Novavax(US:NVAX)2025-08-06 11:47PART I. FINANCIAL INFORMATION This part presents the company's unaudited financial statements, management's analysis, and key risk disclosures for the period Item 1. Consolidated Financial Statements The company reported significant H1 2025 net income driven by APA terminations, leading to a positive shift in stockholders' equity Consolidated Statements of Operations | Financial Metric | Q2 2025 (in thousands) | Q2 2024 (in thousands) | H1 2025 (in thousands) | H1 2024 (in thousands) | | :--- | :--- | :--- | :--- | :--- | | Total Revenue | $239,240 | $415,484 | $905,895 | $509,339 | | Total Expenses | $138,170 | $254,486 | $289,311 | $493,172 | | Income from Operations | $101,070 | $160,998 | $616,584 | $16,167 | | Net Income | $106,508 | $162,381 | $625,154 | $14,831 | | Diluted EPS | $0.62 | $0.99 | $3.55 | $0.10 | - Net income for the first six months of 2025 surged to $625.2 million, a substantial increase from $14.8 million in the same period of 2024, primarily driven by higher revenue13 - Total expenses decreased significantly in both the three-month and six-month periods of 2025 compared to 2024, reflecting successful cost control measures13 Consolidated Balance Sheets | Balance Sheet Item | June 30, 2025 (in thousands) | Dec 31, 2024 (in thousands) | | :--- | :--- | :--- | | Cash and cash equivalents | $253,744 | $530,230 | | Marketable securities | $358,560 | $392,888 | | Total Current Assets | $919,512 | $1,128,942 | | Total Assets | $1,336,549 | $1,560,418 | | Deferred revenue (Current) | $113,763 | $675,067 | | Total Liabilities | $1,298,924 | $2,184,259 | | Total Stockholders' Equity (Deficit) | $37,625 | ($623,841) | - The company's financial position improved significantly, with total stockholders' equity becoming positive at $37.6 million as of June 30, 2025, compared to a deficit of $623.8 million at the end of 202417 - Total liabilities saw a substantial decrease to $1.30 billion from $2.18 billion, primarily due to a reduction in deferred revenue from $1.12 billion to $0.51 billion1748 Consolidated Statements of Cash Flows | Cash Flow Activity | H1 2025 (in thousands) | H1 2024 (in thousands) | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | ($312,964) | $230,714 | | Net cash provided by (used in) investing activities | $37,779 | ($379,957) | | Net cash (used in) provided by financing activities | ($8,101) | $264,102 | | Net (decrease) in cash, cash equivalents, and restricted cash | ($276,310) | $111,748 | - There was a significant negative swing in operating cash flow, with a net cash use of $313.0 million in H1 2025 compared to a net cash provision of $230.7 million in H1 202422 Notes to the Consolidated Financial Statements Notes detail the strategic focus on the Sanofi partnership, revenue from APA terminations, and the basis for the going concern assumption - The company's three strategic priorities are: focusing on the Sanofi partnership, enhancing existing partnerships and forging new ones, and advancing its technology platform and early-stage pipeline25 - Based on its current cash balance and cash flow forecast, management has concluded that the company has sufficient capital to fund operations for at least one year from the financial statement issuance date, supporting the going concern assumption34 - In H1 2025, the company recognized $575.7 million in product sales revenue from the termination of the Canada APA and $27.3 million from the termination of the New Zealand APA6061 - The company continued its global restructuring plan, recording charges of $5.1 million in H1 2025 for severance and asset impairments, as part of its effort to improve operational efficiency111113 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes improved H1 2025 results to APA terminations and outlines its strategic focus on the Sanofi partnership and pipeline advancement Overview and Pipeline - The company's strategy is centered on three priorities: the Sanofi partnership, leveraging its technology platform for new partnerships, and advancing its early-stage pipeline through a lean operating model126 - In May 2025, the FDA approved the Biologics License Application (BLA) for Nuvaxovid, triggering a $175 million milestone payment from Sanofi137158 - Novavax intends to partner its late-stage COVID-Influenza Combination (CIC) and stand-alone influenza vaccine candidates to advance further development after a Phase 3 trial showed robust immune responses130151 - The early-stage pipeline is being advanced with a capital-efficient approach, focusing on RSV combinations, H5N1 avian pandemic influenza, shingles, and C. Diff, with the intent to partner these programs at proof of concept132142 Results of Operations Three Months Ended June 30, 2025 vs 2024 (in thousands) | Item | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Total Revenue | $239,240 | $415,484 | ($176,244) | | Cost of Sales | $15,325 | $46,242 | ($30,917) | | R&D Expenses | $79,233 | $106,946 | ($27,713) | | SG&A Expenses | $43,612 | $101,298 | ($57,686) | | Net Income | $106,508 | $162,381 | ($55,873) | - The decrease in Q2 2025 revenue was primarily due to lower licensing revenue from the Sanofi CLA compared to the prior year, which included a large upfront fee recognition167170 Six Months Ended June 30, 2025 vs 2024 (in thousands) | Item | H1 2025 | H1 2024 | Change | | :--- | :--- | :--- | :--- | | Total Revenue | $905,895 | $509,339 | $396,556 | | Cost of Sales | $29,439 | $105,451 | ($76,012) | | R&D Expenses | $168,170 | $199,625 | ($31,455) | | SG&A Expenses | $91,702 | $188,096 | ($96,394) | | Net Income | $625,154 | $14,831 | $610,323 | - The substantial increase in H1 2025 revenue was driven by the recognition of $603 million from the termination of the Canada and New Zealand APAs185 Liquidity Matters and Capital Resources - As of June 30, 2025, the company had $627.5 million in cash, cash equivalents, restricted cash, and marketable securities215 - The company expects to receive a $175.0 million milestone payment from Sanofi in Q3 2025, which was triggered by the FDA's BLA approval203215 - Under the Sanofi CLA, Novavax is eligible for up to $475 million in remaining aggregate milestone payments related to COVID-19 and combination vaccine products203204 - The company has remaining obligations of $222.1 million under various APAs, with a risk that up to $92.5 million under the Australia APA may become refundable212 Item 3. Quantitative and Qualitative Disclosures about Market Risk The company's primary market risks stem from foreign currency fluctuations and interest rate movements on its investment portfolio - The company's operations are subject to foreign currency exchange rate fluctuations, primarily the U.S. dollar against the Euro, Pound Sterling, and Swedish Krona222 - A 10% decline in foreign exchange rates would result in an approximate $16 million decline in stockholders' equity as of June 30, 2025223 - Interest rate risk is primarily confined to the company's investment portfolio, and the company does not believe it has material exposure from its fixed-rate convertible notes225227 Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective and noted no material changes to internal controls - As of June 30, 2025, the CEO and CFO concluded that the company's disclosure controls and procedures were effective at the reasonable assurance level228 - There were no material changes to the company's internal control over financial reporting during the quarter ended June 30, 2025229 PART II. OTHER INFORMATION This part details legal proceedings, risk factors, and other required corporate disclosures Item 1. Legal Proceedings The company has resolved significant stockholder class action and derivative lawsuits, resulting in dismissals and a net settlement gain - The Sinnathurai securities class action was settled, and the case was closed by the court in May 2024102231 - A settlement was reached in the consolidated derivative lawsuits, which was approved by the court in March 2025, including a $6.8 million payment to Novavax and the adoption of new governance measures, resulting in a net gain of $4.8 million104233 - Following the main derivative settlement, the Mesa and Acosta actions in Delaware were dismissed with prejudice in May and July 2025, and the Kirst and Needelman actions in Maryland were dismissed in April 2025107109236238 Item 1A. Risk Factors Key risks include contractual obligations, the transition to a commercial COVID-19 market, regulatory changes, and vaccine shelf-life approval - The company faces risks in satisfying performance obligations under its Sanofi CLA and APAs, with up to $92.5 million of deferred revenue from the Australia APA potentially refundable if regulatory deadlines are not met241244 - There is significant uncertainty regarding pricing and reimbursement as the COVID-19 vaccine market shifts from government purchasing to a commercial model, which could be adversely affected by changes in recommendations from bodies like the ACIP245250 - The company faces regulatory uncertainty due to the change in presidential administration, which could lead to adverse changes in vaccine recommendations by the CDC and ACIP, potentially reducing demand for its COVID-19 vaccine248260 - A key commercial risk is the pending FDA approval to extend the shelf life of its COVID-19 vaccine from three to six months, as the current shelf life is unlikely to be commercially attractive253 Item 5. Other Information No directors or officers adopted or terminated Rule 10b5-1 trading arrangements during the second quarter of 2025 - No director or officer adopted or terminated a Rule 10b5-1 trading plan during the three months ended June 30, 2025261 Item 6. Exhibits This section lists all exhibits filed with the report, including officer certifications and material agreements