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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2023
OR
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to .
Commission File No. 000-26770
NOVAVAX, INC.
(Exact name of registrant as specified in its charter)
Delaware22-2816046
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
700 Quince Orchard Road,
Gaithersburg,MD20878
(Address of principal executive offices)(Zip code)
(240) 268-2000
(Registrant's telephone number, including area code)

21 Firstfield Road, Gaithersburg, MD 20878
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading
Symbol(s)
Name of each exchange on which registered
Common Stock, Par Value $0.01 per shareNVAXThe Nasdaq Global Select Market
Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerxAccelerated Filero
Non-accelerated fileroSmaller reporting companyo
Emerging growth companyo 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  No x
The number of shares outstanding of the Registrant's Common Stock, $0.01 par value, was 94,404,185 as of July 31, 2023.


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

i

PART I. FINANCIAL INFORMATION
Item 1.    Financial Statements
1

NOVAVAX, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share information)
(unaudited)
For the Three Months Ended
June 30,
For the Six Months Ended
June 30,
2023202220232022
Revenue:
Product sales$285,163 $55,455 $277,706 $641,083 
Grants137,079 107,774 224,458 207,075 
Royalties and other2,184 22,696 3,213 41,738 
Total revenue424,426 185,925 505,377 889,896 
Expenses:
Cost of sales55,777 271,077 89,863 286,281 
Research and development219,475 289,648 466,576 673,131 
Selling, general, and administrative93,717 108,160 206,249 204,152 
Total expenses368,969 668,885 762,688 1,163,564 
Income (Loss) from operations55,457 (482,960)(257,311)(273,668)
Other income (expense):
Interest expense(3,124)(6,234)(7,440)(11,110)
Other income (expense)5,532 (19,873)29,894 (18,219)
Income (Loss) before income tax expense (benefit)57,865 (509,067)(234,857)(302,997)
Income tax expense (benefit)(143)1,418 1,040 4,080 
Net income (loss)$58,008 $(510,485)$(235,897)$(307,077)
Net income (loss) per share:
Basic$0.65 $(6.53)$(2.69)$(3.97)
Diluted$0.58 $(6.53)$(2.69)$(3.97)
Weighted average number of common shares outstanding
Basic89,362 78,143 87,769 77,305 
Diluted104,065 78,143 87,769 77,305 
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(in thousands)
(unaudited)
For the Three Months Ended
June 30,
For the Six Months Ended
June 30,
2023202220232022
Net income (loss)$58,008 $(510,485)$(235,897)$(307,077)
Other comprehensive income (loss):
Foreign currency translation adjustment(5,011)(9,558)(1,800)(9,517)
Other comprehensive income (loss)(5,011)(9,558)(1,800)(9,517)
Comprehensive income (loss)$52,997 $(520,043)$(237,697)$(316,594)
The accompanying notes are an integral part of these financial statements.
2


NOVAVAX, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share information)
June 30,
2023
December 31,
2022
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents$505,912 $1,336,883 
Restricted cash10,361 10,303 
Accounts receivable394,890 82,375 
Inventory23,488 36,683 
Prepaid expenses and other current assets192,903 237,147 
Total current assets1,127,554 1,703,391 
Property and equipment, net299,955 294,247 
Right of use asset, net 95,739 106,241 
Goodwill128,366 126,331 
Other non-current assets33,434 28,469 
Total assets$1,685,048 $2,258,679 
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accounts payable$87,246 $216,517 
Accrued expenses458,397 591,158 
Deferred revenue300,473 370,137 
Current portion of finance lease liabilities953 27,196 
Convertible notes payable 324,881 
Other current liabilities749,186 930,055 
Total current liabilities1,596,255 2,459,944 
Deferred revenue606,937 179,414 
Convertible notes payable167,248 166,466 
Non-current finance lease liabilities30,744 31,238 
Other non-current liabilities38,383 55,695 
Total liabilities2,439,567 2,892,757 
Commitments and contingencies (Note 15)
Preferred stock, $0.01 par value, 2,000,000 shares authorized at June 30, 2023 and December 31, 2022; no shares issued and outstanding at June 30, 2023 and December 31, 2022.
  
Stockholders' deficit:
Common stock, $0.01 par value, 600,000,000 shares authorized at June 30, 2023 and December 31, 2022; 95,183,750 shares issued and 94,308,379 shares outstanding at June 30, 2023 and 86,806,554 shares issued and 86,039,923 shares outstanding at December 31, 2022
952 868 
Additional paid-in capital3,855,916 3,737,979 
Accumulated deficit(4,511,786)(4,275,889)
Treasury stock, cost basis, 875,371 shares at June 30, 2023 and 766,631 shares at December 31, 2022
(91,424)(90,659)
Accumulated other comprehensive loss(8,177)(6,377)
Total stockholders’ deficit(754,519)(634,078)
Total liabilities and stockholders’ deficit$1,685,048 $2,258,679 
The accompanying notes are an integral part of these financial statements.
3


NOVAVAX, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
Three and Six Ended June 30, 2023 and 2022
(in thousands, except share information)
(unaudited)
Common StockAdditional
Paid-in
Capital
Accumulated
Deficit
Treasury
Stock
Accumulated Other
Comprehensive
Loss
Total Stockholders'
Equity (Deficit)
SharesAmount
Balance at March 31, 202387,139,831 $871 $3,767,733 $(4,569,794)$(91,226)$(3,166)$(895,582)
Stock-based compensation— — 20,292 — — — 20,292 
Stock issued under incentive programs95,965 1 (1)— (198)— (198)
Issuance of common stock, net of issuance costs $861
7,947,954 80 67,892 — — — 67,972 
Foreign currency translation adjustment— — — — — (5,011)(5,011)
Net income— — — 58,008 — — 58,008 
Balance at June 30, 202395,183,750 $952 $3,855,916 $(4,511,786)$(91,424)$(8,177)$(754,519)
Balance at March 31, 202278,722,337 $787 $3,566,292 $(3,414,542)$(85,901)$(1,312)$65,324 
Stock-based compensation— — 38,048 — — — 38,048 
Stock issued under incentive programs53,897 1 274 — (554)— (279)
Foreign currency translation adjustment— — — — — (9,558)(9,558)
Net loss— — — (510,485)— — (510,485)
Balance at June 30, 202278,776,234 $788 $3,604,614 $(3,925,027)$(86,455)$(10,870)$(416,950)

                            
Common StockAdditional
Paid-in
Capital
Accumulated
Deficit
Treasury
Stock
Accumulated Other
Comprehensive
Loss
Total Stockholders'
Equity (Deficit)
SharesAmount
Balance at December 31, 202286,806,554 $868 $3,737,979 $(4,275,889)$(90,659)$(6,377)$(634,078)
Stock-based compensation— — 48,939 — — — 48,939 
Stock issued under incentive programs429,242 4 1,106 — (765)— 345 
Issuance of common stock, net of issuance costs of $861
7,947,954 80 67,892 — — — 67,972 
Foreign currency translation adjustment— — — — — (1,800)(1,800)
Net loss— — — (235,897)— — (235,897)
Balance at June 30, 202395,183,750 $952 $3,855,916 $(4,511,786)$(91,424)$(8,177)$(754,519)
Balance at December 31, 202176,433,151 $764 $3,351,967 $(3,617,950)$(85,101)$(1,353)$(351,673)
Stock-based compensation— — 70,981 — — — 70,981 
Stock issued under incentive programs145,685 2 2,303 — (1,354)— 951 
Issuance of common stock, net of issuance costs of $2,311
2,197,398 22 179,363 — — — 179,385 
Foreign currency translation adjustment— — — — — (9,517)(9,517)
Net loss— — — (307,077)— — (307,077)
Balance at June 30, 202278,776,234 $788 $3,604,614 $(3,925,027)$(86,455)$(10,870)$(416,950)
The accompanying notes are an integral part of these financial statements.




4


NOVAVAX, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Six Months Ended June 30,
20232022
Operating Activities:
Net loss$(235,897)$(307,077)
Reconciliation of net loss to net cash used in operating activities:
Depreciation and amortization19,110 13,485 
Non-cash stock-based compensation48,939 70,981 
Provision for excess and obsolete inventory31,546 155,662 
Impairment of long-lived assets10,081  
Right-of-use assets expensed, net of credits received (3,291)
Other items, net(89)(642)
Changes in operating assets and liabilities:
Inventory(19,361)(403,725)
Accounts receivable, prepaid expenses, and other assets(266,482)112,845 
Accounts payable, accrued expenses, and other liabilities(443,238)179,158 
Deferred revenue357,860 (76,809)
Net cash used in operating activities(497,531)(259,413)
Investing Activities:
Capital expenditures(26,774)(41,402)
Internal-use software(4,563) 
Net cash used in investing activities(31,337)(41,402)
Financing Activities:
Net proceeds from sales of common stock61,986 179,385 
Net proceeds from the exercise of stock-based awards345 1,050 
Finance lease payments(26,784)(15,911)
Repayment of 2023 Convertible notes(325,000) 
Payments of costs related to issuance of 2027 Convertible notes(3,591) 
Net cash provided by (used in) financing activities(293,044)164,524 
Effect of exchange rate on cash, cash equivalents, and restricted cash(8,992)(4,453)
Net decrease in cash, cash equivalents, and restricted cash(830,904)(140,744)
Cash, cash equivalents, and restricted cash at beginning of period1,348,845 1,528,259 
Cash, cash equivalents, and restricted cash at end of period$517,941 $1,387,515 
Supplemental disclosure of non-cash activities:
Sales of common stock not settled at end of period$5,986 $ 
Right-of-use assets from new lease agreements$ $69,366 
Capital expenditures included in accounts payable and accrued expenses$6,591 $17,890 
Supplemental disclosure of cash flow information:
Cash interest payments, net of amounts capitalized$11,294 $8,604 
Cash paid for income taxes$128 $17,778 
    
The accompanying notes are an integral part of these financial statements.
5


NOVAVAX, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2023
(unaudited)
Note 1 – Organization and Business
Novavax, Inc. (“Novavax,” and together with its wholly owned subsidiaries, the “Company”) is a biotechnology company that promotes improved health globally through the discovery, development, and commercialization of innovative vaccines to prevent serious infectious diseases. The Company’s vaccines and vaccine candidates are genetically engineered nanostructures of conformationally correct recombinant proteins critical to disease pathogenesis and may elicit differentiated immune responses, which may be more efficacious than naturally occurring immunity or other vaccine approaches. Novavax currently has one commercial program, for vaccines to prevent COVID (“Novavax COVID Vaccine, Adjuvanted”), which it markets in various territories where it is allowed to do so, under the brand name “Nuvaxovid™”. Novavax’s prototype COVID vaccine was derived from the prototype strain of COVID and is variously referred to here and in prior financial statements without branding as “NVX-CoV2373”. Our partners, Serum Institute of India Pvt. Ltd. (“SIIPL”) markets NVX-CoV2373 as “Covovax™.” Novavax is currently developing an updated vaccine which it refers to as its “XBB COVID vaccine.”

Beginning in 2022, the Company received approval, interim authorization, provisional approval, conditional marketing authorization, and emergency use authorization (“EUA”) from multiple regulatory authorities globally for NVX-CoV2373 for both adult and adolescent populations as a primary series and for both homologous and heterologous booster indications. Novavax is currently seeking similar approvals from multiple regulatory authorities globally for its XBB COVID vaccine as a single dose booster for the fall 2023 and subsequently. The Company exclusively depends on its supply agreement with SIIPL and its subsidiary, Serum Life Sciences Limited (“SLS”), for co-formulation, filling and finishing (other than in Europe) and on its service agreement with PCI Pharma Services (“PCI”) for finishing in Europe. The Company plans to rely on these arrangements to supply the XBB COVID vaccine, if authorized, during the 2023 fall vaccination campaign and subsequently (see Note 4).

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

Note 2 – Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. The consolidated financial statements are unaudited but include all adjustments (consisting of normal recurring adjustments) that the Company considers necessary for a fair presentation of the financial position, operating results, comprehensive loss, changes in stockholders’ equity (deficit), and cash flows for the periods presented. Although the Company believes that the disclosures in these unaudited consolidated financial statements are adequate to make the information presented not misleading, certain information and footnote information normally included in consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted as permitted under the rules and regulations of the United States Securities and Exchange Commission (“SEC”).
The unaudited consolidated financial statements include the accounts of Novavax, Inc. and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. Accumulated other comprehensive loss included a foreign currency translation loss of $8.2 million and $6.4 million at June 30, 2023 and December 31, 2022, respectively. The aggregate foreign currency transaction gains and losses resulting from the conversion of the transaction currency to functional currency were a $0.2 million loss and a $16.1 million gain, and a $22.2 million and $21.0 million loss for the three months and six months ended June 30, 2023 and 2022, respectively, which are reflected in Other income (expense).
The accompanying unaudited consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2022. Results for this or any interim period are not necessarily indicative of results for any future interim period or for the entire year. The Company operates in one business segment.
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Liquidity and Going Concern
The accompanying unaudited consolidated financial statements have been prepared assuming that the Company will continue as a going concern within one year after the date that the financial statements are issued. In addition, as of June 30, 2023, the Company had $517.9 million in cash and cash equivalents and restricted cash. Pursuant to the June 2023 Amendment to the advance purchase agreement (“APA”) between the Company and His Majesty the King in Right of Canada, as represented by the Minister of Public Works and Government Services, as successor in interest to Her Majesty the Queen in Right of Canada, as represented by the Minister of Public Works and Government Services (“Canadian government”), the Company received $174.8 million from the Canadian government in July 2023 with a second installment of $174.8 million that is contingent and payable upon the Company’s delivery of vaccine doses in the second half of 2023 (see Note 3). During the six months ended June 30, 2023, the Company incurred a net loss of $235.9 million and had net cash flows used in operating activities of $497.5 million.
In accordance with Accounting Standards Codification 205-40, Going Concern, the Company evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about its ability to continue as a going concern within one year after the date that these unaudited consolidated financial statements are issued. While the Company’s current cash flow forecast for the one-year going concern look forward period estimates that there will be sufficient capital available to fund operations, this forecast is subject to significant uncertainty, including as it relates to revenue for the next 12 months, funding from the U.S. government, and a pending matter subject to arbitration proceedings. The Company’s revenue projections depend on its ability to successfully develop, manufacture, distribute and market an updated monovalent formulation of a vaccine candidate for COVID-19 for the fall 2023 COVID vaccine season, which is inherently uncertain and subject to a number of risks, including regulatory authorization, ability to timely deliver doses and commercial adoption and market acceptance. Further, failure to meet regulatory milestones, timely obtain supportive recommendations from governmental advisory committees, or achieve product volume or delivery timing obligations under the Company’s advance purchase agreements may require the Company to refund portions of upfront and other payments or result in reduced future payments. For example, if the Company fails to deliver XBB COVID vaccine doses to the Canadian government in the second half of 2023, the second installment payment of $174.8 million will be terminated and not be payable to the Company. Also, if the Company does not timely achieve supportive recommendations from the Joint Committee on Vaccination and Immunisation (the “JCVI”) of the government of the United Kingdom of Great Britain and Northern Ireland with respect to use of NVX-CoV2373 for (a) the general adult population as part of a SARS-CoV-2 vaccine booster campaign in the United Kingdom or (b) the general adolescent population as part of a SARS-CoV-2 vaccine booster campaign in the United Kingdom or as a primary series SARS-CoV-2 vaccination, excluding where that recommendation relates only to one or more population groups comprising less than one million members in the United Kingdom, then the Company would be required to repay up to $112.5 million related to the upfront payment previously received from the Authority under the Original UK Supply Agreement. In February 2023, in connection with the execution of Modification 17 to the USG Agreement (as defined in Note 3), the U.S. government indicated to the Company that the award may not be extended past its current period of performance. If the USG Agreement is not amended, as the Company’s management had previously expected, then the Company may not receive all of the remaining $250.6 million in funding as of June 30, 2023. On January 24, 2023, Gavi, the Vaccine Alliance (“Gavi”) filed a demand for arbitration with the International Court of Arbitration regarding an alleged material breach by the Company of the Company’s advance purchase agreement with Gavi (the “Gavi APA”). The arbitration hearing is scheduled for July 2024, with a written decision to follow. The outcome of that arbitration is inherently uncertain, and it is possible the Company could be required to refund all or a portion of the remaining advance payments of $696.4 million as of June 30, 2023 (see Note 3 and Note 15).
Management believes that, given the significance of these uncertainties, substantial doubt exists regarding the Company’s ability to continue as a going concern through one year from the date that these financial statements are issued.
In May 2023, the Company announced a global restructuring and cost reduction plan (the “Restructuring Plan”) which includes a more focused investment in its NVX-CoV2373 program, reduction to its pipeline spending, the continued rationalization of its manufacturing network, a reduction to the Company’s global workforce, as well as the consolidation of facilities, and infrastructure. The workforce reduction plan included an approximately 25% reduction in the Company’s global workforce, comprised of an approximately 20% reduction in full-time Novavax employees and the remainder comprised of contractors and consultants. The Company has decided to progress CIC toward late-stage development and, as such, is assessing the impact on its workforce requirements. The Company expects the full annual impact of the cost savings from the Restructuring Plan to be realized in 2024 and approximately half of the annual impact to be realized in 2023 due to timing of implementing the measures, and the applicable laws, regulations, and other factors in the jurisdictions in which the Company operates. During the three months ended June 30, 2023, the Company recorded a charge of $4.6 million related to one-time employee severance and benefit costs and $10.1 million related to the consolidation of facilities and infrastructure (see Note 16).
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The Company’s ability to fund Company operations is dependent upon revenue related to vaccine sales for its products and product candidates, if such product candidates receive marketing approval and are successfully commercialized, and in particular the 2023 fall COVID vaccination campaign, which is inherently uncertain and subject to a number of risks, including regulatory authorization, ability to timely deliver doses and commercial adoption and market acceptance, the resolution of certain matters, including whether, when, and how the dispute with Gavi is resolved, and management’s plans, which includes cost reductions associated with the Restructuring Plan. Management’s plans may also include raising additional capital through a combination of equity and debt financing, collaborations, strategic alliances, and marketing, distribution, or licensing arrangements. New financings may not be available to the Company on commercially acceptable terms, or at all. Also, any collaborations, strategic alliances, and marketing, distribution, or licensing arrangements may require the Company to give up some or all of its rights to a product or technology, which in some cases may be at less than the full potential value of such rights. In addition, the regulatory and commercial success of NVX-CoV2373 and the Company’s other vaccine candidates, including an influenza vaccine candidate, a CIC vaccine candidate, and a COVID-19 variant strain-containing monovalent formulation, remains uncertain. If the Company is unable to obtain additional capital, the Company will assess its capital resources and may be required to delay, reduce the scope of, or eliminate some or all of its operations, or further downsize its organization, any of which may have a material adverse effect on its business, financial condition, results of operations, and ability to operate as a going concern.
Use of Estimates
The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ materially from those estimates.
Revenue Recognition Constraints
The Company constrains the transaction price for customer arrangements until it is probable that a significant reversal in cumulative revenue recognized will not occur. Specifically, if a customer arrangement includes a provision whereby the customer may request a discount, return, or refund for a previously satisfied performance obligation or otherwise could have the effect of decreasing the transaction price, revenue is constrained based on an estimate of the impact to the transaction price recognized until it is probable that a significant reversal in cumulative revenue recognized will not occur.
Restructuring
The Company recognizes restructuring charges when such costs are incurred. The Company's restructuring charges consist of employee severance and other termination benefits related to the reduction of its workforce, the consolidation of facilities, and infrastructure and other costs. Termination benefits are expensed on the date the Company notifies the employee, unless the employee must provide future service, in which case the benefits are expensed ratably over the future service period. Ongoing benefits are expensed when restructuring activities are probable and the benefit estimable.
See Note 16 for additional information on the severance and employee benefit costs for terminated employees and impairment of assets in connection with the Company’s Restructuring Plan.
Recent Accounting Pronouncements
Adopted
In June 2016, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), with amendments in 2018, 2019, 2020, and 2022. The ASU sets forth a “current expected credit loss” model that requires companies to measure all expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions, and reasonable supportable forecasts. ASU 2016-13 applies to financial instruments that are not measured at fair value, including receivables that result from revenue transactions. The Company adopted ASU 2020-06 on January 1, 2023, using a modified retrospective approach, and it did not have a material impact on the Company’s consolidated financial statements.
Note 3 – Revenue
The Company's accounts receivable included $334.4 million and $53.8 million related to amounts that were billed to
8


customers and $60.5 million and $28.6 million related to amounts which had not yet been billed to customers as of June 30, 2023 and December 31, 2022, respectively. During the six months ended June 30, 2023, and 2022, changes in the Company's accounts receivables, allowance for doubtful accounts, and deferred revenue balances were as follows (in thousands):
Balance, Beginning of PeriodAdditionsDeductions Balance, End of Period
Accounts receivable:
Six Months Ended June 30, 2023$96,210 $793,039 $(486,684)$402,565 
Six Months Ended June 30, 2022454,993 808,713 (1,069,173)194,533 
Allowance for doubtful accounts(1):
Six Months Ended June 30, 2023$(13,835)$ $6,160 $(7,675)
Six Months Ended June 30, 2022    
Deferred revenue:(2)
Six Months Ended June 30, 2023$549,551 $414,816 $(56,957)$907,410 
Six Months Ended June 30, 20221,595,472 49,107 (128,432)1,516,147 
(1)    There was no bad debt expense recorded during the three and six months ended June 30, 2023 or 2022. There was a $6.2 million reversal of a bad debt allowance during the three months ended June 30, 2023 due to the collection of a previously recognized allowance for doubtful accounts. To estimate the allowance for doubtful accounts, the Company evaluates the credit risk related to its customers based on historical loss experience, economic conditions, the aging of receivables, and customer-specific risks.
(2) Deductions from Deferred revenue generally related to the recognition of revenue once performance obligations on a contract with a customer are met.
As of June 30, 2023, the aggregate amount of the transaction price allocated to performance obligations that were unsatisfied (or partially unsatisfied), excluding amounts related to sales-based royalties, the Gavi APA, and the reduction in doses related to the Amended and Restated UK Supply Agreement, was approximately $2 billion of which $907.4 million was included in Deferred revenue. Failure to meet regulatory milestones, timely obtain supportive recommendations from governmental advisory committees, or achieve product volume or delivery timing obligations under the Company’s advance purchase agreements may require the Company to refund portions of upfront and other payments or result in reduced future payments, which could adversely impact the Company’s ability to realize revenue from its unsatisfied performance obligations. The timing to fulfill performance obligations related to grant agreements will depend on the results of the Company's research and development activities, including clinical trials, and delivery of doses. The timing to fulfill performance obligations related to APAs will depend on the timing of product manufacturing, receipt of marketing authorizations for additional indications, delivery of doses based on customer demand, and the ability of the customer to request variant vaccine in place of the prototype NVX-CoV2373 vaccine under certain of the Company’s APAs.
Under the terms of the Gavi APA and a separate purchase agreement between Gavi and SIIPL, 1.1 billion doses of NVX-CoV2373 were to be made available to countries participating in the COVAX Facility. The Company expected to manufacture and distribute 350 million doses of NVX-CoV2373 to countries participating under the COVAX Facility. Under a separate purchase agreement with Gavi, SIIPL was expected to manufacture and deliver the balance of the 1.1 billion doses of NVX-CoV2373 for low- and middle-income countries participating in the COVAX Facility. The Company expected to deliver doses with antigen and adjuvant manufactured at facilities directly funded under the Company's funding agreement with Coalition for Epidemic Preparedness Innovations (“CEPI”), with initial doses supplied by SIIPL and SLS under a supply agreement. The Company expected to supply significant doses that Gavi would allocate to low-, middle- and high-income countries, subject to certain limitations, utilizing a tiered pricing schedule and Gavi could prioritize such doses to low- and middle- income countries, at lower prices. Additionally, the Company could provide additional doses of NVX-CoV2373, to the extent available from CEPI-funded manufacturing facilities, in the event that SIIPL could not materially deliver expected vaccine doses to the COVAX Facility. Under the agreement, the Company received an upfront payment of $350.0 million from Gavi in 2021 and an additional payment of $350 million in 2022 related to the Company’s achieving an emergency use license for NVX-CoV2373 by the WHO (the “Advance Payment Amount”).
On November 18, 2022, the Company delivered written notice to Gavi to terminate the Gavi APA on the basis of Gavi’s failure to procure the purchase of 350 million doses of NVX-CoV2373 from the Company as required by the Gavi APA. As of November 18, 2022, the Company had only received orders under the Gavi APA for approximately 2 million doses. On
9


December 2, 2022, Gavi issued a written notice purporting to terminate the Gavi APA based on Gavi’s contention that the Company repudiated the agreement and, therefore, materially breached the Gavi APA. Gavi also contends that, based on its purported termination of the Gavi APA, it is entitled to a refund of the Advance Payment Amount less any amounts that have been credited against the purchase price for binding orders placed by a buyer participating in the COVAX Facility. Since December 31, 2022, the remaining Gavi Advance Payment Amount, which is $696.4 million as of June 30, 2023, pending resolution of the dispute with Gavi related to a return of the remaining Advance Payment Amount, has been classified within Other current liabilities in the Company’s consolidated balance sheet. On January 24, 2023, Gavi filed a demand for arbitration with the International Court of Arbitration based on the claims described above. The Company filed its Answer and Counterclaims on March 2, 2023. On April 5, 2023, Gavi filed its Reply to the Company’s Counterclaims. The arbitration hearing is scheduled for July 2024, with a written decision to follow. Arbitration is inherently uncertain, and while the Company believes that it is entitled to retain the remaining Advance Payment Amount received from Gavi, it is possible that it could be required to refund all or a portion of the remaining Advance Payment Amount from Gavi.
Product Sales
Product sales by the Company’s customer’s geographic location was as follows (in thousands):
Three Months Ended
June 30,
Six Months Ended
June 30,
2023202220232022
North America
$ $ $ $64,762 
Europe1,518  58,785 413,745 
Rest of the world
283,645 55,455 218,921 162,576 
Total product sales revenue$285,163 $55,455 $277,706 $641,083 
In May 2023, the Company extended a credit for certain doses delivered in 2022 that qualified for replacement under the contract with the Australian government. This credit is the result of a single lot sold to the Australian government that upon pre-planned 6-month stability testing was found to have fallen below the defined specifications and the lot therefore was removed from the market. The credit will be applied against the future sale of doses to the customer and, during the six months ended June 30, 2023, the Company recorded a reduction of $64.7 million in product sales, with a corresponding increase to Deferred revenue, non-current.
In April 2023, the Company amended its APA with the Canadian government, for the purchase of doses of NVX-CoV2373 (the “Canada APA”) to forfeit certain doses originally scheduled for delivery in 2022 for a payment of $100.4 million received in the second quarter of 2023. On June 30, 2023, the Company entered into an additional amendment (the “June 2023 Amendment”) to the Canada APA. Pursuant to the June 2023 Amendment, the parties revised the Canadian government’s previous commitment by (i) forfeiting certain doses of the NVX-CoV2373 previously scheduled for delivery, (ii) reducing the amount of doses of NVX-CoV2373 due for delivery, (iii) revising the delivery schedule for the remaining doses of NVX-CoV2373 to be delivered, and (iv) requiring use of the Biologics Manufacturing Centre (“BMC”) Inc. to produce bulk antigen for doses in 2024 and 2025. In connection with the forfeiture of doses of NVX-CoV2373, the Canadian government agreed to pay a total amount of $349.6 million to the Company in two equal installments in 2023, which total amount equals the remaining balance owed by the Canadian government with respect to such forfeited vaccine doses. The first installment was payable upon execution of the June 2023 Amendment and the second installment is contingent and payable upon the Company’s delivery of vaccine doses in the second half of 2023. The first installment of $174.8 million was received from the Canadian government in July 2023. If the Company fails to deliver COVID-19 vaccine doses to the Canadian government in the second half of 2023, the second installment payment of $174.8 million will be terminated and not be payable to the Company. The Canadian Government may terminate the Canada APA, as amended, if the Company fails to achieve regulatory approval for use of BMC for NVX-CoV2373 production on or before December 31, 2024. The June 2023 Amendment maintained the total contract value of the original Canada APA. Pursuant to the June 2023 Amendment, the Company and the Canadian government will endeavor to expand the Company’s previously agreed in-country commitment to Canada and to further partner to provide health, economic, and future pandemic preparedness benefits to Canada, which value may be provided through a number of activities, including without limitation, capital investments, the performance of activities or services, or the provision of technology or intellectual property licenses. Further, the parties will endeavor to enter into a memorandum of understanding (the “MOU”) to illustrate the Company’s ability to deliver such benefits over a 15 year period with an aggregate value of not less than 100% of the amount remaining to be paid under the June 2023 Amendment and ultimately received by the Company. The Company agreed to hold $20 million in escrow for the benefit of the Canadian
10


government, which amount is the sole recourse available to the Canadian government in the event of non-performance under the MOU.
Grants
The Company’s U.S. government agreement consists of a Project Agreement (the “Project Agreement”) and a Base Agreement with Advanced Technology International, the Consortium Management Firm acting on behalf of the Medical CBRN Defense Consortium in connection with the partnership formerly known as Operation Warp Speed (the Base Agreement together with the Project Agreement are referred to as the “USG Agreement”). In February 2023, in connection with the execution of Modification 17 to the Project Agreement, the U.S. government indicated to the Company that the award may not be extended past its current period of performance, which is December 31, 2023. Also, Modification 17 included provisions requiring that the payment of $60.0 million of consideration associated with manufacturing work now be contingent upon meeting certain milestones, including the delivery of up to 1.5 million doses of NVX-CoV2373 and development and regulatory milestones related to commercial readiness, expansion of the EUA and development of multiple vial presentations. As of June 30, 2023, the Company constrained the total transaction price by $48.0 million for consideration associated with milestones that are not fully within the Company’s control. This constraint, in addition to other contract changes included within Modification 17, resulted in an approximately $29 million cumulative reduction to revenue previously recognized under the contract for the six months ended June 30, 2023.
Royalties and Other
During the three and six months ended June 30, 2023, the Company did not recognize revenue related to milestone payments or sales-based royalties. During the three and six months ended June 30, 2022, the Company recognized a $20.0 million milestone payment upon the first sale of NVX-CoV2373 in Japan and $1.7 million and $9.2 million, respectively in revenue related to sales-based royalties.
Note 4 – Collaboration, License, and Supply Agreements
SIIPL
The Company previously granted SIIPL exclusive and non-exclusive licenses for the development, co-formulation, filling and finishing, registration, and commercialization of NVX-CoV2373, its proprietary COVID-19 variant antigen candidate(s), its quadrivalent influenza vaccine candidate, and its CIC vaccine candidate. SIIPL agreed to purchase the Company's Matrix-M™ adjuvant and the Company granted SIIPL a non-exclusive license to manufacture the antigen drug substance component of NVX-CoV2373 in SIIPL’s licensed territory solely for use in the manufacture of NVX-CoV2373. The Company and SIIPL equally split the revenue from SIIPL’s sale of NVX-CoV2373 in its licensed territory, net of agreed costs. The Company also has a supply agreement with SIIPL and SLS under which SIIPL and SLS supply the Company with NVX-CoV2373, its proprietary COVID-19 variant antigen candidate(s), its quadrivalent influenza vaccine candidate, and its CIC vaccine candidate for commercialization and sale in certain territories, as well as a contract development manufacture agreement with SLS, under which SLS manufactures and supplies finished vaccine product to the Company using antigen drug substance and Matrix-M™ adjuvant supplied by the Company. In March 2020, the Company granted SIIPL a non-exclusive license for the use of Matrix-M™ adjuvant supplied by the Company to develop, manufacture, and commercialize R21, a malaria candidate developed by the Jenner Institute, University of Oxford (“R21/Malaria”). Under the agreement, SIIPL purchases the Company's Matrix-M™ adjuvant to manufacture R21/Malaria and SIIPL pays a royalty in the single to low double-digit range for a period of 15 years after the first commercial sale of product in each country.
Takeda Pharmaceutical Company Limited
The Company has a collaboration and license agreement with Takeda Pharmaceutical Company Limited (“Takeda”) under which the Company granted Takeda an exclusive license to develop, manufacture, and commercialize NVX-CoV2373 in Japan. Under the agreement, Takeda purchases Matrix-M™ adjuvant from the Company to manufacture doses of NVX-CoV2373, and the Company is entitled to receive payments from Takeda based on the achievement of certain development and commercial milestones, as well as a portion of net profits from the sale of NVX-CoV2373. In September 2021, Takeda finalized an agreement with the Government of Japan’s Ministry of Health, Labour and Welfare ("MHLW") for the purchase of 150 million doses of NVX-CoV2373. In February 2023, MHLW cancelled the remainder of doses under its agreement with Takeda. As a result, it is uncertain whether the Company will receive future payments from Takeda under the terms and conditions of their current collaboration and licensing agreement.
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Bill & Melinda Gates Medical Research Institute
In May 2023, we entered into a 3-year agreement with the Bill & Melinda Gates Medical Research Institute to provide our Matrix-M™ adjuvant for use in preclinical vaccine research.
Other Supply Agreements
On September 30, 2022, the Company, FUJIFILM Diosynth Biotechnologies UK Limited (“FDBK”), FUJIFILM Diosynth Biotechnologies Texas, LLC (“FDBT”), and FUJIFILM Diosynth Biotechnologies USA, Inc. (“FDBU” and together with FDBK and FDBT, “Fujifilm”) entered into a Confidential Settlement Agreement and Release (the “Fujifilm Settlement Agreement”) regarding amounts due to Fujifilm in connection with the termination of manufacturing activity at FDBT under the Commercial Supply Agreement (the “CSA”) dated August 20, 2021 and Master Services Agreement dated June 30, 2020 and associated statements of work (the “MSA”) by and between the Company and Fujifilm. The MSA and CSA established the general terms and conditions applicable to Fujifilm’s manufacturing and supply activities related to NVX-CoV2373 under the associated statements of work.
Pursuant to the Fujifilm Settlement Agreement, the Company is responsible for payment of up to $185.0 million (the “Settlement Payment”) to Fujifilm in connection with cancellation of manufacturing activity at FDBT under the CSA, of which (i) $47.8 million, constituting the initial reservation fee under the CSA, was credited against the Settlement Payment on September 30, 2022 and (ii) the remaining balance is to be paid in four equal quarterly installments of $34.3 million each, which began on March 31, 2023. As of June 30, 2023, the remaining payment of $68.6 million was reflected in Accrued expenses. Under the Fujifilm Settlement Agreement, Fujifilm is required to use commercially reasonable efforts to mitigate the losses associated with the vacant manufacturing capacity caused by the termination of manufacturing activities at FDBT under the Fujifilm CSA, and the final two quarterly installments will be mitigated by any replacement revenue achieved by Fujifilm between July 1, 2023 and December 31, 2023.
In May 2023, the Company issued a notice to SK bioscience Co., Ltd. (“SK bioscience) to cancel and wind down all drug substance and drug product manufacturing activities for supply by SK bioscience to the Company. The Company recognized $20.4 million of research and development expense associated with a take-or-pay obligation that became due as a result of the cancellation.
The Company continues to assess its manufacturing needs and intends to modify its global manufacturing footprint consistent with its contractual obligations to supply, and anticipated demand for, NVX-CoV2373, and in doing so, recognizes that significant costs may be incurred.
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Note 5Earnings (Loss) per Share
Basic and diluted net income (loss) per share were calculated as follows (in thousands, except per share data):
Three Months Ended
June 30,
Six Months Ended
June 30,
2023202220232022
Numerator:
Net income (loss), basic$58,008 $(510,485)$(235,897)$(307,077)
Interest on convertible notes2,582    
Net income (loss), dilutive60,590 (510,485)(235,897)(307,077)
Denominator:
Weighted average number of common shares outstanding, basic89,362 78,143 87,769 77,305 
Effect of dilutive securities14,703    
Weighted average number of common shares outstanding, dilutive104,065 78,143 87,769 77,305 
Net income (loss) per share:
Basic$0.65 $(6.53)$(2.69)$(3.97)
Diluted$0.58 $(6.53)$(2.69)$(3.97)
Anti-dilutive securities excluded from calculations of diluted net income (loss) per share6,791 8,073 23,447 8,073 
Note 6 – Cash, Cash Equivalents, and Restricted Cash
The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported in the consolidated balance sheets that sums to the total of such amounts shown in the consolidated statements of cash flows (in thousands):

June 30, 2023December 31, 2022
Cash and cash equivalents$505,912 $1,336,883 
Restricted cash, current10,361 10,303 
Restricted cash, non-current(1)
1,668 1,659 
Cash, cash equivalents, and restricted cash$517,941 $1,348,845 
(1)Classified as Other non-current assets as of June 30, 2023 and December 31, 2022, on the consolidated balance sheets.
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Note 7 – Fair Value Measurements
The following table represents the Company’s fair value hierarchy for its financial assets and liabilities (in thousands):
Fair Value at June 30, 2023Fair Value at December 31, 2022
AssetsLevel 1Level 2Level 3Level 1Level 2Level 3
Money market funds(1)
$81,268 $ $ $398,834 $ $ 
Government-backed securities(1)
 180,000   296,000  
Corporate debt securities(1)
 28,515     
Agency securities(1)
 9,971   104,536  
Total cash equivalents$81,268 $218,486 $ $398,834 $400,536 $ 
Liabilities
5.00% Convertible notes due 2027
$$130,957 $$$172,789$
3.75% Convertible notes due 2023
    322,111  
Total convertible notes payable$ $130,957 $ $ $494,900 $ 
(1)All investments are classified as Cash and cash equivalents as of June 30, 2023 and December 31, 2022, on the consolidated balance sheets.
Fixed-income investments categorized as Level 2 are valued at the custodian bank by a third-party pricing vendor’s valuation models that use verifiable observable market data, such as interest rates and yield curves observable at commonly quoted intervals and credit spreads, bids provided by brokers or dealers, or quoted prices of securities with similar characteristics. Pricing of the Company’s convertible notes has been estimated using observable inputs, including the price of the Company’s common stock, implied volatility, interest rates, and credit spreads.
During the six months ended June 30, 2023 and 2022, the Company did not have any transfers between levels.
The amount in the Company’s consolidated balance sheets for accounts payable and accrued expenses approximates its fair value due to its short-term nature.
Note 8 – Inventory
Inventory consisted of the following (in thousands):
June 30, 2023December 31, 2022
Raw materials$10,892 $13,912 
Semi-finished goods12,596 21,410 
Finished goods 1,361 
Total inventory$23,488 $36,683 
Inventory write-downs as a result of excess, obsolescence, expiry, or other reasons, and losses on firm purchase commitments, offset by recoveries of such commitments, are recorded as a component of cost of sales in our consolidated statements of operations. For the three and six months ended June 30, 2023, inventory write-downs were $19.1 million and $31.5 million, respectively and losses on firm purchase commitments were $0.7 million and $8.5 million, respectively. In addition, for the three and six months ended June 30, 2023 the Company recorded recoveries on firm purchase commitments of $17.9 million and $18.8 million, respectively, related primarily to negotiated reductions to previously recognized firm purchase commitments. For the three and six months ended June 30, 2022, inventory write-downs and losses on firm purchase commitments were $155.7 million and $99.6 million, respectively.
Note 9 – Goodwill
The Company has one reporting unit, which has a negative equity as of June 30, 2023 and December 31, 2022. The
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change in the carrying amounts of goodwill for the six months ended June 30, 2023 was as follows (in thousands):
Amount
Balance at December 31, 2022$126,331 
Currency translation adjustments2,035 
Balance at June 30, 2023$128,366 
Note 10 – Leases
The Company has embedded leases related to supply agreements with contract manufacturing organizations (“CMOs”) and contract manufacturing and development organizations to manufacture NVX-CoV2373, as well as leases for its research and development and manufacturing facilities, corporate headquarters and offices, and certain equipment. During the six months ended June 30, 2023, the Company continued to align its global manufacturing footprint as a result of its ongoing assessment of manufacturing needs consistent with its contractual obligations related to the supply, and anticipated demand for, NVX-CoV2373.
During the three and six months ended June 30, 2023, the Company recognized a short-term lease benefit of $9.2 million and $8.5 million, respectively, related to its embedded leases, primarily as a result of a benefit of $9.5 million related to a settlement executed during the three months ended June 30, 2023. During the three and six months ended June 30, 2022, the Company recognized a short-term lease expense of $5.8 million and $83.9 million respectively, related to its embedded leases and expensed $9.4 million and $19.8 million respectively, for the write off of right of use (“ROU”) assets that represented assets acquired for research and development activities that did not have an alternative future use at the commencement or modification of the lease ROU written off. There were no ROU assets written off during the three and six months ended June 30, 2023, related to embedded leases.
During the three and six months ended June 30, 2023, the Company recognized $0.5 million and $0.9 million of interest expense, respectively, on its finance lease liabilities. During the three and six months ended June 30, 2022, the Company recognized $2.3 million and $3.4 million of interest expense, respectively, on its finance lease liabilities.
During the three and six months ended June 30, 2023, the Company recorded an impairment charge of $5.9 million related to ROU facility leases used for research and development, manufacturing and offices space that are impacted by the Restructuring Plan (see Note 16).
Note 11 – Long-Term Debt
Total convertible notes payable consisted of the following (in thousands):
June 30, 2023December 31, 2022
Current portion:
3.75% Convertible notes due 2023
$ $325,000 
Unamortized debt issuance costs (119)
Total current convertible notes payable$ $324,881 
Non-current portion:
5.00% Convertible notes due 2027
$175,250 $175,250 
Unamortized debt issuance costs and discount(8,002)(8,784)
Total non-current convertible notes payable$167,248 $166,466 
In February 2023, the Company repaid the outstanding principal amount of $325.0 million on its 3.75% Convertible notes due in 2023, together with accrued but unpaid interest on the maturity date. The repayment was funded by the issuance of the 5.00% Convertible notes due 2027 and the concurrent common stock offering in December 2022, as well as cash on hand. The effective interest rate of the 2027 Convertible notes is 6.2%.
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The interest expense incurred in connection with the convertible notes payable consisted of the following (in thousands):
Three Months Ended
June 30,
Six Months Ended
June 30,
2023202220232022
Coupon interest $2,191 $3,047 $5,397 $6,094 
Amortization of debt issuance costs391 356 900 712 
Total interest expense on convertible notes payable$2,582 $3,403 $6,297 $6,806 
Note 12 – Stockholders' Equity (Deficit)
In June 2021, the Company entered into an At Market Issuance Sales Agreement (the "June 2021 Sales Agreement"), which allows it to issue and sell up to $500 million in gross proceeds of shares of its common stock. During the three and six months ended June 30, 2023, the Company sold 7.9 million shares of its common stock under its June 2021 Sales Agreement resulting in net proceeds of approximately $68 million, of which $6 million was included in Prepaid expenses and other current assets as of June 30, 2022 and received in cash in July 2023. As of June 30, 2023, the remaining balance available under the June 2021 Sales Agreement was approximately $249 million.
During the six months ended June 30, 2022, the Company sold 2.2 million shares of its common stock resulting in net proceeds of approximately $179 million, under its June 2021 Sales Agreement.
Note 13 – Stock-Based Compensation
Equity Plans
In January 2023, the Company established the 2023 Inducement Plan (the “2023 Inducement Plan”), which provides for the granting of share-based awards to individuals who were not previously employees, or following a bona fide period of non-employment, as an inducement material to such individuals entering into employment with the Company. The Company reserved 1.0 million shares of common stock for grants under the 2023 Inducement Plan. As of June 30, 2023, there were 0.3 million shares available for issuance under the 2023 Inducement Plan.
The 2015 Stock Incentive Plan, as amended (“2015 Plan”), was approved at the Company's annual meeting of stockholders in June 2015. Under the 2015 Plan, equity awards may be granted to officers, directors, employees, and consultants of and advisors to the Company and any present or future subsidiary. The 2015 Plan authorizes the issuance of up to 14.8 million shares of common stock under equity awards granted under the 2015 Plan. All such shares authorized for issuance under the 2015 Plan have been reserved. The 2015 Plan will expire on March 4, 2025. As of June 30, 2023, there were 0.9 million shares available for issuance under the 2015 Plan.
The Amended and Restated 2005 Stock Incentive Plan (“2005 Plan”) expired in February 2015 and no new awards may be made under such plan, although awards will continue to be outstanding in accordance with their terms.
The 2023 Inducement Plan and the 2015 Plan permit and the 2005 Plan permitted the grant of stock options (including incentive stock options), restricted stock, stock appreciation rights (“SARs”), and restricted stock units (“RSUs”). In addition, under the 2023 Inducement Plan and the 2015 Plan, unrestricted stock, stock units, and performance awards may be granted. Stock options and SARs generally have a maximum term of ten years and may be or were granted with an exercise price that is no less than 100% of the fair market value of the Company's common stock at the time of grant. Grants of share-based awards are generally subject to vesting over periods ranging from one to four years.
The Company recorded stock-based compensation expense in the consolidated statements of operations as follows (in
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thousands):
Three Months Ended
June 30,
Six Months Ended
June 30,
2023202220232022
Cost of sales$998 $ $1,516 $ 
Research and development9,946 19,695 23,804 36,582 
Selling, general, and administrative9,348 18,353 23,619 34,399 
Total stock-based compensation expense$20,292 $38,048 $48,939 $70,981 
Total stock-based compensation capitalized and included in inventory as of June 30, 2023 and December 31, 2022 was $1.7 million.
As of June 30, 2023, there was approximately $122 million of total unrecognized compensation expense related to unvested stock options, SARs, RSUs, and the Company’s Employee Stock Purchase Plan, as amended (“ESPP”). This unrecognized non-cash compensation expense is expected to be recognized over a weighted-average period of approximately one year. This estimate does not include the impact of other possible stock-based awards that may be made during future periods.
The aggregate intrinsic value represents the total intrinsic value (the difference between the Company’s closing stock price on the last trading day of the period and the exercise price, multiplied by the number of in-the-money stock options and SARs) that would have been received by the holders had all stock option and SAR holders exercised their stock options and SARs on June 30, 2023. This amount is subject to change based on changes to the closing price of the Company's common stock. The aggregate intrinsic value of stock options and SARs exercises and vesting of RSUs for the six months ended June 30, 2023 and 2022 was approximately $2 million and $8 million, respectively.
Stock Options and Stock Appreciation Rights
The following is a summary of stock options and SARs activity under the 2023 Inducement Plan, 2015 Plan, and 2005 Plan for the six months ended June 30, 2023:
2023 Inducement Plan2015 Plan2005 Plan
Stock
Options
Weighted-Average
Exercise
Price
Stock
Options
Weighted-Average
Exercise
Price
Stock
Options
Weighted-Average
Exercise
Price
Outstanding at December 31, 2022 $ 4,053,290 $46.07 63,725 $112.94 
Granted358,600 10.96 860,872 7.29   
Exercised  (5,031)6.81   
Canceled  (63,839)51.41 (5,250)36.60 
Outstanding at June 30, 2023358,600 $10.96 4,845,292 $39.15 58,475 $119.80 
Shares exercisable at June 30, 2023 $ 3,295,810 $40.62 58,475 $119.80 
The fair value of stock options granted under the 2023 Inducement Plan and the 2015 Plan was estimated at the date of
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grant using the Black-Scholes option-pricing model with the following assumptions:
Three Months Ended
June 30,
Six Months Ended
June 30,
2023202220232022
Weighted average Black-Scholes fair value of stock options granted
$6.79
$43.21
$7.24
$62.52
Risk-free interest rate
3.5%-3.9%
2.7%-3.2%
3.5%-4.0%
1.4%-3.2%
Dividend yield%%%%
Volatility
120.4%-131.3%
120.5%-136.7%
120.4%-140.3%
120.5%-136.7%
Expected term (in years)
3.9-6.4
4.0-6.2
3.9-6.4
4.0-6.2
The total aggregate intrinsic value and weighted-average remaining contractual term of stock options and SARs outstanding under the 2023 Inducement Plan, 2015 Plan and 2005 Plan as of June 30, 2023 was approximately $1.7 million and 7.3 years, respectively. The total aggregate intrinsic value and weighted-average remaining contractual term of stock options and SARs exercisable under the 2023 Inducement Plan, 2015 Plan and 2005 Plan as of June 30, 2023 was approximately $1.1 million and 6.3 years, respectively.
Restricted Stock Units
The following is a summary of RSU activity for the six months ended June 30, 2023:
2023 Inducement Plan2015 Plan
Number of
Shares
Per Share
Weighted-
Average
Fair Value
Number of
Shares
Per Share
Weighted-
Average
Fair Value
Outstanding and unvested at December 31, 2022 $ 2,034,574 $61.67 
Granted308,390 $10.96 2,767,475 7.23 
Vested $ (307,653)82.94 
Forfeited $ (637,727)29.46 
Outstanding and unvested at June 30, 2023308,390 $10.96 3,856,669 $26.23 
Employee Stock Purchase Plan
The ESPP was approved at the Company's annual meeting of stockholders in June 2013. The ESPP currently authorized an aggregate of 1.2 million shares of common stock to be purchased, and the aggregate amount of shares will continue to increase 5% on each anniversary of its adoption up to a maximum of 1.65 million shares. The ESPP allows employees to purchase shares of common stock of the Company at each purchase date through payroll deductions of up to a maximum of 15% of their compensation, at 85% of the lesser of the market price of the shares at the time of purchase or the market price on the beginning date of an option period (or, if later, the date during the option period when the employee was first eligible to participate). As of June 30, 2023, there were 0.6 million shares available for issuance under the ESPP.
Note 14 – Income Taxes
The Company evaluates the available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit use of the existing deferred tax assets. A significant piece of objective evidence evaluated was the cumulative loss incurred over the three-year period ended June 30, 2023 and that the Company has historically generated pretax losses. Such objective evidence limits the ability to consider other subjective evidence, such as projections for future growth. On the basis of this evaluation, as of June 30, 2023, the Company continued to maintain a full valuation allowance against its deferred tax assets, except to the extent Net Operating Losses (“NOLs”) have been used to reduce taxable income. The Company’s remaining U.S. Federal NOLs are subject to limitation in accordance with the 2017 Tax Cuts and Jobs Act (“TCJA”), which limits allowable NOL deductions to 80% of federal taxable income.
Effective January 1, 2022, a provision of the TCJA has taken effect creating a significant change to the treatment of
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research and experimental expenditures under Section 174 of the IRC (“Sec. 174 expenses”). Historically, businesses have had the option of deducting Sec. 174 expenses in the year incurred or capitalizing and amortizing the costs over five years. The new TCJA provision, however, eliminates this option and will require Sec. 174 expenses associated with research conducted in the U.S. to be capitalized and amortized over a five-year period. For expenses associated with research outside of the U.S., Sec. 174 expenses will be capitalized and amortized over a 15-year period.
During the three months ended June 30, 2023 and 2022, the Company recognized federal, state, and foreign income tax benefit of $0.1 million and income tax expense of $1.4 million, respectively. During the six months ended June 30, 2023 and 2022, the Company recognized income tax expense of $1.0 million and $1.9 million, respectively. The Company recognized foreign withholding tax expense on royalties of $2.2 million for the six months ended June 30, 2022. The Company did not recognize any foreign withholding tax expense on royalties for the three months ended June 30, 2022 and the three and six months ended June 30, 2023.
Note 15Commitments and Contingencies
Legal Matters
On November 12, 2021, Sothinathan Sinnathurai filed a purported securities class action in the U.S. District Court for the District of Maryland (the “Maryland Court”) against the Company and certain members of senior management, captioned Sothinathan Sinnathurai v. Novavax, Inc., et al., No. 8:21-cv-02910-TDC (the “Sinnathurai Action”). On January 26, 2022, the Maryland Court entered an order designating David Truong, Nuggehalli Balmukund Nandkumar, and Jeffrey Gabbert as co-lead plaintiffs in the Sinnathurai Action. The co-lead plaintiffs filed a consolidated amended complaint on March 11, 2022, alleging that the defendants made certain purportedly false and misleading statements concerning the Company’s ability to manufacture NVX-CoV2373 on a commercial scale and to secure the NVX-CoV2373’s regulatory approval. The amended complaint defines the purported class as those stockholders who purchased the Company’s securities between February 24, 2021 and October 19, 2021. On April 25, 2022, the defendants filed a motion to dismiss the consolidated amended complaint. On December 12, 2022, the Maryland Court issued a ruling granting in part and denying in part defendants’ motion to dismiss. The Maryland Court dismissed all claims against two individual defendants and claims based on certain public statements challenged in the consolidated amended complaint. The Maryland Court denied the motion to dismiss as to the remaining claims and defendants, and directed the Company and other remaining defendants to answer within fourteen days. On December 27, 2022, the Company filed its answer and affirmative defenses.
After the Sinnathurai Action was filed, eight derivative lawsuits were filed: (i) Robert E. Meyer v. Stanley C. Erck, et al., No. 8:21-cv-02996-TDC (the “Meyer Action”), (ii) Shui Shing Yung v. Stanley C. Erck, et al., No. 8:21-cv-03248-TDC (the “Yung Action”), (iii) William Kirst, et al. v. Stanley C. Erck, et al., No. C-15-CV-21-000618 (the “Kirst Action”), (iv) Amy Snyder v. Stanley C. Erck, et al., No. 8:22-cv-01415-TDC (the “Snyder Action”), (v) Charles R. Blackburn, et al. v. Stanley C. Erck, et al., No. 1:22-cv-01417-TDC (the “Blackburn Action”), (vi) Diego J. Mesa v. Stanley C. Erck, et al., No. 2022-0770-NAC (the “Mesa Action”), (vii) Sean Acosta v. Stanley C. Erck, et al., No. 2022-1133-NAC (the “Acosta Action”), and (viii) Jared Needelman v. Stanley C. Erck, et al., No. C-15-CV-23-001550 (the “Needelman Action”). The Meyer, Yung, Snyder, and Blackburn Actions were filed in the Maryland Court. The Kirst Action was filed in the Circuit Court for Montgomery County, Maryland, and shortly thereafter removed to the Maryland Court by the defendants. The Needleman Action was also filed in the Circuit Court for Montgomery County, Maryland. The Mesa and Acosta Actions were filed in the Delaware Court of Chancery (the “Delaware Court”). The derivative lawsuits name members of the Company’s board of directors and certain members of senior management as defendants. The Company is deemed a nominal defendant. The plaintiffs assert derivative claims arising out of substantially the same alleged facts and circumstances as the Sinnathurai Action. Collectively, the derivative complaints assert claims for breach of fiduciary duty, insider selling, unjust enrichment, violation of federal securities law, abuse of control, waste, and mismanagement. Plaintiffs seek declaratory and injunctive relief, as well as an award of monetary damages and attorneys’ fees.
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On February 7, 2022, the Maryland Court entered an order consolidating the Meyer and Yung Actions (the “First Consolidated Derivative Action”). The plaintiffs in the First Consolidated Derivative Action filed their consolidated derivative complaint on April 25, 2022. On May 10, 2022, the Maryland Court entered an order granting the parties’ request to stay all proceedings and deadlines pending the earlier of dismissal or the filing of an answer in the Sinnathurai Action. On June 10, 2022, the Snyder and Blackburn Actions were filed. On October 5, 2022, the Maryland Court entered an order granting a request by the plaintiffs in the First Consolidated Derivative Action and the Snyder and Blackburn Actions to consolidate all three actions and appoint co-lead plaintiffs and co-lead and liaison counsel (the “Second Consolidated Derivative Action”). The co-lead plaintiffs in the Second Consolidated Derivative Action filed a consolidated amended complaint on November 21, 2022. On February 10, 2023, defendants filed a motion to dismiss the Second Consolidated Derivative Action. The plaintiffs filed their opposition to the motion to dismiss on April 11, 2023. Defendants filed their reply brief in further support of their motion to dismiss on May 11, 2023.
On July 21, 2022, the Maryland Court issued a memorandum opinion and order remanding the Kirst Action to state court. On December 6, 2022, the parties to the Kirst Action filed a stipulated schedule pursuant to which the plaintiffs were expected to file an amended complaint on December 22, 2022, and either (i) the parties would file a stipulated stay of the Kirst Action or (ii) the defendants would file a motion to stay the case by January 23, 2023. The plaintiffs filed an amended complaint on December 30, 2022. On January 23, 2023, defendants filed a motion to stay the Kirst Action. On February 22, 2023, the parties in the Kirst Action filed for the Court’s approval of a stipulation staying the Kirst Action pending the resolution of defendants’ motion to dismiss in the Second Consolidated Derivative Action. On March 22, 2023, the Court entered an order staying the Kirst Action pending resolution of the Motion to Dismiss in the Second Consolidated Derivative Action.
On August 30, 2022, the Mesa Action was filed. On October 3, 2022, the Delaware Court entered an order granting the parties’ request to stay all proceedings and deadlines in the Mesa Action pending the earlier of dismissal of the Sinnathurai Action or the filing of an answer to the operative complaint in the Sinnathurai Action. On January 9, 2023, following the ruling on the motion to dismiss the Sinnathurai Action, the Delaware Court entered an order granting the Mesa Action parties’ request to set a briefing schedule in connection with a motion to stay by defendants. On February 28, 2023, the court granted the defendants’ motion and stayed the Mesa Action pending the entry of a final, non-appealable judgment in the Second Consolidated Derivative Action.
On December 7, 2022, the Acosta Action was filed. On February 6, 2023, defendants accepted service of the complaint and summons in the Acosta Action. On March 9, 2023, the court entered an order granting the parties’ request to stay the Acosta Action pending the entry of a final, non-appealable judgment in the Second Consolidated Derivative Action. On June 28, 2023 the Company, along with representatives from its insurance carriers, met with the plaintiffs and the plaintiffs of the Sinnathurai Action in mediation to engage in potential settlement discussions. The parties continue to discuss whether an amicable resolution is possible.
On April 17, 2023, the Needelman Action was filed. On July 12, 2023, the parties filed a stipulation and proposed order to stay the Needelman Action pending the Maryland Court’s decision on the motion to dismiss in the Second Consolidated Derivative Action. The financial impact of this claim, as well as the claims discussed above, is not estimable.
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On February 26, 2021, a Company stockholder named Thomas Golubinski filed a derivative complaint against members of the Company’s board of directors and members of senior management in the Delaware Court, captioned Thomas Golubinski v. Richard H. Douglas, et al., No. 2021-0172-JRS. The Company is deemed a nominal defendant. Golubinski challenged equity awards made in April 2020 and in June 2020 on the ground that they were “spring-loaded,” that is, made at a time when such board members or members of senior management allegedly possessed undisclosed positive material information concerning the Company. The complaint asserted claims for breach of fiduciary duty, waste, and unjust enrichment. The plaintiff sought an award of damages to the Company, an order rescinding both awards or requiring disgorgement, and an award of attorneys’ fees incurred in connection with the litigation. On May 10, 2021, the defendants moved to dismiss the complaint in its entirety. On June 17, 2021, the Company’s stockholders voted FOR ratification of the April 2020 awards and ratification of the June 2020 awards. Details of the ratification proposals are set forth in the Company’s Definitive Proxy Statement filed on May 3, 2021. The results of the vote were disclosed in the Company’s Current Report on Form 8-K filed on June 24, 2021. Thereafter, the plaintiff stipulated that, as a result of the outcome of the June 17, 2021 vote, the plaintiff no longer intends to pursue the lawsuit or any claim arising from the April 2020 and June 2020 awards. On August 23, 2021, the plaintiff filed a motion seeking an award of attorneys’ fees and expenses, to which the defendants filed an opposition. On October 18, 2022, the Delaware Court denied the plaintiff’s fee application in its entirety. Under a prior Delaware Court order, the case was automatically dismissed with prejudice upon denial of the plaintiff’s fee application. On November 14, 2022, Golubinski filed a Notice of Appeal in the Supreme Court of the State of Delaware. The plaintiff / appellant filed his opening appellate brief on December 30, 2022. The Company filed its responsive brief on January 30, 2023 and the appellant filed his reply brief on February 14, 2023. On June 8, 2023, the Supreme Court affirmed the Court of Chancery’s denial of the plaintiff’s fee application. The case was closed on June 26, 2023.
On March 29, 2022, Par Sterile Products, LLC (“Par”) submitted a demand for arbitration against the Company with the American Arbitration Association, alleging that the Company breached certain provisions of the Manufacturing and Services Agreement (the “Par MSA”) that the Company entered into with Par in September 2020 to provide fill-finish manufacturing services for NVX-CoV2373. On April 4, 2023 the parties entered into a Settlement Agreement and Release of Claims pursuant to which Novavax agreed to pay $27.0 million to Par, which was fully accrued for as of March 31, 2023. Novavax characterized the payment as a $15.0 million termination fee and a $12.0 million settlement payment. Because Par and its parent company, Endo International plc, are parties to Chapter 11 bankruptcy proceedings, the Settlement Agreement and Release of Claims and the payment due thereunder required, and subsequently received, approval from the bankruptcy court. The Company has made the payment required by the Settlement Agreement and Release of Claims, and the arbitration was dismissed with prejudice following a joint motion by Par and Novavax on August 1, 2023.
On November 18, 2022, the Company delivered written notice to Gavi to terminate the Gavi APA based on Gavi’s failure to procure the purchase of 350 million doses of NVX-CoV2373 from the Company as required by the Gavi APA. As of November 18, 2022, the Company had only received orders under the Gavi APA for approximately 2 million doses. On December 2, 2022, Gavi issued a written notice purporting to terminate the Gavi APA based on Gavi’s contention that the Company repudiated the agreement and, therefore, materially breached the Gavi APA. Gavi also contends that, based on its purported termination of the Gavi APA, it is entitled to a refund of the Advance Payment Amount less any amounts that have been credited against the purchase price for binding orders placed by a buyer participating in the COVAX Facility. Since December 31, 2022, the remaining Gavi Advance Payment Amount, which is $696.4 million as of June 30, 2023, pending resolution of the dispute with Gavi related to a return of the remaining Advance Payment Amount, has been classified within Other current liabilities in the Company’s consolidated balance sheet. On January 24, 2023, Gavi filed a demand for arbitration with the International Court of Arbitration based on the claims described above. The Company filed its Answer and Counterclaims on March 2, 2023. On April 5, 2023, Gavi filed its Reply to the Company’s Counterclaims. The arbitration hearing is scheduled for July 2024, with a written decision to follow. Arbitration is inherently uncertain, and while the Company believes that it is entitled to retain the remaining Advance Payment Amount received from Gavi, it is possible that it could be required to refund all or a portion of the remaining Advance Payment Amount from Gavi.
The Company is also involved in various other legal proceedings arising in the normal course of business. Although the outcomes of these other legal proceedings are inherently difficult to predict, the Company does not expect the resolution of these other legal proceedings to have a material adverse effect on its financial position, results of operations, or cash flows.

Note 16Restructuring
During the three and six months ended June 30, 2023, the restructuring charge recorded by the Company as a result of the Restructuring Plan includes (in thousands):
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Amount
Severance and employee benefit costs$4,643 
Impairment of assets10,081 
Total Restructuring charge (1)
$14,724 
(1) Restructuring charges of $0.5 million, $2.7 million and $11.5 million are included in Cost of sales, Research and development and Selling, general, and administrative expenses, respectively, in the Consolidated Statements of Operations for the three and six months ended June 30, 2023. These charges reflect substantially all expected restructuring charges under the Restructuring Plan.
Severance and employee benefit costs
Employees affected by the reduction in force under the Restructuring Plan are entitled to receive severance payments and certain termination benefits. The Company recorded a severance and termination benefit cost in full for employees who were notified of their termination in the three months ended June 30, 3023 and had no requirements for future service. The Company paid a total of $3.6 million for the severance and employee benefit costs during the three months ended June 30, 2023, and the remaining liability of $1.0 million is included in Accrued expenses in the Company’s Consolidated Balance Sheet as of June 30, 2023.
Impairment of assets
In connection with the Restructuring Plan, the Company evaluated its long-lived assets for impairment including certain leased laboratory and office spaces located in Gaithersburg, Maryland. The Company performed an impairment evaluation for the applicable long-lived assets which is subject to judgment and actual results may vary from the estimates, resulting in potential future adjustments to amounts recorded. During the three and six months ended June 30, 2023, the Company recorded an impairment charge of $10.1 million related to the impairment of long-lived assets, including $5.9 million related to ROU assets for facility leases.






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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Any statements in the discussion below and elsewhere in this Quarterly Report on Form 10-Q (“Quarterly Report”) about expectations, beliefs, plans, objectives, assumptions, or future events or performance of Novavax, Inc. (“Novavax,” together with its wholly owned subsidiaries, the “Company,” “we,” or “us”) are not historical facts and are forward-looking statements. Such forward-looking statements include, without limitation, statements about our capabilities, goals, expectations regarding future revenue and expense levels, and capital raising activities; our operating plans and prospects, including our ability to continue as a going concern through one year from the date of our unaudited financial statements for the period ended June 30, 2023; our global restructuring and cost reduction plan (“Restructuring Plan”), which includes a more focused investment in our NVX-CoV2373 program, reduction to our pipeline spending, the continued rationalization of our manufacturing network, a reduction to our global workforce, as well as the consolidation of facilities, and infrastructure; the size and timing of our workforce reduction; the impact of our decision to progress our COVID-19-Influenza Combination (“CIC”) vaccine candidate toward late-stage development on our workforce requirements; the amount and timing of the charges and cash expenditures resulting from our workforce reduction, and the expected timing and impact of cost savings from our global restructuring and cost reduction plan; potential market sizes and demand for our product candidates; the efficacy, safety, and intended utilization of our product candidates; the development of our clinical-stage product candidates and our recombinant vaccine and adjuvant technologies, including our updated monovalent Omicron XBB.1.5 COVID-19 vaccine, which is referred to as our “XBB COVID vaccine”; the conduct, timing, and potential results from clinical trials; plans for and potential timing of regulatory filings, including our submission to the U.S. Food and Drug Administration (“FDA”) for the Biologics License Application for the full approval of the Novavax COVID-19 Vaccine, Adjuvanted; our expectation of manufacturing capacity, timing, production, distribution, and delivery for NVX-CoV2373 by us and our partners; our expectations with respect to the anticipated ongoing development and commercialization or licensure of NVX-CoV2373, ongoing development of our influenza vaccine candidate, COVID-19-Influenza Combination (“CIC”) vaccine candidate, high-dose COVID-19 vaccine candidate, and COVID-19 variant strain-containing monovalent formulation, including the Phase 2b/3 Hummingbird™ trial, and the timing of anticipated results from and our efforts for the fall 2023 vaccination season, efforts to expand the NVX-CoV2373 label worldwide as a booster, and to various age groups and geographic locations; the expected timing, content, and outcomes of regulatory actions; funding from the U.S. government partnership formerly known as Operation Warp Speed under the USG Agreement (as defined below); funding under our advance purchase agreements (“APAs”) and supply agreements and amendments to, termination of, or legal disputes relating to any such agreement; our available cash resources and usage and the availability of financing generally; plans regarding partnering activities and business development initiatives; and other matters referenced herein. Generally, forward-looking statements can be identified through the use of words or phrases such as “believe,” “may,” “could,” “will,” “would,” “possible,” “can,” “estimate,” “continue,” “ongoing,” “consider,” “anticipate,” “intend,” “seek,” “plan,” “project,” “expect,” “should,” “would,” “aim,” or “assume,” the negative of these terms, or other comparable terminology, although not all forward-looking statements contain these words.
Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs and expectations about the future of our business, future plans and strategies, projections, anticipated events and trends, the economy, and other future conditions. Forward-looking statements involve estimates, assumptions, risks, and uncertainties that could cause actual results or outcomes to differ materially from those expressed or implied in any forward-looking statements, and, therefore, you should not place considerable reliance on any such forward-looking statements. Such risks and uncertainties include, without limitation, our ability to successfully develop, manufacture, distribute, or market an XBB COVID vaccine for COVID-19 for the fall 2023 COVID vaccine season, which is inherently uncertain and subject to a number of risks, including regulatory authorization, ability to timely deliver doses and commercial adoption and market acceptance; challenges in obtaining commercial adoption of NVX-CoV2373 or any COVID-19 variant strain containing formulation; challenges satisfying, alone or together with partners, various safety, efficacy, and product characterization requirements, including those related to process qualification, assay validation, and stability testing, necessary to satisfy applicable regulatory authorities, such as the FDA, the World Health Organization (“WHO”), United Kingdom (“UK”) Medicines and Healthcare Products Regulatory Agency (“MHRA”), the European Medicines Agency (“EMA”), the Republic of Korea’s Ministry of Food and Drug Safety, or Japan’s Ministry of Health, Labour and Welfare; challenges or delays in conducting clinical trials; or obtaining regulatory authorization for our product candidates, including for our monovalent XBB COVID vaccine in time for the fall 2023 vaccination season, or for future COVID variant strain changes manufacturing distribution or export delays or challenges, including the requirement to obtain approval from the drug licensing body in India for the distribution of our XBB COVID vaccine to timely deliver such vaccine candidate for the fall 2023 vaccination season; our exclusive dependence on SIIPL and SLS for co-formulation and filling, and PCI for finishing NVX-CoV2373 and the impact of any delays or disruptions in these suppliers’ operations on the delivery of customer orders; difficulty obtaining scarce raw materials and supplies; resource constraints, including human capital and manufacturing capacity, constraints on the ability of Novavax to pursue planned regulatory pathways, alone or with partners, in multiple jurisdictions simultaneously, leading to staggering of regulatory filings, and potential regulatory actions; challenges meeting contractual requirements under agreements with multiple commercial, governmental, and other entities; challenges in implementing our global restructuring and cost
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reduction plan; and other risks and uncertainties identified in Part II, Item 1A “Risk Factors” of this Quarterly Report on Form 10-Q for the quarter ended June 30, 2023, in Part II, Item 1A “Risk Factors” of our Quarterly Report on Form 10-Q for the quarter ended March 31, 2023 and in Part I, Item 1A “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2022, which may be detailed and modified or updated in other documents filed with the SEC from time to time, and are available at www.sec.gov and at www.novavax.com. You are encouraged to read these filings as they are made.
We cannot guarantee future results, events, level of activity, performance, or achievement. Any or all of our forward-looking statements in this Quarterly Report may turn out to be inaccurate or materially different from actual results. Further, any forward-looking statement speaks only as of the date when it is made, and we undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, unless required by law. New factors emerge from time to time, and it is not possible for us to predict which factors will arise. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.
Information in this Quarterly Report includes a financial measure that was not prepared in accordance with U.S. generally accepted accounting principles (“GAAP”), which we refer to as adjusted cost of sales. We are presenting this non-GAAP financial measure to assist an understanding of our business and its performance. Adjusted cost of sales includes an estimate of standard manufacturing costs that were previously expensed to research and development prior to regulatory approvals for NVX-CoV2373 that would otherwise have been capitalized to inventory. Any non-GAAP financial measures presented are not, and should not be viewed as, substitutes for financial measures required by GAAP, have no standardized meaning prescribed by GAAP, and may not be comparable to the calculation of similar measures of other companies.
Overview
We are a biotechnology company that promotes improved health globally through the discovery, development, and commercialization of innovative vaccines to prevent serious infectious diseases. Our proprietary recombinant technology platform harnesses the power and speed of genetic engineering to efficiently produce highly immunogenic nanoparticle vaccines designed to address urgent global health needs.
Our vaccine candidates are nanostructures of conformationally correct recombinant proteins that mimic those found on natural pathogens. This technology enables the immune system to recognize target proteins and develop protective antibodies. We believe that our vaccine technology may lead to the induction of a differentiated immune response that may be more efficacious than naturally occurring immunity or some other vaccine approaches. Our vaccine candidates also incorporate our proprietary saponin-based Matrix-M™ adjuvant to enhance the immune response, stimulate higher levels of functional antibodies, and induce a cellular immune response.
We have developed a COVID-19 vaccine, NVX-CoV2373 (“Nuvaxovid™,” “Covovax™,” “Novavax COVID-19 Vaccine, Adjuvanted”) that has received full marketing authorization (“MA”), approval, interim authorization, provisional approval, conditional marketing authorization (“CMA”), and emergency use authorization (“EUA”) from multiple regulatory authorities globally for both adult and adolescent populations as a primary series and for both homologous and heterologous booster indications. Additionally, in partnership with regulators and public health authorities, we have been developing and manufacturing at commercial scale our XBB COVID vaccine that is in line with the FDA, WHO, and EMA recommendations for the 2023 fall season. We intend to deliver our XBB COVID vaccine for the 2023 fall vaccination campaign pending authorization from regulatory authorities. We are also developing a stand-alone influenza vaccine candidate, high-dose COVID-19 vaccine candidate, and a CIC vaccine candidate. In addition to COVID-19 and seasonal influenza, our other areas of focus include providing Matrix-M™ adjuvant for collaborations investigating the prevention of malaria, including R21/Matrix-M™ adjuvant malaria vaccine, which recently received authorization in several countries, as well as other preclinical vaccine research with our Matrix-M™ adjuvant in partnership with the Bill & Melinda Gates Medical Research Institute.
We intend to focus the organization to align our investments and activities with our top priority of delivering our XBB COVID vaccine for the 2023 fall season. To maximize our opportunities and mitigate the significant risks and uncertainties of the COVID-19 market, we have progressed our cost restructuring measures to reduce spend, extend our cash runway, and operate efficiently to seek to best position the Company to deliver longer-term growth. We discuss these cost restructuring strategies in greater detail in Note 2 to our consolidated financial statements in this Quarterly Report.
Technology Overview
We believe our recombinant nanoparticle vaccine technology, together with our proprietary Matrix-M™ adjuvant, is well suited for the development and commercialization of vaccine candidates targeting a broad scope of respiratory and other
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endemic and emerging infectious diseases.
Recombinant Nanoparticle Vaccine Technology
Once a pathogen of interest has been identified, the genetic sequence encoding an antigen is selected for developing the vaccine construct. The genetic sequence may be optimized to enhance protein stability or confer resistance to degradation. This genetic construct is inserted into the baculovirus Spodoptera frugiperda (“Sf-/BV”) insect cell-expression system, which enables efficient, large-scale expression of the optimized protein. The Sf-/BV system produces protein-based antigens that are properly folded and modified—which can be critical for functional, protective immunity. Protein antigens are purified and organized around a polysorbate-based nanoparticle core in a configuration that resembles their native presentation. This results in a highly immunogenic nanoparticle that is ready to be formulated with Matrix-M™ adjuvant.
Matrix-M™ Adjuvant
Our proprietary Matrix-M™ adjuvant is a key differentiator within our platform. This adjuvant has enabled potent, well tolerated, and durable efficacy by stimulating the entry of antigen presenting cells (“APCs”) into the injection site and enhancing antigen presentation in local lymph nodes. This in turn activates APCs, T-cell and B-cell populations, and plasma cells, which promote the production of high affinity antibodies, an immune boosting response. This potent mechanism of action enables a lower dose of antigen to achieve the desired immune response, thereby contributing to increased vaccine supply and manufacturing capacity. These immune-boosting and dose-sparing capabilities contribute to the adjuvant’s highly unique profile.
We continue to evaluate commercial opportunities for the use of our Matrix-M™ adjuvant alongside vaccine antigens produced by other manufacturers. Matrix-M™ adjuvant is being evaluated in combination with several partner-led malaria vaccine candidates, including for R21/Matrix-M™ adjuvant, a malaria vaccine candidate created by the Jenner Institute, University of Oxford. The R21/Matrix-M™ adjuvant vaccine has been licensed to Serum Institute of India Pvt. Ltd. (“SIIPL”) for commercialization. Additionally, in May 2023, we entered into a 3-year agreement with the Bill & Melinda Gates Medical Research Institute to provide our Matrix-M™ adjuvant for use in preclinical vaccine research. Our adjuvant technology is also being used by commercial partners as a key component in veterinary vaccines against equine influenza and Strangles as well as the manufacture of black-widow anti-venom.

COVID-19 Vaccine Regulatory and Licensure

We continue to expand the regulatory authorizations for our COVID-19 vaccine and remain focused on the planned EUA request for our XBB COVID vaccine for the 2023 fall season. We have received authorizations for NVX-CoV2373 in over 40 countries globally including from major regulatory agencies including the FDA, the WHO, the EMA, and the MHRA. To date, we have received full MA, approval, interim authorization, provisional approval, CMA, and EUA for the adult population, aged 18 and older, the adolescent population, aged 12 to 17 years, and the pediatric population, aged 7 to 11 years in select territories. The regulatory authorizations for NVX-CoV2373 include primary series and both homologous and heterologous booster indications within specific countries. For the territories in which our vaccine has received regulatory authorizations, NVX-CoV2373 is marketed under the brand names (i) Nuvaxovid™ (SARS-CoV-2 rS Recombinant, adjuvanted), (ii) Covovax™ (manufacturing and commercialization by SIIPL), or (iii) Novavax COVID-19 Vaccine, Adjuvanted.
Below we highlight the second quarter 2023 and subsequent regulatory progress made for NVX-CoV2373 through the date of this filing on Form 10-Q.
In July 2023, we initiated the rolling submission to the U.S. FDA for the Biologics License Application for the full approval of the Novavax COVID-19 Vaccine, Adjuvanted in individuals aged 12 years and older.
In July 2023, the European Commission in the European Union granted our first full MA for Nuvaxovid™ as primary series in individuals aged 12 and older and as a booster in adults aged 18 and older. This decision followed the positive opinion in May 2023 for full MA from the Committee for Medicinal Products for Human Use of the European Medicines Agency.
In May 2023, the Singapore Health Sciences Authority granted extended interim authorization for Nuvaxovid™ as a non-mRNA option in adolescents aged 12 through 17 years.
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Additionally in May 2023, Taiwan’s Food and Drug Administration granted EUA for Nuvaxovid™ as a booster in adolescents aged 12 through 17 years.
We are working to continue to expand our label for heterologous boosting in adults and adolescents, for primary and re-vaccination in younger children, and to achieve supportive policy recommendations enabling broad market access. We continue to work closely with governments, regulatory authorities, and non-governmental organizations in our commitment to facilitate global access to our COVID-19 vaccine.
Clinical Pipeline
Our clinical pipeline is comprised of vaccine candidates for infectious diseases, with our COVID-19 vaccine, NVX-CoV2373, as our lead product. NVX-CoV2373 has received authorizations for both adult and adolescent populations globally. We advanced NVX-CoV2373, through two pivotal Phase 3 clinical trials that demonstrated high efficacy against both the original COVID-19 strain and commonly circulating COVID-19 variants during the conduct of the trials, while maintaining a favorable safety profile. We are in the process of developing our XBB COVID vaccine, which is in line with the FDA, WHO, and EMA recommendations for the 2023 fall season. In June 2023, at the U.S. Vaccines and Related Biological Products Advisory Committee's meeting we shared nonclinical data demonstrating that our XBB COVID vaccine induced functional immune responses for Omicron XBB.1.5, XBB1.16, and XBB.2.3 subvariants indicating broad responses that could be applicable to forward-drift variants. We are finalizing our COVID-19 Phase 3 Strain-Change interim study report and additional nonclinical and manufacturing data summaries to support our XBB COVID vaccine for EUA and other regulatory authorizations. This is in-line with the expectation set by the U.S. Health and Human Services letter to all COVID-19 manufacturers communicating that the FDA will take regulatory action on submissions and the Centers for Disease Control and Prevention will provide vaccination recommendations in the latter part of September 2023. Pending EUA and additional regulatory authorizations, we expect to commercialize our XBB COVID vaccine for the 2023 fall season providing access and accessibility to a protein-based choice within the market. Beyond COVID-19, our clinical pipeline includes seasonal influenza and CIC vaccines, in addition to our Matrix-M™ adjuvant being used for collaborations investigating the prevention of malaria.
The pipeline chart below summarizes the core clinical development programs that we are focusing on in the near-term.
Pipeline (2023.07.28).jpg
(1) Authorized in select geographies under trade names Novavax COVID-19 Vaccine, Adjuvanted; Covovax™; and Nuvaxovid™.
(2) Ongoing Phase 3 strain change trial.
(3) R21/Matrix-M™ adjuvant malaria vaccine being commercialized by SIIPL.

Coronavirus Vaccine Clinical Development
We continue to evaluate vaccine effectiveness through ongoing and planned booster studies to support our planned requests for authorization to the FDA, WHO, and EMA for our XBB COVID vaccine for the upcoming 2023 fall season. We expect to leverage these studies to pursue additional regulatory authorizations of our COVID-19 vaccine for primary, re-vaccination, and pediatric indications globally.
Phase 3 Strain-Change Trial
In August 2023, we announced topline results from the Phase 3 Strain-Change Trial that achieved all three co-primary
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endpoints demonstrating immunologic superiority for the Omicron BA.5 variant of a bivalent prototype and Omicron BA.5 vaccine compared to our prototype vaccine (NVX-CoV2373). The study compared our prototype vaccine (NVX-CoV2373), to a monovalent Omicron BA.5 vaccine and a bivalent vaccine (prototype and Omicron BA.5) in 750 adults who had previously received three or more doses of mRNA vaccine. This study design was developed in consultation with regulatory agencies to support the upcoming strain-change EUA request to the FDA for our XBB COVID vaccine.
The data also showed that the monovalent Omicron BA.5 vaccine performed better with higher neutralization titers and seroresponse rates than the bivalent vaccine (prototype and Omicron BA.5), supporting the use of our XBB COVID vaccine for the 2023 fall vaccination season. These results show that our protein-based vaccine can be successfully adapted to new variant strains.
Phase 2b/3 Hummingbird™ Trial
In August 2023, we announced topline results from our Phase 2b/3 Hummingbird™ trial that met its primary endpoints in children aged 6 through 11 years confirming immunologic effectiveness. This ongoing trial is evaluating the safety, effectiveness (immunogenicity), and efficacy of two doses of NVX-CoV2373, followed by a booster 6 months after the primary vaccination series. The trial includes three age de-escalation cohorts of 1,200 children each. The next cohort aged 2 through 5 years is fully enrolled, with topline results expected in the fourth quarter of 2023.
COVID-Influenza Combination and Stand-alone Influenza Program
In May 2023, we announced preliminary topline data from our Phase 2 trial for CIC, stand-alone influenza and high-dose COVID-19 vaccine candidates. All three vaccine candidates contain our Matrix-M™ adjuvant, showed preliminary robust immune responses, reassuring safety profiles, and reactogenicity that was comparable to the licensed influenza vaccine comparator arms. We intend to further explore our options to progress select candidates into late-stage development.
R21/Matrix-M™ Adjuvant Malaria Vaccine
Our partner-led malaria candidates present strong opportunities for future development. An ongoing Phase 3 clinical trial is being conducted for R21/Matrix-M™ adjuvant malaria vaccine, developed by our partner, the Jenner Institute, University of Oxford and manufactured by SIIPL, which is formulated with our Matrix-M™ adjuvant. In April 2023, the R21/Matrix-M™ adjuvant malaria vaccine received multiple authorizations including in Ghana and Nigeria as well as in July 2023 received authorization in Burkina Faso. We have an agreement with SIIPL related to its manufacture of R21/Matrix-M™ adjuvant malaria vaccine under which SIIPL purchases Matrix-M™ adjuvant, as well as pays royalties based on its vaccine sales.

Business Highlights
Second Quarter 2023 and Recent Highlights
During the second quarter, we continued to make progress on our three key priorities for 2023.

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

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

Continue to prepare to deliver our updated XBB COVID vaccine for the fall, consistent with recommendations from the FDA, EMA and WHO
Initiated filing in the U.S., with submissions in the European Union (“EU”) and Canada to follow in the coming weeks
Manufacturing ongoing at commercial scale to supply global markets
Fully deployed commercial teams across the U.S., EU and other select markets, with executed contracts to support market access

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

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

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

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

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

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

On track with our Restructuring Plan and reiterate target to reduce our annual combined research and development and selling, general and administrative expenses by approximately 20% to 25% in 2023 versus 2022, and by approximately 40% to 50% in 2024 versus 2022

Executed amended Canada APA in June 2023, outlining an updated delivery schedule for Nuvaxovid™ and negotiated up to $350 million in 2023 payments

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

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

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

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

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

Sales of Common Stock
In June 2021, we entered into an At Market Issuance Sales Agreement (the "June 2021 Sales Agreement"), which allows us to issue and sell up to $500.0 million in gross proceeds of shares of its common stock. During the three and six months ended June 30, 2023, we sold 7.9 million shares of our common stock under our June 2021 Sales Agreement resulting in net proceeds of approximately $68 million, of which $6 million was included in prepaid expenses and other current assets as of June 30, 2023 and received in cash in July 2023. As of June 30, 2023, the remaining balance available under the June 2021 Sales Agreement was approximately $249 million.
During the six months ended June 30, 2022, we sold 2.2 million shares of our common stock resulting in net proceeds of approximately $179 million, under the June 2021 Sales Agreement.

Critical Accounting Policies and Use of Estimates
The discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements (unaudited) and the accompanying notes, which have been prepared in accordance with generally accepted accounting principles in the United States.
The preparation of our consolidated financial statements requires us to make estimates, assumptions, and judgments that affect the reported amounts of assets, liabilities, and equity and disclosure of contingent assets and liabilities at the date of the
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financial statements and the reported amounts of revenue and expenses during the reporting period. Our critical accounting policies and estimates are included under Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, as filed with the SEC.
Recent Accounting Pronouncements Not Yet Adopted
See “Note 2―Summary of Significant Accounting Policies” included in our Notes to Consolidated Financial Statements (under the caption “Recent Accounting Pronouncements”).
Results of Operations
The following is a discussion of the historical financial condition and results of our operations that should be read in conjunction with the unaudited consolidated financial statements and notes set forth in this Quarterly Report.
Three Months Ended June 30, 2023 and 2022
Revenue
Three Months Ended June 30,
20232022Change
Revenue (in thousands):
Product sales$285,163 $55,455 $229,708 
Grants137,079 107,774 29,305 
Royalties and other2,184 22,696 (20,512)
Total revenue$424,426 $185,925 $238,501 
Revenue for the three months ended June 30, 2023 was $424.4 million as compared to $185.9 million for the same period in 2022, an increase of $238.5 million. Revenue for the three months ended June 30, 2023 and June 30, 2022 was primarily comprised of revenue from product sales of NVX-CoV2373 and services performed under our U.S. government agreement with Advanced Technology International (“USG Agreement”), the Consortium Management Firm acting on behalf of the Medical CBRN Defense Consortium in connection with the partnership formerly known as Operation Warp Speed. The increase in revenue is primarily due to an increased quantity of dose sales of NVX-CoV2373 during the three months ended June 30, 2023 as compared to the same period in 2022.

Product sales
Product sales for the three months ended June 30, 2023 were $285.2 million as compared to $55.5 million during the three months ended June 30, 2022. Our product sales related to sales of NVX-CoV2373 under our APA agreements. The geographic distribution of product sales was as follows:
Three Months Ended March 31,
20232022Change
North America
$— $— $— 
Europe1,518 — 1,518 
Rest of the world
283,645 55,455 228,190 
Total product sales revenue$285,163 $55,455 $229,708 
Grants
Grant revenue during the three months ended June 30, 2023 was $137.1 million as compared to $107.8 million during the same period in 2022, an increase of $29.3 million. Grant revenue for 2023 and 2022, comprised revenue for services performed under our USG Agreement. The increase was primarily due to increased support activities under the USG Agreement during the three months ended June 30, 2023.
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Expenses
Three Months Ended June 30,
20232022Change
Expenses (in thousands):
Cost of sales$55,777 271,077 $(215,300)
Research and development 219,475 289,648 (70,173)
Selling, general, and administrative93,717 108,160 (14,443)
Total expenses$368,969 $668,885 $(299,916)
Cost of Sales
Cost of sales was $55.8 million for the three months ended June 30, 2023, including expenses of $19.8 million related to excess, obsolete, or expired inventory and losses on certain firm purchase commitments and a credit of $17.9 million related to negotiated certain reductions to previously recognized firm purchase commitments. Cost of sales was $271.1 million for the three months ended June 30, 2022, including expense of $255.3 million related to excess, obsolete, or expired inventory and losses on firm purchase commitments. Prior to receiving regulatory approval, we expensed manufacturing costs as research and development expenses. After receiving regulatory approval, we capitalize the costs of production for a particular supply chain when we determine that we have a present right to the economic benefit associated with the product. While we tracked the quantities of our manufactured vaccine product and components, we did not track pre-approval manufacturing costs and therefore the manufacturing cost of our pre-launch inventory produced prior to approval is not reasonably determinable. However, based on our expectations for future manufacturing costs to produce our vaccine product and components inventory, we estimate at June 30, 2023, we had approximately $25.9 million of salable commercial inventory that was expensed prior to approval. We expect to utilize the majority of our reduced-cost inventory through 2023. If inventory sold for the three months ended June 30, 2023 was valued at expected standard cost, including expenses related to excess and obsolete inventory, adjusted cost of sales for the period would have been approximately $71.7 million, an adjustment of $15.9 million as compared to cost of sales recognized. If inventory sold for the three months ended June 30, 2022 was valued at expected standard cost, adjusted cost of sales for the period would have been approximately $279.5 million, an adjustment of $8.4 million. The cost of sales as a percentage of product sales may fluctuate in the future as a result of changes to our customer pricing mix or standard costs.
Research and Development Expenses
Research and development expenses were $219.5 million for the three months ended June 30, 2023 as compared to $289.6 million for the three months ended June 30, 2022, a decrease of $70.2 million. The decrease was primarily due to a reduction in overall expenditures relating to development activities on coronavirus vaccines, including NVX-CoV2373 and XBB COVID vaccine, and CIC, as summarized in the table below (in thousands):
Three Months Ended June 30,
20232022
Coronavirus vaccines $139,646 $201,015 
Influenza vaccine
— 2,274 
Other vaccine development programs285 224 
Total direct external research and development expense139,931 203,513 
Employee expenses46,132 43,177 
Stock-based compensation expense9,946 19,695 
Facility expenses14,158 10,863 
Other expenses9,308 12,400 
Total research and development expenses$219,475 $289,648 
Research and development expenses for coronavirus vaccines for the three months ended June 30, 2023 and 2022, decreased from $201.0 million to $139.6 million primarily as a result of a reduction in manufacturing and support costs under manufacturing supply agreements with Contract Manufacturing Organizations (“CMOs”) and contract manufacturing and development organizations (“CDMOs”), a reduction in clinical study costs and the commercialization of internal manufacturing
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capabilities, as offset by a benefit of $20.5 million and $87.2 million, respectively, related to previously accelerated manufacturing costs for leases that we determined were embedded in manufacturing supply agreements with CMOs and CDMOs.
Selling, General, and Administrative Expenses
Selling, general, and administrative expenses were $93.7 million for the three months ended June 30, 2023 as compared to $108.2 million for the same period in 2022, a decrease of $14.4 million. The decrease in selling, general, and administrative expenses is primarily due to certain cost containment measures to reduce our operating spend, partially offset by restructuring expenses of $11.5 million.
For the remainder of 2023, we expect a reduction in our annual combined research and development, and selling, general, and administrative spend as a result of our Restructuring Plan announced during the three months ended June 30, 2023.
Other Income (Expense)
Three Months Ended June 30,
20232022Change
Other income (expense):
Interest expense$(3,124)$(6,234)$3,110 
Other income (expense)5,532 (19,873)25,405 
Total other income (expense), net$2,408 $(26,107)$28,515 
Total other income, net was $2.4 million for the three months ended June 30, 2023 as compared to a total other expense, net of $26.1 million for the same period in 2022. The increase in other income is due to the favorable impact of exchange rates on foreign currency denominated balances, including an intercompany loan with Novavax CZ.
Income Tax Expense
During the three months ended June 30, 2023 and 2022, we recognized an income tax benefit of $0.1 million and income tax expense $1.4 million, respectively, of income tax expense related to federal, state, and foreign income taxes.
Net Income (Loss)
Three Months Ended June 30,
20232022Change
Net Income (Loss) (in thousands, except per share information):
Net income (loss)$58,008 $(510,485)$568,493 
Net income (loss) per share, basic$0.65 $(6.53)$7.18 
Net income (loss) per share, dilutive$0.58 $(6.53)$7.11 
Weighted average shares outstanding, basic 89,362 78,143 11,219 
Weighted average shares outstanding, dilutive104,065 78,143 25,922 
Net income for the three months ended June 30, 2023 was $58.0 million, or $0.65 per share, basic, as compared to net loss of $510.5 million, or $6.53 per share, basic, for the same period in 2022. The increase in income during the three months ended June 30, 2023, was primarily due to the increase in commercial sales of NVX-CoV2373 in the three months ended June 30, 2023 and by a decrease in excess, obsolete, or expired inventory and losses on firm purchase commitments, research and development, and selling, general and administrative expenses as a result of the implementation of our Restructuring Plan.
The increase in weighted average shares outstanding for the three months ended June 30, 2023 was primarily a result of the sale of common stock.
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Six Months Ended June 30, 2023 and 2022
Revenue
Six Months Ended June 30,
20232022Change
Revenue (in thousands):
Product sales$277,706 $641,083 $(363,377)
Grants224,458 207,075 17,383 
Royalties and other3,213 41,738 (38,525)
Total revenue$505,377 $889,896 $(384,519)
Revenue for the six months ended June 30, 2023 was $505.4 million as compared to $889.9 million for the same period in 2022, a decrease of $384.5 million. Revenue for the six months ended June 30, 2023 was primarily comprised of revenue from product sales of NVX-CoV2373 and services performed under our USG Agreement. The decrease in revenue was primarily due to a decrease in quantity of doses sold of NVX-CoV2373 during the six months ended June 30, 2023 as compared to the same period in 2022.
Product sales
Product sales for the six months ended June 30, 2023 were $277.7 million as compared to $641.1 million during the six months ended June 30, 2022. Our product sales related to sales of NVX-CoV2373 under our APA agreements. The geographic distribution of product sales was as follows:
Six Months Ended June 31,
20232022Change
North America
$— $64,762 $(64,762)
Europe58,785 413,745 (354,960)
Rest of the world
218,921 162,576 56,345 
Total product sales revenue$277,706