Novavax Q1 2025 Earnings Call Transcript

Quartr
Provided by Quartr
May 8, 2025

There are 12 speakers on the call.

Operator

Good morning, and welcome to Novavax First Quarter twenty twenty five Financial Results and Operational Highlights Conference Call. All participants will be in a listen only mode. Assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star followed by the number one on your touch Please note this event is being recorded.

Operator

I would now like to turn the conference over to Luis Sannai, Vice President, Investor Relations. Please go ahead.

Speaker 1

Good morning, and thank you all for joining us today to discuss our first quarter twenty twenty five financial results and operational highlights. A press release announcing our results is currently available on our website at novavax.com and an audio archive of this conference call will be available on our website later today. Please turn to slide two. Before we begin with prepared remarks, I need to remind you that this presentation includes forward looking statements, including but not limited to statements related to Novavax's corporate strategy and operating plans, its strategic priorities, its partnerships, and expectations with respect to potential royalties, milestones, and cost reimbursements, FDA approval of the company's COVID-nineteen vaccine BLA and alignment on the post marketing commitment, its expectations regarding manufacturing capacity, timing, production, and delivery for its COVID-nineteen vaccine, the development of Novavax's clinical and preclinical product candidates, full year 2025 financial guidance and revenue framework, and Novavax's future financial business performance. Each forward looking statement contained in this presentation is subject to risks and uncertainties that could cause actual results to differ materially from those projected in such statements.

Speaker 1

Additional information regarding these factors appears under the heading Cautionary Note Regarding Forward Looking Statements in the presentation we issued this morning and under the heading Risk Factors in our most recent Form 10 ks and subsequent Form 10 Qs filed with the Securities and Exchange Commission available at sec.gov and on our website at novavax.com. The forward looking statements in this presentation speak only as of the original date of this presentation, and we undertake no obligation to update or revise any of these statements. Please turn to slide three. This presentation also includes references to non GAAP financial measures, which are total adjusted revenue and adjusted licensing royalties and other revenue and non GAAP profitability. Please turn to slide four.

Speaker 1

Joining me today is John Jacobs, our President and CEO, who will provide an update on our progress during the quarter and highlight our growth strategy. Doctor. Alexandra Dragia, Head of R and D, will discuss our R and D updates. And finally, Jim Kelly, Chief Financial Officer and Treasurer, will provide an overview of our financial results and 2025 financial guidance and revenue framework. John Trezzino, Chief Operating Officer will be available for the Q and A portion of the call.

Speaker 1

I would now like to hand over the call to John Jacobs. Thank you, Louis. I'm pleased to

Speaker 2

be here with you today along with members of our executive team to discuss our financial results and highlight the progress we have made in Q1. This earnings call marks approximately the one year anniversary of our new corporate growth strategy, which was formed after signing our agreement with Sanofi. Over the course of the past year, we have moved away from our prior focus, which was allocating the majority of our time, energy, and resources on commercializing our COVID-nineteen vaccine to a strategy focused on optimizing our existing partnerships and expanding access to our proven technology platform via R and D innovation, organic portfolio expansion, and forging new partnerships and collaborations with other companies. We believe this strategy enables maximum value creation from our cutting edge technology. In parallel, we are creating a significantly leaner infrastructure with continued cost reduction initiatives underway as we drive towards potential non GAAP profitability as early as 2027.

Speaker 2

Via our new strategy, we intend to create multiple opportunities for value growth. Important catalysts this year include the potential approval of the BLA for our COVID vaccine and other milestones related to the Sanofi agreement, preclinical data from our early stage pipeline programs in the second half of this year, and the potential for additional partnerships and collaborations. As an example, we are excited about the progression of our partnership with Takeda as it significantly improves the financial terms for Novavax in Japan, the third largest healthcare market in the world. This strengthened partnership with Takeda, a globally respected multinational pharmaceutical company, further validates the value of our cutting edge technology platform and our efforts to become a partner of choice. Forging new collaborations and partnerships based on our differentiated tech platform and deep expertise in vaccine development is a top priority for us this year, and we look forward to sharing partnership updates with you as we continue to execute upon this key strategic pillar for Novavax.

Speaker 2

To guide our work for the remainder of 2025, we remain focused on three strategic priorities. Our first priority is optimizing our partnership with Sanofi. Our partnership with Sanofi is a prime example of how we intend to work with others as we look to become a partner of choice and create long term value for our stakeholders. As we have said before, this partnership has many important and potentially value creating elements to it, including milestones and royalties associated with the marketing of our COVID vaccine related to the BLA approval, MAH transfers, tech transfer, and ongoing royalties. Number two, milestones and royalties associated with the development of new combination vaccines that include our COVID vaccine.

Speaker 2

For example, Sanofi is developing two combination vaccines that include our COVID vaccine and their market leading flu vaccines, both of which earned Fast Track designation from the FDA last year. And finally, milestones and royalties associated with any other new products developed using our Matrix M adjuvant. Regarding our COVID vaccine, we are working constructively with the FDA with the intent of bringing the BLA process to a positive conclusion as soon as possible. FDA feedback on our BLA suggests a pathway to approval upon alignment on study parameters for the post marketing commitment requested. We believe it's important that a non mRNA protein based COVID-nineteen vaccine option is available as a choice for US consumers.

Speaker 2

Our second strategic priority is to leverage our proven tech platform and pipeline to drive additional partnerships. Our team has been actively working on developing new partnership opportunities beyond Sanofi and the material transfer agreement or MTA with a top tier pharma company that we announced last fall to explore our Matrix M adjuvant with bacterial pathogens. In fact, the past few months, we have signed new agreements, including an expanded scope of the MTA I just mentioned to now include viral pathogens. We signed another new MTA for Matrix M with a different top tier pharma company, entered a preclinical collaboration with a new partner to explore the application and utility of Matrix M with their cancer vaccine candidate, And as noted earlier, strengthened our existing agreement with Takeda for the COVID market in Japan, including significantly improved financial terms for Novavax. These new agreements represent important steps in our continuing quest to add new partnerships throughout licensing efforts and further highlight the growing interest in our tech platform.

Speaker 2

We intend to optimize these new agreements with the goal of expanding the scope and value creation opportunity for each of them over time. And we don't intend to stop here. We are actively seeking additional partnerships and collaborations with the goal of creating multiple growth opportunities in the short, mid and long term for Novavax. As we stated before, this ongoing effort includes seeking a potential partner to develop and commercialize our late stage COVID influenza combination vaccine and standalone flu vaccine. And finally, third strategic priority is to advance our tech platform and early stage pipeline.

Speaker 2

We are actively advancing our early stage pipeline programs using a capital efficient approach. Our R and D investment strategy should allow us to make disciplined investments in programs aligned to the highest potential value opportunities both infectious disease and beyond. Our intent is to partner these assets at early proof of concept stages. However, for the right asset where data and commercial landscape indicate a unique high value opportunity, we would consider bringing that asset forward ourselves and we'll make that determination on a case by case basis as these assets mature. A bit later in the call, Roxandra will talk about how we're using translational research and computational medicine to inform these investment decisions.

Speaker 2

We anticipate sharing some initial data on our new pipeline assets and new data on Matrix M and our technology platform in the second half of the year during an Investor Day. In summary, over the past few months we have made significant progress on our new growth strategy including the addition of new agreements with other companies, the expansion and strengthening of existing agreements with two major pharma companies, the initiation of four new early stage pipeline programs, and the continued advancement of our partnership with Sanofi. We remain confident that over the long run our technology has the opportunity to positively impact the lives of billions of people around the world. That our strategy has the potential to drive significant value creation. And that our team has the knowledge, poise, and skill to help carry us forward to an exciting and positive future for Novavax.

Speaker 2

I would now like to turn the call to Roxandra to discuss our research and development updates. Roxandra?

Speaker 3

Thank you, John. Please turn to slide six. It has been six months since joining Novavax's innovative R and D team, and this time left me even more excited about the potential of our technology platform and the opportunity we have to strengthen and build on the depth and breadth of our partnerships. As John mentioned before, an important part of our corporate growth strategy is value creation through the advancement of our early stage pipeline and high quality R and D. Value comes in different shapes and sizes.

Speaker 3

It starts in the lab, advancing programs and learnings in a continuous cycle of generating scientific data, which in turn informs next projects and experiments with a goal of developing new vaccines and positively impacting public health. We have already accomplished a lot in a short timeframe, and I'm encouraged and inspired by the depth, expertise, and skills of our team. Since the start of the year, we initiated and advanced four early stage programs after a rigorous prioritization process, H5N1, RSV combinations, shingles, and C. Difficile, using information from translational models and leveraging artificial intelligence and machine learning. Furthermore, we continued our research into our COVID-nineteen vaccine and progressed our late stage programs in kick and flu.

Speaker 3

Please turn to slide seven. We also continue to explore Matrix M and its potential impact across a variety of vaccine platforms and pathogens, including new formulations of Matrix M, generating data that demonstrates the utility of our adjuvant and sharing that with potential BD partners. Another example of us leading the way with science. In April, I presented at the World Vaccine Congress on the potential of Novavax's platform technology and Matrix M adjuvant showcasing attributes related to efficacy and tolerability. Data collected and analyzed from multiple clinical trials show that vaccines adjuvanted with matrix M have a milder reactogenicity profile compared to mRNA vaccines.

Speaker 3

Please turn to slide eight. Furthermore, we presented the results of the Shield Utah study at the Congress of the European Society of Clinical Microbiology and Infectious Disease Conference. This real world study demonstrated that our protein based technology platform outperformed one of the mRNA COVID vaccines across all parameters measured in terms of fewer and less severe reactogenicity symptoms with approximately 39 fewer symptoms on average and reduced the impact of the symptoms on quality of life, such as daily work and family responsibilities. We believe that real world information showing that a better tolerability and a milder arachnogenicity profile will lead people to prefer our protein based technology over other vaccine platforms when given the choice. In early studies, we are seeking to explore how neuromatrix formulations, different regimens and dosing schedules, and other enhancements to matrix M and its components could lead to improved vaccines, personalized approaches, and advancement in therapeutic areas beyond infectious diseases.

Speaker 3

As an example, we are currently developing research partnerships and collaboration in immuno oncology, a field that is rapidly progressing and one where we envision exciting potential opportunities for our technology. By taking targeted risks, we expect to identify specific areas where Matrix M, either as currently formulated or as a next generation formulation, has the potential to improve rates and duration of antitumor responses. Please turn to slide nine. We have previously reported that we developed a protein nanoparticle and matrix M vaccine against highly pathogenic avian H5N1 virus that is currently undergoing preclinical evaluation. Nonhuman primate studies have shown our candidate vaccine can produce protective levels of immunity after a single dose in primed animals, a situation like that of the human population which received the flu vaccine or had influenza in the past.

Speaker 3

A lethal mirroring challenge model showed complete protection in a similar vaccination regimen. Unlike other vaccines, which might require two or more doses for full protection, the possibility to administer a single vaccine dose for protection is important in the context of a pandemic, both in The United States and globally. Furthermore, additional exploratory data in the context of our COVID vaccine have shown that our technology platform can induce mucosal antibodies. Mucosal protection is important not only for the person receiving the vaccine, but for instance for reducing virus transmission. Elements of our vaccine platform, its design, scale up, and manufacturing processes should make a pandemic flu vaccine from Novavax amenable to rapid deployment as an alternative to mRNA vaccines.

Speaker 3

We stand ready to join The United States and global health security efforts related to H5N1 and are currently pursuing funding and partnership opportunities for this program. Our new programs across our discovery portfolio are using artificial intelligence and machine learning enabled structure driven optimization, rapid antibody testing for epitope assessment, and novel in vitro and in vivo models for rapid preclinical testing. Our early stage pipeline includes development of an RSV combination vaccine candidate that builds on the company's extensive history in this area. Lessons learned regarding superior protein antigen design, together with the new computational capabilities mentioned before, should allow us to enhance structural stability and immunogenicity and combine multiple different respiratory virus antigens with Matrix M into this program potentially created a competitive, meaningful and differentiated offering in this key area. For shingles prevention, we believe our technology has the potential to improve on the current standard of care by enabling a more tolerable, less reactogenic, equally efficacious vaccine.

Speaker 3

Many at risk adults are declining shingles protections or don't complete their vaccination series because of the fear of side effects. By providing a more attractive option regarding tolerability, which we believe our technology has the potential to do, we intend to change this dynamic and address a persistent public health need. We believe our technology may lead to better vaccine candidates for the prevention of C. Difficile morbidity and mortality. There is no approved vaccine for C.

Speaker 3

Difficile, yet the medical need is large with C. Diff related illness including recurrent infection. Our technology has the potential to facilitate the development of a multivalent adjuvant vaccine with enhanced activity that could provide a differentiated impact in an underserved patient population. We expect to share some initial data and early learnings on our early stage organic pipeline during the second half of the year. Turning to our late stage kick and standalone flu programs.

Speaker 3

In December 2024, we started an initial cohort of a phase three immunogenicity and safety trial for our KIT and standalone influenza vaccine candidates in older adults. This trial completed enrollment of approximately 2,000 participants, and we are on track to report top line data midyear. While not a pivotal study, this data will be essential to inform the design of a subsequent pivotal trial in older adults for both programs. In addition, after further consultation with The U. S.

Speaker 3

FDA, we determined that seeking an accelerated approval pathway for either of these assets would not be feasible. We intend to partner both vaccine programs and have the potential partner advance and fund all future clinical development, regulatory filing, and commercialization activities. In summary, now with an intense focus on science and readiness for partnering, we intend to advance and optimize our programs and generate initial proof of concept in preclinical evaluation. I'm very much looking forward to sharing with you some of our first data readouts in the second half of this year. I'll turn the call over to Jim to discuss our financial results.

Speaker 4

Well, you, Alexandra. Please turn to slide 10. This morning we announced our financial results for the first quarter of twenty twenty five. Details of our results can be found in our press release issued today and in our Form 10 Q filed with the SEC. Before reviewing our financial results, I would like to begin by noting that today we are reiterating our financial guidance for full year 2025 combined R and D and SG and A expenses and raising our 2025 revenue framework.

Speaker 4

Last quarter, we outlined Novavax's path to significant value creation and potential non GAAP profitability, and we are focused on the execution of this plan. More on these points later in my remarks. Please turn to slide 11. I'll begin with key highlights from our first quarter twenty twenty five financial results. Novavax reported total revenue of $667,000,000 as compared to $94,000,000 in the first quarter of twenty twenty four.

Speaker 4

The $622,000,000 of product sales in the current quarter includes $6.00 $3,000,000 recognized in connection with the termination of the Canada and New Zealand APA agreements. Both of these agreements are now fully closed, and the revenue recognized relates to cash received in prior years. In addition, we recorded $45,000,000 from licensing, royalties, and other revenue. During the first quarter of twenty twenty five, we continued to transform Novavax into a more lean and agile organization. We strengthened our balance sheet, reducing our current liabilities by over 60% compared to year end 2024, and improved our cost structure by reducing combined R and D and SG and A costs by 24% compared to the same period last year.

Speaker 4

For 2025, we are reiterating our full year financial guidance for combined R and D and SG and A expenses of between $475,000,000 and $525,000,000 At the midpoint, this reflects a 30% reduction when compared to 2024. Of note, we continue to work with FDA on the parameters of the requested post marketing commitment study related to our BLA. For now, we believe it should be assumed that our multi year guidance includes the potential impact to Novavax of this post marketing commitment. If needed, our guidance and operating plan may be updated based upon the outcome of that discussion. In parallel, we are working closely with our partner Sanofi to determine the potential approach to funding.

Speaker 4

We ended the first quarter with just under $800,000,000 in cash and receivables. During 2025, we anticipate earning an additional $225,000,000 in milestones from Sanofi, assuming Nivaxibat approval in The US and Europe, and a $20,000,000 upfront payment in the second quarter from Takeda related to our amended license agreement. These anticipated cash flows from our licensed partners highlight Novavax's potential to create significant shareholder value by monetizing our cutting edge technology. Based on our current operating plan, including milestone payments, royalties and the multi year expense targets, we have highlighted a path towards our goal of non GAAP profitability as early as 2027 and maintaining at least a year and a half to two years of cash on hand at all times. Please turn to slide 12 for a detailed view of our first quarter revenue results and disclosures.

Speaker 4

You will see that beginning this quarter, we are highlighting two categories under product sales. Nevaxivid reflects product sales where Novavax is the commercial market lead and records revenue related to the sales and distribution of our COVID-nineteen vaccine. This is where we historically have recorded our APA and commercial market sales. New beginning in 2025 is a category called supply sales that includes sales of finished product, Matrix M adjuvant, and other supplies to our licensed partners. Under supply sales, we act as a contract manufacturer to our licensed partners to support their development and sales of vaccines to customers around the world, leveraging our proven technology.

Speaker 4

In prior years, we recorded the supply sales under licensing royalties and other, as they were less material at that time. For the first quarter of twenty twenty five, we recorded total revenue of $667,000,000 compared to 94,000,000 in the same period in 2024. Product sales for the first quarter of twenty twenty five were $622,000,000 driven by $6.00 3,000,000 of revenue related to the closeout of the Canada and New Zealand APAs. In each case, this resolution allows Novavax to retain cash previously received under these agreements and resolves any outstanding obligation via payments of $28,000,000 and $4,000,000 to Canada and New Zealand respectively in the first quarter. The remaining 5,000,000 for Nivaxavib product sales in the first quarter relates to sales in The US and Germany.

Speaker 4

Our supply sales of 14,000,000 in the first quarter of twenty twenty five were primarily related to Matrix M adjuvant sales to our license partners. We recorded $45,000,000 of licensing royalties and other revenue in the first quarter, consisting of $40,000,000 related to our Sanofi agreement, and 5,000,000 partners. The Sanofi revenue consists of 29,000,000 from the amortization of our upfront payment and database lock milestones, plus 11,000,000 from R and D reimbursements in the period, as we support Sanofi in their efforts. Please turn to slide 13 for a detailed view of our first quarter financial results, where I'll focus on our operating expense results and trends. First quarter twenty twenty five combined R and D and SG and A expenses were $137,000,000 and reflect a 24% reduction from the same period in 2024.

Speaker 4

Importantly, our SG and A expense of $48,000,000 is 45% lower than the same period last year and is driven by the decrease in closeout of our global sales and marketing capabilities, plus strong execution on our broader cost reduction plan. Research and development expenses of $89,000,000 in the first quarter of twenty twenty five were primarily driven by our investments in the phase three kick flu study and support of Sanofi for the upcoming COVID-nineteen vaccine season. A smaller portion of this spend is presently directed towards our early stage preclinical programs. We intend to focus our attention on partnering our kick and flu vaccine candidates, and this study reflects the material completion of our intended investments in this program. And finally, we reported net income of $519,000,000 or $2.93 per diluted share for the first quarter of twenty twenty five.

Speaker 4

Please turn to slide 14. Our first quarter twenty twenty five results highlight the significant progress we have made this year to improve our balance sheet by reducing current liabilities by $732,000,000. Since 2022, we have reduced Novavax's current liabilities by 2,100,000,000.0 and over 80%. During the first quarter, our change in cash of approximately $250,000,000 included the elimination of many short term liabilities, and we expect our go forward expenditures to be lower. Specifically, we anticipate our expenditure rate, which reflects our net spend prior to new cash flows from royalties and milestones, to be in the 140,000,000 to $160,000,000 range per quarter and declining over time.

Speaker 4

We believe this progress places Novavax in a stronger financial position as we execute on our growth strategy. Please turn to slide 15. We are committed to streamlining our operating expenses to enable value creation. For 2025, we are reiterating our full year combined R and D and SG and A expense guidance of between $475,000,000 and $525,000,000 We intend to invest approximately 70% of this combined spend into R and D to drive shareholder value as we allocate our resources towards what we believe are the highest return activities. During 2025, we expect our operating expenses to be highest in the first half of the year as we conclude our kick flu study and then decline through the second half of the year.

Speaker 4

Looking forward, we expect to achieve combined R and D and SG and A expenses of approximately $250,000,000 in 2027, and believe we are well on our way to achieving this goal. As mentioned earlier, we continue to work with FDA on the parameters of the requested post marketing commitment study. For now, it should be assumed that our multi year guidance includes the potential impact to Novavax of this post marketing commitment. Reducing our cost structure is an important piece of our drive towards non GAAP profitability as early as 2027. We define non GAAP profitability as GAAP operating profit less non cash items such as stock based comp and depreciation.

Speaker 4

Keys to the timing on our path to profitability are the successful development, regulatory approval, and commercialization of products by our partner Sanofi under our agreement. Please turn to slide 16. Now turning to our 2025 revenue framework. Today, we are raising our prior revenue framework and now expect to achieve adjusted total revenue of between $975,000,000 and 1,000,000,000 and 25,000,000. Our 2025 revenue framework excludes Sanofi supply sales, royalties, and influenza COVID-nineteen combination and Matrix M related milestones.

Speaker 4

This means there may be revenue in 2025 that is additive to our expectations for adjusted total revenue for the year. At midpoint, the $675,000,000 increase to our 2025 adjusted total revenue is driven by, first, the addition of $610,000,000 of Nevexib product sales, that includes our first quarter results, and a small amount of sales in the second quarter of twenty twenty five. Second, a 15,000,000 increase to adjusted supply sales related to increased demand for Matrix M from Serum for the R21 malaria vaccine, and from Takeda for COVID-nineteen. And third, a $50,000,000 increase to adjusted licensing royalties and others that has two components, a $30,000,000 increase to other partner revenue driven by a $20,000,000 upfront payment from Takeda in the second quarter and anticipated milestones and royalties from our licensed partners. And also, a $20,000,000 increase to amortization related to the Sanofi upfront payment in pediatric milestone.

Speaker 4

This reflects a timing update that shifts amounts into 2025 that were previously anticipated to be recorded in 2026. We look forward to sharing additional updates as we improve Novavax's financial performance, cost structure, and strength to deliver shareholder value. With that, I'd like to turn the call back over to John for some closing remarks.

Speaker 2

Thank you, Jim. In summary, we intend to drive long value creation through our corporate growth strategy. And in 2025, we'll continue to focus on our three strategic priorities. Priority one, executing on our Sanofi partnership and in doing so successfully demonstrating we are our partner of choice. Priority two, leveraging our technology platform and pipeline to forge additional partnerships.

Speaker 2

And priority three, advancing our tech platform and early stage pipeline to help foster additional partnering and growth opportunities. Thank you all for joining us today, and thank you to all of our employees for their continued efforts in advancing our business. I'm proud of our accomplishments to date and excited about the opportunity to drive future value from our strategy in 2025 and beyond. I'd now like to turn the call over to our operator for Q and A. Operator?

Operator

Thank you. We will now begin the question and answer session. Your first question comes from the line of Roger Song of Jefferies. Line is now open.

Speaker 5

Great. Good morning. Thanks for the update and taking our question. A couple of questions from us. The first one is regarding this post marketing commitment FDA requested.

Speaker 5

Can you just comment on the nature of the study, in terms of the efficacy versus safety requirement? And then also, we just know, in two weeks, VERPAC is going to host a meeting to select the c string for the twenty twenty five, twenty twenty six season. How do you think this post marketing commitment gonna impact the 2025 and '26 season? And I have a follow-up question regarding the kick. Thank you.

Speaker 2

Hi, Roger. Good to hear from you, and thanks for the questions. We haven't commented publicly on the nature of the post marketing commitment at this time, but as we've said a few times and will continue to say today right now, we continue to work with the FDA diligently and urgently to try to bring this forward as soon as possible to a positive conclusion. And we do see a pathway forward to approval based on the formal comments and questions we've received from FDA. You know, we'll keep you posted as that develops.

Speaker 2

And right now we're not seeing a direct impact on any discussions VRBPAC may be having on the season related directly or indirectly to any requests we may have had in our BLA.

Speaker 5

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

Speaker 2

All right, I'll hand that question over to Roxanne. Rajan, if we heard you right, you were asking about the nature of that data or what we're expecting or hoping to see in that cohort, Roxandra, of our phase three program.

Speaker 3

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

Speaker 3

It is to generate additional immunogenicity and safety data.

Speaker 2

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

Speaker 5

Got it. Yep, thank you.

Operator

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

Speaker 6

Yes. Good morning, team. Thanks for taking our questions congrats on the progress. Yeah, thanks, John. So I was wondering, in context of this Utah Shield study that was published, I was just curious how much is this quality of life activities of daily living kind of in regulatory science as, you know, FDA as well as global regulators think of adjuvanted, protein based vaccines versus mRNA?

Speaker 6

And I was also curious, you know, this talk on contemporary placebo controlled study required, like how does that inform your thinking of what a registration enabling phase three trial would look like for your wholly owned KCA flu vaccine? And I have a quick follow-up.

Speaker 2

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

Speaker 6

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

Speaker 2

of Okay, so Rux, why don't you take the first question please? You.

Speaker 3

Yeah, thank you, John. So let's be clear, the Utah study is an observational study. So basically based on a questionnaire asking about the quality of life of individuals. This is not part of a typical regulatory submission. It is to inform probably much more the consumers rather than the regulators.

Speaker 3

We cannot speculate how the regulators are going to look at that particular data. They are actually looking at the safety and efficacy of each of the vaccines on their own merit. But after the introduction of any vaccine, not only a COVID vaccine or a flu vaccine in the population, there are a lot of these real world evidence studies that are looking at different characteristics. So, that Utah study is in that particular category.

Speaker 2

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

Speaker 6

Right. That's right.

Speaker 2

And whether or not it would be placebo controlled?

Speaker 6

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

Speaker 2

Well, we're going to be or again, as we said, Novavax does not intend to take on ourselves further clinical investment in those late stage programs. We intend to do that with a partner. So we're currently seeking a partner. And if and when we get designing the study with them. And at that time, then we will be disclosing how that study is designed.

Speaker 2

When it comes to placebo controlled, our existing efficacy data for Nuvaxavid was based upon an initial placebo controlled trial with approximately 30,000 patients. So, we've done that before with our products, but any new trial would be designed with a partner. That's our intent.

Speaker 6

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

Speaker 2

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

Speaker 3

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

Speaker 3

So, stay tuned for the second half of the year.

Speaker 2

And then I think Mike, you were trying to ask about timing for any INDs that might come out of our early stage program, but we specified that at this time. But I think you'd use normal assumptions on that when you're coming out of the clinic. And I think that will be more clear also in the second half of the year as we share some initial results on these programs. Go ahead Jim on question two.

Speaker 4

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

Speaker 6

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

Operator

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

Speaker 7

Hey, guys. Thanks for taking our questions. Just two for me. Maybe just starting on the APA revenues that got recognized this quarter. I guess how much of this is maybe cash today versus cash in the future?

Speaker 7

Or is basically all of it just revenue recognition of prior cash that's been received? Then I've

Speaker 5

got a follow-up.

Speaker 2

Jim, you want to take that one?

Speaker 4

Yes, certainly. Certainly a good question. The APA revenue recognition, the $6.00 3,000,000 from Canada and New Zealand is non cash. We had received that cash under those agreements in prior years. Of course, it was on our balance sheet.

Speaker 4

And then through the termination and close out of those agreements, what that meant is that we get to keep that cash under the close out of those agreements.

Speaker 7

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

Speaker 2

Go ahead, Roxandra.

Speaker 3

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

Speaker 7

Thank you.

Speaker 2

Thank you.

Operator

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

Speaker 8

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

Speaker 2

Tom, I wouldn't say we proactively designed a study based on reactogenicity. We designed it to demonstrate, you know, an immune response to both of the pathogens that are being targeted with that vaccine, as you're well aware. And then we'll see how the reactogenicity profile looks. We would expect it to be reasonable based on what we know about our tech. And again, we need to be crystal clear, make sure everyone, what I want everyone to understand is this is a 2,000 patient cohort.

Speaker 2

This is not a pivotal trial. This is not a full phase three program, this is not designed for registration, this is not designed to definitively prove anything long term about our vaccine. What it is designed to do as a small cohort is to add additional data into our data set to help us think about how to then design with a partner, which is our intent, a study that would be targeted toward registration. So that's the goal. Roxandra, anything you'd add to that?

Speaker 3

No, you've said it all, John. Perfect, thank you. Thank you.

Speaker 8

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

Speaker 2

Sorry, Tom. We just want to make sure we fully understand your question. Could you just clarify, just take a shot at clarifying that and then Ruxandra will try to answer you.

Speaker 8

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

Speaker 2

I see. Go ahead, Jonte.

Speaker 9

Yeah, hi. Thanks for the clarification. I think it's important to understand what the BLA submission is and what's being reviewed. It's taking the existing product that's in market today under the Emergency Use Authorization and getting a BLA approval for that vaccine. Remember, the basis for that BLA is on the clinical data to date.

Speaker 9

There's no new clinical data. It's from our Phase III efficacy trial and any other updated information that was relative to that filing. We then, after the approval of the BLA and some of the conversations we're having with FDA today, would result in then a readiness for the 'twenty five, 'twenty six marketplace, which would include strain change. But first step, again, just to be clear, is the BLA for the existing product with no new clinical data relative to the JN1 strain.

Speaker 2

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

Speaker 2

Hopefully we've understood your question clearly and that was helpful.

Speaker 8

Absolutely. Thank you very much.

Operator

Your next question comes from the line of Eric Joseph. Your line is now open.

Speaker 10

Hi, good morning. Thanks for taking the questions. As a condition of approval for the COVID-nineteen vaccine, is the discussion with FDA solely focused on the shape of the post marketing commitment? I just want to be confident that we can rule out additional clinical work being a condition for initial BLA approval. And then secondly, to what extent does the milestone, the approval milestone from Sanofi consider a post marketing commitment?

Speaker 10

I guess what I mean to ask there is whether that milestone may be impacted at all if a additional clinical trial is required as a condition of BLA approval. Thank you.

Speaker 2

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

Speaker 4

Yes, certainly. Eric, the milestone based upon BLA approval is not impacted by post marketing commitment. I want make sure Right. Still eligible to receive upon a BLA approval. Yep.

Speaker 4

Even with a post marketing commitment, dollars 175,000,000 milestone.

Speaker 2

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

Speaker 10

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

Speaker 2

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

Speaker 2

That's what we can share so That's what we've said so far. If anything changes, we'll let everybody know.

Speaker 10

Great. Thanks for taking the questions.

Operator

Thank you. Your next question comes from the line of Chris Lobianco from Ed Securities. Your line is now open.

Speaker 11

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

Speaker 2

Thank you, Chris, for your question. Good hear from you. And I'd like to ask the question back to you because if you know, we'd love to find out. But in seriousness, know, we really can't speculate on FDA's thoughts regarding other companies filings. We know that we have our conversations ongoing with FDA and that's all we can comment on at this time, Chris.

Speaker 11

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

Speaker 11

Thank you.

Speaker 2

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

Speaker 1

Operator? Operator.

Speaker 2

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

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Earnings Conference Call
Novavax Q1 2025
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