in that. And then I think the other thing is, you know, seasonal execution and what it could mean for the market going forward. Certainly, I think right now there is a lot of support for an alternative technology platform, for protein based technology platform. And, you know, we're excited to partner with Sanofi as they take the lead commercialization role and execute in this environment.

Thank you, Alvin. Thank you.

And as a reminder to ask a question, please press star one. We'll go next to Tom Schrader at PTIG.

Good morning. Thanks for all the detail. The profitability comment for 2027, does that assume worldwide COVID vaccine use is about flat? And then a remedial one for Oxandra. All your talk about more robust flu responses, the multi-year flu vaccines make sense ever? I mean, or does the strain essentially always drift too much to make a vaccine that lasted two years valuable? Thank you.

Jim, you want to take the first question?

All right, certainly. And I appreciate the question. We have as a objective of this company to drive value, the goal of reaching not just profitability, but sustainable and growing non-GAAP profitability. In addition, and in the interim, we're focused on making sure we have the financial strength with at least a year and a half to two years or more of cash on hand. What you're seeing is we are setting up the company to unlock value. And then with respect to the comments around as early as 2027, and of course, this is dependent on the performance of our partners, we see multiple paths to profitability. And I'll just give you a couple of examples that I emphasized a little bit earlier this year. Our non-GAAP profitability profile, and I'm going to start with the breakeven and our expense profile target for 2027. We've told you R&D and S-DNA of $250 million. And just to simplify math, imagine the cash OPEX there is about two and a quarter, 200 to two and a quarter. The ability to get the breakeven, therefore, would be in the case of a COVID vaccine. So think about our royalty rate on Sanofi, that's approximately 20% and around the midpoint, we've given you a range, high teens to low 20s. That would mean to be breakeven, Sanofi would be selling a billion or more of the COVID vaccine. In a market that is eight to nine billion, you get a sense of the market share required, right? Somewhere in the teens. Then another alternative, advancing the flu and KIC combination by Sanofi, the approval launch milestone itself is 225 million and would meet the objective on its own of getting us to breakeven just there with royalties and of course, growing revenues on the back end of that launch. And that's me yet to even address other new collaborations that we're working towards that could in turn drive additional cash flow for the company. And so it is really the combination of the transformation into a lean and agile cost structure that creates, I'll call it this far lower bar towards profitability. And then the maturing and evolution of our partnering plan to drive cash flow to the company to not just breakeven, but grow a sustainable cash flow as a company over time to create value.

Thank you, Jim. And Roxanne, did you want to take the second question from Tom about a flu vaccine, a multi-year flu vaccine? Thank

you. Well, it's implied from your question, the influenza vaccines are typically subtype specific, yeah, and that is changing every year, where there has been a tremendous effort in the field in the last 35 years for these more universal vaccines. For the moment, those efforts have not been brought to fruition, I would say. The data that we are generating is actually showing that our vaccine can offer a little bit broader immune protection. So slightly heterosubtypes might be in the scope of that protection. And also the T cell data that we have generated, it's showing that we can probably confer a little bit of more durability of protection. But we need to look at the durability of protection or that heterosubtypic protection in the context. The current vaccines might protect for a season. A season, it means a few months. What if we can actually protect for six months or for 12 months? It would already be an advancement versus the current state of science. That we will be able to confer protection for two years or three years or for longer or have these universal flu vaccines, I actually think that the jury is out there. There have been so many efforts in that field. Unfortunately, they all have failed for the moment.

Great. Thanks for all the colors.

And we'll go next to Jeff Meacham at Citi.

Hey, good morning, guys. This is Jarley. On for Jeff. Thanks for taking the question. As part of RKJ's comments yesterday about the BARDA situation and the framework, definitely the comments on mRNA could be a tailwind for you guys. Among his comments, he also noted the desire for a universal vaccine rather than an antigenic specific vaccine. Based on that, how do you think that might impact discussions going forward for interest for your flu and kick vaccine for partners? And then a second question for us is you guys have noted interest in going in oncology and additional plans beyond respiratory vaccines. Given the importance of that beyond respiratory revenues, how do you think you guys might be able to fund those programs de novo on current expectations of cash generation from the fantasy collaboration? Thanks.

Just want to make sure we unpack that clearly and do your question on, your double question on here. The first part of that question, I believe, had to do with universal vaccine and any impact on discussions or partnering. I think Roxandra did an excellent job addressing that through a different question just a moment ago. We don't currently see that as an impediment. That's something that has been tried for over 35 years and there hasn't been a lot of success at all scientifically in that direction. We're excited about any partnering discussions or any current partnerships we currently have with our technology platform. And then the second part of your question, if you could just condense that and restate so we can get it correctly.

Of course. Yeah, just the interest in going on oncology, if you could give us more details on that and plans for what other areas you guys may have interest in going into and then also in your confidence and being able to run those programs based on current projections of a new generation from the fantasy collaboration. Right,

very good question. Appreciate that. We're excited about the potential outcomes of our explorations in oncology. We'll be looking forward to in the coming quarter sharing some initial data coming out of those explorations and we're very excited about the potential there for our technology. Let me let Jim handle your question about the financial runway to support our portfolio programs, Jim.

Certainly. And maybe reinforcing, and this is the reason why I really like this question, it reinforces the thoughtful approach we're using to our business model of finding outside this company experts who can utilize our technology to drive new areas of vaccine innovation where we don't have to do it ourselves. And so in the case of oncology, we've recognized the importance of the right adjunct playing a role, right, in oncology. And we don't intend to be an oncology company. We don't. However, we'll generate the right type of data to encourage, you know how vast that marketplace is, to encourage those players to collaborate with us, have access to our technology, to advance what Matrix could be. And the return on that could be exceptional. And so I think you heard today from Rox, just some preliminary information that we're learning leaves us to believe we're on the right path and we're looking forward to partnering with others.

Yeah. And today Jim outlined our, you know, once again, very clearly our lean financial platform that we're building and the continued cost reduction efforts of this organization that we've been under for the last few years and continue to execute upon while keeping our capabilities and focusing our investments in the right areas that are portfolio that we've already shared. Four different programs plus exploration in oncology plus H5N1 discussions, et cetera. All of that is inclusive and as part of that lean financial platform that Jim outlined clearly here. And if we've always said, if we do find a gem coming out of our portfolio, it will be clear that it is one. And at that time we may choose to bring that forward. But right now it's all contemplated as part of the current financials Jim shared.

Great. Thank you.

This

concludes our question and answer session. I would like to turn the conference back over to John Jacobs for any closing remarks.

Thank you very much, everyone. We appreciate you joining the call today and look forward to seeing you in the near term. Have a great day.

This conference has now concluded. Thank you for attending today's presentation. You may now disconnect.