Item 1. Financial Statements
NOVAVAX, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per
share information)
|
|
March 31,
|
|
|
December 31,
|
|
|
|
2020
|
|
|
2019
|
|
|
|
(unaudited)
|
|
|
|
|
ASSETS
|
Current assets:
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
179,881
|
|
|
$
|
78,823
|
|
Marketable securities
|
|
|
57,474
|
|
|
|
—
|
|
Restricted cash
|
|
|
6,900
|
|
|
|
2,947
|
|
Accounts receivable
|
|
|
—
|
|
|
|
7,500
|
|
Prepaid expenses and other current assets
|
|
|
10,977
|
|
|
|
7,977
|
|
Total current assets
|
|
|
255,232
|
|
|
|
97,247
|
|
Restricted cash
|
|
|
411
|
|
|
|
410
|
|
Property and equipment, net
|
|
|
10,795
|
|
|
|
11,445
|
|
Intangible assets, net
|
|
|
5,052
|
|
|
|
5,581
|
|
Goodwill
|
|
|
49,988
|
|
|
|
51,154
|
|
Other non-current assets
|
|
|
6,590
|
|
|
|
7,120
|
|
Total assets
|
|
$
|
328,068
|
|
|
$
|
172,957
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ DEFICIT
|
Current liabilities:
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
2,518
|
|
|
$
|
2,910
|
|
Accrued expenses
|
|
|
10,004
|
|
|
|
14,867
|
|
Accrued interest
|
|
|
2,031
|
|
|
|
5,078
|
|
Deferred revenue
|
|
|
3,113
|
|
|
|
1,678
|
|
Other current liabilities
|
|
|
1,316
|
|
|
|
1,262
|
|
Total current liabilities
|
|
|
18,982
|
|
|
|
25,795
|
|
Deferred revenue
|
|
|
2,500
|
|
|
|
2,500
|
|
Convertible notes payable
|
|
|
320,967
|
|
|
|
320,611
|
|
Other non-current liabilities
|
|
|
9,590
|
|
|
|
10,068
|
|
Total liabilities
|
|
|
352,039
|
|
|
|
358,974
|
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ deficit:
|
|
|
|
|
|
|
|
|
Preferred stock, $0.01 par value, 2,000,000 shares authorized; no shares issued and outstanding as of March 31, 2020 and December 31, 2019, respectively
|
|
|
—
|
|
|
|
—
|
|
Common stock, $0.01 par value, 600,000,000 shares authorized at March 31, 2020 and December 31, 2019; 53,906,322 shares issued and 53,854,913 shares outstanding at March 31, 2020 and 32,399,352 shares issued and 32,352,416 shares outstanding at December 31, 2019
|
|
|
539
|
|
|
|
324
|
|
Additional paid-in capital
|
|
|
1,450,279
|
|
|
|
1,260,551
|
|
Accumulated deficit
|
|
|
(1,457,665
|
)
|
|
|
(1,431,801
|
)
|
Treasury stock, 51,409 shares, cost basis at March 31, 2020 and 46,936 shares, cost basis at December 31, 2019
|
|
|
(2,638
|
)
|
|
|
(2,583
|
)
|
Accumulated other comprehensive loss
|
|
|
(14,486
|
)
|
|
|
(12,508
|
)
|
Total stockholders’ deficit
|
|
|
(23,971
|
)
|
|
|
(186,017
|
)
|
Total liabilities and stockholders’ deficit
|
|
$
|
328,068
|
|
|
$
|
172,957
|
|
The accompanying notes are an integral part
of these financial statements.
NOVAVAX, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share information)
(unaudited)
|
|
For the Three Months
Ended March 31,
|
|
|
|
2020
|
|
|
2019
|
|
Revenue:
|
|
|
|
|
|
|
|
|
Grant and other
|
|
$
|
3,377
|
|
|
$
|
3,982
|
|
Total revenue
|
|
|
3,377
|
|
|
|
3,982
|
|
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
Research and development
|
|
|
16,895
|
|
|
|
35,473
|
|
General and administrative
|
|
|
9,379
|
|
|
|
8,732
|
|
Total expenses
|
|
|
26,274
|
|
|
|
44,205
|
|
Loss from operations
|
|
|
(22,897
|
)
|
|
|
(40,223
|
)
|
Other income (expense):
|
|
|
|
|
|
|
|
|
Investment income
|
|
|
436
|
|
|
|
420
|
|
Interest expense
|
|
|
(3,403
|
)
|
|
|
(3,403
|
)
|
Other income (expense)
|
|
|
—
|
|
|
|
(12
|
)
|
Net loss
|
|
$
|
(25,864
|
)
|
|
$
|
(43,218
|
)
|
|
|
|
|
|
|
|
|
|
Basic and diluted net loss per share
|
|
$
|
(0.58
|
)
|
|
$
|
(2.11
|
)
|
|
|
|
|
|
|
|
|
|
Basic and diluted weighted average number of common shares outstanding
|
|
|
44,421
|
|
|
|
20,442
|
|
CONSOLIDATED STATEMENTS OF COMPREHENSIVE
LOSS
(in thousands)
(unaudited)
|
|
For the Three Months
Ended March 31,
|
|
|
|
2020
|
|
|
2019
|
|
Net loss
|
|
$
|
(25,864
|
)
|
|
$
|
(43,218
|
)
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
Net unrealized gains (losses) on marketable debt securities available-for-sale
|
|
|
(132
|
)
|
|
|
5
|
|
Foreign currency translation adjustment
|
|
|
(1,846
|
)
|
|
|
(1,174
|
)
|
Other comprehensive loss
|
|
|
(1,978
|
)
|
|
|
(1,169
|
)
|
Comprehensive loss
|
|
$
|
(27,842
|
)
|
|
$
|
(44,387
|
)
|
The accompanying notes are an integral part
of these financial statements.
NOVAVAX, INC.
CONSOLIDATED STATEMENTS OF CHANGES
IN STOCKHOLDERS’ DEFICIT
Three Months Ended March 31, 2020 and
2019
(unaudited)
|
|
Common Stock
|
|
|
Additional
Paid-in
|
|
|
Accumulated
|
|
|
Treasury
|
|
|
Other
Comprehensive
|
|
|
Stockholders’
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Deficit
|
|
|
Stock
|
|
|
Income (Loss)
|
|
|
(Deficit)
|
|
|
|
(in thousands, except share information)
|
|
Balance at December 31, 2019
|
|
|
32,399,352
|
|
|
$
|
324
|
|
|
$
|
1,260,551
|
|
|
$
|
(1,431,801
|
)
|
|
$
|
(2,583
|
)
|
|
$
|
(12,508
|
)
|
|
$
|
(186,017
|
)
|
Non-cash compensation cost for stock options, RSUs, SARs and ESPP
|
|
|
—
|
|
|
|
—
|
|
|
|
3,965
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
3,965
|
|
Vesting of RSUs/Purchases under ESPP
|
|
|
33,239
|
|
|
|
—
|
|
|
|
60
|
|
|
|
—
|
|
|
|
(55
|
)
|
|
|
—
|
|
|
|
5
|
|
Issuance of common stock, net of issuance costs of $2,498
|
|
|
21,473,731
|
|
|
|
215
|
|
|
|
185,703
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
185,918
|
|
Unrealized loss on marketable securities
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(132
|
)
|
|
|
(132
|
)
|
Foreign currency translation adjustment
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(1,846
|
)
|
|
|
(1,846
|
)
|
Net loss
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(25,864
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
(25,864
|
)
|
Balance at March 31, 2020
|
|
|
53,906,322
|
|
|
$
|
539
|
|
|
$
|
1,450,279
|
|
|
$
|
(1,457,665
|
)
|
|
$
|
(2,638
|
)
|
|
$
|
(14,486
|
)
|
|
$
|
(23,971
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2018
|
|
|
19,245,302
|
|
|
$
|
192
|
|
|
$
|
1,144,621
|
|
|
$
|
(1,299,107
|
)
|
|
$
|
(2,450
|
)
|
|
$
|
(11,191
|
)
|
|
$
|
(167,935
|
)
|
Non-cash compensation cost for stock options, RSUs and ESPP
|
|
|
—
|
|
|
|
—
|
|
|
|
5,558
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
5,558
|
|
Exercise of stock options/Purchases under ESPP
|
|
|
51,388
|
|
|
|
1
|
|
|
|
941
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
942
|
|
Issuance of common stock, net of issuance costs of $1,115
|
|
|
4,198,776
|
|
|
|
42
|
|
|
|
55,197
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
55,239
|
|
Unrealized gain on marketable securities
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
5
|
|
|
|
5
|
|
Foreign currency translation adjustment
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(1,174
|
)
|
|
|
(1,174
|
)
|
Net loss
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(43,218
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
(43,218
|
)
|
Balance at March 31, 2019
|
|
|
23,495,466
|
|
|
$
|
235
|
|
|
$
|
1,206,317
|
|
|
$
|
(1,342,325
|
)
|
|
$
|
(2,450
|
)
|
|
$
|
(12,360
|
)
|
|
$
|
(150,583
|
)
|
The accompanying
notes are an integral part of these financial statements.
NOVAVAX, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
|
|
Three Months Ended
March 31,
|
|
|
|
2020
|
|
|
2019
|
|
Operating Activities:
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(25,864
|
)
|
|
$
|
(43,218
|
)
|
Reconciliation of net loss to net cash used in operating activities:
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
925
|
|
|
|
1,939
|
|
Loss on disposal of property and equipment
|
|
|
—
|
|
|
|
88
|
|
Amortization of debt issuance costs
|
|
|
356
|
|
|
|
356
|
|
Non-cash stock-based compensation
|
|
|
3,965
|
|
|
|
5,558
|
|
Other
|
|
|
—
|
|
|
|
(14
|
)
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
Prepaid expenses and other assets
|
|
|
4,521
|
|
|
|
(296
|
)
|
Accounts payable and accrued expenses
|
|
|
(8,450
|
)
|
|
|
(11,853
|
)
|
Deferred revenue
|
|
|
1,437
|
|
|
|
(3,167
|
)
|
Net cash used in operating activities
|
|
|
(23,110
|
)
|
|
|
(50,607
|
)
|
|
|
|
|
|
|
|
|
|
Investing Activities:
|
|
|
|
|
|
|
|
|
Capital expenditures
|
|
|
(122
|
)
|
|
|
(805
|
)
|
Proceeds from maturities of marketable securities
|
|
|
—
|
|
|
|
22,000
|
|
Purchases of marketable securities
|
|
|
(57,606
|
)
|
|
|
(2,484
|
)
|
Net cash provided by (used in) investing activities
|
|
|
(57,728
|
)
|
|
|
18,711
|
|
|
|
|
|
|
|
|
|
|
Financing Activities:
|
|
|
|
|
|
|
|
|
Net proceeds from sales of common stock
|
|
|
185,918
|
|
|
|
55,239
|
|
Proceeds from the exercise of stock options and employee stock purchases
|
|
|
5
|
|
|
|
942
|
|
Net cash provided by financing activities
|
|
|
185,923
|
|
|
|
56,181
|
|
Effect of exchange rate on cash, cash equivalents and restricted cash
|
|
|
(73
|
)
|
|
|
(45
|
)
|
Net increase in cash, cash equivalents and restricted cash
|
|
|
105,012
|
|
|
|
24,240
|
|
Cash, cash equivalents and restricted cash at beginning of period
|
|
|
82,180
|
|
|
|
81,959
|
|
Cash, cash equivalents and restricted cash at end of period
|
|
$
|
187,192
|
|
|
$
|
106,199
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure of non-cash activities:
|
|
|
|
|
|
|
|
|
Property and equipment purchases included in accounts payable and accrued expenses
|
|
$
|
125
|
|
|
$
|
194
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
|
|
|
|
|
Cash payments of interest
|
|
$
|
6,094
|
|
|
$
|
6,094
|
|
The accompanying notes are an integral
part of these financial statements.
NOVAVAX, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2020
(unaudited)
Note 1 – Organization
Novavax, Inc. (“Novavax,”
and together with its wholly owned subsidiary, Novavax AB, the “Company”) is a late-stage biotechnology company that
promotes improved global health through the discovery, development and commercialization of innovative vaccines to prevent serious
infectious diseases and address urgent, global health needs. The Company’s vaccine candidates, including its lead candidates,
NanoFluTM and ResVaxTM, and its recent coronavirus vaccine candidate, NVX-CoV2373, are genetically engineered,
three-dimensional nanostructures of recombinant proteins critical to disease pathogenesis and may elicit differentiated immune
responses, which may be more efficacious than naturally occurring immunity or traditional vaccines. The Company’s technology
targets a variety of infectious diseases. The Company is also developing proprietary immune stimulating saponin-based adjuvants
at Novavax AB, its wholly owned Swedish subsidiary. The Company’s lead adjuvant, Matrix-M™, has been shown to enhance
immune responses and has been well-tolerated in multiple clinical trials.
Note 2 – Summary
of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited
consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United
States of America (“U.S. GAAP”) for interim financial information and the instructions to Form 10-Q and Article 10
of Regulation S-X. The consolidated balance sheet as of March 31, 2020, the consolidated statements of operations and the consolidated
statements of comprehensive loss for the three months ended March 31, 2020 and 2019, the consolidated statements of changes in
stockholders’ deficit for the three months ended March 31, 2020 and 2019 and the consolidated statements of cash flows for
the three months ended March 31, 2020 and 2019 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’ deficit and cash flows, respectively, for the periods presented. Although the Company believes that
the disclosures in these unaudited consolidated financial statements are adequate to make the information presented not misleading,
certain information and footnote information normally included in consolidated financial statements prepared in accordance with
U.S. GAAP have been condensed or omitted as permitted under the rules and regulations of the United States Securities and Exchange
Commission (“SEC”).
The unaudited consolidated
financial statements include the accounts of Novavax, Inc. and its wholly owned subsidiary, Novavax AB. All intercompany accounts
and transactions have been eliminated in consolidation.
The accompanying unaudited
consolidated financial statements are presented in U.S. dollars. The functional currency of Novavax AB, which is located in Sweden,
is the local currency (Swedish Krona). The translation of assets and liabilities of Novavax AB to U.S. dollars is made at the exchange
rate in effect at the consolidated balance sheet date, while equity accounts are translated at historical rates. The translation
of the statement of operations data is made at the average exchange rate in effect for the period. The translation of operating
cash flow data is made at the average exchange rate in effect for the period, and investing and financing cash flow data is translated
at the exchange rate in effect at the date of the underlying transaction. Translation gains and losses are recognized as a component
of accumulated other comprehensive loss in the accompanying unaudited consolidated balance sheets. The foreign currency translation
adjustment balance included in accumulated other comprehensive loss was $14.4 million and $12.5 million at March 31, 2020 and December
31, 2019, respectively.
The accompanying unaudited
consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in the
Company’s Annual Report on Form 10-K for the year ended December 31, 2019. 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.
Use of Estimates
The preparation of
the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated
financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ
materially from those estimates.
Cash and Cash Equivalents
Cash and cash equivalents consist of highly
liquid investments with maturities of three months or less from the date of purchase. Cash and cash equivalents consist of the
following at (in thousands):
|
|
March
31,
2020
|
|
|
December 31, 2019
|
|
Cash
|
|
$
|
39,348
|
|
|
$
|
15,863
|
|
Money market funds
|
|
|
47,654
|
|
|
|
42,960
|
|
Asset-backed securities
|
|
|
24,250
|
|
|
|
20,000
|
|
Corporate debt securities
|
|
|
68,629
|
|
|
|
—
|
|
Cash and cash equivalents
|
|
$
|
179,881
|
|
|
$
|
78,823
|
|
Cash equivalents are
recorded at cost, which approximate fair value due to their short-term nature.
Marketable Securities
Marketable securities
consist of debt securities with maturities greater than three months from the date of purchase that include commercial paper, asset-backed
securities and corporate notes. Classification of marketable securities between current and non-current is dependent upon the maturity
date at the balance sheet date taking into consideration the Company’s ability and intent to hold the investment to maturity.
Interest and dividend
income is recorded when earned and included in investment income in the consolidated statements of operations. Premiums and discounts,
if any, on marketable securities are amortized or accreted to maturity and included in investment income in the consolidated statements
of operations. The specific identification method is used in computing realized gains and losses on the sale of the Company’s
securities.
The Company classifies
its marketable securities with readily determinable fair values as “available-for-sale.” Investments in securities
that are classified as available-for-sale are measured at fair market value in the consolidated balance sheets, and unrealized
gains and losses on marketable securities are reported as a separate component of stockholders’ deficit until realized. Marketable
securities are evaluated periodically to determine whether a decline in value is “other-than-temporary.” The term “other-than-temporary”
is not intended to indicate a permanent decline in value. Rather, it means that the prospects for a near term recovery of value
are not necessarily favorable, or that there is a lack of evidence to support fair values equal to, or greater than, the carrying
value of the security. Management reviews criteria, such as the magnitude and duration of the decline, as well as the Company’s
ability to hold the securities, including whether the Company will be required to sell a security prior to recovery of its amortized
cost basis, the investment issuer’s financial condition and business outlook to predict whether the loss in value is other-than-temporary.
If a decline in value is determined to be other-than-temporary, the value of the security is reduced and the impairment is recorded
as other income (expense) in the consolidated statements of operations.
Restricted Cash
The Company’s
current and non-current restricted cash includes payments received under the Grant Agreement (as defined in Note 9) with the Bill
& Melinda Gates Foundation (“BMGF”) under which the Company was awarded a grant up to $89.1 million, payment received
under the Coalition for Epidemic Preparedness Innovations (“CEPI”) grant awarded in March 2020 (as discussed in Note
9), escrow funds received in connection with a transaction in 2019 with Catalent Maryland, Inc. (formerly Paragon Bioservices,
Inc.), a unit of Catalent Biologics (“Catalent”), pursuant to which the Company agreed to sell to Catalent certain
assets related to its biomanufacturing and development activities and cash collateral accounts under letters of credit that serve
as security deposits for certain facility leases. The Company will utilize the Grant Agreement and CEPI grant funds as it incurs
expenses for services performed under these agreements. At both March 31, 2020 and December 31, 2019, the restricted cash balances
(both current and non-current) consisted of $1.4 million of payments received under the Grant Agreement, $3.9 million payment
under the CEPI grant at March 31, 2020, $1.5 million held in escrow received in connection with the Catalent transaction and $0.4
million of security deposits.
The following table
provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheets that sum
to the total of the same such amounts shown in the statement of cash flows (in thousands):
|
|
March 31,
2020
|
|
|
December 31, 2019
|
|
Cash and cash equivalents
|
|
$
|
179,881
|
|
|
$
|
78,823
|
|
Restricted cash current
|
|
|
6,900
|
|
|
|
2,947
|
|
Restricted cash non-current
|
|
|
411
|
|
|
|
410
|
|
Cash, cash equivalents and restricted cash
|
|
$
|
187,192
|
|
|
$
|
82,180
|
|
Revenue Recognition
The Company performs
research and development under grant, license and clinical development agreements. Payments received in advance of work performed
are recorded as deferred revenue.
In
March 2020, the Company was awarded a grant of $3.9 million from CEPI to facilitate its development of a vaccine to
prevent a new strain of the coronavirus (“COVID-19”) in preparation for potential future clinical trials.
The Company’s grant does not provide a direct economic benefit to CEPI. Based on this circumstance, the Company does
not consider CEPI to be a customer and concluded the funding agreement is outside the scope of ASU 2014-09, Revenue
from Contracts with Customers (Topic 606). Payments received under the grant are considered conditional contributions
under the scope of ASC 958-605, Not-for-Profit Entities – Revenue Recognition, and are recorded as deferred
revenue until the period in which such research and development activities are performed and revenue can be recognized.
The Company analyzed
the grant with CEPI to determine whether the payments received should be recorded as revenue or as a reduction to research and
development expenses. In reaching the determination that such payments should be recorded as revenue, management considered a number
of factors, including whether the Company is principal under the arrangement, and whether the arrangement is significant to, and
part of, the Company’s core operations. Further, management has consistently applied its policy of presenting such amounts
as revenue
Net Loss per
Share
Net loss per share
is computed using the weighted average number of shares of common stock outstanding. At March 31, 2020 and 2019, the Company had
outstanding stock options, stock appreciation rights (“SARs”) and unvested restricted stock units (“RSUs”)
totaling 4,968,953 and 3,063,049, respectively. At March 31, 2020, the Company’s Notes (see Note 6) would have been convertible
into approximately 2,385,800 shares of the Company’s common stock assuming a common stock price of $136.20 or higher. These
and any shares due to the Company upon settlement of its capped call transactions are excluded from the computation, as their effect
is antidilutive.
Recent Accounting Pronouncements
Recently Adopted
In January 2017, the
FASB issued ASU No. 2017-04, Intangibles-Goodwill and Other (Topic 350) (“ASU 2017-04”),
which will simplify the goodwill impairment calculation by eliminating Step 2 from the current goodwill impairment test. The new
standard does not change how a goodwill impairment is identified. The Company will continue to perform its quantitative goodwill
impairment test by comparing the fair value of its reporting unit to its carrying amount, but if the Company is required to recognize
a goodwill impairment charge, under the new standard, the amount of the charge will be calculated by subtracting the reporting
unit’s fair value from its carrying amount. Under the current standard, if the Company is required to recognize a goodwill
impairment charge, Step 2 requires it to calculate the implied value of goodwill by assigning the fair value of a reporting unit
to all of its assets and liabilities as if that reporting unit had been acquired in a business combination and the amount of the
charge is calculated by subtracting the reporting unit’s implied fair value of goodwill from the goodwill carrying amount.
The standard was effective January 1, 2020 for the Company and will be applied prospectively from the date of adoption. The adoption
of ASU 2017-04 did not have a material impact on the Company’s historical financial statements.
Note 3 – Fair Value Measurements
The
following table represents the Company’s fair value hierarchy for its financial assets and liabilities measured at fair value
(in thousands):
|
|
Fair Value at March 31, 2020
|
|
|
Fair Value at December 31, 2019
|
|
Assets
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
Money market funds(1)
|
|
$
|
47,654
|
|
|
$
|
―
|
|
|
$
|
―
|
|
|
$
|
42,960
|
|
|
$
|
―
|
|
|
$
|
―
|
|
Asset-backed securities(2)
|
|
|
―
|
|
|
|
24,250
|
|
|
|
―
|
|
|
|
―
|
|
|
|
20,000
|
|
|
|
―
|
|
Corporate debt securities(3)
|
|
|
―
|
|
|
|
126,103
|
|
|
|
―
|
|
|
|
―
|
|
|
|
―
|
|
|
|
―
|
|
Total assets
|
|
$
|
47,654
|
|
|
$
|
150,353
|
|
|
$
|
―
|
|
|
$
|
42,960
|
|
|
$
|
20,000
|
|
|
$
|
―
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Convertible notes payable
|
|
$
|
―
|
|
|
$
|
253,331
|
|
|
$
|
―
|
|
|
$
|
$ ―
|
|
|
$
|
125,811
|
|
|
$
|
―
|
|
|
(1)
|
Classified as cash and
cash equivalents as of March 31, 2020 and December 31, 2019, respectively, on the consolidated balance sheets.
|
|
(2)
|
Includes $24,250 and $20,000
classified as cash and cash equivalents as of March 31, 2020 and December 31, 2019, respectively, on the consolidated balance
sheets.
|
|
(3)
|
Includes $68,629 classified
as cash and cash equivalents as of March 31, 2020 on the consolidated balance sheets.
|
Fixed-income investments
categorized as Level 2 are valued at the custodian bank by a third-party pricing vendor’s valuation models that use verifiable
observable market data, e.g., interest rates and yield curves observable at commonly quoted intervals and credit spreads, bids
provided by brokers or dealers or quoted prices of securities with similar characteristics. Pricing of the Company’s
Notes (see Note 6) has been estimated using other observable inputs, including the price of the Company’s common stock, implied
volatility, interest rates and credit spreads among others.
During the three months ended March 31,
2020 and 2019, the Company did not have any transfers between levels.
The amount recorded
in the Company’s unaudited consolidated balance sheets for accounts payable and accrued expenses approximates its fair value
due to its short-term nature.
Note 4 – Marketable Securities
Marketable securities
classified as available-for-sale as of March 31, 2020 and December 31, 2019 were comprised of (in thousands):
|
|
March
31, 2020
|
|
|
December
31, 2019
|
|
|
|
Amortized
Cost
|
|
|
Gross
Unrealized Gains
|
|
|
Gross
Unrealized Losses
|
|
|
Fair
Value
|
|
|
Amortized
Cost
|
|
|
Gross
Unrealized Gains
|
|
|
Gross
Unrealized Losses
|
|
|
Fair
Value
|
|
Corporate
debt securities
|
|
$
|
57,606
|
|
|
$
|
—
|
|
|
$
|
(132
|
)
|
|
$
|
57,474
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Total
|
|
$
|
57,606
|
|
|
$
|
—
|
|
|
$
|
(132
|
)
|
|
$
|
57,474
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Marketable Securities
– Unrealized Losses
The primary objective
of the Company’s investment policy is the preservation of capital; thus, the Company’s investment policy limits investments
to certain types of instruments with high-grade credit ratings, places restrictions on maturities and concentrations in certain
industries and requires the Company to maintain a certain level of liquidity.
The Company owned 14
securities with an aggregate fair value of $51.2 million that were in an unrealized loss position totaling $0.1 million as of March
31, 2020. The Company did not have any investments in a loss position for greater than 12 months as of March 31, 2020. The Company
has evaluated its marketable securities and has determined that none of these investments had an other-than-temporary impairment,
as there was no indicator of credit loss, it has no intent to sell securities with unrealized losses and it is not more likely
than not that the Company will be required to sell any securities with unrealized losses prior to a recovery in value, which may
be maturity, given the Company’s current and anticipated financial position.
Note 5 – Goodwill and Other Intangible
Assets
Goodwill
The change in the carrying amounts of goodwill
for the three months ended March 31, 2020 was as follows (in thousands):
|
|
Amount
|
|
Balance at December 31, 2019
|
|
$
|
51,154
|
|
Currency translation adjustments
|
|
|
(1,166
|
)
|
Balance at March 31, 2020
|
|
$
|
49,988
|
|
Identifiable Intangible
Assets
Purchased intangible assets consisted of
the following as of March 31, 2020 and December 31, 2019 (in thousands):
|
|
March 31, 2020
|
|
|
December 31, 2019
|
|
|
|
Gross Carrying Amount
|
|
|
Accumulated Amortization
|
|
|
Intangible Assets, Net
|
|
|
Gross Carrying Amount
|
|
|
Accumulated Amortization
|
|
|
Intangible Assets, Net
|
|
Finite-lived intangible assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proprietary adjuvant technology
|
|
$
|
7,452
|
|
|
$
|
(2,484
|
)
|
|
$
|
4,968
|
|
|
$
|
7,985
|
|
|
$
|
(2,562
|
)
|
|
$
|
5,423
|
|
Collaboration agreements
|
|
|
3,365
|
|
|
|
(3,281
|
)
|
|
|
84
|
|
|
|
3,606
|
|
|
|
(3,448
|
)
|
|
|
158
|
|
Total identifiable intangible assets
|
|
$
|
10,817
|
|
|
$
|
(5,765
|
)
|
|
$
|
5,052
|
|
|
$
|
11,591
|
|
|
$
|
(6,010
|
)
|
|
$
|
5,581
|
|
Amortization expense
for the three months ended March 31, 2020 and 2019 was $0.2 million.
Estimated amortization
expense for existing intangible assets for the remainder of 2020 and for each of the five succeeding years ending December 31 will
be as follows (in thousands):
Year
|
|
Amount
|
|
2020 (remainder)
|
|
$
|
363
|
|
2021
|
|
|
373
|
|
2022
|
|
|
373
|
|
2023
|
|
|
373
|
|
2024
|
|
|
373
|
|
2025
|
|
|
373
|
|
Note 6 – Long-Term Debt
Convertible Notes
The Company incurred
approximately $10.0 million of debt issuance costs during the first quarter of 2016 relating to the issuance of $325 million aggregate
principal amount of convertible senior unsecured notes that will mature on February 1, 2023 (the
“Notes”), which were recorded as a reduction to the Notes on the consolidated balance sheet. The $10.0 million
of debt issuance costs is being amortized and recognized as additional interest expense over the seven-year contractual term of
the Notes on a straight-line basis, which approximates the effective interest rate method.
Total convertible notes
payable consisted of the following at (in thousands):
|
|
March 31,
2020
|
|
|
December 31,
2019
|
|
Principal amount of the Notes
|
|
$
|
325,000
|
|
|
$
|
325,000
|
|
Unamortized debt issuance costs
|
|
|
(4,033
|
)
|
|
|
(4,389
|
)
|
Total convertible notes payable
|
|
$
|
320,967
|
|
|
$
|
320,611
|
|
Interest expense incurred in connection
with the Notes consisted of the following (in thousands):
|
|
Three Months Ended
March
31,
|
|
|
|
2020
|
|
|
2019
|
|
Coupon interest at 3.75%
|
|
$
|
3,047
|
|
|
$
|
3,047
|
|
Amortization of debt issuance costs
|
|
|
356
|
|
|
|
356
|
|
Total interest expense on the Notes
|
|
$
|
3,403
|
|
|
$
|
3,403
|
|
Note 7 – Stockholders’ Deficit
In March 2020, the
Company entered into an At Market Issuance Sales Agreement (“March 2020 Sales Agreement”), which allows it to issue
and sell up to $150 million in gross proceeds of its common stock. During the first quarter of 2020, the Company sold 3.8 million
shares of common stock under the March 2020 Sales Agreement resulting in $48.7 million in net proceeds. From April 1, 2020 through
May 8, 2020, the Company sold 4.1 million shares of common stock resulting in $73.6 million in net proceeds, leaving $26.0 million
remaining under the March 2020 Sales Agreement.
In January 2020, the
Company entered into an At Market Issuance Sales Agreement (“January 2020 Sales Agreement”), which allowed it to issue
and sell up to $100 million in gross proceeds of its common stock. During the first quarter of 2020, the Company sold 10.5 million
shares of common stock under the January 2020 Sales Agreement resulting in $98.7 million in net proceeds. The January 2020 Sales
Agreement was fully utilized at that time.
In December 2018, the
Company entered into an At Market Issuance Sales Agreement (“December 2018 Sales Agreement”), which allowed it to issue
and sell up to $100 million in gross proceeds of its common stock. During the first quarter of 2019, the Company sold 1.7 million
shares of common stock under the December 2018 Sales Agreement resulting in $17.4 million in net proceeds. During the first quarter
of 2020, the Company sold 7.2 million shares of common stock resulting in $38.5 million in net proceeds. The December 2017 Sales
Agreement was fully utilized at that time.
In December 2017, the
Company entered into an At Market Issuance Sales Agreement (“December 2017 Sales Agreement”), which allowed it to issue
and sell up to $75 million in gross proceeds of its common stock. During the first quarter of 2019, the Company sold 2.5 million
shares of common stock under the December 2017 Sales Agreement resulting in $37.9 million in net proceeds. The December 2017 Sales
Agreement was fully utilized at that time.
Note 8 – Stock-Based Compensation
Stock Options
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 3,800,000 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.
The Amended and Restated
2005 Stock Incentive Plan (“2005 Plan”) expired in February 2015 and no new awards may be made under such plan, although
awards will continue to be outstanding in accordance with their terms.
The 2015 Plan permits
and the 2005 Plan permitted the grant of stock options (including incentive stock options), restricted stock, stock appreciation
rights and restricted stock units. In addition, under the 2015 Plan, unrestricted stock, stock units and performance awards may
be granted. Stock options and stock appreciation rights generally have a maximum term of 10 years and may be or were granted with
an exercise price that is no less than 100% of the fair market value of the Company’s common stock at the time of grant.
Grants of stock options are generally subject to vesting over periods ranging from one to four years.
Stock
Options and Stock Appreciation Rights
The following is a summary of stock options
and stock appreciation rights activity under the 2015 Plan and 2005 Plan for the three months ended March 31, 2020:
|
|
2015 Plan
|
|
|
2005 Plan
|
|
|
|
Stock Options
|
|
|
Weighted-Average Exercise Price
|
|
|
Stock Options
|
|
|
Weighted-Average
Exercise Price
|
|
Outstanding at January 1, 2020
|
|
|
3,388,701
|
|
|
$
|
35.64
|
|
|
|
501,780
|
|
|
$
|
64.19
|
|
Granted
|
|
|
22,086
|
|
|
$
|
6.52
|
|
|
|
—
|
|
|
$
|
—
|
|
Exercised
|
|
|
—
|
|
|
$
|
—
|
|
|
|
—
|
|
|
$
|
—
|
|
Canceled
|
|
|
(22,033
|
)
|
|
$
|
37.44
|
|
|
|
(14,879
|
)
|
|
$
|
47.85
|
|
Outstanding at March 31, 2020
|
|
|
3,388,754
|
|
|
$
|
35.46
|
|
|
|
486,901
|
|
|
$
|
64.69
|
|
Shares exercisable at March 31, 2020
|
|
|
1,098,087
|
|
|
$
|
77.97
|
|
|
|
486,901
|
|
|
$
|
64.69
|
|
Shares available for grant at March 31, 2020
|
|
|
219,732
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In 2019, the Company
granted 192,400 stock appreciation rights, with a weighted-average exercise price of $5.95, under the 2015 Plan.
Additionally, in 2019,
due to the limitations on the equity awards currently available under the 2015 Plan, the Company granted to certain employees 1,014,200
stock options, with a weighted-average exercise price of $5.95, under the 2015 Plan that are subject to approval at the Company’s
annual meeting of stockholders in June 2020. Furthermore, in April 2020, due to the limitations on the equity awards currently
available under the 2015 Plan, the Company granted to all of its employees collectively 2,501,600 stock options, with a weighted-average
exercise price of $19.08, and 326,050 restricted stock units under the 2015 Plan that include a performance requirement related
to its NVX-CoV2373 program before they begin to vest. These awards are also subject to approval at the Company’s annual meeting
of stockholders in June 2020. As these stock options and restricted stock units have not yet been approved by the Company’s
stockholders, the Company will not record any stock-based compensation expense for these awards until such time these awards are
approved by the stockholders and a measurement date occurs.
The fair value of stock
options granted under the 2015 Plan was estimated at the date of grant using the Black-Scholes option-pricing model with the following
assumptions:
|
|
Three Months Ended
March 31,
|
|
|
2020
|
|
2019
|
Weighted-average Black-Scholes fair value of stock options granted
|
|
$5.39
|
|
$27.60
|
Risk-free interest rate
|
|
0.6%-1.5%
|
|
2.4%-2.6%
|
Dividend yield
|
|
0%
|
|
0%
|
Volatility
|
|
133.6%-142.6%
|
|
111.7%-126.8%
|
Expected term (in years)
|
|
3.9
|
|
4.1-4.5
|
Expected forfeiture rate
|
|
0%
|
|
0%
|
The total aggregate
intrinsic value and weighted-average remaining contractual term of stock options and stock appreciation rights outstanding under
the 2015 Plan and 2005 Plan as of March 31, 2020 was $12.6 million and 7.6 years, respectively. The total aggregate intrinsic value
and weighted-average remaining contractual term of stock options and stock appreciation rights exercisable under the 2015 Plan
and 2005 Plan as of March 31, 2020 was $0 and 5.5 years, respectively. The aggregate intrinsic value represents the total intrinsic
value (the difference between the Company’s closing stock price on the last trading day of the period and the exercise price,
multiplied by the number of in-the-money stock options and stock appreciation rights) that would have been received by the holders
had all stock option and stock appreciation rights holders exercised their stock options and stock appreciation rights on March
31, 2020. This amount is subject to change based on changes to the closing price of the Company’s common stock. The aggregate
intrinsic value of stock options and vesting of restricted stock awards for the three months ended March 31, 2020 and 2019 was
$0.2 million and $0.1 million, respectively.
Employee Stock Purchase Plan
The Employee Stock
Purchase Plan, as amended (the “ESPP”), was approved at the Company’s annual meeting of stockholders in June
2013. The ESPP currently authorizes an aggregate of 597,500 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 600,000 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).
At March 31, 2020, there were 276,043 shares available for issuance under the ESPP.
The ESPP is considered
compensatory for financial reporting purposes. As such, the fair value of ESPP shares was estimated at the date of grant using
the Black-Scholes option-pricing model with the following assumptions:
|
|
Three Months Ended
March 31,
|
|
|
2020
|
|
2019
|
Range of Black-Scholes fair value of ESPP shares granted
|
|
$2.57-$35.00
|
|
$7.20-$34.80
|
Risk-free interest rate
|
|
1.5%-2.6%
|
|
1.2%-2.5%
|
Dividend yield
|
|
0%
|
|
0%
|
Volatility
|
|
66.6%-154.4%
|
|
52.2%-171.6%
|
Expected term (in years)
|
|
0.5-2.0
|
|
0.5-2.0
|
Expected forfeiture rate
|
|
0%
|
|
0%
|
Restricted Stock Units
The following is a
summary of restricted stock units activity for the three months ended March 31, 2020:
|
|
Number of
Shares
|
|
|
Per Share Weighted-Average Grant-Date Fair Value
|
|
Outstanding and Unvested at January 1, 2020
|
|
|
1,102,311
|
|
|
$
|
5.95
|
|
Restricted stock units granted
|
|
|
25,000
|
|
|
$
|
7.95
|
|
Restricted stock units vested
|
|
|
(17,563
|
)
|
|
$
|
8.76
|
|
Restricted stock units forfeited
|
|
|
(16,450
|
)
|
|
$
|
5.95
|
|
Outstanding and Unvested at March 31, 2020
|
|
|
1,093,298
|
|
|
$
|
5.95
|
|
The Company recorded
all stock-based compensation expense in the consolidated statements of operations as follows (in thousands):
|
|
Three Months Ended
March 31,
|
|
|
|
2020
|
|
|
2019
|
|
Research and development
|
|
$
|
1,908
|
|
|
$
|
3,179
|
|
General and administrative
|
|
|
2,057
|
|
|
|
2,379
|
|
Total stock-based compensation expense
|
|
$
|
3,965
|
|
|
$
|
5,558
|
|
As of March 31, 2020,
there was approximately $23 million of total unrecognized compensation expense related to unvested stock options, stock appreciation
rights, restricted stock units and the ESPP. This unrecognized non-cash compensation expense is expected to be recognized over
a weighted-average period of 1.4 years, and will be allocated between research and development and general and administrative expenses
accordingly. This estimate does not include the impact of other possible stock-based awards that may be made during future periods
and awards that require approval by the stockholders.
Note 9 – Grants
Bill & Melinda Gates Foundation
In support of the Company’s
development of ResVax, in September 2015, the Company entered into the grant agreement with BMGF (the “Grant Agreement”),
under which it was awarded a grant totaling up to $89.1 million (the “Grant”). The Grant supports development activities,
including the Company’s global Phase 3 clinical trial in pregnant women in their third trimester, product licensing efforts
and efforts to obtain WHO prequalification of ResVax. Unless terminated earlier by BMGF, the Grant Agreement will continue in effect
until the end of 2021. The Company concurrently entered into a Global Access Commitments Agreement (“GACA”) with BMGF
as a part of the Grant Agreement. Under the terms of the GACA, among other things, the Company agreed to make a certain amount
of ResVax available and accessible at affordable pricing to people in certain low- and middle-income countries. Unless terminated
earlier by BMGF, the GACA will continue in effect until the later of 15 years from its effective date, or 10 years after the first
sale of a product under defined circumstances. The term of the GACA may be extended in certain circumstances, by a period of up
to five additional years.
Payments received in
advance that are related to future performance are deferred and recognized as revenue when the research and development activities
are performed. Cash payments received under the Grant Agreement are restricted as to their use until expenditures contemplated
in the Grant Agreement are incurred. During the three months ended March 31, 2020, the Company recognized revenue from the Grant
of $0.3 million and has recognized approximately $82 million in revenue since the inception of the agreement.
Coalition for Epidemic Preparedness
Innovations
In March 2020,
the Company was awarded a grant of $3.9 million from the CEPI to facilitate its development of a COVID-19 vaccine in preparation
for potential future clinical trials. The grant continues in effect until the activities contemplated under the funding agreement
between CEPI and the Company are completed. Payments received in advance that are related to future performance are deferred and
recognized as revenue when the research and development activities are performed. Cash payments received under this grant are restricted
as to their use until expenditures contemplated in the funding agreement are incurred. During the three months ended March 31,
2020, the Company recognized revenue under this grant of $2.3 million.
In May 2020, CEPI
and the Company signed a restated funding agreement under which CEPI provides for funding of up to $384.5 million in addition
to the $3.9 million of funding it provided in the original funding agreement. CEPI funding is to be used by the Company for
the development of NVX-CoV2373.
At March 31, 2020,
the Company’s current restricted cash and deferred revenue balances on the consolidated balance sheet include its estimate
of costs to be reimbursed and revenue to be recognized, respectively, in the next twelve months under the Grant Agreement and CEPI
grant.
Note 10 – CARES
Act
On March 27, 2020,
Congress enacted the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”) to provide certain relief as a
result of the COVID-19 pandemic. Amongst other items, the CARES Act lifts certain interest expense deduction limitations originally
imposed by the Tax Cuts and Jobs Act of 2017. The enactment of the CARES Act did not result in any material adjustments to the
Company’s income tax provision or net deferred tax assets for the three months ended March 31, 2020.
Item 2. Management’s Discussion
and Analysis of Financial Condition and Results of Operations
Any statements in the
discussion below and elsewhere in this Quarterly Report about expectations, beliefs, plans, objectives, assumptions or future events
or performance of Novavax, Inc. (“Novavax,” and together with its wholly owned subsidiary Novavax AB, the “Company,”
“we” or “us”) are not historical facts and are forward-looking statements. Such forward-looking statements
include, without limitation, statements with respect to our capabilities, goals, expectations regarding future revenue and expense
levels and capital raising activities, including possible proceeds from our March 2020 Sales Agreement (defined below); potential
market sizes and demand for our product candidates; the efficacy, safety and intended utilization of our product candidates; the
development of our clinical-stage product candidates and our recombinant vaccine and adjuvant technologies; the development of
our preclinical product candidates; the conduct, timing and potential results from clinical trials and other preclinical studies;
plans for and potential timing of regulatory filings; our expectations with respect to the anticipated ongoing development and
potential commercialization or licensure of ResVax; the expected timing and content of regulatory actions; payments by the Bill
& Melinda Gates Foundation (“BMGF”); funding from the Coalition for Epidemic Preparedness Innovations (“CEPI”);
our available cash resources and usage and the availability of financing generally; plans regarding partnering activities, business
development initiatives; the adoption of stock incentive plans and amendments thereto; and other matters referenced herein. You
generally can identify these forward-looking statements by 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,” or “assume”
or the negative of these terms, or other comparable terminology, although not all forward-looking statements contain these words.
Forward-looking statements
involve estimates, assumptions and uncertainties that could cause actual results to differ materially from those expressed or implied
in the statements. Any or all of our forward-looking statements in this Quarterly Report may turn out to be inaccurate or materially
different from actual results.
Because the risk factors
discussed in this Quarterly Report and identified in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019,
and other risk factors of which we are not aware, could cause actual results or outcomes to differ materially from those expressed
or implied in any forward-looking statements made by or on behalf of us, you should not place undue reliance on any such forward-looking
statements. These statements are subject to risks and uncertainties, known and unknown, which could cause actual results and developments
to differ materially from those expressed or implied in such statements. We have included important factors that could cause results
to differ in the cautionary statements included in this Quarterly Report, particularly those identified in Part II, Item 1A “Risk
Factors” of this Quarterly Report and in Part I, Item 1A “Risk Factors” of our Annual Report on Form 10-K. These
and other risks may also be detailed and modified or updated in our reports and other documents filed with the Securities and Exchange
Commission (“SEC”) from time to time. You are encouraged to read these filings as they are made.
We cannot guarantee
future results, events, level of activity, performance or achievement. Further, any forward-looking statement speaks only as of
the date on which it is made, and we undertake no obligation to update or revise any forward-looking statements, whether as a result
of new information, future events or otherwise, unless required by law. New factors emerge from time to time, and it is not possible
for us to predict which factors will arise. In addition, we cannot assess the impact of each factor on our business or the extent
to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking
statements.
Overview
We are a late-stage
biotechnology company that promotes improved global health through the discovery, development and commercialization of innovative
vaccines to prevent serious infectious diseases and address urgent, global health needs. Our vaccine candidates, including our
lead candidates, NanoFlu™ and ResVax™, and our recent coronavirus vaccine candidate, NVX-CoV2373, are genetically engineered,
three-dimensional nanostructures of recombinant proteins critical to disease pathogenesis and may elicit differentiated immune
responses, which may be more efficacious than naturally occurring immunity or traditional vaccines. Our technology targets a variety
of infectious diseases. We are also developing proprietary immune stimulating saponin-based adjuvants at Novavax AB, our wholly
owned Swedish subsidiary. Our lead adjuvant, Matrix-M™, has been shown to enhance immune responses and has been well-tolerated
in multiple clinical trials.
Product Pipeline
Program
|
|
Current Development Stage
|
Seasonal Influenza
|
|
|
·
NanoFlu (Older Adults)(1)
|
|
Phase 3(2)
|
|
|
|
Respiratory Syncytial Virus (“RSV”)
|
|
|
·
ResVax(3) (Infants via Maternal Immunization)
|
|
Phase 3
|
·
Older Adults(1)
|
|
Phase 2
|
·
Pediatrics
|
|
Phase 1
|
|
|
|
Combination Seasonal Influenza/RSV(1)
|
|
Preclinical
|
|
|
|
Coronavirus
|
|
|
·
NVX-CoV2373(1)(4)
|
|
Phase 1
|
· Middle
East Respiratory Syndrome (“MERS”)
|
|
Preclinical
|
·
Severe Acute Respiratory Syndrome (“SARS”)
|
|
Preclinical
|
|
|
|
Ebola Virus (“EBOV”)(1)
|
|
Phase 1
|
|
(1)
|
Includes Matrix-M adjuvant
|
|
(2)
|
Successfully achieved all primary endpoints and achieved
statistical significance in key secondary endpoints
|
|
(3)
|
Supported by a grant from BMGF
|
|
(4)
|
Supported by funding from CEPI
|
A summary and status
of these vaccine programs follows:
Seasonal Influenza
NanoFlu Program (Older Adults)
Influenza is a world-wide
infectious disease with serious illness generally occurring in more susceptible populations such as children under 18 years old
and older adults, but also occurring in the general population. According to influenza vaccines forecasts by Datamonitor in 2013,
the market for seasonal influenza vaccines is expected to grow from approximately $3.2 billion in the 2015-16 flu season to approximately
$5.3 billion in the 2021-22 flu season (in the countries comprising the top seven markets). Recent flu seasons have shown an increase
in the influenza disease burden. For the 2017-18 flu season, the Centers for Disease Control and Prevention estimates that influenza
in the U.S. resulted in 48.8 million illnesses, 959,000 hospitalizations and 79,400 deaths, a dramatic increase across all categories
compared to previous years.
In March 2020, we announced
positive top-line results from our Phase 3 clinical trial of our nanoparticle seasonal quadrivalent influenza vaccine candidate,
including our proprietary Matrix-M adjuvant (“NanoFlu”). The trial was a randomized, observer-blinded, active controlled
trial in approximately 2,652 healthy older adults (65 years and older) across 19 clinical sites in the U.S. The trial evaluated
the immunogenicity and safety of NanoFlu compared to a U.S.-licensed quadrivalent vaccine, Fluzone® Quadrivalent.
The trial’s primary objective was to demonstrate non-inferior immunogenicity as measured by hemagglutination inhibition (“HAI”)
titers of vaccine homologous influenza strains compared to a licensed seasonal vaccine, and to describe its safety profile. NanoFlu
achieved all the primary objectives, and was well-tolerated and had a safety profile comparable to Fluzone Quadrivalent with a
modest increase in local adverse events. NanoFlu also achieved statistical significance in key secondary endpoints. This positive
data will support a U.S. biologics license application (“BLA”), which BLA will include process performance qualification
(“PPQ”) and a lot consistency clinical trial, and licensure of NanoFlu using the U.S. Food and Drug Administration’s
(“FDA”) accelerated approval pathway.
In March 2020, we entered
into an agreement with Emergent BioSolutions, Inc. (“Emergent”) to provide contract development and manufacturing services,
supplying us with Good Manufacturing Practices (“GMP”) vaccine product for use in PPQ and lot consistency trial. In
addition, this arrangement offers the potential to leverage Emergent’s rapid deployment capabilities and expertise that provide
us scalability and capacity to produce NanoFlu, with the added flexibility of converting all or a portion of this Emergent manufacturing
capacity towards production of our NVX-CoV2373 vaccine product described below.
In
January 2020, we announced that the FDA granted NanoFlu Fast Track designation, which is intended for products that treat serious
or life-threatening diseases or conditions and that demonstrate the potential to address unmet medical needs for such diseases
or conditions. The program is designed to facilitate development and expedite review of drugs to treat serious and life-threatening
conditions so that approved products can reach the market expeditiously. Specifically, Fast Track designation facilitates meetings
to discuss all aspects of development to support licensure and provides the opportunity to submit sections of a BLA on a rolling
basis as data become available. This permits the FDA to review modules of the BLA as they are received instead of waiting for the
entire BLA submission. In addition, priority review (six-month review versus standard 10-month review) is an additional benefit
that may potentially be available for NanoFlu in the future.
In June 2019, we announced
that the FDA acknowledged that the accelerated approval pathway is available for NanoFlu. An accelerated approval may be granted
for certain biological products that have been studied for their safety and effectiveness in treating serious or life-threatening
illnesses and that provide meaningful therapeutic benefit over existing treatments. Such an approval will be based on adequate
and well-controlled clinical trials establishing that the biological product has an effect on a surrogate endpoint that is reasonably
likely to predict clinical benefit. For seasonal influenza vaccines, the HAI antibody response is considered an acceptable surrogate
marker of activity that is reasonably likely to predict clinical benefit. To be considered for accelerated approval, a BLA for
a new seasonal influenza vaccine should include results from one or more well-controlled studies designed to meet immunogenicity
endpoints along with a commitment to conduct confirmatory post-marketing studies of clinical effectiveness in preventing influenza.
Respiratory Syncytial Virus (RSV)
Currently, there is
no approved RSV vaccine available to combat the estimated 64 million RSV infections that occur globally each year. We have identified
three susceptible target populations that we believe could benefit from the development of our respiratory syncytial virus fusion
(F) protein nanoparticle vaccine candidate (“RSV F Vaccine”) in different formulations: (1) infants via maternal immunization,
(2) older adults (60 years and older) and (3) children six months to five years old (“pediatrics”). With our current
estimates of the annual global cost burden of RSV in excess of $88 billion, we believe our RSV F Vaccine represents a multi-billion
dollar worldwide opportunity.
ResVax Program (Infants
via Maternal Immunization)
ResVax is our adjuvanted
RSV F Vaccine for infants via maternal immunization. RSV is the most common cause of lower respiratory tract infections (“LRTI”)
and the leading viral cause of severe lower respiratory tract disease in infants and young children worldwide. In the U.S., RSV
is the leading cause of hospitalization of infants and, globally, is second only to malaria as a cause of death in children under
one year of age.
Data from our Prepare
trial, which was initiated in December 2015, was announced in February 2019. The Prepare trial was conducted to determine whether
ResVax reduced incidence of medically significant RSV-positive LRTI in infants through a minimum of the first 90 days of life and
up through the first six months of life. While these data did not meet the trial’s primary efficacy endpoint, it did demonstrate
efficacy against a secondary objective by reducing RSV LRTI hospitalizations in treated infants. ResVax is thus the first RSV vaccine
to show efficacy in a Phase 3 clinical trial, and in addition, showed important effects against a variety of pre-specified exploratory
endpoints and post-hoc analyses. This included a ~60% reduction in RSV-related severe hypoxemia and a ~74% reduction in RSV-related,
radiographically-confirmed pneumonia through day 90. As in previous clinical trials, ResVax also showed favorable safety and tolerability
results. In light of the fact that the trial failed to meet the primary endpoints, the FDA and European Medicines Agency (“EMA”)
recommended that we conduct an additional Phase 3 clinical trial to confirm efficacy. BMGF has supported the Prepare trial for
ResVax through a grant of up to $89.1 million; BMGF continues to financially support our efforts to conduct certain follow-on analyses
of the Phase 3 data. We are currently in discussions with multiple potential commercial partners about the opportunity to bring
ResVax to market globally. In addition, we are continuing to determine and pursue regulatory licensure requirements and pathways
in the U.S., the European Union and other geographies.
RSV Older Adults
Program
Older adults (60 years
and older) are at increased risk for RSV disease due in part to immunosenescence, the age-related decline in the human immune system.
RSV infection can also lead to exacerbation of underlying co-morbidities such as chronic obstructive pulmonary disease, asthma
and congestive heart failure. In the U.S. alone, a reported RSV incidence rate of 5.5% in older adults would account for approximately
2.5 million infections per year. We estimate that approximately 900,000 medical interventions are caused by RSV disease in this
U.S. population each year. We followed up the 2016 Phase 3 clinical trial of our RSV F Vaccine, which failed to meet its pre-specified
primary or secondary efficacy objectives, with a 2017 Phase 2 clinical trial in older adults, to assess safety and immunogenicity
of one and two dose regimens of our RSV F Vaccine, with and without aluminum phosphate or our proprietary Matrix-M adjuvant. Immunogenicity
results from the 2017 trial indicate that both adjuvants increase the magnitude, duration and quality of the immune response versus
the non-adjuvanted RSV F Vaccine. We continue to assess the development opportunities for our RSV F Vaccine in older adults.
RSV Pediatrics
Program
By the age of five,
essentially all children will have been exposed to RSV and will likely develop natural immunity against the virus; however, children
under five remain vulnerable to RSV disease, offering a strong rationale for a pediatric vaccine that could offer enhanced protection.
In 2015, we announced positive results in our Phase 1 clinical trial evaluating the safety and immunogenicity of our RSV F Vaccine
in healthy children between two and six years of age. We continue to assess the development opportunities for our RSV F Vaccine
for pediatrics.
Combination Seasonal Influenza/RSV F
Vaccine
With the ongoing development
of our NanoFlu and RSV F Vaccine, a strong rationale exists for developing a combination respiratory vaccine that is designed to
protect susceptible populations against both diseases. Although testing is at an early stage, we believe that a combination vaccine
against both influenza and RSV may be achievable.
Coronavirus
Coronaviruses (“CoV”),
so named for their “crown-like” appearance, are a large family of viruses that spread from animals to humans and include
diseases such as MERS and SARS, and COVID-19, the most recent disease resulting from the SARS-CoV2 virus. COVID-19 first emerged
in late 2019 in China, and in March 2020 was declared a global pandemic by the World Health Organization. The virus has spread
to virtually all countries and territories in the world. There are currently no licensed vaccines proven to prevent COVID-19, although
a range of vaccine candidates are under development.
NVX-CoV2373
We have
successfully produced a vaccine candidate, NVX-CoV2373, designed to provide protection against COVID-19. Engineered from the
genetic sequence of COVID-19, we used our recombinant nanoparticle technology to generate the antigen derived from the
coronavirus spike (S) protein. In combination with our proprietary Matrix-M adjuvant, NVX-CoV2373 has demonstrated in
preclinical studies that it binds efficiently with human receptors targeted by the virus, a critical aspect for effective
vaccine protection.
In May 2020, we
signed a restated funding agreement with CEPI under which we receive funding of up to $384.5 million in addition to the $3.9
million of funding CEPI provided in the original funding agreement. CEPI funding is to be used by us for the development of
NVX-CoV2373.
In April 2020, we announced
that NVX-CoV2373 is highly immunogenic in animal models measuring spike protein-specific antibodies, antibodies that block the
binding of the spike protein to the receptor and wild-type virus neutralizing antibodies. High levels of spike protein-specific
antibodies with ACE-2 human receptor binding domain blocking activity and SARS-CoV-2 wild-type virus neutralizing antibodies were
observed after a single immunization. In addition, the already high microneutralization titers seen after one dose increased eight
fold with a second dose. High titer microneutralizing antibodies are generally accepted evidence that a vaccine is likely to be
protective in humans. The NVX-CoV2373 development plan combines a Phase 1/Phase 2 approach to allow rapid advancement during the
current coronavirus pandemic. The Phase 1 clinical trial will be a placebo-controlled observer blinded study of approximately 130
healthy adults and includes assessment of dosage amount and number of vaccinations. The trial is expected to begin in May 2020
with preliminary immunogenicity and safety results in July 2020.
In March 2020, we entered
into an agreement with Emergent to provide contract development and manufacturing services, supplying us with NVX-CoV2373 under
GMP. The Emergent arrangement offers the potential to leverage its rapid deployment capabilities for scalability, with the added
flexibility of converting Emergent manufacturing capacity scheduled for NanoFlu into production of our NVX-CoV2373 vaccine product
as needed.
MERS/SARS
Historically, we developed
a vaccine candidate against MERS, a novel coronavirus first identified in 2012, as well as a vaccine candidate against SARS in
2005. In 2012, within weeks of obtaining the sequence of the circulating MERS strain, we successfully produced a vaccine candidate
designed to provide protection. Our MERS candidate was based on the major surface spike protein, which we had previously identified
as the antigen of choice in our work with our SARS vaccine candidate. In 2014, in collaboration with the University of Maryland,
School of Medicine, we published results that showed our MERS and SARS vaccine candidates both blocked infection in laboratory
studies. Although not in active development, our MERS and SARS vaccine candidates remain viable opportunities to potentially develop
independently or in conjunction with other coronavirus development activities.
Ebola Virus
EBOV is a filovirus
that produces severe, often fatal illness in humans. Within the last decade, it has produced two large outbreaks in Sub-Saharan
Africa with high mortality. There are currently no licensed treatments proven to prevent EBOV, although a range of blood, immunological
and drug therapies are under development.
We have developed an
EBOV glycoprotein vaccine candidate (“Ebola GP Vaccine”) expressed in insect cells, using our core recombinant baculovirus
technology. In five separate studies, carried out in collaboration with the National Institute of Allergy and Infectious Disease,
active immunization with Ebola GP Vaccine was shown to be highly immunogenic and efficacious in preventing lethal disease in non-human
primates challenged with EBOV. Our 2015 Phase 1 clinical trial demonstrated that our Ebola GP Vaccine is highly immunogenic in
humans, well-tolerated and, in conjunction with our proprietary Matrix-M adjuvant, demonstrated marked antigen dose-sparing and
induced significant increases in neutralizing antibody titers. Although not in active development, our Ebola GP Vaccine is a viable
development opportunity in the event of dedicated funding or a partnership arrangement.
Sales of Common Stock
In March 2020, we entered
into an At Market Issuance Sales Agreement (“March 2020 Sales Agreement”), which allows us to issue and sell up to
$150 million in gross proceeds of our common stock. During the first quarter of 2020, we sold 3.8 million shares of common stock
under the March 2020 Sales Agreement resulting in $48.7 million in net proceeds. From April 1, 2020 through May 8, 2020, we sold
4.1 million shares of common stock resulting in $73.6 million in net proceeds, leaving $26.0 million remaining under the March
2020 Sales Agreement.
In January 2020, we
entered into an At Market Issuance Sales Agreement (“January 2020 Sales Agreement”), which allowed us to issue and
sell up to $100 million in gross proceeds of its common stock. During the first quarter of 2020, we sold 10.5 million shares of
common stock under the January 2020 Sales Agreement resulting in $98.7 million in net proceeds. The January 2020 Sales Agreement
was fully utilized at that time.
In December 2018,
we entered into an At Market Issuance Sales Agreement (“December 2018 Sales Agreement”), which allowed us to issue
and sell up to $100 million in gross proceeds of our common stock. In January 2020, we sold 7.2 million shares of common stock
under the December 2018 Sales Agreement resulting in $38.5 million in net proceeds. The December 2018 Sales Agreement
was fully utilized at that time.
Critical Accounting
Policies and Use of Estimates
There are no material
changes to our critical accounting policies as described in Item 7 of our Annual Report on Form 10-K for the fiscal year ended
December 31, 2019, 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 operations of the Company and should be read in conjunction with
the unaudited consolidated financial statements and notes thereto set forth in this Quarterly Report.
Three Months Ended
March 31, 2020 and 2019 (amounts in tables are presented in thousands, except per share information or as otherwise indicated)
Revenue:
|
|
Three Months Ended
March
31,
|
|
|
|
2020
|
|
|
2019
|
|
|
Change 2019
to 2020
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue
|
|
$
|
3,377
|
|
|
$
|
3,982
|
|
|
$
|
(605
|
)
|
Revenue for the three
months ended March 31, 2020 was $3.4 million as compared to $4.0 million for the same period in 2019, a decrease of $0.6 million,
or 15%. Revenue for the three months ended March 31, 2019 was primarily comprised of revenue for services performed under the Grant
Agreement with BMGF and revenue from Novavax AB. Revenue for the three months ended March 31, 2020 also included revenue under
the CEPI grant. The decrease was due to lower revenue under the Grant Agreement with BMGF as the Prepare trial concluded in 2019
and was partially offset by revenue under the CEPI grant.
We expect revenue
in 2020 to significantly increase due to our NVX-CoV2373 program, which we anticipate will be primarily funded by CEPI and/or
other potential non-dilutive funding sources.
Expenses:
|
|
Three Months Ended
March 31,
|
|
|
|
2020
|
|
|
2019
|
|
|
Change 2019
to 2020
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development
|
|
$
|
16,895
|
|
|
$
|
35,473
|
|
|
$
|
(18,578
|
)
|
General and administrative
|
|
|
9,379
|
|
|
|
8,732
|
|
|
|
647
|
|
Total expenses
|
|
$
|
26,274
|
|
|
$
|
44,205
|
|
|
$
|
(17,931
|
)
|
Research
and Development Expenses
Research and development
expenses include salaries, stock-based compensation, laboratory supplies, consultants and subcontractors, including external contract
research organizations, and other expenses associated with our process development, manufacturing, clinical, regulatory and quality
assurance activities for our programs. In addition, indirect costs such as fringe benefits and overhead expenses related to research
and development activities, are also included in research and development expenses. Research and development expenses decreased
to $16.9 million for the three months ended March 31, 2020 from $35.5 million for the same period in 2019, a decrease of $18.6
million, or 52%. This decrease was primarily due to decreased development activities, including lower clinical trial costs, of
ResVax, lower employee-related costs and other cost savings resulting from our 2019 transaction with Catalent Maryland, Inc. (formerly
Paragon Bioservices, Inc.), a unit of Catalent Biologics (“Catalent”). At March 31, 2020, we had 125 employees dedicated
to our research and development programs versus 324 employees as of March 31, 2019. For 2020, we expect research and development
expenses to significantly increase due to our anticipated development activities for our NVX-CoV2373 program (see discussion on
our NVX-CoV2373 program above).
Expenses by Functional
Area
We track our research
and development expenses by the type of costs incurred in identifying, developing, manufacturing and testing vaccine candidates.
We evaluate and prioritize our activities according to functional area and therefore believe that project-by-project information
would not form a reasonable basis for disclosure to our investors. Historically, we did not account for internal research and development
expenses by project, since our employees’ work time is spread across multiple programs and our internal manufacturing clean-room
facility produces multiple vaccine candidates.
The following summarizes
our research and development expenses by functional area for the three months ended March 31 (in millions):
|
|
2020
|
|
|
2019
|
|
Manufacturing
|
|
$
|
9.2
|
|
|
$
|
21.6
|
|
Vaccine Discovery
|
|
|
2.0
|
|
|
|
1.8
|
|
Clinical and Regulatory
|
|
|
5.7
|
|
|
|
12.1
|
|
Total research and development expenses
|
|
$
|
16.9
|
|
|
$
|
35.5
|
|
We do not provide forward-looking
estimates of costs and time to complete our research projects due to the many uncertainties associated with vaccine development.
As we obtain data from preclinical studies and clinical trials, we may elect to discontinue or delay clinical trials in order to
focus our resources on more promising vaccine candidates. Completion of clinical trials may take several years or more, but the
length of time can vary substantially depending upon the phase, size of clinical trial, primary and secondary endpoints and the
intended use of the vaccine candidate. The cost of clinical trials may vary significantly over the life of a project as a result
of a variety of factors, including:
|
·
|
the number of participants who participate in the clinical trials;
|
|
·
|
the number of sites included in the clinical trials;
|
|
·
|
if clinical trial locations are domestic, international or both;
|
|
·
|
the time to enroll participants;
|
|
·
|
the duration of treatment and follow-up;
|
|
·
|
the safety and efficacy profile of the vaccine candidate; and
|
|
·
|
the cost and timing of, and the ability to secure, regulatory approvals.
|
As a result of these
uncertainties, we are unable to determine with any significant degree of certainty the duration and completion costs of our research
and development projects or when, and to what extent, we will generate future cash flows from our research projects.
General
and Administrative Expenses
General and administrative
expenses increased to $9.4 million for the three months ended March 31, 2020 from $8.7 million for the same period in 2019,
an increase of $0.6 million, or 7%. The increase in general and administrative expenses is primarily due to increased professional
fees. At March 31, 2020, we had 40 employees dedicated to general and administrative functions versus 49 employees as of March
31, 2019. For 2020, we expect general and administrative expenses to increase due to increased activities related to supporting
our NVX-CoV2373 program.
Other Income (Expense):
|
|
Three
Months Ended
March 31,
|
|
|
|
2020
|
|
|
2019
|
|
|
Change 2019
to 2020
|
|
Other Income (Expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment income
|
|
$
|
436
|
|
|
$
|
420
|
|
|
$
|
16
|
|
Interest expense
|
|
|
(3,403
|
)
|
|
|
(3,403
|
)
|
|
|
—
|
|
Other income (expense)
|
|
|
—
|
|
|
|
(12
|
)
|
|
|
12
|
|
Total other income (expense)
|
|
$
|
(2,967
|
)
|
|
$
|
(2,995
|
)
|
|
$
|
28
|
|
We had total other
expense, net of $3.0 million for the three months ended March 31, 2020 and 2019.
Net Loss:
|
|
Three Months Ended
March 31,
|
|
|
|
2020
|
|
|
2019
|
|
|
Change 2019
to 2020
|
|
Net Loss:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(25,864
|
)
|
|
$
|
(43,218
|
)
|
|
$
|
17,354
|
|
Net loss per share
|
|
$
|
(0.58
|
)
|
|
$
|
(2.11
|
)
|
|
$
|
1.53
|
|
Weighted shares outstanding
|
|
|
44,421
|
|
|
|
20,442
|
|
|
|
23,979
|
|
Net loss for the three
months ended March 31, 2020 was $25.9 million, or $0.58 per share, as compared to $43.2 million, or $2.11 per share, for the same
period in 2019. The decrease in net loss was primarily due to decreased development activities, including lower clinical trial
costs, of ResVax in the three months ended March 31, 2020 as compared to the same period in 2019, as well as lower employee-related
costs and other cost savings due to the Catalent transaction.
The increase in weighted
average shares outstanding for the three months ended March 31, 2020 is primarily a result of sales of our common stock in 2020
and 2019.
Liquidity Matters
and Capital Resources
Our future capital
requirements depend on numerous factors including, but not limited to, the commitments and progress of our research and development
programs, the progress of preclinical and clinical testing, the time and costs involved in obtaining regulatory approvals, the
costs of filing, prosecuting, defending and enforcing patent claims and other intellectual property rights and manufacturing costs.
We plan to continue to have multiple vaccines and product candidates in various stages of development, and we believe our operating
expenses and capital requirements will fluctuate depending upon the timing of events, such as the scope, initiation, rate and progress
of our preclinical studies and clinical trials and other research and development activities. We have primarily funded our recent
operations with proceeds from the sale of common stock in equity offerings, the issuance of convertible debt and revenue under
our Grant Agreement with BMGF. We anticipate our future operations to be additionally funded by CEPI and/or other potential non-dilutive
funding sources.
As of March 31, 2020,
we had $244.7 million in cash and cash equivalents, marketable securities and restricted cash as compared to $82.2 million as of
December 31, 2019. These amounts consisted of $179.9 million in cash and cash equivalents, $57.4 million in marketable securities
and $7.3 million in restricted cash as of March 31, 2020 as compared to $78.8 million in cash and cash equivalents and $3.4 million
in restricted cash as of December 31, 2019.
The following table
summarizes cash flows for the three months ended March 31, 2020 and 2019 (in thousands):