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Table of Contents
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2021
OR
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to .
Commission File No. 000-26770
NOVAVAX, INC.
(Exact name of registrant as specified in its charter)
Delaware 22-2816046
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
21 Firstfield Road
Gaithersburg MD 20878
(Address of principal executive offices) (Zip code)
(240) 268-2000
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading
Symbol(s)
Name of each exchange on which registered
Common Stock, Par Value $0.01 per share NVAX The Nasdaq Global Select Market
Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer x Accelerated Filer o
Non-accelerated filer o Smaller reporting company o
Emerging growth company o  
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No x
The number of shares outstanding of the Registrant's Common Stock, $0.01 par value, was 75,608,073 as of October 31, 2021.



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NOVAVAX, INC.
TABLE OF CONTENTS
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PART I. FINANCIAL INFORMATION
Item 1.    Financial Statements
NOVAVAX, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share information)
September 30,
2021
December 31,
2020
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 1,936,998  $ 553,398 
Marketable securities —  157,649 
Restricted cash 8,175  93,880 
Accounts receivable 75,283  262,012 
Unbilled receivable
34,678  — 
Prepaid expenses and other current assets 119,047  181,264 
Total current assets 2,174,181  1,248,203 
Restricted cash 1,653  1,460 
Property and equipment, net 214,751  179,954 
Intangible assets, net 5,027  5,725 
Goodwill 131,989  135,379 
Other non-current assets 38,340  11,758 
Total assets $ 2,565,941  $ 1,582,479 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable $ 59,564  $ 54,332 
Accrued expenses 323,867  142,468 
Deferred revenue 1,262,360  273,228 
Current portion of finance lease liabilities 103,987  105,862 
Other current liabilities 3,637  3,782 
Total current liabilities 1,753,415  579,672 
Convertible notes payable 323,102  322,035 
Non-current finance lease liabilities —  40,083 
Other non-current liabilities 28,088  13,480 
Total liabilities 2,104,605  955,270 
Commitments and contingencies
Preferred stock, $0.01 par value, 2,000,000 shares authorized at September 30, 2021 and December 31, 2020; no shares issued and outstanding at September 30, 2021 and December 31, 2020
—  — 
Stockholders' equity:
Common stock, $0.01 par value, 600,000,000 shares authorized at September 30, 2021 and December 31, 2020; and 75,973,523 shares issued and 75,415,774 shares outstanding at September 30, 2021 and 71,350,365 shares issued and 70,953,739 shares outstanding at December 31, 2020
760  714 
Additional paid-in capital 3,310,513  2,535,476 
Accumulated deficit (2,771,666) (1,874,199)
Treasury stock, 557,749 shares, cost basis at September 30, 2021 and 396,626 shares, cost basis at December 31, 2020
(79,132) (41,806)
Accumulated other comprehensive income 861  7,024 
Total stockholders’ equity 461,336  627,209 
Total liabilities and stockholders’ equity $ 2,565,941  $ 1,582,479 
The accompanying notes are an integral part of these financial statements.
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Table of Contents
NOVAVAX, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share information)
(unaudited)
For the Three Months Ended
September 30,
For the Nine Months Ended
September 30,
2021 2020 2021 2020
Revenue:
Government contracts $ 97,502  $ 42,938  $ 720,740  $ 43,249 
Grant and other 41,401  114,086  139,952  152,690 
 Royalties 39,941  —  63,398  — 
Total revenue 178,844  157,024  924,090  195,939 
Expenses:
Research and development 408,195  294,087  1,571,551  345,828 
General and administrative 77,793  56,879  214,144  83,977 
Total expenses 485,988  350,966  1,785,695  429,805 
Loss from operations (307,144) (193,942) (861,605) (233,866)
Other income (expense):
Investment income 330  140  1,061  872 
Interest expense (5,182) (4,460) (15,989) (11,266)
Other income (expense) (4,394) 952  (8,328) 3,565 
Net loss before income tax expense $ (316,390) $ (197,310) $ (884,861) $ (240,695)
Income tax expense 6,041  —  12,606  — 
Net loss $ (322,431) $ (197,310) $ (897,467) $ (240,695)
Basic and diluted net loss per share $ (4.31) $ (3.21) $ (12.13) $ (4.39)
Basic and diluted weighted average number of common shares outstanding 74,745  61,554  73,972  54,810 
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(in thousands)
(unaudited)
For the Three Months Ended
September 30,
For the Nine Months Ended
September 30,
2021 2020 2021 2020
Net loss $ (322,431) $ (197,310) $ (897,467) $ (240,695)
Other comprehensive income (loss):
Net unrealized losses on marketable securities available-for-sale, net of reclassifications —  (26) (9) 18 
Foreign currency translation adjustment (3,309) 8,226  (6,154) 7,495 
Other comprehensive income (loss) (3,309) 8,200  (6,163) 7,513 
Comprehensive loss $ (325,740) $ (189,110) $ (903,630) $ (233,182)
The accompanying notes are an integral part of these financial statements.
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NOVAVAX, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
Three Months Ended September 30, 2021 and 2020
(in thousands, except share information)
(unaudited)
Common Stock Additional
Paid-in
Capital
Accumulated
Deficit
Treasury
Stock
Other
Comprehensive
Income (Loss)
Stockholders'
Equity
Shares Amount
Balance at June 30, 2021 74,672,351  $ 747  $ 3,237,085  $ (2,449,235) $ (47,205) $ 4,170  $ 745,562 
Non-cash stock-based compensation —  —  45,274  —  —  —  45,274 
Stock issued under incentive programs 1,301,172  13  28,154  —  (31,927) —  (3,760)
Foreign currency translation adjustment —  —  —  —  —  (3,309) (3,309)
Net loss —  —  —  (322,431) —  —  (322,431)
Balance at September 30, 2021 75,973,523  $ 760  $ 3,310,513  $ (2,771,666) $ (79,132) $ 861  $ 461,336 
Balance at June 30, 2020 61,262,632  $ 612  $ 1,699,072  $ (1,499,325) $ (2,638) $ (13,195) $ 184,526 
Non-cash stock-based compensation —  —  65,705  —  —  —  65,705 
Stock issued under incentive programs 1,534,345  16  26,682  —  (38,569) —  (11,871)
Issuance of common stock, net of issuance costs of $725
521,911  57,185  —  —  —  57,190 
Unrealized loss on marketable securities —  —  —  —  —  (26) (26)
Foreign currency translation adjustment —  —  —  —  —  8,226  8,226 
Net loss —  —  —  (197,310) —  —  (197,310)
Balance at September 30, 2020 63,318,888  $ 633  $ 1,848,644  $ (1,696,635) $ (41,207) $ (4,995) $ 106,440 
The accompanying notes are an integral part of these financial statements.











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Table of Contents
NOVAVAX, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
Nine Months Ended September 30, 2021 and 2020
(in thousands, except share information)
(unaudited)
Common Stock Additional
Paid-in
Capital
Accumulated
Deficit
Treasury
Stock
Other
Comprehensive
Income (Loss)
Stockholders'
Equity
Shares Amount
Balance at December 31, 2020 71,350,365  $ 714  $ 2,535,476  $ (1,874,199) $ (41,806) $ 7,024  $ 627,209 
Non-cash stock-based compensation —  —  151,457  —  —  —  151,457 
Stock issued under incentive programs 2,044,191  20  58,747  —  (37,326) —  21,441 
Issuance of common stock, net of issuance costs of $7,292
2,578,967  26  564,833  —  —  —  564,859 
Unrealized loss on marketable securities —  —  —  —  —  (9) (9)
Foreign currency translation adjustment —  —  —  —  —  (6,154) (6,154)
Net loss —  —  —  (897,467) —  —  (897,467)
Balance at September 30, 2021 75,973,523  $ 760  $ 3,310,513  $ (2,771,666) $ (79,132) $ 861  $ 461,336 
Balance at December 31, 2019 32,399,352  $ 324  $ 1,260,551  $ (1,431,801) $ (2,583) $ (12,508) $ (186,017)
Preferred stock beneficial conversion feature —  —  24,139  (24,139) —  —  — 
Non-cash stock-based compensation —  —  77,602  —  —  —  77,602 
Stock issued under incentive programs 1,884,399  19  35,689  —  (38,624) —  (2,916)
Issuance of common stock, net of issuance costs of $5,870
29,035,137  290  450,663  —  —  —  450,953 
Unrealized loss on marketable securities —  —  —  —  —  18  18 
Foreign currency translation adjustment —  —  —  —  —  7,495  7,495 
Net loss —  —  —  (240,695) —  —  (240,695)
Balance at September 30, 2020 63,318,888  $ 633  $ 1,848,644  $ (1,696,635) $ (41,207) $ (4,995) $ 106,440 
The accompanying notes are an integral part of these financial statements.

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Table of Contents
NOVAVAX, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Nine Months Ended September 30,
2021 2020
Operating Activities:
Net loss $ (897,467) $ (240,695)
Reconciliation of net loss to net cash used in operating activities:
Depreciation and amortization 8,989  3,091 
Non-cash stock-based compensation 151,457  77,602 
Right-of-use assets written off 17,117  187,193 
Other items, net 2,739  (3,051)
Changes in operating assets and liabilities:
Receivables, prepaid expenses and other assets 209,221  (78,788)
Accounts payable and accrued expenses 180,708  60,540 
Deferred revenue 992,590  80,135 
Net cash provided by operating activities 665,354  86,027 
Investing Activities:
Capital expenditures (41,122) (12,610)
Acquisition of Novavax CZ, net of cash required —  (164,204)
Purchases of marketable securities (2,167) (266,330)
Proceeds from maturities and sale of marketable securities 159,807  96,488 
Net cash provided by (used in) investing activities 116,518  (346,656)
Financing Activities:
Net proceeds from sale of preferred stock —  199,822 
Net proceeds from sales of common stock 564,859  447,070 
Net proceeds from the exercise of stock-based awards 21,441  (1,316)
Finance lease payments (63,876) (65,424)
Net cash provided by financing activities 522,424  580,152 
Effect of exchange rate on cash, cash equivalents and restricted cash (6,208) 33 
Net increase in cash, cash equivalents and restricted cash 1,298,088  319,556 
Cash, cash equivalents and restricted cash at beginning of period 648,738  82,180 
Cash, cash equivalents and restricted cash at end of period $ 1,946,826  $ 401,736 
Supplemental disclosure of non-cash activities:
Sale of common stock under the Sales Agreement not settled at quarter-end $ —  $ 3,883 
Right-of-use assets from new lease agreements $ 34,914  $ 188,362 
Capital expenditures included in accounts payable and accrued expenses $ 7,884  $ 6,189 
Supplemental disclosure of cash flow information:
Cash interest payments $ 17,768  $ 12,188 
Cash paid for income taxes $ 6,041  $ — 
    
The accompanying notes are an integral part of these financial statements.
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Table of Contents
NOVAVAX, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2021
(unaudited)
Note 1 – Organization

Novavax, Inc. (“Novavax,” and together with its wholly owned subsidiaries, including Novavax AB and Novavax CZ, the “Company”) is a biotechnology company that promotes improved health globally through the discovery, development and commercialization of innovative vaccines to prevent serious infectious diseases. The Company’s vaccine candidates, including both its coronavirus vaccine candidate, NVX-CoV2373, and its lead influenza vaccine candidate, NanoFlu, 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. NVX-CoV2373 and NanoFlu include the use of the Company's proprietary Matrix-Madjuvant.
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 September 30, 2021, the consolidated statements of operations and the consolidated statements of comprehensive loss for the three and nine months ended September 30, 2021 and 2020, the consolidated statements of changes in stockholders’ equity for the three and nine months ended September 30, 2021 and 2020 and the consolidated statements of cash flows for the nine months ended September 30, 2021 and 2020 are unaudited, but include all adjustments (consisting of normal recurring adjustments) that the Company considers necessary for a fair presentation of the financial position, operating results, comprehensive loss, changes in stockholders’ equity 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 subsidiaries, including Novavax AB and Novavax CZ. 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), and the functional currency of Novavax CZ, which is located in the Czech Republic, is the local currency (Czech Koruna). The translation of assets and liabilities of these subsidiaries 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 income in the accompanying unaudited consolidated balance sheets. Accumulated other comprehensive income included a foreign currency translation balance of $0.9 million and $7.0 million as of September 30, 2021 and December 31, 2020, 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, 2020. 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.
6

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):
September 30,
2021
December 31,
2020
Cash $ 113,781  $ 122,312 
Money market funds 366,242  96,116 
Government-backed securities 197,250  44,250 
Treasury securities 99,996  44,052 
Corporate debt securities 1,159,729  246,668 
Cash and cash equivalents $ 1,936,998  $ 553,398 
Cash equivalents are recorded at cost, which approximate fair value due to their short-term nature.
Marketable Securities
The Company invests in marketable securities that generally consist of debt securities with maturities greater than three months from the date of purchase that include commercial paper, government-backed securities, treasury securities, corporate notes and agency securities. 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 are 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' equity 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. Realized gains and losses and declines in value determined to be other-than-temporary are 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 Coalition for Epidemic Preparedness Innovations (“CEPI”) funding agreements, payments received under the Bill & Melinda Gates Foundation (“BMGF”) grant agreements and cash collateral accounts under letters of credit that serve as security deposits for certain facility leases. The Company will utilize the CEPI and BMGF funds as it incurs expenses for services performed under these agreements.
As of September 30, 2021, the restricted cash balances (both current and non-current) consisted of $1.2 million for payments received from BMGF, $7.0 million of payments under the CEPI funding agreements and $1.5 million of security
7

deposits. As of December 31, 2020, the restricted cash balances (both current and non-current) consisted of $1.5 million for payments received from BMGF, $92.4 million of payments under the CEPI funding agreements and $1.5 million of security deposits.
The following table provides a reconciliation of cash, cash equivalents and restricted cash reported in the consolidated balance sheets that sum to the total of the same such amounts shown in the statement of cash flows (in thousands):
September 30,
2021
December 31,
2020
Cash and cash equivalents $ 1,936,998  $ 553,398 
Restricted cash current 8,175  93,880 
Restricted cash non-current 1,653  1,460 
Cash, cash equivalents and restricted cash $ 1,946,826  $ 648,738 
Pre-Launch Inventory

Prior to an emergency use authorization ("EUA") or regulatory approval of NVX-CoV2373, the Company's policy is to recognize the cost associated with acquiring raw materials and production for preclinical studies, clinical trials and pre-launch inventory, including both internal manufacturing and third-party Contract Manufacturing Organizations ("CMO"), as research and development expense in its consolidated statements of operations, in the period in which the costs are incurred. When the Company believes EUA or regulatory approval and subsequent commercialization of NVX-CoV2373 is probable, and expects future economic benefit from the sales of NVX-CoV2373 to be realized, the Company will then start capitalizing the costs of production as inventory.
Revenue Recognition

The Company has various arrangements that include a right for a third party to use the Company's intellectual property as a functional license. These licensing arrangements include sales-based royalties, as well as certain development and commercial milestone payments, and the license is deemed to be the predominant item to which the sales-based royalties or milestone payments relate. For arrangements that include a development or regulatory milestone payment, the Company evaluates whether the associated event is considered probable of achievement and estimates the amount to be included in the transaction price using the most likely amount method. Milestone payments that are not within the Company or licensee's control, such as those dependent upon receipt of regulatory approval, are not considered probable of achievement until the triggering event occurs. At the end of each reporting period, the Company reevaluates the probability of achievement of each milestone and any related constraint, and if necessary, adjusts its estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis and affect revenue and results of operations in the period of adjustment. For arrangements that include sales-based royalties, including milestone payments based upon the achievement of a certain level of product sales, wherein the license is deemed to be the sole or predominant item to which the payments relate, the Company recognizes revenue on the satisfaction (or partial satisfaction) of its performance obligation to which some or all of the payment has been allocated, which is normally on the occurrence of the related sales. As a practical expedient, the Company has elected not to disclose the aggregate amount of the transaction price for the variable consideration that represents sales-based royalties under the licensing arrangements. Consideration for optional goods and/or services is excluded from the transaction price at contract inception. During the three and nine months ended September 30, 2021, the Company recognized sales-based royalties of $39.9 million and $63.4 million, respectively.
Income Taxes

The Company accounts for income taxes in accordance with ASC Topic 740, Income Taxes. Under the liability method, deferred income taxes are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis and operating loss carryforwards.

The Company has historically generated significant federal, state and foreign tax net operating losses, which may be subject to limitation in future periods. Management has fully reserved the related deferred tax assets with a valuation allowance in the current reporting period as more likely than not the related benefit will not be realized. The Company is currently subject to examination in all open tax years.

During the three and nine months ended September 30, 2021, the Company recognized $6.0 million and $12.6 million, respectively, of income tax expense related to foreign withholding tax on royalties.

Net Loss per Share
8

Net loss per share is computed using the weighted average number of shares of common stock outstanding. As of September 30, 2021 and 2020, the Company had outstanding stock options, stock appreciation rights (“SARs”) and unvested restricted stock units (“RSUs”) totaling 4,911,656 and 6,623,466, respectively.
As of September 30, 2021, the Company’s Notes (see Note 7) 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 shares, after giving effect to the add back of interest expense and unamortized debt issuance costs on the Notes 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
Not Yet Adopted
In August 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”), which will simplify the accounting for certain financial instruments with characteristics of liabilities and equity, including certain convertible instruments and contracts in an entity’s own equity. Specifically, the new standard will remove the separation models required for convertible debt with cash conversion features and convertible instruments with beneficial conversion features. It will also remove certain settlement conditions that are currently required for equity contracts to qualify for the derivative scope exception and will simplify the diluted earnings per share calculation for convertible instruments. ASU 2020-06 will be effective January 1, 2022 for the Company and may be applied using a full or modified retrospective approach. Management has evaluated the impact of adopting ASU 2020-06 and has determined that it will not have a material impact on the Company’s consolidated financial statements.
Note 3 – Fair Value Measurements
The following table represents the Company's fair value hierarchy for its financial assets and liabilities (in thousands):
Fair Value at September 30, 2021 Fair Value at December 31, 2020
Assets Level 1 Level 2 Level 3 Level 1 Level 2 Level 3
Money market funds(1) $ 366,242  $ —  $ —  $ 96,116  $ —  $ — 
Government-backed securities(1) —  197,250  —  —  44,250  — 
Treasury securities(2) —  99,996  —  —  54,088  — 
Corporate debt securities(3) —  1,159,729  —  —  373,681  — 
Agency securities —  —  —  —  20,600  — 
Total cash equivalents and marketable securities $ 366,242  $ 1,456,975  $ —  $ 96,116  $ 492,619  $ — 
Liabilities
Convertible notes payable $ —  $ 559,722  $ —  $ —  $ 407,238  $ — 
(1)Classified as cash and cash equivalents as of September 30, 2021 and December 31, 2020, respectively, on the consolidated balance sheets.
(2)Includes $99,996 and $44,052 classified as cash and cash equivalents as of September 30, 2021 and December 31, 2020, respectively, on the consolidated balance sheets.
(3)Includes $1,159,729 and $246,668 classified as cash and cash equivalents as of September 30, 2021 and December 31, 2020, respectively, 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 7) 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 nine months ended September 30, 2021 and 2020, the Company did not have any transfers between levels.
9

Note 4 – Marketable Securities
The Company had no marketable securities classified as available-for-sale as of September 30, 2021 as all of the Company's investments were in securities classified as cash and cash equivalents. Marketable securities were classified as available-for-sale as of December 31, 2020 were comprised of (in thousands):
December 31, 2020
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Fair Value
Treasury securities $ 10,038  $ —  $ (2) $ 10,036 
Corporate debt securities 127,003  13  (3) 127,013 
Agency securities 20,599  —  20,600 
Total marketable securities $ 157,640  $ 14  $ (5) $ 157,649 
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.
Note 5 – Goodwill and Other Intangible Assets
Goodwill
The change in the carrying amounts of goodwill for the nine months ended September 30, 2021 was as follows (in thousands):
Amount
Balance at December 31, 2020 $ 135,379 
Currency translation adjustments (3,390)
Balance at September 30, 2021 $ 131,989 

Identifiable Intangible Assets
Purchased intangible assets consisted of the following as of September 30, 2021 and December 31, 2020 (in thousands):
September 30, 2021 December 31, 2020
Gross
Carrying
Amount
Accumulated 
Amortization
Intangible
Assets, Net
Gross
Carrying
Amount
Accumulated 
Amortization
Intangible
Assets, Net
Finite-lived intangible assets:
Proprietary adjuvant technology $ 8,496  $ (3,469) $ 5,027  $ 9,099  $ (3,374) $ 5,725 
Collaboration agreements 3,836  (3,836) —  4,109  (4,109) — 
Total identifiable intangible assets $ 12,332  $ (7,305) $ 5,027  $ 13,208  $ (7,483) $ 5,725 
Amortization expense for the nine months ended September 30, 2021 and 2020 was $0.3 million and $0.5 million, respectively.
10

Estimated amortization expense for existing intangible assets for the remainder of 2021 and for each of the five succeeding years ending December 31 will be as follows (in thousands):
Year Amount
2021 (remainder) $ 106 
2022 425 
2023 425 
2024 425 
2025 425 
2026 425 
Note 6 - Leases
During the third quarter of 2021, the Company entered into a supply agreement with a CMO that modified existing short-term embedded leases under ASC Topic 842, Leases (“ASC 842”) as the Company continues to have the exclusive use of, and control over, a portion of manufacturing facilities and equipment of the supplier during the contractual term of the new arrangement. The modifications did not result in a change in lease classification and, in accordance with the Company's election to apply the practical expedient in ASC 842, it did not recognize a Right-Of-Use ("ROU") asset or lease liability but instead, will recognize lease payments as an expense on a straight-line basis over the modified lease term and variable lease payments that do not depend on an index or rate, are recognized as an expense in the period in which the variable lease costs are incurred based on performance or usage in accordance with contractual agreements.

During the second quarter of 2021, the Company evaluated the impact of changes in facts and circumstances on its CMOs and contract development and manufacturing organizations agreements that had previously been determined to represent embedded lease arrangements. The Company concluded that the impact resulted in the modification of existing leases and, in accordance with its policy, the Company remeasured and reallocated the remaining consideration in the contracts and reassessed the lease classification as of the effective date of the modification. As a result, the Company recognized a ROU asset and a corresponding long-term operating lease liability of $11.4 million on the remeasurement of one of its long-term supply agreements using an incremental borrowing rate of 6.5%. The Company expensed the ROU asset since it relates to research and development activities for the development of NVX-CoV2373 for which the Company does not have an alternative future use. Modifications to leases with a lease term of 12 months or less at the commencement date did not result in a change in lease classification and in accordance with the Company's election, it applied the practical expedient in ASC 842, as described above.
During the three and nine months ended September 30, 2021, the Company recognized a short-term lease expense of $111.3 million and $325.5 million, respectively, related to its embedded leases and expensed $4.4 million and $17.1 million, respectively, of ROU assets that represented assets acquired for research and development activities that did not have an alternative future use at the commencement of lease. The Company recognized a short-term lease expense of $19.4 million related to embedded leases and expensed $187.2 million of ROU assets that represented assets acquired for research and development activities that did not have an alternative future use at the commencement of lease during the three and nine months ended September 30, 2020.
During the three and nine months ended September 30, 2021, the Company recognized $1.6 million and $5.6 million of interest expenses, respectively, on its finance lease liabilities. The Company recognized $1.0 million of interest expense related to finance lease liabilities during the three and nine months ended September 30, 2020.
During the nine months ended September 30, 2021, the Company entered into or extended the term of certain of its existing research and development facility and offices leases, giving rise to additional ROU assets and related operating lease liabilities of $17.8 million.
Note 7 – 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):
11

September 30,
2021
December 31,
2020
Principal amount of Notes $ 325,000  $ 325,000 
Unamortized debt issuance costs (1,898) (2,965)
Total convertible notes payable $ 323,102  $ 322,035 
The interest expense incurred in connection with the Notes consisted of the following (in thousands):
Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
Coupon interest at 3.75%
$ 3,047  $ 3,047  $ 9,141  $ 9,141 
Amortization of debt issuance costs 356  356  1,068  1,068 
Total interest expense on Notes $ 3,403  $ 3,403  $ 10,209  $ 10,209 

Note 8 – Stockholders' Equity
During the nine months ended September 30, 2021 and 2020, the Company sold 2.6 million and 29.1 million, respectively, of shares of its common stock resulting in net proceeds of approximately $565 million and $446 million, respectively, under its various At Market Issuance Sales agreements.

In June 2021, the Company entered into an At Market Issuance Sales Agreement (the "June 2021 Sales Agreement"), which allows it to issue and sell up to $500 million in gross proceeds of shares of its common stock, and terminated its existing At Market Issuance Sales agreement. As of September 30, 2021, no shares had been sold under the June 2021 Sales Agreement.
Note 9 – Stock-Based Compensation
Equity Plans
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 12.4 million shares of common stock under equity awards granted under the 2015 Plan, including an increase of 1.5 million shares approved for issuance under the 2015 Plan at the Company's 2021 annual meeting of stockholders. 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, SARs and RSUs. 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 ten years and may be or were granted with an exercise price that is no less than 100% of the fair market value of the Company's common stock at the time of grant. Grants of 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 SARs activity under the 2015 Plan and 2005 Plan for the nine months ended September 30, 2021:
12

2015 Plan 2005 Plan
Stock
Options and SARs
Weighted-Average
Exercise
Price
Stock
Options
Weighted-Average
Exercise
Price
Outstanding at January 1, 2021 5,420,463  $ 38.05  214,186  $ 88.11 
Granted 73,091  $ 176.39  —  $ — 
Exercised (1,420,550) $ 32.49  (140,580) $ 80.03 
Canceled (80,799) $ 119.36  —  $ — 
Outstanding at September 30, 2021 3,992,205  $ 40.92  73,606  $ 103.56 
Shares exercisable at September 30, 2021 1,286,515  $ 48.62  73,606  $ 103.56 
Shares available for grant at September 30, 2021 3,788,799 
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
September 30,
Nine Months Ended
September 30,
2021 2020 2021 2020
Weighted average Black-Scholes fair value of stock options granted $203.51 $102.41 $156.86 $78.78
Risk-free interest rate
0.6%-0.9%
0.2%-0.4%
0.5%-1.1%
0.2%-1.5%
Dividend yield —% —% —% —%
Volatility
126.4%-140.0%
135.4%-152.2%
124.7%-142.0%
116.0%-152.2%
Expected term (in years)
4.1-6.1
4.0-5.3
4.1-6.1
4.0-7.6
The total aggregate intrinsic value and weighted-average remaining contractual term of stock options and SARs outstanding under the 2015 Plan and 2005 Plan as of September 30, 2021 was approximately $673 million and 7.9 years, respectively. The total aggregate intrinsic value and weighted-average remaining contractual term of stock options and SARs exercisable under the 2015 Plan and 2005 Plan as of September 30, 2021 was approximately $212 million and 7.0 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 SARs) that would have been received by the holders had all stock option and SAR holders exercised their stock options and SARs on September 30, 2021. This amount is subject to change based on changes to the closing price of the Company's common stock. The aggregate intrinsic value of stock options and SARs exercises and vesting of RSUs for the nine months ended September 30, 2021 and 2020 was approximately $381 million and $164 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 600,000 shares of common stock to be purchased. The ESPP allows employees to purchase shares of common stock of the Company at each purchase date through payroll deductions of up to a maximum of 15% of their compensation, at 85% of the lesser of the market price of the shares at the time of purchase or the market price on the beginning date of an option period (or, if later, the date during the option period when the employee was first eligible to participate). As of September 30, 2021, there were 164,495 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:
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Three Months Ended
September 30,
Nine Months Ended
 September 30,
2021 2020 2021 2020
Range of Black-Scholes fair values of ESPP shares granted
$83.47-$152.11
$3.08-$92.67
$83.47-$238.85
$2.57-$92.67
Risk-free interest rate
0.1%-0.2%
0.2%-2.5%
0.1%-0.2%
0.2%-2.6%
Dividend yield —% —% —% —%
Volatility
114.9%-150.6%
77.5%-189.7%
114.9%-159.4%
66.6%-189.7%
Expected term (in years)
0.5-2.0
0.5-2.0
0.5-2.0
0.5-2.0
Restricted Stock Units
The following is a summary of RSUs activity for the nine months ended September 30, 2021:
Number of
Shares
Per Share
Weighted-
Average
Fair Value
Outstanding and Unvested at January 1, 2020 1,044,980  $ 72.59 
Restricted stock units granted 225,424  $ 196.93 
Restricted stock units vested (391,960) $ 57.81 
Restricted stock units forfeited (32,599) $ 131.95 
Outstanding and Unvested at September 30, 2021 845,845  $ 110.68 
The Company recorded all stock-based compensation expense in the consolidated statements of operations as follows (in thousands):
Three Months Ended
September 30,
Nine Months Ended
September 30,
2021 2020 2021 2020
Research and development $ 21,860  $ 28,730  $ 70,429  $ 34,735 
General and administrative 23,414  36,975  81,028  42,867 
Total stock-based compensation expense $ 45,274  $ 65,705  $ 151,457  $ 77,602 
As of September 30, 2021, there was approximately $209 million of total unrecognized compensation expense related to unvested stock options, SARs, RSUs and the ESPP. This unrecognized non-cash compensation expense is expected to be recognized over a weighted-average period of one year, 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.
Note 10 – Revenue
During the three and nine months ended September 30, 2021 and 2020, the Company performed research and development under government contracts and grant, license and clinical development agreements. The Company's revenue
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primarily consisted of funding under U.S. government contracts and the Company's funding arrangement with CEPI to advance the clinical development and manufacturing of NVX-CoV2373, and royalties under its licensing arrangements.
The Company recorded revenue as follows (in thousands):
Three Months Ended
September 30,
Nine Months Ended
September 30,
2021 2020 2021 2020
Government contracts
OWS $ 96,215  $ 39,370  $ 699,268  $ 39,370 
DoD 1,287  3,568  21,472  3,879 
Grants and other
CEPI 37,505  111,266  131,022  147,770 
BMGF
—  2,316  2,628  2,731 
Other 3,896  504  6,302  2,189 
Royalties 39,941  —  63,398  — 
Total $ 178,844  $ 157,024  $ 924,090  $ 195,939 
Government Contracts and Grants
The Company’s U.S. government contracts comprise an agreement with Advanced Technology International (“ATI”), the Consortium Management Firm acting on behalf of the Medical CBRN Defense Consortium in connection with the partnership formerly known as Operation Warp Speed (“OWS”) and a contract with the U.S. Department of Defense (the “DoD”). As of September 30, 2021, the Company's OWS agreement was amended to increase the contract ceiling by $52.9 million for a revised total of $1.8 billion. The agreement’s authorized funding and original scope of work remains unchanged at $1.75 billion for support of certain activities related to the development of NVX-CoV2373 and the manufacture and delivery of 100 million doses of the vaccine candidate to the U.S. government. In July 2021, the U.S. government instructed the Company to prioritize alignment with the U.S. Food and Drug Administration on the Company's analytic methods before conducting additional U.S. manufacturing and further indicated that the U.S. government will not fund additional U.S. manufacturing until such agreement has been made. In the third quarter of 2021, the Company updated its estimate-at-completion to reflect the impact of the change to the recognition of the fixed-fee under the contract. The U.S. government also instructed the Company to proceed with work under the OWS Agreement related to all other activities, including ongoing clinical trials and nonclinical studies, regulatory interactions, analytics/assays and characterization of manufactured vaccine and project management.
The Company’s revenue from CEPI comprises grant and forgivable loan funding. The latter is repayable if the proceeds from the sales of NVX-CoV2373 to one or more third parties cover the Company’s costs of manufacturing the vaccine, not including manufacturing costs funded by CEPI.
Collaboration and License Agreements

In February 2021, the Company finalized an expanded collaboration and license agreement with SK bioscience, Co., Ltd. ("SK bioscience") to manufacture and commercialize NVX-CoV2373 for sale to the government of Korea. Concurrently, SK bioscience finalized an advance purchase agreement ("APA") with the Korean government to supply 40 million doses of NVX-CoV2373 to the Republic of Korea beginning in 2021. The agreement is in addition to the Company's existing manufacturing arrangement with SK bioscience entered into in August 2020. Under the collaboration agreement, SK bioscience was granted an exclusive license to develop, manufacture and commercialize NVX-CoV2373 in the Republic of Korea. SK bioscience expanded its capacity to manufacture the antigen component of NVX-CoV2373 for use in the final drug product globally, including product distributed by the COVAX Facility. SK bioscience will also purchase a certain quantity of NVX-CoV2373 directly from the Company, subject to approval by relevant regulatory authority, and sufficient doses of Matrix-M adjuvant to manufacture the remainder of the 40 million doses of NVX-CoV2373 it expects to sell to the Korean government. SK bioscience will pay the Company a tiered royalty in the low to middle double-digit range on the sale of NVX-CoV2373. The Company recognized royalties of $39.9 million and $63.4 million during the three and nine months ended September 30, 2021, respectively, related to SK bioscience's sale of the antigen component of NVX-CoV2373 to the Korean government. In May 2021, the Company entered a non-binding Memorandum of Understanding ("MOU") with the Ministry of Health and Welfare of Korea and SK bioscience to explore further cooperation in the development and manufacturing of vaccines, including NVX-CoV2373. Under the MOU, the Company agreed to potentially explore the development of new vaccine products with SK bioscience, including COVID-19 variant vaccines, and/or an influenza/COVID-19 combination vaccine.
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In February 2021, the Company finalized a collaboration and license agreement previously announced in August 2020, with Takeda Pharmaceutical Company Limited (“Takeda”), under which the Company granted Takeda an exclusive license to develop, manufacture and commercialize NVX-CoV2373 in Japan. Under the agreement, Takeda purchases Matrix-M™ adjuvant from the Company to manufacture doses of finished NVX-CoV2373. Takeda is receiving funding from the Government of Japan’s Ministry of Health, Labour and Welfare ("MHLW") to support the technology transfer, establishment of infrastructure and scale-up of manufacturing and, in September 2021, Takeda finalized an agreement with the MHLW for the purchase of 150 million doses of NVX-CoV2373. The Company will be entitled to receive royalties based on the achievement of certain development and commercial milestones, as well as on a portion of net profits from the sale of the vaccine.

In July 2020, the Company entered into a supply and license agreement with Serum Institute of India Private Limited (“SIIPL”), which was amended and restated in July 2021, under which it granted exclusive (in India) and non-exclusive (in designated other countries) licenses to SIIPL for the development, co-formulation, filling and finishing, registration and commercialization of NVX-CoV2373. SIIPL agreed to purchase Matrix-M™ adjuvant from the Company and the Company granted SIIPL a non-exclusive license to manufacture the antigen drug substance component of NVX-CoV2373 in SIIPL’s licensed territory solely for use in the manufacture of NVX-CoV2373 under the terms of the agreement. The parties will equally split the revenue from SIIPL’s sale of NVX-CoV2373 in its licensed territory, net of agreed costs. In partnership with SIIPL, in August 2021, for the Company's COVID-19 vaccine that will be manufactured and commercialized with SIIPL, the Company filed regulatory submissions for EUA with the Drugs Controller General of India, regulatory agencies in Indonesia, the Philippines and emergency use listing ("EUL") for the World Health Organization ("WHO"). The grant of EUL by the WHO is a prerequisite for exports to numerous countries participating in the COVAX Facility, which was established to allocate and distribute vaccines equitably to participating countries and economies. EUA was granted by Indonesia on October 31, 2021.
Vaccine Supply Agreements
During the nine months ended September 30, 2021, the Company entered into various APA, including an agreement with Her Majesty the Queen in Right of Canada as represented by the Minister of Public Works and Government Services to supply 52 million doses of NVX-CoV2373. As part of the agreement, Canada will have the option to purchase up to an additional 24 million doses of NVX-CoV2373. In February 2021, the Company reached a MOU with the Canadian government to produce NVX-CoV2373 in Canada. The Company plans to produce NVX-CoV2373 at the National Research Council’s Biologics Manufacturing Centre in Montreal once both the vaccine candidate and the facility receive Health Canada approvals. On November 1, 2021, the Company submitted an application for regulatory approval in Canada.
In May 2021, the Company entered into an APA with Gavi, the Vaccine Alliance ("Gavi") building upon its MOU previously announced in February 2021. Under the terms of the agreement, 1.1 billion doses of NVX-CoV2373 are to be made available to countries participating in the COVAX Facility. The Company expects to manufacture and distribute 350 million doses of NVX-CoV2373 to countries participating under the COVAX Facility. Under a separate purchase agreement with Gavi, SIIPL is expected to manufacture and deliver the balance of the 1.1 billion doses of NVX-CoV2373 for low- and middle-income countries participating in the COVAX Facility. The Company expects to deliver doses with antigen and adjuvant manufactured at facilities directly funded under the Company's funding agreement with CEPI. The Company expects to supply significant doses that Gavi would allocate to low-, middle- and high-income countries, subject to certain limitations, utilizing a tiered pricing schedule and Gavi may prioritize such doses to low- and middle- income countries, at lower prices. Additionally, the Company may provide additional doses of NVX-CoV2373, to the extent available from CEPI funded manufacturing facilities, in the event that SIIPL cannot materially deliver expected vaccine doses to the COVAX Facility. Together with SIIPL, the Company expects to initiate delivery of doses following receipt of appropriate regulatory authorizations. Under the agreement, the Company received an upfront payment from Gavi of $350 million during the second quarter of 2021 and expects
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to receive an additional payment of $350 million if the Company secures emergency use listing for NVX-CoV2373 by the WHO.
In August 2021, the Company executed an APA with the European Commission acting on behalf of various European Union member states (the "Commission"), to supply a minimum of 20 million and up to 100 million initial doses of NVX-CoV2373, with the option for the Commission to purchase up to a maximum aggregate of 100 million additional doses in one or more tranches, through 2023. Under the terms of the APA, the Company agreed to use reasonable best efforts to seek European marketing authorization for NVX-CoV2373, manufacture the vaccine in facilities located in the European Union and ensure continued efficacy of the vaccine against variants of the SARS-CoV-2 virus. Furthermore, if European marketing authorization is obtained, the Company agreed to commence delivering shipments of the vaccine to participating European Union member states as soon as possible thereafter pursuant to order forms to be entered into with such European Union member states based on an allocation determined by the Commission. Pursuant to the terms of the APA, the Company is prohibited from supplying NVX-CoV2373 to any third party if such delivery would impede or limit the fulfillment of the Company’s obligations to the Commission under the APA, except with respect to the Company’s obligations under its APA with Gavi.
During the nine months ended September 30, 2021, changes in the Company's accounts receivables, unbilled receivable and deferred revenue balances were as follows (in thousands):
December 31, 2020 Additions Deductions September 30, 2021
Accounts receivable $ 262,012  $ 1,601,385  $ (1,788,114) $ 75,283 
Unbilled receivable
—  635,975  (601,297) 34,678 
Deferred revenue 273,228  1,277,247  (288,115) 1,262,360 
As of September 30, 2021, the deferred revenue of $1.3 billion primarily comprised of approximately $1.2 billion related to upfront payments under APAs. The upfront payments are intended to assist the Company in funding investments related to building out and operating its manufacturing and distribution network, among other expenses, in support of its global supply commitment. Such upfront payments generally become non-refundable upon our achievement of certain development and commercial milestones. However, certain of the APAs may be terminated by the counterparty if the Company does not timely achieve requisite regulatory approval for NVX-CoV2373 in the relevant jurisdictions under such agreements. If the APAs were terminated, the refundable portion of the upfront payments will be repaid.
The aggregate amount of the transaction price allocated to performance obligations that were unsatisfied (or partially unsatisfied) was $7.2 billion as on September 30, 2021. The Company expects to fulfill its unsatisfied performance obligations within 12 months.
Note 11Subsequent Events
In November 2021, in partnership with SIIPL, the Company received EUA from the National Agency of Drug and Food Control of the Republic of Indonesia, or Badan Pengawas Obat dan Makanan, following the August 2021 regulatory submission made by SIIPL with support from the Company. EUA was granted for the Company's recombinant nanoparticle protein-based vaccine with its Matrix-MTM adjuvant, which will be manufactured and marketed in Indonesia by SIIPL under the brand name COVOVAXTM. Indonesia contracted with SIIPL for the purchase of 50 million doses of COVOVAXTM.
In November 2021, the Company completed the rolling submission of all modules required by the European Medicines Agency ("EMA") to support final regulatory review. The final step to complete the application in the European Union will be an invitation from EMA to file for conditional marketing authorization.

In October and November 2021, the Company completed rolling regulatory submissions in key markets for NVX-CoV2373. The Company filed for conditional marketing authorization with the United Kingdom Medicines and Healthcare products Regulatory Agency, leveraging its manufacturing partnership with SIIPL. Additionally, the Company filed for provisional approval with Australia’s Therapeutic Goods Administration, authorization with Health Canada, provisional approval with New Zealand Medicines and Medical Devices Authority and the WHO for EUL.

In October 2021, the Company entered into a supply agreement with SIIPL and Serum Life Sciences Limited. ("SLS"), an affiliate of SIIPL, for the manufacture of NVX-CoV2373. In October 2021, the Company also entered into a contract development manufacture agreement with SLS, where SLS will manufacture and supply finished vaccine product to the Company using antigen drug substance and Matrix-M™ adjuvant supplied by the Company.

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In October 2021, the Company entered into a CMO agreement with Mabion S.A. (“Mabion”) for the large-scale manufacturing of NVX-CoV2373 through 2026 at the Mabion facility located near Warsaw, Poland.
In October 2021, the Company entered into a lease for approximately 63,000 square feet of space for premises located in Germantown, MD. The Company intends to use the premises for manufacturing, research and development and offices. The term of the lease is approximately eight years with options to extend the lease. The lease provides for an annual base rent of $1.9 million that is subject to future rent increases, and obligates the Company to pay building operating costs.






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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Any statements in the discussion below and elsewhere in this Quarterly Report about expectations, beliefs, plans, objectives, assumptions or future events or performance of Novavax, Inc. (“Novavax,” together with its wholly owned subsidiaries Novavax AB and Novavax CZ, the “Company,” “we” or “us”) are not historical facts and are forward-looking statements. Such forward-looking statements include, without limitation, statements about our capabilities, goals, expectations regarding future revenue and expense levels and capital raising activities; our operating plans and prospects; 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; our expectations related to enrollment in our clinical trials; the conduct, timing and potential results from clinical trials and other preclinical studies; plans for and potential timing of regulatory filings; our expectation of manufacturing capacity, timing, production, distribution and delivery for NVX-CoV2373 by us and our partners; our expectations with respect to the anticipated ongoing development and potential commercialization or licensure of NVX-CoV2373 and NanoFlu™; the expected timing, content and outcomes of regulatory actions; funding from the U.S. government partnership formerly known as Operation Warp Speed (“OWS”), the U.S. Department of Defense (“DoD”) and the Coalition for Epidemic Preparedness Innovations (“CEPI”), and payments from the Bill & Melinda Gates Foundation (“BMGF”); funding under our advance purchase agreements and supply agreements; our available cash resources and usage and the availability of financing generally; plans regarding partnering activities and business development initiatives; and other matters referenced herein. Generally, forward-looking statements can be identified through the use of words or phrases such as “believe,” “may,” “could,” “will,” “would,” “possible,” “can,” “estimate,” “continue,” “ongoing,” “consider,” “anticipate,” “intend,” “seek,” “plan,” “project,” “expect,” “should,” “would,” “aim,” or “assume,” the negative of these terms or other comparable terminology, although not all forward-looking statements contain these words.

Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs and expectations about the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Forward-looking statements involve estimates, assumptions, risks and uncertainties that could cause actual results or outcomes to differ materially from those expressed or implied in any forward-looking statements, and, therefore, you should not place considerable reliance on any such forward-looking statements. Such risks and uncertainties include, without limitation, challenges satisfying, alone or together with partners, various safety, efficacy, and product characterization requirements, including those related to process qualification and assay validation, necessary to satisfy each applicable regulatory authority, like the U.S. Food and Drug Administration (“FDA”), World Health Organization (“WHO”), United Kingdom (“UK”) Medicines and Healthcare Products Regulatory Agency (“MHRA”), the European Medicines Agency (“EMA”), the Republic of Korea’s Ministry of Food and Drug Safety (“MFDS”), or Japan’s Ministry of Health, Labour and Welfare (“MHLW”); difficulty obtaining scarce raw materials; resource, including human capital and manufacturing capacity, constraints on our ability to pursue these regulatory pathways, alone or with partners, in multiple jurisdictions simultaneously, leading to staggering of regulatory filings and potential regulatory actions; challenges meeting contractual requirements under agreements with multiple commercial, governmental, and other entities; and other risks and uncertainties 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, which may be detailed and modified or updated in other documents filed with the United States Securities and Exchange Commission (“SEC”) from time to time, and are available at www.sec.gov and at www.novavax.com. You are encouraged to read these filings as they are made.

We cannot guarantee future results, events, level of activity, performance or achievement. Any or all of our forward-looking statements in this Quarterly Report may turn out to be inaccurate or materially different from actual results. Further, any forward-looking statement speaks only as of the date when it is made, and we undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, unless required by law. New factors emerge from time to time, and it is not possible for us to predict which factors will arise. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.
Overview

Novavax, Inc., together with our wholly-owned subsidiaries, Novavax AB and Novavax CZ, is a biotechnology company promoting 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 both our coronavirus vaccine candidate (“NVX-CoV2373”) and our seasonal quadrivalent influenza vaccine candidate (“NanoFlu”), are genetically engineered, three-dimensional nanostructures of recombinant proteins critical to disease pathogenesis. We believe that our protein-subunit-based candidates elicit differentiated immune responses that may be more efficacious than naturally occurring immunity or other vaccine approaches. Additionally, our Matrix-M adjuvant has been shown to enhance functional immune responses and has been well-tolerated in multiple clinical trials. To date, we have formulated many of the vaccine candidates in our pipeline with our Matrix-M adjuvant, including NVX-CoV2373 and NanoFlu.

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Matrix-M Adjuvant

Our Matrix-M™ adjuvant has been a key differentiator within our platform. Our proprietary Matrix-M adjuvant has demonstrated potent and well-tolerated efficacy by stimulating the entry of antigen presenting cells (“APCs”) into the injection site and enhancing antigen presentation in local lymph nodes, which in turn activates T-cell, B-cell, and APC populations, thereby boosting immune response. Matrix-M adjuvant has been shown to increase neutralizing antibodies and induce long-lasting memory B cells, which enhances B-cell immunity and recruits and increases the frequency of CD4+ and CD8+ T-cells to enhance T-cell immunity in preclinical models. The potent immune-stimulating mechanism of action enables a lower dose of antigen required to achieve the desired immune response, ultimately contributing to increased supply and manufacturing capacity. These immune-boosting and dose-sparing capabilities contribute to the adjuvant’s highly unique profile.

We continue to evaluate commercial opportunities for the use of our Matrix-MTM adjuvant alongside vaccine antigens produced by other manufacturers. Our Matrix-M adjuvant is being evaluated in combination with several malaria vaccine candidates, including in a Phase 3 trial for R21, a malaria vaccine candidate created by the Jenner Institute, University of Oxford. The University of Oxford has partnered with SIIPL for commercial development of R21 and has granted them a license for the vaccine. We expect to manufacture and supply the Matrix-M adjuvant component of R21 to SIIPL. We believe the use of our Matrix-M adjuvant in R21 may present a significant commercial opportunity for our adjuvant, pending possible licensure.

Near-term Clinical Development Pipeline

Our development pipeline encompasses vaccine candidates addressing therapeutic areas including coronavirus, seasonal influenza, respiratory syncytial virus (“RSV”) and other emerging infectious diseases. At the forefront of our pipeline is our COVID-19 vaccine candidate, NVX-CoV2373. We advanced NVX-CoV2373 through two Phase 3 clinical trials, which demonstrated high efficacy against both the original COVID-19 strain and commonly circulating COVID-19 variants of concern ("VoC"), while maintaining a favorable safety profile. We also advanced our NanoFlu vaccine program through a Phase 3 clinical trial, which demonstrated positive top-line results and achieved statistical significance in key secondary endpoints. We recently initiated a trial of a combination vaccine consisting of NanoFluand NVX-CoV2373 and remain interested in further development of the respiratory syncytial virus fusion (F) protein nanoparticle vaccine candidate (“RSV F Vaccine”). RSV F Vaccine may be considered for further development.

We remain focused on bringing our NVX-CoV2373 vaccine candidate to market following global regulatory authorizations. Through ongoing crossover and booster studies in our clinical trials, as well as the development of our COVID-19 variant strain vaccine candidates, we continue to collect data to characterize and optimize vaccine performance. We expect to leverage these clinical insights to advance the use of our COVID-19 vaccine for both primary vaccination around the globe and to further develop a booster strategy amidst the ongoing and evolving COVID-19 pandemic.

Although NVX-CoV2373 and NanoFlu are our near-term priorities, we remain optimistic that the additional programs in our pipeline, including our vaccine candidates for RSV and other emerging infectious diseases, present viable opportunities for future development.

The pipeline chart below summarizes the clinical and preclinical development programs that we are focused on in the near-term. We will continue to evaluate areas of development focus over time.

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NVAX-20210930_G1.JPG

(1) Supported by funding from OWS, DoD, CEPI and BMGF
(2) PREVENT-19, a Phase 3 clinical trial in the U.S. and Mexico; Ongoing PREVENT-19 pediatric expansion in the U.S.; Phase 3 clinical trial in the UK

Coronavirus

NVX-CoV2373 Clinical Development

Our lead vaccine candidate, NVX-CoV2373 has progressed through multiple clinical trials, including two Phase 3 trials, one Phase 2b trial, and one Phase 1/2 trial. We have completed crossover arms in our Phase 3 UK, Phase 2b South Africa, PREVENT-19 Phase 3 U.S. and Mexico, and PREVENT-19 pediatric expansion trials. Through our clinical development program to date, we have established a dose of 5 micrograms of NVX-CoV2373 with Matrix-M adjuvant for late-stage development. We have collected data that indicates a reassuring safety profile and statistically significant levels of efficacy for NVX-CoV2373 against the original COVID-19 strain and commonly circulating VOC. A summary and status of our clinical development of NVX-CoV2373 by trial is as follows:

PREVENT-19 Phase 3 U.S. and Mexico

PREVENT-19 was a randomized, placebo-controlled, observer-blinded Phase 3 trial to evaluate the efficacy, safety, and immunogenicity of NVX-CoV2373 in 29,960 participants aged 18 years or older across 119 sites in the U.S. and Mexico. Enrollment for PREVENT-19 emphasized recruiting high-risk groups most impacted by COVID-19.

In October 2021, the final analysis of our PREVENT-19 Phase 3 trial in the U.S. and Mexico was submitted for peer review and is available ahead of publication via the preprint server on medRxiv. The analysis, previously announced in June 2021, was conducted on events accrued prior to participants receiving crossover vaccine. NVX-CoV2373 achieved its primary endpoint with an overall efficacy of 90.4% despite the majority (82%) of the sequenced cases of illness being attributed to Variants of Interest and VoC. Notably, NVX-CoV2373 demonstrated 100% protection against moderate and severe disease, including those caused by variants. PREVENT-19 was conducted with support and funding from OWS.

In August 2021, the U.S. Centers for Disease Control and Prevention (“CDC”) provided guidance for our PREVENT-19 participants in the U.S. stating that they meet the criteria to be considered fully vaccinated two weeks after completion of the active vaccine series. With the CDC’s validation, we expect our participants to be considered fully vaccinated and in compliance with mandated vaccination policies.

PREVENT-19 Pediatric Expansion

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In June 2021, we completed enrollment of the pediatric expansion of our PREVENT-19 Phase 3 trial in the U.S. that was initiated in April 2021. The pediatric expansion is a placebo-controlled trial to evaluate efficacy, safety, and immunogenicity of NVX-CoV2373 in 2,248 adolescent participants aged 12 to 17 years across up to 75 sites in the U.S. Participants randomly received either the vaccine candidate or placebo in two doses, administered 21 days apart. Two-thirds of participants received intramuscular injections of the vaccine and one-third received placebo. All primary and crossover doses have been administered. Participants are being monitored for safety for up to two years following the final administered dose. We expect to have a regulatory package available for global submission in the first quarter of 2022. The subsequent pediatric clinical development plan has been agreed to by the FDA, MHRA and European Medicines Agency (“EMA”) and be initiated after this adolescent study reads out.

Phase 3 UK

In June 2021, the final analysis of our Phase 3 UK trial was published in the New England Journal of Medicine. The publication of the final analysis highlights the robust safety and efficacy data for NVX-CoV2373. The final analysis confirmed 89.7% overall efficacy, with over 60% of the cases caused by the Alpha (B.1.1.7) variant strain. The analysis also confirmed 96.4% efficacy against non-Alpha (non-B.1.1.7) variant strains, which represents strains most similar to the original COVID-19 virus. The trial was conducted in partnership with the UK government Vaccines Taskforce (“VTF”) and led by researchers at St George’s, University of London and St George’s Hospital, London.

In June 2021, the National Health Service (“NHS”), UK government VTF and National Institute for Health Research determined participants in our Phase 3 UK trial may be considered fully vaccinated under the standard NHS program.

Phase 3 UK Influenza Co-Administration Sub-Study

In October 2021, the final analysis of our Phase 3 UK influenza co-administration sub-study was accepted by a peer-reviewed journal and is available ahead of publication via the preprint server on medRxiv. Previously, we announced data from this sub-study in June 2021. In this sub-study, 431 participants from our Phase 3 UK trial received an approved seasonal influenza vaccine (Seqirus, adjuvanted, trivalent seasonal influenza vaccine or a cell-based quadrivalent seasonal influenza vaccine). Approximately half of the participants in the study were co-vaccinated with NVX-CoV2373, while the remainder received placebo. Results demonstrated a robust immune response and a favorable safety and reactogenicity profile. Immunogenicity of the influenza vaccine was preserved with concomitant administration, while a modest decrease in the immunogenicity of NVX-CoV2373 was found. There was an adequate number of participants aged 18 to 64 years to confirm an efficacy trend of 87.5% against COVID-19. The co-administration sub-study represents the first study of a SARS-CoV-2 vaccine candidate and an approved influenza vaccine, and was led by researchers at St George’s, University of London and St George’s Hospital, London.

NVX-CoV2373 Booster Studies

Novavax-Led Booster Study

In August 2021, we announced data from our six-month booster study in the Phase 2 portion of our U.S. and Australia Phase 1/2 trial, which we initiated in March 2021. Select participants in the 5 microgram dose cohort from the Phase 2 portion of the Phase 1/2 trial received a third 5 microgram dose (booster dose) at six months to examine the functional immune response of our vaccine candidate. Analysis of sera from primary vaccination series notably showed cross-reactive functional antibodies to Alpha (B.1.1.7), Beta (B.1.351) and Delta (B.1.617.2) variant spike proteins, all of which increased 6- to 10-fold with the booster dose.

In September 2021, we initiated a twelve-month booster dose for select participants in the Phase 2 portion of our U.S. and Australia Phase 1/2 trial. In this booster study, select participants in the 5 microgram dose cohort from our six-month booster study in the Phase 2 portion of the Phase 1/2 trial will receive an additional 5 microgram dose (a booster dose) at twelve months to examine the functional immune response of our vaccine candidate.

NVX-CoV2373: Partner-Led Vaccine Mix and Match Clinical Studies

We recognize the importance of exploring NVX-CoV2373 alongside the use of other COVID-19 vaccine manufacturers. We continue to develop our booster strategy through our participation in multiple partner-led trials evaluating the potential for mixed vaccine regimens in primary and booster settings.

A summary and status of our participation in partner-led vaccine interchangeability trials follows:

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NVAX-20210930_G2.JPG
NVX-CoV2373 Regulatory and Licensure

We have completed multiple regulatory submissions and expect to complete additional filings. We are in constant discussions with regulatory authorities globally for our completed and anticipated submissions. We continue to work closely with governments, regulatory authorities, and non-governmental organizations in our commitment to ensuring equitable global access to our COVID-19 vaccine. Below is a summary and status of our regulatory processes through the date of filing this Form 10-Q.

In November 2021, in partnership with Serum Institute of India Pvt. Ltd. (“SIIPL”), we received emergency use authorization (“EUA”) from the National Agency of Drug and Food Control of the Republic of Indonesia, or Badan Pengawas Obat dan Makanan, following the August 2021 regulatory submission made by SIIPL with our support. EUA was granted for our recombinant nanoparticle protein-based vaccine with our Matrix-MTM adjuvant, which will be manufactured and marketed in Indonesia by SIIPL under the brand name COVOVAX™. Indonesia contracted with SIIPL for the purchase of 50 million doses of COVOVAX™. This marks the first regulatory authorization worldwide of a protein-based COVID-19 vaccine based on Phase 3 clinical data demonstrating efficacy and a favorable safety profile.

In November 2021, we completed the rolling submission of all modules required by the EMA to support final regulatory review. The final step to complete the application in the European Union will be an invitation from EMA to file for conditional marketing authorization ("CMA").

In October and November 2021, we completed rolling regulatory submissions in key markets for NVX-CoV2373. We filed for CMA with the UK MHRA, leveraging our manufacturing partnership with SIIPL. Additionally, we filed for provisional approval with Australia’s Therapeutic Goods Administration, authorization with Health Canada, and provisional approval with New Zealand Medicines and Medical Devices Authority and the WHO for emergency use listing ("EUL").

In partnership with SIIPL, in August 2021, for our COVID-19 vaccine that will be manufactured and commercialized with SIIPL, we filed regulatory submission for EUA with the Drugs Controller General of India, regulatory agencies in Indonesia and the Philippines, and EUL with the WHO. The grant of EUL by the WHO is a prerequisite for exports to numerous countries participating in the COVAX Facility, which was established to allocate and distribute vaccines equitably to participating countries and economies.

These filings mark the first protein-based COVID-19 vaccine submitted in these markets.

In the U.S, we are in continued discussions with the FDA about submission of our investigational new drug application for NVX-CoV2373. We continue to address and complete various Chemistry, Manufacturing and Controls ("CMC") requirements, which ensure that our manufacturing processes are in accordance with regulatory standards. As of November 2021, we validated the potency and purity of our assays and are in the final process of testing our product using these assays. We expect to submit the complete regulatory package to the FDA by the end of 2021.

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COVID-19 Vaccine Funding

We have secured critical funding throughout 2020 and into 2021 to support the development of NVX-CoV2373. Through the date of filing this Form 10-Q, funding for NVX-CoV2373 encompasses over $2 billion from sources including the BMGF, CEPI, the DoD, and OWS.

In April 2021, our Base Agreement and a Project Agreement (together, as amended and supplemented, the “OWS Agreement”) entered into with Advanced Technology International, Inc., the Consortium Management Firm acting on behalf of the Medical CBRN Defense Consortium in connection with OWS, was amended to fully fund the agreement up to $1.75 billion to support certain activities related to the development of NVX-CoV2373. This includes the manufacture and delivery of 100 million doses of NVX-CoV2373 to the U.S. government. We expect this funding will assist in rapidly developing our large-scale manufacturing capacity and transitioning into ongoing production, including the capability to stockpile and distribute large quantities of NVX-CoV2373 for use in clinical trials and potentially for commercial sale, if authorized for emergency use or licensed. The OWS Agreement is funding the late-stage clinical studies necessary to determine the safety and efficacy of NVX-CoV2373, including PREVENT-19. Funding under the OWS Agreement is expected to support our plans to file submissions for EUA and licensure with the FDA. Accepted analytical methods that we can use to demonstrate our vaccine’s purity, potency and consistent lot manufacturing are critical to attaining licensure in all the territories we intend to sell our vaccine. In the U.S., these analytical methods will be reviewed and approved by the FDA. As of September 30, 2021, the Company's OWS agreement was amended to increase the contract ceiling by $52.9 million for a revised total of $1.8 billion. The agreement’s authorized funding and scope remains unchanged at $1.75 billion for support of certain activities related to the development of NVX-CoV2373 and the manufacture and delivery of 100 million doses of the vaccine candidate to the U.S. government. In July 2021, the U.S. government instructed us to prioritize alignment with the FDA on our analytic methods before conducting additional U.S. manufacturing and further indicated that the U.S. government will not fund additional U.S. manufacturing until such agreement has been made. The U.S. government also instructed us to proceed with work under the OWS Agreement related to all other activities including ongoing clinical trials and nonclinical studies, regulatory interactions, analytics/assays and characterization of manufactured vaccine and project management.

A summary and status of our historical COVID-19 funding developments follows:

NVAX-20210930_G3.JPG


NVX-CoV2373 Manufacturing and Supply

We have established a global manufacturing and supply chain to support the commercialization of NVX-CoV2373. With significant progress made throughout 2020 and through the third quarter of 2021, our global supply chain spans over ten countries and includes Novavax-owned facilities in the Czech Republic and Sweden, as well as partnerships with contract
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manufacturing organizations around the world. In the third quarter of 2021, we remained focused on readying our global supply chain for commercialization to ensure we will promptly deliver NXV-CoV2373 upon anticipated regulatory authorizations.

We have reached our global manufacturing capacity of NVX-CoV2373 of approximately 100 million doses per month as of the end of the third quarter of 2021. We anticipate the remainder of our manufacturing capacity will be ready by the end of the fourth quarter of 2021, which we expect will support total global manufacturing capacity of approximately 150 million doses per month, including doses manufactured by our partner SIIPL. We expect to have manufacturing capacity in excess of 2 billion annual doses in 2022.

NVX-CoV2373 Manufacturing Agreements

In October 2021, we entered into a supply agreement with SIIPL and Serum Life Sciences Limited (“SLS"), an affiliate of SIIPL, for the manufacture of NVX-CoV2373. In October 2021, we also entered into a contract development manufacture agreement with SLS, where SLS will manufacture and supply finished vaccine product to us using antigen drug substance and Matrix-M™ adjuvant supplied by us.

In October 2021, we entered into a contract manufacturing agreement with Mabion S.A. (“Mabion”) for the large-scale manufacturing of NVX-CoV2373 through 2026. This agreement follows the successful completion of technology transfer to Mabion for antigen production of NVX-CoV2373. Following this agreement, we anticipate rapid scale-up in manufacturing of NVX-CoV2373 at Mabion’s Good Manufacturing Practice-certified facility located near Warsaw, Poland.

In September 2021, Takeda Pharmaceutical Company Limited (“Takeda”) finalized an agreement with the government of Japan’s Ministry of Health, Labour and Welfare (“MHLW”) for the purchase of 150 million doses of NVX-CoV2373. The announcement followed a recent update from MHLW on its ongoing efforts to secure coronavirus vaccine for the citizens of Japan. These efforts include vaccine procurement by Takeda based on technology transfer from us, with Takeda in the process of manufacturing implementation at its facility, pursuant to the terms of the collaboration and license agreement we entered into with Takeda in February 2021, under which we granted Takeda an exclusive license to develop, manufacture and commercialize NVX-CoV2373 in Japan. Under the agreement, Takeda purchases Matrix-M™ adjuvant from us to manufacture doses of finished NVX-CoV2373, and we are entitled to receive payments from Takeda based on the achievement of certain development and commercial milestones, as well as a portion of net profits from the sale of NVX-CoV2373. Distribution of Novavax’ vaccine in Japan by Takeda is expected to begin in 2022. Takeda anticipates the capacity to manufacture 250 million doses of NVX-CoV2373 per year.

In August 2021, we extended our partnership with FUJIFILM Diosynth Biotechnologies through an agreement for long-term commercial manufacturing of NVX-CoV2373 through 2025. Under this agreement, FUJIFILM Diosynth Biotechnologies will continue to manufacture the antigen component of NVX-CoV2373 at its sites in Morrisville, North Carolina, College Station, Texas, and Billingham, UK. This development follows a previous manufacturing agreement with FUJIFILM Diosynth Biotechnologies, which we entered into in July 2020.

NVX-CoV2373 Supply Agreements

We expect our global supply chain will enable us to deliver upon our supply commitments around the world. We have entered into advance purchase agreements (referred to as "APAs" or "supply agreements" throughout this Form 10-Q), as well as multiple supply and license agreements with strategic partners. The APAs typically contain terms that include upfront payments intended to assist us in funding investments related to building out and operating our manufacturing and distribution network, among other expenses, in support of our global supply commitment. Such upfront payments generally become non-refundable upon our achievement of certain development and commercial milestones. Certain of the APAs and supply agreements may be terminated by the counterparty if we do not timely achieve requisite regulatory approval for NVX-CoV2373 in the relevant jurisdictions under such agreements. If the APAs were terminated, the refundable portion of the upfront payments will be repaid.

In August 2021, we executed an APA with the European Commission acting on behalf of various European Union member states, to supply a minimum of 20 million and up to 100 million initial doses of NVX-CoV2373, with the option for the European Commission to purchase an additional 100 million doses through 2023.
Seasonal Influenza
NanoFlu Vaccine Program (Older Adults)

In September 2021, the final analysis of the primary endpoint of our pivotal Phase 3 clinical trial for NanoFluTM was published in The Lancet Infectious Diseases. We previously announced that NanoFluTM achieved the trial’s primary endpoints,
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demonstrating non-inferior immunogenicity to Fluzone® Quadrivalent against all four influenza virus strains included in the vaccine, while also showing both enhanced wild-type hemagglutination-inhibiting antibody responses against homologous strains (22-66% increased) and six heterologous A/H3N2 strains (34-46% increased) as compared to Fluzone® Quadrivalent. Additionally, NanoFluTM showed potent induction of polyfunctional antigen-specific CD4+ T-cells against A(H3N2) and B/Victoria strains, with a 126–189% increase in various post vaccination cell-mediated immunity markers as compared to Fluzone® Quadrivalent.
Combination Vaccines

Our NanoFlu vaccine team remains focused on advancing combination vaccine candidates. With the ongoing development of NanoFlu, NVX-CoV2373 and our RSV F Vaccine, a strong rationale exists for developing combination respiratory vaccines designed to protect susceptible populations against these diseases.

Phase 1/2 Clinical Trial of COVID-NanoFlu™ Combination Vaccine

In October 2021, we completed enrollment of our Phase 1/2 study in Australia, which we initiated in September 2021. The trial enrolled 642 healthy adults aged 50 to 70 years across 10 sites and will evaluate the safety, tolerability and immune response of a combination vaccine using NanoFlu™ and NVX-CoV2373, combined with our Matrix-M™ adjuvant. Participants have been either previously infected with the SARS-CoV-2 virus that causes COVID-19 or vaccinated through an authorized vaccine at least eight weeks prior to enrollment. All participants will be randomly assigned to cohorts to evaluate multiple formulations and will be administered doses on Day 0 and again at Day 56. Data from this trial are expected in the first half of 2022.
Sales of Common Stock
During the nine months ended September 30, 2021 and 2020, we sold 2.6 million and 29.1 million, respectively, of shares of our common stock resulting in net proceeds of approximately $565 million and $446 million, respectively, under our various At Market Issuance Sales agreements.

In June 2021, we entered into an At Market Issuance Sales Agreement (the "June 2021 Sales Agreement"), which allows us to issue and sell up to $500 million in gross proceeds of shares of our common stock, and terminated our existing At Market Issuance Sales agreement. As of September 30, 2021, no shares had been sold under the June 2021 Sales Agreement.
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, 2020, 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 the Company’s operations that should be read in conjunction with the unaudited consolidated financial statements and notes set forth in this Quarterly Report.
Three Months Ended September 30, 2021 and 2020
Revenue:
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Three Months Ended September 30,
2021 2020 Change
Revenue (in thousands):
Government contracts $ 97,502  $ 42,938  $ 54,564 
Grants and other 41,401  114,086  (72,685)
Royalties 39,941  —  39,941 
Total revenue $ 178,844  $ 157,024  $ 21,820 
Revenue for the three months ended September 30, 2021 was $178.8 million as compared to $157.0 million for the same period in 2020, an increase of $21.8 million. Revenue for the three months ended September 30, 2021 was primarily comprised of revenue for services performed under the OWS Agreement and our funding agreements with CEPI (collectively, the "CEPI Funding Agreement") and royalties under our licensing arrangements. Revenue for the three months ended September 30, 2020 was primarily comprised of revenue for services performed under the CEPI Funding Agreement. The increase in revenue was due to increased development activities relating to NVX-CoV2373 under the OWS Agreement and royalties under our licensing arrangements, partially offset by decreased development activities under the CEPI Funding Agreement as we approach anticipated commercialization of NVX-CoV2373.
Revenue in 2021 increased significantly as compared with 2020 due to our NVX-CoV2373 program, which we anticipate will continue to be funded by OWS and CEPI and/or other revenue sources. Further, we anticipate bringing our NVX-CoV2373 vaccine candidate to market following global regulatory approvals which, if achieved, should significantly increase revenue. In anticipation, we have entered into various APA, as well as multiple supply and license agreements with strategic partners to supply NVX-CoV2373 in their specified territories under which we are entitled to receive royalties from the sale of NVX-CoV2373 by such partners. 
Expenses:
Three Months Ended September 30,
2021 2020 Change
Expenses (in thousands):
Research and development $ 408,195  294,087  $ 114,108 
General and administrative 77,793  56,879  20,914 
Total expenses $ 485,988  $ 350,966  $ 135,022 
Research and Development Expenses
In the three months ended September 30, 2021, our research and development activities were primarily focused on the development of NVX-CoV2373 and included direct external research and development expenses related to NVX-CoV2373 of $341.6 million, primarily comprised of costs related to the following:
expenses incurred under agreements with contract research organization ("CROs") that conduct our clinical trials and third-party consultants related to the development of NVX-CoV2373;
expenses incurred on developing and manufacturing the antigen drug substance and Matrix-Mcomponents of NVX-CoV2373 under agreements that we established with third-party contract manufacturing organizations ("CMOs") and contract manufacturing and development organizations ("CDMOs");
expenses incurred for the procurement of raw materials, laboratory supplies and equipment; and
other costs related to preclinical studies and regulatory consulting, as well as related program management activities to support our growing global operations.
Research and development expenses increased to $408.2 million for three months ended September 30, 2021 as compared to $294.1 million for three months ended September 30, 2020, an increase of $114.1 million primarily due to research and development of NVX-CoV2373, as summarized in the table below (in millions):

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Three Months Ended September 30,
2021 2020
NVX-CoV2373 $ 341,600  $ 249,789 
NanoFlu
1,656  2,558 
Other vaccine development programs 126 
Total direct external research and development expense 343,382  252,350 
Employee expenses 36,574  10,950 
Stock-based compensation expense 21,860  28,730 
Facility expenses 4,983  1,914 
Other expenses 1,396  143 
Total research and development expenses $ 408,195  $ 294,087 

For 2021, research and development expenses increased significantly over 2020 expenses due to our continued development activities for our NVX-CoV2373 program and increases in employee-related costs. Following a potential regulatory approval of NVX-CoV2373, we expect product sales will result in certain types of costs that have been previously recorded as research and development in our Consolidated Statement of Operations to be capitalized as inventory and expensed as cost of goods sold when product is delivered.

We do not provide forward-looking estimates of costs and time to complete our research programs 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 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 $77.8 million for the three months ended September 30, 2021 from $56.9 million for the same period in 2020, an increase of $20.9 million. The increase in general and administrative expenses is primarily due to an increase in professional fees in support of our NVX-CoV2373 program. For 2021, general and administrative expenses increased significantly due to increased activities related to supporting our NVX-CoV2373 program and increases in employee-related costs and professional fees.
Other Income (Expense):
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Three Months Ended September 30,
2021 2020 Change
Other Income (Expense) (in thousands):
Investment income $ 330  140  $ 190 
Interest expense (5,182) (4,460) (722)
Other income (expense) (4,394) 952  (5,346)
Total other income (expense), net $ (9,246) $ (3,368) $ (5,878)
We had total other expense, net, of $9.2 million for the three months ended September 30, 2021 as compared to $3.4 million for the same period in 2020. In the three months ended September 30, 2021, we recorded a $3.9 million loss due to changes in the foreign exchange rates, primarily on an intercompany loan with Novavax CZ.
Income Tax Expense:
During the three months ended September 30, 2021, we recognized $6.0 million of income tax expense related to foreign withholding tax on royalties. We did not recognize any income tax expense for the three months ended September 30, 2020.
Net Loss:
Three Months Ended September 30,
2021 2020 Change
Net Loss (in thousands, except per share information):
Net loss $ (322,431) $ (197,310) $ (125,121)
Net loss per share $ (4.31) $ (3.21) $ (1.10)
Weighted average shares outstanding 74,745  61,554  13,191 
Net loss for the three months ended September 30, 2021 was $322.4 million, or $4.31 per share, as compared to $197.3 million, or $3.21 per share, for the same period in 2020. The increase in net loss was primarily due to a significant increase in development activities relating to NVX-CoV2373, partially offset by increased revenue under the OWS Agreement and royalties under our licensing arrangements.
The increase in weighted average shares outstanding for the three months ended September 30, 2021 is primarily a result of sales of our common stock in 2021 and 2020.
Nine Months Ended September 30, 2021 and 2020
Revenue:
Nine Months Ended September 30,
2021 2020 Change
Revenue (in thousands):
Government contracts $ 720,740  $ 43,249  $ 677,491 
Grants and other 139,952  152,690  (12,738)
Royalties 63,398  —  63,398 
Total revenue $ 924,090  $ 195,939  $ 728,151 
Revenue for the nine months ended September 30, 2021 was $924.1 million as compared to $195.9 million for the same period in 2020, an increase of $728.2 million. Revenue for the nine months ended September 30, 2021 was primarily comprised of revenue for services performed under the OWS Agreement and CEPI Funding Agreement and royalties under our licensing arrangements. Revenue for the nine months ended September 30, 2020 was primarily comprised of revenue for
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services performed under the CEPI Funding Agreement. The significant increase in revenue was due to increased development activities relating to NVX-CoV2373 under the OWS Agreement and, to a lesser extent, royalties under our licensing arrangements.
Expenses:
Nine Months Ended September 30,
2021 2020 Change
Expenses (in thousands):
Research and development $ 1,571,551  $ 345,828  $ 1,225,723 
General and administrative 214,144  83,977  130,167 
Total expenses $ 1,785,695  $ 429,805  $ 1,355,890 
Research and Development Expenses
In the nine months ended September 30, 2021, our research and development activities were primarily focused on the development of NVX-CoV2373 and included direct external research and development expenses related to NVX-CoV2373 of $1.4 billion, primarily comprised of costs related to the following:
expenses incurred under agreements with CROs that conduct our clinical trials and third-party consultants related to the development of NVX-CoV2373;

expenses incurred on developing and manufacturing the antigen drug substance and Matrix-Mcomponents of NVX-CoV2373 under agreements that we established with third-party CMOs and CDMOs;

expenses incurred for the procurement of raw materials, laboratory supplies and equipment; and

other costs related to preclinical studies and regulatory consulting, as well as related program management activities to support our growing global operations.

Research and development expenses increased to $1.6 billion for the nine months ended September 30, 2021 from $345.8 million for the same period in 2020, an increase of $1.2 billion, primarily due to increased development activities relating to NVX-CoV2373, as summarized in the table below (in millions):
Nine Months Ended September 30,
2021 2020
NVX-CoV2373 $ 1,376,921  $ 268,642 
NanoFlu
5,950  11,013 
Other vaccine development programs 641  1,905 
Total direct external research and development expense 1,383,512  281,560 
Employee expenses 86,085  20,313 
Stock-based compensation expense 70,429  34,735 
Facility expenses 11,387  4,003 
Other expenses 20,138  5,217 
Total research and development expenses $ 1,571,551  $ 345,828 

General and Administrative Expenses
General and administrative expenses increased to $214.1 million for the nine months ended September 30, 2021 from $84.0 million for the same period in 2020, an increase of $130.1 million. The increase in general and administrative expenses is primarily due to increased employee-related costs, primarily stock-based compensation expense, and an increase in professional fees in support of our NVX-CoV2373 program.
Other Income (Expense):
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Nine Months Ended September 30,
2021 2020 Change
Other Income (Expense) (in thousands):
Investment income $ 1,061  $ 872  $ 189 
Interest expense (15,989) (11,266) (4,723)
Other income (expense) (8,328) 3,565  (11,893)
Total other income (expense), net $ (23,256) $ (6,829) $ (16,427)
We had total other expense, net of $23.3 million for the nine months ended September 30, 2021 as compared to $6.8 million for the same period in 2020. In the nine months ended September 30, 2021, we also recorded an interest expense of $5.6 million for finance leases. In the nine months ended September 30, 2021 and 2020, other income included a loss of $7.0 million and a gain of $3.5 million, respectively, due to changes in the foreign exchange rates, primarily on an intercompany loan with Novavax CZ.
Income Tax Expense:
During the nine months ended September 30, 2021, we recognized $12.6 million of income tax expense related to foreign withholding tax on royalties. We did not recognize any income tax expense for the nine months ended September 30, 2020.
Net Loss:
Nine Months Ended September 30,
2021 2020 Change
Net Loss (in thousands, except per share information):
Net loss $ (897,467) $ (240,695) $ (656,772)
Net loss per share $ (12.13) $ (4.39) $ (7.74)
Weighted average shares outstanding 73,972  54,810  19,162 
Net loss for the nine months ended September 30, 2021 was $897.5 million, or $12.13 per share, as compared to $240.7 million, or $4.39 per share, for the same period in 2020. The increase in net loss was primarily due to increased development activities relating to NVX-CoV2373, increased employee-related costs, primarily stock-based compensation expense, partially offset by increased revenue under the OWS Agreement and, to a lesser extent, royalties under our licensing arrangements.
The increase in weighted average shares outstanding for the nine months ended September 30, 2021 is primarily a result of sales of our common stock in 2021 and 2020.
Liquidity Matters and Capital Resources

Our future capital requirements depend on numerous factors including, but not limited to, our projected activities related to the development of NVX-CoV2373, including significant commitments under various CRO, CMO and CDMO agreements, the progress of preclinical studies and clinical trials, 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 other manufacturing, sales and distribution costs. We plan to continue developing other vaccines and product candidates, such as our NanoFlu vaccine candidate and potential combination vaccines candidates, which are in various stages of development. We believe our operating expenses and capital requirements will fluctuate depending upon the timing of events, such as the progress of our NVX-CoV2373 clinical trials and regulatory approval for the use of NVX-CoV2373 in the U.S. and internationally, as well as the scope, initiation and progress of our preclinical studies and clinical trials related to other research and development activities.

We have entered into APAs or supply agreements with Gavi, the European Commission, and various countries globally that, if our COVID-19 vaccine candidate is approved, are expected to result in the delivery of approximately 570 million doses of NVX-CoV2373. The APAs or supply agreements typically contain terms that include upfront payments
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intended to assist us in funding investments related to building out and operating our manufacturing and distribution network, among other expenses, in support of our global supply commitment. Such upfront payments generally become non-refundable upon our achievement of certain development and commercial milestones. However, certain of the APAs and supply agreements may be terminated by the counterparty if we do not timely achieve requisite regulatory approval for NVX-CoV2373 in the relevant jurisdictions under such agreements. If the APAs or supply agreements were terminated, the refundable portion of the upfront payments will be repaid. We expect to sign additional APAs or supply agreements that are currently in active discussions and negotiations.
In May 2021, we finalized an APA with Gavi, building upon our MOU previously announced in February 2021. Under the terms of the agreement, 1.1 billion doses of NVX-CoV2373 are to be made available to countries participating in the COVAX Facility, which was established to allocate and distribute vaccines equitably to participating countries and economies. We expect to manufacture and distribute 350 million doses of NVX-CoV2373 to countries participating under the COVAX Facility. Under a separate purchase agreement with Gavi, SIIPL is expected to manufacture and deliver the balance of the 1.1 billion doses of NVX-CoV2373 for low- and middle-income countries participating in the COVAX Facility. We expect to deliver doses with antigen and adjuvant manufactured at facilities directly funded by the investments previously received from CEPI. We expect to supply significant doses that Gavi would allocate to low-, middle- and high-income countries, subject to certain limitations, utilizing a tiered pricing schedule and Gavi may prioritize such doses to low- and middle- income countries, at lower prices. Additionally, we may provide additional doses, to the extent available from CEPI-funded manufacturing facilities, in the event that SIIPL cannot materially deliver expected vaccine doses to the COVAX Facility. Together with SIIPL, we expect to initiate delivery of doses following receipt of appropriate regulatory authorizations. Under the agreement, we received an upfront payment of $350 million from Gavi during the second quarter of 2021 and expect to receive an additional payment of $350 million if we secure EUL for NVX-CoV2373 by the WHO.
We have also entered into supply and license agreements with strategic partners to supply NVX-CoV2373 in their specified territories under which we are entitled to receive royalties primarily from the sale of NVX-CoV2373 by our partners, such as SIIPL in India, Takeda in Japan and SK bioscience in the Republic of Korea. During the three and nine months ended September 30, 2021, we received royalties of $39.9 million and $63.4 million, respectively, under these licensing arrangements.
In the nine months ended September 30, 2021, we funded our operations with cash and marketable securities on hand, upfront payments under APAs, proceeds from the sale of common stock together with revenue under the OWS Agreement and CEPI Funding Agreement that support our NVX-CoV2373 vaccine development activities. We anticipate our future operations to be funded by our cash, cash equivalents and marketable securities, upfront payments under our APAs, revenue under our OWS Agreement and CEPI Funding Agreement, and following any potential global regulatory approvals, revenue from product sales, royalties under licensing arrangements with our strategic partners and/or other potential funding sources.
As of September 30, 2021, we had $1.9 billion in cash and cash equivalents, marketable securities and restricted cash as compared to $806.4 million as of December 31, 2020. These amounts consisted of $1.9 billion in cash and cash equivalents and $9.8 million in restricted cash as of September 30, 2021, as compared to $553.4 million in cash and cash equivalents, $157.6 million in marketable securities and $95.3 million in restricted cash as of December 31, 2020.
The following table summarizes cash flows for the nine months ended September 30, 2021 and 2020 (in thousands):
2021 2020 Change
Net cash provided by (used in):
Operating activities $ 665,354  $ 86,027  $ 579,327 
Investing activities 116,518  (346,656) 463,174 
Financing activities 522,424  580,152  (57,728)
Effect on exchange rate on cash, cash equivalents and restricted cash (6,208) 33  (6,241)
Net increase in cash, cash equivalents and restricted cash 1,298,088  319,556  978,532 
Cash, cash equivalents and restricted cash at beginning of period 648,738  82,180  566,558 
Cash, cash equivalents and restricted cash at end of period $ 1,946,826  $ 401,736  $ 1,545,090 
Net cash provided by operating activities increased to $665.4 million for the nine months ended September 30, 2021, as compared to $86.0 million for the same period in 2020. The increase in cash provided is primarily due to payments under APAs recorded as deferred revenue, partially offset by funding of our increased net loss and the timing of payments to third parties.
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During the nine months ended September 30, 2021 and 2020, our investing activities consisted primarily of maturities and sale of marketable securities, net of purchases, our acquisition of Novavax CZ in 2020 and, to a much lesser extent, capital expenditures. Capital expenditures for the nine months ended September 30, 2021 and 2020 were $41.1 million and $12.6 million, respectively, and the increase in capital expenditures was primarily due to the build out of our facilities and related capital expenditures to support NVX-CoV2373. For 2021, we expect our capital expenditures to continue to increase due to further development activities for our NVX-CoV2373 program, including the additional build-out of research and development and manufacturing facilities and related equipment, and the build-out of our new corporate office facility to accommodate anticipated increases in headcount.
Our financing activities consisted primarily of sales of our common stock under our At Market Issuance Sales Agreements, payments of finance lease liabilities and exercise of stock-based awards. In the nine months ended September 30, 2021 and 2020, we received net proceeds of approximately $565 million and $446 million, respectively, from selling shares of common stock through our At Market Issuance Sales Agreements. Further, during the nine months ended September 30, 2020, we received approximately $200 million through the issuance of preferred stock in a private placement.
Off-Balance Sheet Arrangements
We did not have any material off-balance sheet arrangements as of September 30, 2021.
Item 3.    Quantitative and Qualitative Disclosures About Market Risk
The primary objective of our investment activities is preservation of capital, with the secondary objective of maximizing income. As of September 30, 2021, we had cash and cash equivalents of $1.9 billion, $9.8 million in restricted cash and working capital of $420.8 million.
Our exposure to market risk is primarily confined to our investment portfolio, which historically has been classified as available-for-sale. We do not believe that a change in the market rates of interest would have any significant impact on the realizable value of our investment portfolio. Changes in interest rates may affect the investment income we earn on our marketable securities when they mature and the proceeds are reinvested into new marketable securities and, therefore, could impact our cash flows and results of operations.
Interest and dividend income is recorded when earned and included in investment income. Premiums and discounts, if any, on marketable securities are amortized or accreted to maturity and included in investment income. The specific identification method is used in computing realized gains and losses on the sale of our securities.
We are headquartered in the U.S. where we conduct the vast majority of our business activities. We have two foreign consolidated subsidiaries, Novavax AB, which is located in Sweden, and Novavax CZ, which is located in the Czech Republic. A 10% decline in the foreign exchange rate between the U.S. dollar and Swedish Krona would result in a decline of stockholders’ equity of approximately $5.2 million as of September 30, 2021. A 10% decline in the foreign exchange rate between the U.S. dollar and Czech Koruna would result in a decline of stockholders’ equity of approximately $6.0 million as of September 30, 2021.
Our Notes have a fixed interest rate, and we have no additional material debt. As such, we do not believe that we are exposed to any material interest rate risk as a result of our borrowing activities.
Item 4.    Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our management, with the assistance of our chief executive officer and chief financial officer, has reviewed and evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of September 30, 2021. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Our disclosure controls and procedures are designed to provide reasonable assurance of achieving such control objectives. Based on the evaluation of our disclosure controls and procedures as of September 30, 2021, our chief executive officer and chief financial officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.
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Changes in Internal Control over Financial Reporting

Our management, including our chief executive officer and chief financial officer, have evaluated changes in our internal control over financial reporting that occurred during the quarter ended September 30, 2021, and have concluded that there have been no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting

During the third quarter of 2021, we completed the implementation of an enterprise resource planning system. The implementation was undertaken to establish a scalable foundation for our core business processes and provide us with the functionality to effectively support our expanding global operations. In connection with the implementation, we updated processes that are part of our internal controls over financial reporting to accommodate related changes to our business processes and accounting procedures.


PART II. OTHER INFORMATION
Item 1.    Legal Proceedings

On February 26, 2021, a Novavax stockholder named Thomas Golubinski filed a derivative complaint against certain members of the Novavax board of directors and certain members of senior management in the Delaware Court of Chancery. Novavax is a nominal defendant. The plaintiff challenges two sets of equity awards, made in April 2020 and in June 2020, on the ground that they were “spring-loaded,” that is, made at a time when certain board members or members of senior management allegedly possessed undisclosed positive material information concerning the Company. The complaint asserted claims for breach of fiduciary duty, waste, and unjust enrichment. The plaintiff sought an award of damages to the Company, an order rescinding the April 2020 and June 2020 awards or requiring disgorgement, and an award of attorneys’ fees incurred in connection with the litigation. On May 10, 2021, the defendants moved to dismiss the complaint in its entirety. On June 17, 2021, the Company’s stockholders voted FOR ratification of the April 2020 awards and ratification of the June 2020 awards. Details of the ratification proposals are set forth in the Company’s Definitive Proxy Statement on Schedule 14A filed with the SEC on May 3, 2021. The results of the vote were disclosed in the Company’s Current Report on Form 8-K filed with the SEC on June 24, 2021. Thereafter, the plaintiff stipulated that, as a result of the outcome of the June 17, 2021 vote, the plaintiff no longer intends to pursue the action or any claim arising from or relating to the April 2020 and June 2020 awards. On August 23, 2021, the plaintiff filed a motion seeking an award of attorneys’ fees and expenses in the amount of $1.5 million. The defendants intend to oppose the plaintiff’s motion. The action is currently stayed and upon final resolution of the plaintiff's motion, the action will be automatically dismissed.
Item 1A.    Risk Factors

You should carefully consider the following risk factors in evaluating our business. A number of risks could cause our actual results to differ materially from those that are indicated by forward-looking statements. Some risks relate principally to our business and the industry in which we operate. Others relate principally to the securities market and ownership of our common stock. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties of which we are unaware, or that we currently deem immaterial, also may become important factors that affect us. Any of the following risks could result in material adverse impacts on our business, financial condition or results of operations. You also should consider the other information included in this Quarterly Report on Form 10-Q, as well as our other filings with the SEC.

Summary of Risk Factors

Our business is subject to numerous risks. The following is a summary of the principal risk factors described in this section:

We have a history of losses and our future profitability is uncertain.

We will continue to require significant funding to maintain our current level of operations and fund the further development of our vaccine candidates.

Because our vaccine product development efforts depend on new and rapidly evolving technologies, our efforts may not succeed.

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The regulatory and commercial success of our COVID-19 vaccine candidate, NVX-CoV2373, remains uncertain. We may be unable to obtain regulatory approval or produce a successful vaccine in a timely manner, if at all.

We are a biotechnology company and face significant risk in developing, manufacturing and commercializing our products.

Because we depend on third parties to conduct some of our laboratory testing and clinical trials, and a significant amount of our vaccine manufacturing and distribution, we may encounter delays in or lose some control over our efforts to develop and supply products.

Many of our competitors have significantly greater resources and experience, which may negatively impact our commercial opportunities and those of our current and future licensees.

There is significant competition in the development of a vaccine against COVID-19, influenza, and RSV and we may never see returns on the significant resources we are devoting to our vaccine candidates.

We have not completed the development of vaccine products, and we may not succeed in obtaining the FDA licensure necessary to sell such vaccine products.

The regulatory pathway for NVX-CoV2373 is continually evolving, and may result in unexpected or unforeseen challenges.

We are conducting, and plan to conduct in the future, a number of clinical trials for NVX-CoV2373 at sites outside the United States and the FDA may not accept data from trials conducted in such locations.

Even if regulatory approval is received for our vaccine candidates, the later discovery of previously unknown problems with a product, manufacturer or facility may result in restrictions, including withdrawal of the product from the market, or may mean that product we have produced prior to regulatory approval is not acceptable for sale in one or more markets.

Our success depends on our ability to maintain the proprietary nature of our technology.

Our business may be adversely affected if we do not successfully execute our business development initiatives.

Servicing our 3.75% convertible senior unsecured notes due 2023 (the “Notes”) requires a significant amount of cash, and we may not have sufficient cash flow resources to pay our debt.

Because our stock price has been and will likely continue to be highly volatile, the market price of our common stock may be lower or more volatile than expected.

Litigation or regulatory investigations could have a material adverse impact on our results of operation and financial condition.

We or the third parties upon whom we depend may be adversely affected by natural or man-made disasters or public health emergencies, such as the COVID-19 pandemic.


Risks Related to Our Financial Condition and Capital Requirements

We have a history of losses and our future profitability is uncertain.

Our expenses have exceeded our revenue since our formation in 1987, and our accumulated deficit at September 30, 2021 was $2.8 billion. Our revenues and expenses fluctuate significantly from period to period. For most of our history our
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expenses have exceeded our revenues, which may occur during most periods in the foreseeable future. Our net losses for the last three fiscal years were $418.3 million in 2020, $132.7 million in 2019 and $184.7 million in 2018.

Historically, our losses have resulted predominantly from research and development expenses for our vaccine candidates, manufacturing-related expenses, expenses associated with efforts to obtain regulatory approvals, costs related to protection of our intellectual property and other general and administrative operating expenses, a significant portion of which have been noncash. Our expenses have exceeded our revenue since inception, and we believe our expenses will fluctuate over time, and may substantially increase in some years, as a result of continuing efforts to develop, test, manufacture, and make regulatory filings for our vaccine candidates, and, if our product candidates are approved, commercialization efforts.

As of the end of the third quarter of 2021, our investment in the development and manufacture of NVX-CoV2373 has been substantial, and we expect such levels of investment to continue for the rest of 2021 and beyond, although the precise magnitude of our total investment will depend on the duration of the COVID-19 pandemic, the competitive landscape, the timing and results of our applications for regulatory approvals, the availability of funding, and whether and what booster shot protocols are recommended by governments, regulatory authorities, and healthcare providers. If we are unable to timely commercialize a vaccine against COVID-19, we likely would never recoup our investments. We expect to continue to incur significant operating expenses and anticipate significant losses over time as we seek to:

conduct additional clinical trials and seek regulatory approvals for NVX-CoV2373 and other potential vaccine candidates;

conduct preclinical studies for other potential vaccine candidates;

expand our global manufacturing and distribution capacity; and

maintain, expand and protect our intellectual property portfolio.

As a result, we expect our cumulative operating losses to increase until such time, if ever, that product sales, licensing fees, royalties, milestones, contract research and other sources generate sufficient revenue to fully fund our operations. We may never achieve profitability and may not sustain profitability, if achieved.

We will continue to require significant funding to maintain our current level of operations and fund the further development of our vaccine candidates.

We do not currently generate sufficient revenue from product sales, licensing fees, royalties, milestones, contract research or other sources to fully fund our operations. We, therefore, will use our cash resources, and expect to require additional funds, to maintain our operations, continue our research and development programs, commence future preclinical studies and clinical trials, seek regulatory approvals and manufacture and market any products that are approved for commercialization.

To date, we have financed our operations primarily through the sale of equity and debt securities, government funding and grant agreements, and additional funding may not be available to us on favorable terms, or at all. Although we have entered into supply agreements for NVX-CoV2373 that include prepayments from the purchasers, until we can generate sufficient product revenue in amounts sufficient to fully fund our operations, which we may never do, we expect to finance our cash needs through a combination of additional public or private equity or debt financings, as well as existing cash, potential collaborations, strategic alliances and marketing, distribution or licensing arrangements, funding from governmental and non-governmental funding entities, and potentially other sources. While we may continue to apply for contracts or grants from academic institutions, non-profit organizations and governmental entities, we may not be successful. Adequate additional funding may not be available to us on acceptable terms, if at all. Furthermore, negative interpretations of clinical trial data or setbacks, or perceived setbacks, with respect to manufacturing ability and/or capacity or regulatory filing timelines for NVX-CoV2373 or our other vaccine candidates, as well as the competitive landscape posed by other COVID-19 vaccines, may impair our ability to raise additional financing on favorable terms, or at all. Additionally, certain of the supply agreements for NVX-CoV2373 may be terminated by the counterparty if we do not timely achieve requisite regulatory approval for NVX-CoV2373 in the relevant jurisdictions under such agreements. If we cannot raise the additional funds required for our anticipated operations, we may be required to delay significantly, reduce the scope of or eliminate one or more of our research or development programs, downsize our organization, or seek alternative measures to avoid insolvency, including arrangements with collaborative partners or others that may require us to relinquish rights to certain of our technologies or vaccine candidates. If we raise additional funds through future offerings of shares of our common stock or other securities, such offerings would cause dilution of current stockholders’ percentage ownership in the Company, which could be substantial. Future offerings also could have a material and adverse effect on the price of our common stock.

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Economic uncertainty may adversely affect our access to capital, cost of capital and ability to execute our business plan as scheduled.

Generally, worldwide economic conditions remain uncertain, particularly due to the COVID-19 pandemic. Access to capital markets is critical to our ability to operate. Traditionally, biotechnology companies have funded their research and development expenditures by raising capital in the equity markets. Declines and uncertainties in these markets in the past have severely restricted raising new capital and have affected companies’ ability to continue to expand or fund existing development, manufacturing, regulatory and commercialization efforts. We require significant capital for our current and expected operations. The general economic and capital market conditions, both in the U.S. and worldwide, have been volatile in the past and at times have adversely affected our access to capital and increased the cost of capital. The capital and credit markets may not be available to support future capital raising activity on favorable terms. If economic conditions decline, our future cost of equity or debt capital and access to the capital markets could be adversely affected. In addition, if we are unable to access the capital markets on favorable terms, our ability to execute our business plan as contemplated would be compromised. Moreover, we rely and intend to rely on third parties, including clinical research organizations, contract manufacturing organizations and other important vendors and consultants. Global economic conditions may result in a disruption or delay in the performance of our third-party contractors and suppliers. If such third parties are unable to adequately satisfy their contractual commitments to us in a timely manner, our business could be adversely affected.

Our existing funding and supply agreements do not assure success of our vaccine candidates or that we will be able to fully fund our vaccine candidates.

The OWS Agreement, the DoD Agreement and the CEPI funding agreement each reimburse a portion of the expenses associated with the development and commercialization of NVX-CoV2373. To the extent funding commitments in such agreements are conditioned on our meeting certain milestones or conditions, including regulatory approval in applicable jurisdictions, we may not ultimately receive the full amount of committed funds and could be exposed to urgent need for additional funding to support our NVX-CoV2373 development, manufacturing and distribution activities. For example, in connection with the OWS Agreement, the USG has instructed us to prioritize alignment with the FDA on our analytic methods before conducting additional U.S. manufacturing and further indicated that the USG will not fund additional U.S. manufacturing until such agreement has been made. The OWS Agreement includes provisions giving the USG termination rights based on a determination that the funded project will not produce beneficial results commensurate with the expenditure of resources and that termination would be in the USG’s interest. Such a determination would result in the loss of funding under that agreement and could result in other actions by the U.S. government. The CEPI funding agreement provides CEPI certain “march-in” rights in the event of certain breaches of that agreement. We may be unable to timely obtain additional government or private funding, if at all. Additionally, we have entered into, and plan to continue entering into, supply agreements for NVX-CoV2373 that include prepayments from the purchasers. Certain of the supply agreements may be terminated by the counterparty if we do not timely achieve requisite regulatory approval for NVX-CoV2373 in the relevant jurisdictions under such agreements. In the event we are unable to successfully develop and commercialize NVX-CoV2373 or fail to meet certain regulatory milestones or product volume or delivery timing obligations under our supply agreements, we may be required to refund significant portions of the prepayments, which could have a material and adverse effect on our financial condition. Our inability to succeed with key clinical or development activities could jeopardize our ability to obtain licensure from the FDA or other regulatory authorities to sell NVX-CoV2373. As a result, our existing funding and supply agreements may be insufficient to fund our commercial launch.

Risks Related to Product Development and Commercialization

Because our vaccine product development efforts depend on new and rapidly evolving technologies, our efforts may not succeed.

Our vaccine development efforts depend on new, rapidly evolving technologies and on the marketability and profitability of our products. Our development efforts and, if those are successful, commercialization of NVX-CoV2373 and our other vaccines could fail for a variety of reasons, including if:

our recombinant nanoparticle vaccine technologies, any or all of the products based on such technologies or our proprietary manufacturing process prove ineffective or unsafe;

new strains of COVID-19 evolve, with respect to which NVX-CoV2373 proves less effective;

we or our third-party manufacturer facilities fail to reproducibly scale-up manufacturing with sufficiently high yields at reasonable cost and on projected timelines, or such manufacturing fails to generate product that consistently satisfies purity, potency, quality, stability, and shelf-life standards necessary for obtaining regulatory approvals or achieving commercial viability;
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the products are difficult to manufacture on a large-scale or uneconomical to market;

some or all of the products that we or our third-party partners have manufactured may be determined to be unsalable based on criteria imposed by regulators as they complete regulatory approvals;

our in-house or third-party manufacturing facilities fail regulatory inspections;

proprietary rights of third-parties prevent us or our collaborators from exploiting technologies, and manufacturing or marketing products; or

third-party competitors achieve and maintain greater market share due to earlier approvals or superior marketing capabilities.

The regulatory and commercial success of our COVID-19 vaccine candidate, NVX-CoV2373, remains uncertain. We may be unable to obtain regulatory approval or produce a successful vaccine in a timely manner, if at all.

In response to the outbreak of COVID-19, we are pursuing the development and manufacture of our vaccine candidate, NVX-CoV2373. Even though we have reported positive data from Phase 1, 2 and 3 clinical trials, such results may not be sufficient to support regulatory submissions, authorizations and approvals, accelerated or otherwise, on our projected timelines, if at all.

Additionally, even if NVX-CoV2373 receives regulatory approval, successful commercialization depends on our ability to effectively scale up manufacturing capabilities at our own locations and those of our manufacturing partners and contractors. In May 2020, we acquired Novavax CZ (formerly Praha Vaccines, a.s.) including its vaccine manufacturing facility in Bohumil, Czech Republic and approximately 150 of its employees. We also are actively entering into agreements with third parties to manufacture the antigen component of NVAX-CoV2373 and our proprietary Matrix-Madjuvant, as well as to distribute NVX-CoV2373. Because of contractual restraints and the limited number of third-party manufacturers with the expertise, required regulatory approvals and facilities to manufacture NVX-CoV2373 and its components at commercial scale, replacement of a manufacturer may be expensive and time-consuming and may cause interruptions in production. Manufacturing of NVX-CoV2373 and its components involves a complicated process that will require significant investments of time and financial resources to implement, and our efforts to establish manufacturing capabilities may not meet expectations as to timing, scale-up, reproducibility, yields, purity, cost, potency or quality. Shortages of raw materials and supplies also negatively impact our manufacturing efforts. We may not be able to timely and effectively produce NVX-CoV2373 in adequate quantities to address global demand.

We have not previously had a commercial launch of any vaccine product, and doing so in a pandemic environment with an urgent, critical global need creates additional challenges. In addition to scaling up our manufacturing capabilities, we need to develop global distribution channels and form partnerships with third parties worldwide, as well as hire, train and integrate additional management, administrative and sales and marketing personnel. Rapid and significant growth may strain our administrative and operational infrastructure, imposing significant additional responsibilities on our organization, and our efforts to establish these capabilities may not meet expectations as to timing, scale-up, reproducibility, yields, purity, cost, potency or quality. If we fail to successfully manage our growth and the increased complexity of our operations, our business, financial position, results of operations and prospects may be materially and adversely affected.

We are a biotechnology company and face significant risk in developing, manufacturing and commercializing our products.

We focus our research and development activities on vaccines, an area in which we believe we have particular strengths and a technology that appears promising. The outcome of any research and development program is highly uncertain. Only a small fraction of biopharmaceutical development programs ultimately result in commercial products or even product candidates and a number of events could delay our development efforts and negatively impact our ability to make regulatory submissions or obtain regulatory approval for, and to manufacture, market and sell, NVX-CoV2373 or any other vaccine on our projected timelines, if at all. Vaccine candidates that initially appear promising often fail to yield successful products, and we may not ultimately be able to demonstrate the safety, potency, purity, stability and efficacy necessary to obtain regulatory authorization to market our product candidates. In many cases, preclinical studies or clinical trials will show that a product candidate is not efficacious or that it raises safety concerns or has other side effects that outweigh its intended benefit. Success in preclinical or early clinical trials may not translate into success in large-scale clinical trials. Further, success in clinical trials often leads to increased investment, accelerating cumulative losses. Even if clinical trial results appear positive, regulatory approval may not be obtained if the FDA, or a foreign equivalent, does not agree with our interpretation of the results, and we may face challenges when scaling-up the production process to commercial levels. Even after a product is approved and
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launched, general usage or post-marketing clinical trials may identify safety or other previously unknown problems with the product, or manufacturing issues may emerge, either of which may result in regulatory approvals being suspended, limited to narrow the scope of the approval, or revoked, which may otherwise prevent successful commercialization. Intense competition in the vaccine industry could also limit the successful commercialization of any products for which we receive commercial approval.

Because we depend on third parties to conduct some of our laboratory testing and clinical trials, and a significant amount of our vaccine manufacturing and distribution, we may encounter delays in or lose some control over our efforts to develop and supply products.

We are highly dependent on third-party organizations to conduct some of our laboratory testing and clinical trials and a significant amount of our vaccine manufacturing activities and distribution. If we are unable to obtain any necessary services on acceptable terms, we may not complete our product development or commercialization efforts in a timely manner. We may lose control over these activities or become too dependent upon these parties. These third parties may not complete testing, manufacturing or distribution activities on schedule, or in satisfaction of regulatory or commercial requirements. Certain of our facilities are also contracted for defined time frames and through association with OWS and CEPI, and we may not be able to access those facilities for sufficient periods of time to provide adequate supply.

We are responsible for confirming that each of our clinical trials is conducted in accordance with its general investigational plan and protocol. Moreover, the FDA and foreign regulatory agencies require us to comply with regulations and standards, commonly referred to as good clinical practices, for conducting, recording and reporting the results of clinical trials to assure that data and reported results are credible and accurate and that the rights, safety and welfare of clinical trial participants are adequately protected. The FDA and foreign regulatory agencies also require us to comply with good manufacturing practices. Our reliance on third parties does not relieve us of these responsibilities and requirements. These third parties may not successfully carry out their contractual duties or regulatory obligations. Furthermore, if a third-party manufacturer is producing materials or products for themselves or other companies, that manufacturer is exposed to regulatory risks for the production of such materials and products. As a result, failure to meet the regulatory requirements for the production of those materials and products may generally affect the regulatory status of the third-party manufacturer’s facility, which could impact its ability to produce our materials and products. Any of our third-party service providers may need to be replaced, the quality or accuracy of the data they obtain may be compromised, the services provided to us may be delayed, or the product they manufacture may be contaminated due to the failure to adhere to our clinical and manufacturing protocols, regulatory requirements or for other reasons. In any such event, our preclinical development activities or clinical trials may be extended, delayed, suspended or terminated, and we may not be able to obtain regulatory approval of, or successfully commercially manufacture on a timely basis, our vaccine candidates.

The results from the Prepare trial, including that ResVax failed to meet the primary endpoint of the trial, will likely create challenges, some of which may be significant, around further development of that vaccine.

While the Prepare results suggest that ResVax is safe and is likely efficacious in more serious manifestations of RSV disease, the trial failed to achieve its primary clinical endpoint. Not achieving the primary clinical endpoint has been viewed negatively by our investors. Although the failure to achieve the primary endpoint in the trial is not evidence that the vaccine is ineffective, it means that regulatory agencies like the FDA and EMA are likely to require additional clinical trial data prior to licensure. This development may be viewed negatively by our potential collaborators and partners, which may make the ongoing development of ResVax, and any other RSV F Vaccine candidates, more challenging.

We may have product liability exposure.

The administration of drugs or vaccines to humans, whether in clinical trials or after marketing approval, can result in product liability claims. We maintain product liability insurance coverage for our current clinical programs, including our NVX-CoV2373 trials. If and when we obtain marketing approval for any vaccine candidate, we intend to expand our insurance coverage to include the sale of commercial products; however, we may not be able to obtain or maintain insurance coverage on commercially reasonable terms, at a reasonable cost or in sufficient amounts to protect us against losses due to liability. Furthermore, such insurance coverage and our resources may not be sufficient to satisfy all liabilities that result from product liability claims. A successful claim may prevent us from obtaining adequate product liability insurance in the future on commercially desirable terms, if at all. Even if a claim is not successful, defending such a claim would be time- consuming and expensive, may damage our reputation in the marketplace and would likely divert management’s attention.

In addition, because we are developing NVX-CoV2373 in response to the outbreak of COVID-19, a global pandemic, we may have a widely used vaccine as an investigational vaccine or a product authorized for temporary or emergency use prior to our receipt of marketing approval. Unexpected safety issues in these circumstances could lead to product liability claims and our existing insurance may not be adequate for such claims.

Regardless of merit or eventual outcome, liability claims may result in:
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decreased demand for our products;

withdrawal of regulatory approvals;

voluntary or mandatory recalls of our products;

necessity for additional nonclinical or clinical studies, changes in labeling, or changes to manufacturing processes, specifications and/or facilities;

impairment of our business reputation and negative media attention;

withdrawal of clinical trial participants;

costs of related litigation;

substantial monetary awards to participants or other claimants;

loss of revenue; and

inability to commercialize our vaccine candidates.

In the United States, the PREP Act, provides immunity for manufacturers from all claims under state or federal law for "loss" arising out of the administration or use of a “covered countermeasure.” However, injured persons may still bring a suit for "willful misconduct" against the manufacturer under some circumstances. "Covered countermeasures" include security countermeasures and "qualified pandemic or epidemic products", including products intended to diagnose or treat pandemic or epidemic disease, such as pandemic vaccines, as well as treatments intended to address conditions caused by such products. For these immunities to apply, the Secretary of DHHS must issue a declaration in cases of public health emergency or “credible risk” of a future public health emergency. On March 17, 2020, the Secretary of DHHS issued a declaration under the PREP Act and has issued subsequent amendments thereto to provide liability immunity for activities related to certain countermeasures against the ongoing COVID-19 pandemic. While we believe our products would be covered under the provisions of the PREP Act, this cannot be assured. Also, the Secretary of the HHS may not make other declarations in the future that cover any of our other product candidates, and the U.S. Congress may reduce coverage under the PREP Act or repeal it altogether. Product liability lawsuits may result in substantial liabilities and may require us to limit commercialization of our product candidates.

If we are unable to effectively manufacture our vaccines in sufficient quantities, at sufficient yields or are unable to obtain regulatory approvals for a manufacturing facility for our vaccines, we may experience delays or an adverse impact on product development, clinical trials, regulatory approval and commercial distribution.

Completion of our clinical trials and commercialization of our vaccine candidates require access to, or development of, facilities to effectively manufacture our vaccine candidates at sufficient yields and at commercial-scale. We have limited experience manufacturing any of our vaccine candidates in the volumes necessary to support commercial sales. While we have recently increased our projected global manufacturing capacity for NVX-CoV2373, our efforts to establish manufacturing capabilities may not meet expectations as to timing, scale-up, reproducibility, yields, purity, cost, potency or quality. The antigen component of NVX-CoV2373 is currently being manufactured at Novavax CZ, as well as numerous partnered manufacturing sites, including FUJIFILM in the United States, SIIPL in India and Takeda in Japan, among others. Challenges manufacturing either the antigen component or the adjuvant, or issues in later manufacturing stages, could compromise production of NVX-CoV2373.

Manufacturing our vaccine candidates involves a complicated process with which we have limited experience. We are highly dependent on third-party organizations to conduct a significant amount of our vaccine manufacturing activities. If we and our third-party manufacturing organizations are unable to manufacture our vaccine candidates in clinical quantities or, if and when necessary, in commercial quantities and at sufficient yields and at required specifications, then commercialization will be delayed, and we will need to identify and reach supply arrangements with additional third parties. Third-party manufacturers also must receive FDA or equivalent foreign regulatory body approval before they can produce clinical material or commercial product. Our vaccines are in competition with other products for access to these third-party facilities and may be subject to delays in manufacture if third parties prioritize other products. We may not be able to enter into any necessary additional third-party manufacturing arrangements on acceptable terms, or on a timely basis. In addition, we have to enter into technical transfer agreements and share our know-how with the third-party manufacturers, which can be time-consuming and may result in delays.
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Because of contractual restraints and the limited number of third-party manufacturers with the expertise, required regulatory approvals and facilities to manufacture our bulk vaccines at commercial-scale, replacement of a manufacturer may be expensive and time-consuming and may cause interruptions in the production of our vaccine. We and our third-party manufacturers may also encounter production challenges related to:

costs, scale up, and yields;

shortages of raw materials and supplies;

quality control and assurance;

contamination, lot consistency, potency, and purity;

shortages of qualified personnel and other capacity constraints;

compliance with strictly enforced and evolving federal, state and foreign regulations that vary in each country where products might be sold including nationalization or other territory restrictions placed on our owned and third-party manufacturing sites; and

capital funding.

Delays or interruptions could have a material adverse effect on our business, financial condition, results of operations and cash flows.

We must identify vaccines for development with our technologies and establish successful third-party relationships.

The near and long-term viability of our vaccine candidates depend in part on our ability to successfully establish new strategic collaborations with pharmaceutical and biotechnology companies, non-profit organizations and government agencies. Establishing strategic collaborations and obtaining government funding is difficult and time-consuming. Potential collaborators may reject collaborations based upon their assessment of our financial, regulatory or intellectual property position or based on their internal pipelines; government agencies may reject contract or grant applications based on their assessment of public need, the public interest, our products’ ability to address these areas, or other reasons beyond our expectations or control. Collaborators also may seek to modify or terminate relationships. Past success in establishing strategic collaborations with pharmaceutical and biotechnology companies, non-profit organizations and government agencies in the past is no guarantee of future success in entering into new relationships or in performing under existing relationships. If we fail to establish a sufficient number of collaborations or government relationships on acceptable terms, or fail to perform under collaborations or relationships to the satisfaction of counter-parties, we may not be able to commercialize our vaccine candidates or generate sufficient revenue to fund further research and development efforts.

The collaborations we have established or may establish may not result in the successful development or commercialization of any vaccine candidates for several reasons, including the fact that:

we may not have the ability to control the activities of our partners and cannot provide assurance that they will fulfill their obligations to us, including with respect to the license, development and commercialization of vaccine candidates, in a timely manner or at all;

such partners may not devote sufficient resources to our vaccine candidates or properly maintain or defend our intellectual property rights;

our partners could independently develop, or develop with third parties, products that compete directly or indirectly with our vaccine candidates if such partners believe that competitive products are more likely to be successfully developed or can be commercialized under terms that are more economically attractive than ours;

any failure on the part of our partners to perform or satisfy their obligations to us could lead to delays in the development or commercialization of our vaccine candidates and affect our ability to realize product revenue; and

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disagreements, including disputes over the ownership of technology developed with such collaborators, could result in litigation, which would be time consuming and expensive, and may delay or terminate research and development efforts, regulatory approvals and commercialization activities.

If we or our collaborators fail to maintain our existing agreements or in the event we fail to establish agreements as necessary, we could be required to undertake research, development, manufacturing and commercialization activities solely at our own expense. These activities would significantly increase our capital requirements and, given our lack of sales, marketing and distribution capabilities, significantly delay the commercialization of our vaccine candidates.

Even if licensed to market, our vaccine products may not be initially or ever profitable.

Whether we make a profit from the sale of our vaccine products is dependent on a number of variables, including the costs we incur manufacturing, testing and releasing, packaging and shipping such vaccine product. Additionally, the CEPI funding agreement necessitates that we allocate a certain number of doses of NVX-CoV2373 to certain middle and lower income countries, and the Grant Agreement with BMGF necessitates that we commit to a specific amount of sales in certain specified middle and lower income countries, which may impact negatively our ability to generate profit. We cannot predict when, if at all, our approved vaccine products will be profitable to the Company.

Even if we successfully commercialize any of our vaccine candidates, either alone or in collaboration, we face uncertainty with respect to pricing, third-party reimbursement and healthcare reform, all of which could adversely affect any commercial success of our vaccine candidates.

Our ability to collect revenue from the commercial sale of our vaccines may depend on our ability, and that of any current or potential future collaboration partners or customers, to obtain adequate levels of approval, coverage and reimbursement for such products from third-party payers such as:

government health administration authorities such as the Advisory Committee for Immunization Practices of the Centers for Disease Control and Prevention;

private health insurers;

managed care organizations;

pharmacy benefit management companies; and

other healthcare related organizations.

Third-party payers are increasingly challenging the prices charged for medical products and may deny coverage or offer inadequate levels of reimbursement if they determine that a prescribed product has not received appropriate clearances from the FDA, or foreign equivalent, or other government regulators; is not used in accordance with cost-effective treatment methods as determined by the third-party payer; or is experimental, unnecessary or inappropriate. Prices could also be driven down by managed care organizations that control or significantly influence utilization of healthcare products.

In both the U.S. and some foreign jurisdictions, there have been a number of legislative and regulatory proposals and initiatives to change the health care system in ways that could affect our ability to sell vaccines and could adversely affect the prices that we receive for our vaccine candidates, if approved. Some of these proposed and implemented reforms could result in reduced pharmaceutical pricing or reimbursement rates for medical products, and while we have no current vaccines available for commercial sale, the impact of such reform could nevertheless adversely affect our business strategy, operations and financial results. For example, the Affordable Care Act (“ACA”) contained several cost containment measures that could adversely affect our future revenue, including, for example, increased drug rebates under Medicaid for brand name prescription drugs, extension of Medicaid rebates to Medicaid managed care organizations, and extension of so-called 340B discounted pricing on pharmaceuticals sold to certain healthcare providers. Additional provisions of the healthcare reform laws that may negatively affect our future revenue and prospects for profitability include the assessment of an annual fee based on our proportionate share of sales of brand name prescription drugs to certain government programs, including Medicare and Medicaid. The ACA also established a Medicare Part D coverage gap discount program, in which manufacturers must agree to offer 70% point-of-sale discounts off negotiated prices of applicable branded on drugs (including vaccines) to eligible beneficiaries during their coverage gap period (the so-called “donut hole”), as condition for the manufacturer’s outpatient drugs to be covered under Medicare Part D. Other aspects of healthcare reform, such as expanded government enforcement authority and heightened standards that could increase compliance-related costs, could also affect our business.

Further, we face uncertainties because of occasional political, legislative, and administrative efforts to substantially modify or invalidate some or all of the provisions of the ACA. For example, in 2017, the Trump administration withheld the cost-sharing subsidies paid to ACA health insurance exchange plans serving low-income enrollees. The Tax Cut and Jobs Act
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(“TCJA”) was also enacted at the end of 2017 and included provisions that affected healthcare insurance coverage and payment, such as the elimination of the tax penalty for individuals who do not maintain sufficient health insurance coverage beginning in 2019 (the so-called “individual mandate”).

More recently, the Biden administration, through the American Rescue Plan Act of 2021, increased subsidies for coverage purchased through ACA health insurance exchanges and extended eligibility for subsidies to higher income levels. On December 14, 2018, a U.S. District Court Judge in the Northern District of Texas ruled that the individual mandate is a critical and inseverable feature of the ACA, and therefore, because it was repealed as part of the TCJA, the remaining provisions of the ACA are invalid as well. On December 18, 2019, the U.S. Court of Appeals for the 5th Circuit ruled that the individual mandate was unconstitutional but remanded the case back to the District Court to determine whether the remaining provisions of the ACA are invalid as well. On March 2, 2020, the U.S. Supreme Court granted the petitions for writs of certiorari to review the case, and oral arguments were heard on November 10, 2020. On June 17, 2021, the U.S. Supreme Court dismissed the most recent judicial challenge to the ACA brought by several states without specifically ruling on the constitutionality of the ACA. Separately, President Biden issued an Executive Order to initiate a special enrollment period from February 15, 2021 through August 15, 2021 for purposes of obtaining health insurance coverage through the ACA marketplace. The Executive Order also instructed certain governmental agencies to review and reconsider their existing policies and rules that limit access to healthcare, including among others, reexamining Medicaid demonstration projects and waiver programs that include work requirements, and policies that create unnecessary barriers to obtaining access to health insurance coverage through Medicaid or the ACA. It is also unclear how these and other healthcare reform measures of the Biden administration or other efforts, if any, to challenge, repeal or replace the ACA, will impact our business.

Other legislative changes have been proposed and adopted since the ACA was enacted. These changes include aggregate reductions to Medicare payments to providers of 2% per fiscal year pursuant to the Budget Control Act of 2011 and subsequent laws, which began in 2013 and, due to subsequent legislative amendments, will stay in effect through 2030 unless additional Congressional action is taken. In January 2013, the American Taxpayer Relief Act of 2012 was signed into law, which, among other things, further reduced Medicare payments to several types of providers, including hospitals, imaging centers and cancer treatment centers, and increased the statute of limitations period for the government to recover overpayments to providers from three to five years. New laws may result in additional reductions in Medicare and other healthcare funding, which may materially adversely affect customer demand and affordability for our products and, accordingly, the results of our financial operations. Additionally, the pharmaceutical industry has also been the subject of significant publicity in recent years regarding the pricing of pharmaceutical products, including publicity and pressure resulting from prices charged by pharmaceutical companies for new products as well as price increases by pharmaceutical companies on older products that some people have deemed excessive. As a result, pharmaceutical product prices have been the focus of increased scrutiny by the U.S. government, including certain state attorneys general, members of congress, presidential candidates and the United States Department of Justice. If reforms in the health care industry make reimbursement for our potential products less likely, the market for our potential products will be reduced, and we could lose potential sources of revenue. The existence or threat of cost control measures could cause our corporate collaborators to be less willing or able to pursue research and development programs related to our vaccine candidates. Further, it is also possible that additional governmental action is taken in response to the COVID-19 pandemic. We cannot predict the ultimate content, timing or effect of any healthcare reform legislation or the impact of potential legislation on us.

Even if we receive regulatory approvals for our vaccine candidates, including NVX-CoV2373, coverage and reimbursement may be subject to unique regulatory policies. For example, under the ACA preventive care mandate, non-grandfathered group health plans and health insurance coverage offered in the individual or group market typically have at least one year before they must provide first-dollar coverage for a newly issued preventive care requirement or guideline. However, pursuant to the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), non-grandfathered group health plans and health insurance coverage offered in the individual or group market must cover any qualifying coronavirus preventive service 15 business days after the United States Preventive Services Task Force, or Advisory Committee on Immunization Practices (ACIP) designates such service as preventive. Further, third-party reimbursement for providers administering COVID-19 vaccines may affect market acceptance of NVX-CoV2373, if we receive regulatory approval. Currently, the CARES Act and its implementing regulations state that (i) providers that participate in the U.S. Centers for Disease Control and Prevention’s COVID-19 Vaccination Program must administer a COVID-19 immunization regardless of an individual’s ability to pay or health insurance coverage status, (ii) providers may not seek any reimbursement, including through balance billing, from an immunization recipient, (iii) coverage is required, without cost-sharing, for the administration of the immunization even if a third party, such as the federal government, pays for the cost of the immunization, and (iv) private health insurance plans must cover COVID-19 immunizations and their administration even when provided by out-of-network providers for the duration of the public health emergency for COVID-19. Even if we receive regulatory approvals for NVX-CoV237, there is no guarantee payors will provide coverage and reimbursement for our product after the termination of the public health emergency, nor can we guarantee that even if coverage is provided, the reimbursement amount will be high enough to allow us to establish or maintain pricing sufficient to realize a sufficient return on our investment. We cannot predict continued prevalence of COVID-19, whether herd immunity will be achieved (which would affect the need for future administration of COVID-19 vaccines), or whether NVX-CoV2373 will be effective against continuing mutations or variants of the SARS-CoV-2 virus.

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We have limited marketing capabilities, and if we are unable to enter into collaborations with marketing partners or develop our own sales and marketing capability, we may not be successful in commercializing any approved products.

Although we have initiated preliminary activities in anticipation of commercialization of our vaccine candidates, we currently have limited dedicated sales, marketing or distribution capabilities. As a result, we depend on collaborations with third parties that have established distribution systems and sales forces, including our collaboration with SIIPL, among others. To the extent that we enter into co-promotion or other licensing arrangements, our revenue will depend upon the efforts of third parties, over which we may have little or no control. If we are unable to reach and maintain agreements with one or more pharmaceutical companies or collaborators, we may be required to market our products directly. Developing a marketing and sales force is expensive and time-consuming and could delay a product launch. We may not be able to attract and retain qualified sales personnel or otherwise develop this capability.

Our vaccine candidates may never achieve market acceptance even if we obtain regulatory approvals.

Even if we receive regulatory approvals for the commercial sale of our vaccine candidates, the commercial success of these vaccine candidates will depend on, among other things, their acceptance by physicians, patients and third-party payers, such as health insurance companies and other members of the medical community, as a vaccine and cost-effective alternative to competing products. If our vaccine candidates fail to gain market acceptance, we may be unable to earn sufficient revenue to continue our business. Market acceptance of, and demand for, any product that we may develop and commercialize will depend on many factors, including:

our ability to provide acceptable evidence of safety and efficacy (including against emerging COVID-19 variants);

the prevalence and severity of adverse side effects;

whether our vaccines are differentiated from other vaccines;

availability, relative cost and relative efficacy of alternative and competing treatments;

the effectiveness of our marketing and distribution strategy;

publicity concerning our products or competing products and treatments; and

our ability to obtain sufficient third party insurance coverage or reimbursement.

If our vaccine candidates do not become widely accepted by physicians, patients, third-party payers and other members of the medical community, our business, financial condition and results of operations could be materially and adversely affected.

We may not be able to secure sufficient supplies of a key component of our adjuvant technology.

Because an important component of our adjuvant technology is extracted from a species of soap-bark tree (Quillaja saponaria) grown in Chile, we need long term access to quillaja extract with a consistent and sufficiently high quality. We need a secure supply of raw material, as well as back-up suppliers, or our adjuvant products may be delayed and we may not be able to meet our obligations under our various collaboration and supply agreements.

Current or future regional relationships may hinder our ability to engage in larger transactions.

We have entered into regional collaborations to develop, manufacture and distribute our vaccine candidates in certain parts of the world, and we anticipate entering into additional regional collaborations. Our relationships with SIIPL, Takeda, SK bioscience and BMGF are examples of these regional relationships. These relationships often involve the licensing of our technology to our partner or entering into a distribution agreement, frequently on an exclusive basis. Generally, exclusive agreements are restricted to certain territories. Because we have entered into exclusive license and distribution agreements, larger companies may not be interested, or able, to enter into collaborations with us on a worldwide-scale. Also, these regional relationships may make us an unattractive target for an acquisition.

Our product candidates are sensitive to shipping and storage conditions, which could subject our vaccine candidates to risk of loss or damage.

Our vaccine candidates are sensitive to storage and handling conditions. Loss in vaccine candidates could occur if the product or product intermediates are not stored or handled properly. It is possible that our vaccine candidates could be lost due
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to expiration prior to use. If we do not effectively maintain our supply logistics, then we may experience an unusual number of returned or out of date products. Failure to effectively maintain our supply logistics, by us or third parties, could lead to additional manufacturing costs and delays in our ability to supply required quantities for clinical trials or otherwise.

Our vaccine candidates could become subject to a product recall which could harm our reputation, business, and financial results.

The FDA and similar foreign governmental authorities have the authority to require the recall of certain vaccine candidates. Manufacturers may, under their own initiative, recall a product if any material deficiency in a product is found. A government-mandated or voluntary recall by us or our strategic collaborators could occur as a result of manufacturing errors, design or labeling defects or other deficiencies and issues. Recalls of any of our vaccine candidates would divert managerial and financial resources and have an adverse effect on our financial condition and results of operations. A recall announcement could harm our reputation with customers and negatively affect our sales, if any.

Risks Related to Our Industry and Competition

Many of our competitors have significantly greater resources and experience, which may negatively impact our commercial opportunities and those of our current and future licensees.

The biotechnology and pharmaceutical industries are subject to intense competition and rapid and significant technological change. We have many potential competitors, including major pharmaceutical companies, specialized biotechnology firms, academic institutions, government agencies and private and public research institutions. Many of our competitors have significantly greater financial and technical resources, experience and expertise in:

research and development;

preclinical testing;

designing and implementing clinical trials;

regulatory processes and approvals;

production and manufacturing; and

sales and marketing of approved products.

Principal competitive factors in our industry include:

the quality and breadth of an organization’s technology;

management of the organization and the execution of the organization’s strategy;

the skill and experience of an organization’s employees and its ability to recruit and retain skilled and experienced employees;

an organization’s intellectual property portfolio;

the range of capabilities, from target identification and validation to drug discovery and development to manufacturing and marketing; and

the availability of substantial capital resources to fund discovery, development and commercialization activities.

Large and established companies, such as Merck & Co., Inc., GlaxoSmithKline plc, CSL Ltd, Sanofi Pasteur, SA, Pfizer Inc., Johnson & Johnson, AstraZeneca, and Moderna, among others, compete in the vaccine market. In particular, these companies have greater experience and expertise in securing government contracts and grants to support their research and development efforts, conducting testing and clinical trials, obtaining regulatory approvals to market products, manufacturing such products on a broad scale and marketing approved products.

Regardless of the disease, smaller or early-stage companies and research institutions also may prove to be significant competitors, particularly through collaborative arrangements with large and established pharmaceutical companies. As these
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companies develop their technologies, they may develop proprietary positions, which may prevent or limit our product development and commercialization efforts. We will also face competition from these parties in recruiting and retaining qualified scientific and management personnel, establishing clinical trial sites and participant registration for clinical trials and in acquiring and in-licensing technologies and products complementary to our programs or potentially advantageous to our business. If any of our competitors succeed in obtaining approval from the FDA or other regulatory authorities for their products sooner than we do or for products that are more effective or less costly than ours, our commercial opportunity could be significantly reduced.

In order to effectively compete, we will have to make substantial investments in development, testing, manufacturing and sales and marketing or partner with one or more established companies. We may not be successful in gaining significant market share for any vaccine. Our technologies and vaccines also may be rendered obsolete or non-competitive as a result of products introduced by our competitors to the marketplace more rapidly and at a lower cost.

There is significant competition in the development of a vaccine against COVID-19, influenza, and RSV and we may never see returns on the significant resources we are devoting to our vaccine candidates.

We may be unable to produce a successful COVID-19 vaccine, and establish a competitive market share for our vaccine before the COVID-19 outbreak is contained or significantly diminished. A large number of vaccine manufacturers, academic institutions and other organizations have developed COVID-19 vaccines or are developing COVID-19 vaccine candidates. In particular, Moderna, Pfizer/BioNTech, and Johnson & Johnson have received emergency use authorizations for their COVID-19 vaccines in the U.S. and other countries, and many other companies, including AstraZeneca, Sinovac Biotech, Sinopharm, and Inovio are in various stages of developing and obtaining marketing authorization for COVID-19 vaccine candidates. Despite funding provided to us to date, many of our competitors pursuing vaccine candidates have significantly greater product candidate development, manufacturing and marketing resources than we do. Larger pharmaceutical and biotechnology companies have extensive experience in clinical testing and obtaining regulatory approval for their products and may have the resources to heavily invest to accelerate discovery and development of their vaccine candidates. The success of our COVID-19 vaccine will depend, in part, on its relative safety, efficacy (including against emerging variant strains), side effect profile, convenience, and cost. COVID-19 vaccines approved prior to our vaccine satisfy a portion of the demand for initial vaccinations, and we no longer have access to that opportunity. In addition, COVID-19 vaccines approved prior to our vaccine may develop broad market acceptance that we are challenged to overcome. Furthermore, if any competitors are successful in producing a more efficacious vaccine or other treatment for COVID-19 (including against emerging variant strains), or if any competitors are able to manufacture and distribute any such vaccines or treatments with greater efficiency there may be a diversion of potential governmental and other funding away from us and toward such other parties.

We are allocating significant financial and personnel resources to the development of NVX-CoV2373, which may cause delays in or otherwise negatively impact our other development programs. Our business could be negatively impacted by our allocation of significant resources to combating a global health threat that is unpredictable or against which our vaccine, if commercialized, may ultimately prove unsuccessful or unprofitable.

Many seasonal influenza vaccines are currently approved and marketed. Competition in the sale of these seasonal influenza vaccines is intense. Therefore, newly developed and approved products must be differentiated from existing vaccines in order to have commercial success. In order to show differentiation in the seasonal influenza market, a product may need to be more efficacious, particularly in older adults, and/or be less expensive or quicker to manufacture. Many competitors are working on new products and new generations of current products, intended to be more efficacious than those currently marketed. Our nanoparticle seasonal influenza vaccine candidate may not prove to be more efficacious than current products or products under development by our competitors. Further, our in-house or third-party manufacturing arrangements may not provide enough savings of time or money to provide the required differentiation for commercial success.

We are also aware that there are multiple companies with active RSV vaccine programs at various stages of development. Thus, while there is no RSV vaccine currently on the market, there is likely to be significant and consistent competition as these active programs mature. Different RSV vaccines may work better for different segments of the population, so it may be difficult for a single RSV vaccine manufacturer to provide vaccines that are marketable to multiple population segments. Geographic markets are also likely to vary significantly, which may make it difficult to market a single RSV vaccine worldwide. Even if a manufacturer brings an RSV vaccine to license, it is likely that competitors will continue to work on new products that could be more efficacious and/or less expensive. Our RSV vaccine candidate may not be as far along in development as other active RSV vaccine programs about which we are not aware, nor as efficacious as products under development by competing companies. Even if our RSV vaccine candidate receives regulatory approval, it may not achieve significant sales if other, more effective vaccines under development by our competitors are also approved.

Risks Related to Regulatory and Compliance Matters

We have not completed the development of vaccine products, and we may not succeed in obtaining the FDA licensure or foreign regulatory approvals necessary to sell such vaccine products.
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The development, manufacture and marketing of our pharmaceutical and biological products are subject to government regulation by the U.S. FDA and regulatory authorities in other jurisdictions, including the European Medicines Agency EMA, the State Institute for Drug Control (SUKL) with respect to our manufacturing facility in the Czech Republic and the Swedish Medical Products Agency (Läkemedelsverket, LV) with respect to our adjuvant product being developed in Sweden, as well as other country authorities into which active pharmaceutical ingredients and excipients are imported and/or manufactured by us or our sub-contracted manufacturers. In the U.S. and most foreign countries, we must complete rigorous preclinical testing and extensive clinical trials that demonstrate the safety and efficacy of a product in order to apply for regulatory approval to market the product. Additionally, we must demonstrate that our manufacturing facilities, processes and controls are adequate with respect to such product to assure safety, purity and potency. None of our vaccine candidates has yet gained regulatory approval in the U.S. or elsewhere. We also have vaccine candidates in clinical trials and preclinical laboratory or animal studies. The steps generally required by the FDA before our proposed investigational products may be marketed in the U.S. include:

performance of preclinical (animal and laboratory) tests;

submission to the FDA of an IND, which must become effective before clinical trials may commence;

performance of adequate and well controlled clinical trials to establish the safety and efficacy of the investigational product in the intended target population;

performance of a consistent and reproducible manufacturing process at commercial scale capable of passing FDA inspection;

submission to the FDA of a BLA or a NDA; and

FDA approval of the BLA or NDA before any commercial sale or shipment of the product.

These processes are expensive and can take many years to complete, and we may not be able to demonstrate the safety, purity, potency and efficacy of our vaccine candidates to the satisfaction of regulatory authorities. The start of clinical trials can be delayed or take longer than anticipated for many and varied reasons, many of which are out of our control. Safety concerns may emerge that could lengthen the ongoing clinical trials or require additional clinical trials to be conducted. Promising results in early clinical trials may not be replicated in subsequent clinical trials. Regulatory authorities may also require additional testing, and we may be required to demonstrate that our proposed products represent an improved form of treatment over existing therapies, which we may be unable to do without conducting further clinical trials. Moreover, if the FDA grants regulatory approval of a product, the approval may be limited to specific indications or limited with respect to its distribution. Expanded or additional indications for approved products may not be approved, which could limit our revenue. Foreign regulatory authorities may apply similar limitations or may refuse to grant any approval. Consequently, even if we believe that preclinical and clinical data are sufficient to support regulatory approval for our vaccine candidates, the FDA and foreign regulatory authorities ultimately may not grant approval for commercial sale in any jurisdiction, or may impose regulatory requirements that make further pursuit of approval uneconomical in one or more jurisdictions. If our vaccine candidates are not approved, our ability to generate revenue will be limited, and our business will be adversely affected.

We may fail to obtain regulatory approval for our products on a timely basis or comply with our continuing regulatory obligations after approval is obtained.

Delays in obtaining regulatory approval can be extremely costly in terms of lost sales opportunities, loss of any potential marketing advantage of being early to market and increased clinical trial costs. For example, certain of our APAs and supply agreements may be terminated by the counterparty if we do not timely achieve requisite regulatory approval for NVX-CoV2373 in the relevant jurisdictions under such agreements. The speed with which we begin and complete our preclinical studies necessary to begin clinical trials, clinical trials and our applications for marketing approval will depend on several factors, including the following:

our ability to scale-up manufacturing capability that reproducibly generates consistent yields of product with required purity, potency and quality; that such scale-up occurs on a timely basis; and that we have access to sufficient quantities of materials for use in necessary preclinical studies and clinical trials;

regulatory agency review and approval of proposed clinical trial protocols;

approval of clinical trials protocols and informed consent forms by institutional review boards responsible for overseeing the ethical conduct of the trial;
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the rate of participant enrollment and retention, which is a function of many factors, including the size of the participant population, the proximity of participants to clinical sites, the eligibility criteria for the clinical trial and the nature of the protocol;

unfavorable test results or side effects experienced by clinical trial participants;

analysis of data obtained from preclinical and clinical activities, which are susceptible to varying interpretations and which interpretations could delay, limit, result in the suspension or termination of, or prevent further conduct of clinical studies or regulatory approval;

the availability of skilled and experienced staff to conduct and monitor clinical trials and to prepare the appropriate regulatory applications; and

changes in the policies of regulatory authorities for drug or vaccine approval during the period of product development.

We have limited experience in conducting and managing the preclinical studies and clinical trials necessary to obtain regulatory marketing approvals. We may not be permitted to continue or commence additional clinical trials. We also face the risk that the results of our clinical trials may be inconsistent with the results obtained in preclinical studies or clinical trials of similar products or that the results obtained in later phases of clinical trials may be inconsistent with those obtained in earlier phases. A number of companies in the biotechnology and product development industry have suffered significant setbacks in advanced clinical trials, even after experiencing promising results in early animal and human testing.

Regulatory agencies may require us or our collaborators to delay, restrict or discontinue clinical trials on various grounds, including a finding that the participants are being exposed to an unacceptable health risk. In addition, we or our collaborators may be unable to submit applications to regulatory agencies within the time frame we currently expect. Once submitted, applications must be approved by various regulatory agencies before we or our collaborators can commercialize the product described in the application. All statutes and regulations governing the conduct of clinical trials are subject to change in the future, which could affect the cost of such clinical trials. Any unanticipated costs or delays in our clinical trials or regulatory submissions could delay our ability to generate revenue and harm our financial condition and results of operations.

Failure to obtain regulatory approval in foreign jurisdictions would prevent us from marketing our products internationally.

We intend to have our vaccine candidates marketed outside the U.S. In furtherance of this objective, we have entered into supply agreements with various foreign governments and international distribution agreements with commercial entities. In order to market our products in the European Union, United Kingdom, India, Asia and many other non-U.S. jurisdictions, we must obtain separate regulatory approvals and comply with numerous and varying regulatory requirements. The approval procedure varies among countries and can involve additional testing and data review. The time required to obtain foreign regulatory approval may differ from that required to obtain FDA approval. The foreign regulatory approval process may include all of the risks associated with obtaining FDA approval. We may not obtain foreign regulatory approvals on a timely basis, if at all. Approval by one regulatory agency does not ensure approval by regulatory agencies in other jurisdictions. However, a failure or delay in obtaining regulatory approval in one jurisdiction may have a negative effect on the regulatory approval process in other jurisdictions, including approval by the FDA. The failure to obtain regulatory approval in foreign jurisdictions could harm our business.

The regulatory pathway for NVX-CoV2373 is continually evolving and may result in unexpected or unforeseen challenges.

The regulatory pathway for NVX-CoV2373 is evolving and failure by us to comply with any laws, rules and standards, some of which may not exist yet or are subject to interpretation and may be subject to change, could result in a variety of adverse consequences, including penalties, fines and delays in vaccine licensure. Efforts to comply with evolving laws, regulations and standards have resulted in, and are likely to continue to result in, increased general and administrative expenses and a diversion of management time and attention to regulatory compliance activities. For example, the rules, regulations and standards governing OWS are uncertain and may evolve as the program progresses. Such rules or standards may adversely affect our plans to develop NVX-CoV2373 and failure by us to comply with any laws, rules or standards, some of which may not exist yet or may change, could result in a range of adverse consequences, such as penalties, fines or failure to receive funding.

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The speed at which multiple stakeholders are moving to create, test and approve vaccines for COVID-19 is highly unusual and may increase the risks associated with traditional vaccine development, which typically takes between eight and ten years. Given this accelerated timeline, we and regulators, such as the FDA, the EMA, and the MHRA may make decisions more rapidly than is typical. Evolving or changing plans or priorities at the FDA or other regulatory bodies, including based on new knowledge of COVID-19 and how the disease affects the human body, and new variants of the virus, may significantly affect the regulatory pathway for NVX-CoV2373. Results from clinical testing may raise new questions and require us to redesign proposed clinical trials, including revising proposed endpoints or adding new clinical trial sites or cohorts of subjects. In addition, the FDA’s or other regulators’ analysis of clinical data may differ from our interpretation, or regulators’ requirements and expectations for vaccine authorization or approval may change over time, with the result that the FDA or other regulators may require that we conduct additional clinical trials or non-clinical studies. The evolving regulatory pathway may impede the development, commercialization and/or licensure of NVX-CoV2373.

In addition, because the path to licensure of any vaccine against COVID-19 is unclear, we may have a widely used vaccine in circulation in certain countries as an investigational vaccine or a product authorized for temporary or emergency use prior to our receipt of full marketing approval. Unexpected safety issues in these circumstances could lead to significant reputational damage for Novavax and our technology platform going forward and other issues, including delays in our other programs, the need for re-design of our clinical trials and the need for significant additional financial resources.

We are conducting, and plan to conduct in the future, a number of clinical trials for NVX-CoV2373 at sites outside the United States and the FDA may not accept data from trials conducted in such locations.

We are currently conducting several clinical trials of NVX-CoV2373 at sites outside the U.S., including a Phase 3 trial in the U.K., a Phase 2b trial in South Africa, a Phase 1/2 trial partially in Australia, a Phase 2/3 trial in India, and a Phase 1/2 trial in Japan. Although the FDA may accept data from clinical trials conducted outside the U.S., acceptance of these data is subject to conditions imposed by the FDA. For example, the clinical trial must be well designed and conducted and be performed by qualified investigators in accordance with ethical principles. The trial population must also adequately represent the U.S. population, and the data must be applicable to the U.S. population and U.S. medical practice in ways that the FDA deems clinically meaningful. In addition, while these clinical trials are subject to the applicable local laws, FDA acceptance of the data will depend on its determination that the trials also complied with all applicable U.S. laws and regulations. If the FDA does not accept the data from any trial that we conduct outside the U.S., it could result in delay pending completion of our trials conducted in the U.S. or result in the need for additional trials, which would be costly and time-consuming and could delay or permanently halt our development of NVX-CoV2373.

Even if regulatory approval is received for our vaccine candidates, the later discovery of previously unknown problems with a product, manufacturer or facility may result in restrictions, including withdrawal of the product from the market, or may mean that product we have produced prior to regulatory approval is not acceptable for sale in one or more markets.

Even after a product gains regulatory approval, the product and the manufacturer of the product will be subject to continuing regulatory review, including adverse event reporting requirements and the FDA’s general prohibition against promoting products for unapproved uses. Failure to comply with any post-approval requirements can, among other things, result in warning letters, product seizures, recalls, substantial fines, injunctions, suspensions or revocations of marketing licenses, operating restrictions and criminal prosecutions. Any such enforcement actions, any unanticipated changes in existing regulatory requirements or the adoption of new requirements, or any safety issues that arise with any approved products, could adversely affect our ability to market products and generate revenue and thus adversely affect our ability to continue our business.

We also may be restricted or prohibited from marketing or manufacturing a product, even after obtaining product approval, if previously unknown problems with the product or its manufacture are subsequently discovered. We cannot provide assurance that newly discovered or developed safety issues will not arise following regulatory approval. With the use of any vaccine by a wide patient population, serious adverse events may occur from time to time that did not arise in the clinical trials of the product or that initially appeared to be unrelated to the vaccine itself and only with the collection of subsequent information were found to be causally related to the product. Any such safety issues could cause us to suspend or cease marketing of our approved products, possibly subject us to substantial liabilities, and adversely affect our ability to generate revenue and our financial condition.

Our ability to produce a successful vaccine may be curtailed by one or more government actions or interventions, which may be more likely during a global health crisis such as COVID-19.

Given the significant global impact of the COVID-19 pandemic, it is possible that one or more government entities may take actions, including under the U.S. Government under the Defense Production Act of 1950, as amended, that directly or indirectly have the effect of diminishing some of our rights or opportunities with respect to NVX-CoV2373, and the economic value of a COVID-19 vaccine to us could be limited. In addition, during a global health crisis, such as the COVID-19
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pandemic, where the spread of a disease needs to be controlled, closed or heavily regulated national borders create challenges and delays in our development, production and distribution activities and may necessitate that we pursue strategies to develop, produce and distribute our vaccine candidates within self-contained national or international borders or with additional safety measures or checks in place, at potentially much greater expense and with longer timeframes for public distribution.

Inadequate funding for the FDA, the SEC and other government agencies could hinder their ability to hire and retain key leadership and other personnel, or otherwise perform their normal functions on which the operation of our business may rely, which could negatively impact our ability to develop or commercialize new products or services, access capital markets, or otherwise operate our business.

The ability of the FDA to review and approve new products is affected by a variety of factors, including government budget and funding levels, ability to hire and retain key personnel and accept the payment of user fees, and statutory, regulatory and policy changes. Average review times at the agency have fluctuated in recent years as a result. In addition, government funding of the SEC and other government agencies on which our operations may rely, including those that fund research and development activities, is subject to the political process, which is inherently fluid and unpredictable.

Disruptions at the FDA and other agencies may also slow the time necessary for new drugs to be reviewed and approved by necessary government agencies, which would adversely affect our business. For example, over the last several years, the U.S. government has shut down several times and certain regulatory agencies, such as the FDA and the SEC, have had to furlough employees and stop or slow the pace of critical activities. If a prolonged government shutdown occurs, it could significantly impact the ability of the FDA to timely review and process our regulatory submissions, which could have a material adverse effect on our business. Further, in our operations as a public company, future government shutdowns could impact our ability to access the public markets and obtain necessary capital in order to properly capitalize and continue our operations.

Fast Track Designation by the FDA or other regulatory acceleration options may not actually lead to a faster development or regulatory review or approval process and does not assure approval.

If a drug is intended for the treatment of a serious or life-threatening condition and the drug demonstrates the potential to address an unmet medical need for this condition, the drug sponsor may apply for FDA Fast Track Designation or similar fast track processes with other regulatory agencies, such as conditional marketing authorizations from the EMA. However, Fast Track Designation does not ensure that the drug sponsor will receive marketing approval or that approval will be granted within any particular timeframe. The FDA granted Fast Track Designation for NVX-CoV2373 in November 2020 and for NanoFlu™, our recombinant quadrivalent seasonal influenza vaccine candidate, in January 2020. We may also seek Fast Track Designation for more of our other vaccine candidates. If we do seek Fast Track Designation for our other vaccine candidates, we may not receive it, and even if we receive Fast Track Designation, we may not experience a faster development process, review or approval compared to conventional FDA procedures. In addition, the FDA may withdraw Fast Track designation if it believes that the designation is no longer supported by data from our clinical development program. Fast Track Designation alone does not guarantee qualification for the FDA’s priority review procedures.

Obtaining a Fast Track Designation does not change the standards for product approval, but may expedite the development or approval process. Even though the FDA has granted such designation for NVX-CoV2373 and NanoFlu, it may not actually result in faster clinical development or regulatory review or approval. Furthermore, such a designation does not increase the likelihood that NVX-CoV2373 or NanoFlu™ will receive marketing approval in the U.S.

Because we are subject to environmental, health and safety laws, we may be unable to conduct our business in the most advantageous manner.

We are subject to various laws and regulations relating to safe working conditions, laboratory and manufacturing practices, the experimental use of animals, emissions and wastewater discharges, and the use and disposal of hazardous or potentially hazardous substances used in connection with our research, including infectious disease agents. We also cannot accurately predict the extent of regulations that might result from any future legislative or administrative action. Any of these laws or regulations could cause us to incur additional expense or restrict our operations.

Our facilities in Maryland are subject to various local, state and federal laws and regulations relating to safe working conditions, laboratory practices, the experimental use of animals and the use and disposal of hazardous or potentially hazardous substances, including chemicals, microorganisms and various hazardous compounds used in connection with our research and development activities. In the U.S., these laws include the Occupational Safety and Health Act, the Toxic Test Substances Control Act and the Resource Conservation and Recovery Act. Similar national and local regulations govern our facilities in Sweden and the Czech Republic. We cannot eliminate the risk of accidental contamination or discharge or injury from these materials. Federal, state and local laws and regulations govern the use, manufacture, storage, handling and disposal of these materials. We could be subject to civil damages in the event of an improper or unauthorized release of, or exposure of
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individuals to, these hazardous materials. In addition, claimants may sue us for injury or contamination that results from our use or the use by third parties of these materials, and our liability may exceed our total assets. Compliance with environmental laws and regulations may be expensive, and current or future environmental regulations may impair our research, development or production efforts.

Although we have general liability insurance, these policies contain exclusions from insurance against claims arising from pollution from chemicals or pollution from conditions arising from our operations. Our collaborators are working with these types of hazardous materials in connection with our collaborations. In the event of a lawsuit or investigation, we could be held responsible for any injury we or our collaborators cause to persons or property by exposure to, or release of, any hazardous materials. However, we believe that we are currently in compliance with all material applicable environmental and occupational health and safety regulations.

For our product candidates, we will be subject to additional healthcare laws and our failure to comply with those laws could have a material adverse effect on our results of operations and financial conditions.

Within the U.S. (and within foreign countries), if we obtain approval for any of our product candidates and begin commercializing them, our operations may be directly, or indirectly through our arrangements with third-party payors and customers, subject to additional healthcare regulation and enforcement by the federal and state governments (or the regulatory bodies or governments of foreign countries), which may constrain the business or financial arrangements and relationships through which we sell, market and distribute our products. These laws and regulations may restrict or prohibit a wide range of pricing, discounting, marketing and promotion, structuring and commission(s), certain customer incentive programs and other business arrangements generally. Activities subject to these laws also involve the improper use of information obtained in the course of patient recruitment for clinical trials. The applicable U.S. federal and state healthcare laws and regulations (which may be comparable to foreign laws existing in foreign countries) that may affect our ability to operate include:

the Federal Food, Drug and Cosmetic Act, which among other things, strictly regulates drug product marketing and promotion and prohibits manufacturers from marketing such products for unapproved uses;

the federal Anti-Kickback Statute, which prohibits, among other things, persons from knowingly and willfully soliciting, receiving or providing remuneration, directly or indirectly, to induce the referral for an item or service or the purchasing or ordering of a good or service, for which payment may be made under federal healthcare programs such as Medicare and Medicaid;

federal false claims laws, including the False Claims Act ("FCA"), which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, information or claims for payment from Medicare, Medicaid, or other third-party payers that are false or fraudulent;

manufacturers can be held liable under the FCA even when they do not submit claims directly to government payors if they are deemed to “cause” the submission of false or fraudulent claims; the FCA also permits a private individual acting as whistleblower to bring actions on behalf of the federal government alleging violations of the FCA and to share in any monetary recovery;

federal laws that require pharmaceutical manufacturers to report certain calculated product prices to the government or provide certain discounts or rebates to government authorities or private entities, often as a condition of reimbursement under government healthcare programs;

the federal Physician Payment Sunshine Act and its implementing regulations, which require manufacturers of drugs, devices, biologicals, and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program (with certain exceptions) to report annually to the DHHS information related to payments or other transfers of value made to physicians (defined to include doctors, dentists, optometrists and chiropractors) and teaching hospitals, as well as ownership and investment interests held by physicians and their immediate family members; effective January 1, 2022, these reporting obligations will extend to include transfers of value made to certain non-physician providers such as physician assistants and nurse practitioners;

the federal law known as HIPAA, which, in addition to privacy protections applicable to healthcare providers and other entities, prohibits executing a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters;

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federal consumer protection and unfair competition laws, which broadly regulate marketplace activities and activities that potentially harm consumers;

state law equivalents of the above federal laws, such as anti-kickback and false claims laws which may apply to items or services reimbursed by any third-party payer, including commercial insurers, and state gift ban and transparency laws, many of which state laws differ from each other in significant ways and often are not preempted by federal laws, thus complicating compliance efforts; and

state laws restricting interactions with healthcare providers and other members of the healthcare community or requiring pharmaceutical manufacturers to implement certain compliance standards.

Because of the breadth of these laws and the narrowness of the statutory exceptions and safe harbors available, it is possible that some of our business activities could be subject to challenge under one or more of such laws. If our operations are found to be in violation of any of such laws or any other governmental regulations that apply to us, we may be subject to, on a corporate or individual basis, penalties, including civil and criminal penalties, damages, fines, the curtailment or restructuring of our operations, the exclusion from participation in federal and state healthcare programs and even imprisonment, any of which could materially adversely affect our ability to operate our business and our financial results. In addition, the cost of implementing sufficient systems, controls, and processes to ensure compliance with all of the aforementioned laws could be significant. Any action for violation of these laws, even if successfully defended, could cause us to incur significant legal expenses and divert management’s attention from the operation of the company’s business. If any of the physicians or other healthcare providers or entities with whom we expect to do business is found not to be in compliance with applicable laws, that person or entity may be subject to criminal, civil or administrative sanctions, including exclusions from government funded healthcare programs. Prohibitions or restrictions on sales or withdrawal of future marketed products could materially affect business in an adverse way.

It is not always possible to identify and deter employee misconduct, and the precautions we take to detect and prevent inappropriate conduct may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws or regulations. Efforts to ensure that our business arrangements will comply with applicable healthcare laws may involve substantial costs. It is possible that governmental and enforcement authorities will conclude that our business practices may not comply with current or future statutes, regulations or case law interpreting applicable fraud and abuse or other healthcare laws and regulations. If any such actions are instituted against us and we are not successful in defending ourselves or asserting our rights those actions, our business may be impaired.

Risks Related to our Intellectual Property

Our success depends on our ability to maintain the proprietary nature of our technology.

Our success in large part depends on our ability to maintain the proprietary nature of our technology and other trade secrets. To do so, we must prosecute and maintain existing patents, obtain new patents and pursue trade secret and other intellectual property protection. We also must operate without infringing the proprietary rights of third-parties or allowing third-parties to infringe our rights. We currently have or have rights to over 500 U.S. patents and corresponding foreign patents and patent applications covering our technologies. However, patent issues relating to pharmaceuticals and biologics involve complex legal, scientific and factual questions. To date, no consistent policy has emerged regarding the breadth of biotechnology patent claims that are granted by the U.S. Patent and Trademark Office (“USPTO”) or enforced by the federal courts. Therefore, we do not know whether any particular patent applications will result in the issuance of patents, or that any patents issued to us will provide us with any competitive advantage. We also cannot be sure that we will develop additional proprietary products that are patentable. Furthermore, there is a risk that others will independently develop or duplicate similar technology or products or circumvent the patents issued to us.

There is a risk that third-parties may challenge our existing patents or claim that we are infringing their patents or proprietary rights. We could incur substantial costs in defending patent infringement suits or in filing suits against others to have their patents declared invalid or claim infringement. It is also possible that we may be required to obtain licenses from third-parties to avoid infringing third-party patents or other proprietary rights. We cannot be sure that such third-party licenses would be available to us on acceptable terms, if at all. If we are unable to obtain required third-party licenses, we may be delayed in or prohibited from developing, manufacturing or selling products requiring such licenses.

Although our patent filings include claims covering various features of our vaccine candidates, including composition, methods of manufacture and use, our patents do not provide us with complete protection against the development of competing products. Some of our know-how and technology is not patentable. To protect our proprietary rights in unpatentable intellectual property and trade secrets, we require employees, consultants, advisors and collaborators to enter into confidentiality
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agreements. These agreements may not provide meaningful protection for our trade secrets, know-how or other proprietary information.

Third parties may claim we infringe their intellectual property rights.

Our research, development and commercialization activities, including any vaccine candidates resulting from these activities, may be found to infringe patents owned by third-parties and to which we do not hold licenses or other rights. There may be rights we are not aware of, including applications that have been filed, but not published that, when issued, could be asserted against us. These third-parties could bring claims against us, and that may cause us to incur substantial expenses and, if successful against us, could cause us to pay substantial damages. Further, if a patent infringement suit were brought against us, we could be forced to stop or delay research, development, manufacturing or sales of the product or biologic drug candidate that is the subject of the suit.

As a result of patent infringement claims, or in order to avoid potential claims, we may choose or be required to seek a license from the third party. These licenses may not be available on acceptable terms, or at all. Even if we are able to obtain a license, the license would likely obligate us to pay license fees or royalties or both, and the rights granted to us might be non- exclusive, which could result in our competitors gaining access to the same intellectual property. Ultimately, we could be prevented from commercializing a product, or be forced to cease some aspect of our business operations, if, as a result of actual or threatened patent infringement claims, we are unable to enter into licenses on acceptable terms. All of the issues described above could also impact our collaborators, which would also impact the success of the collaboration and therefore us.

There has been substantial litigation and other proceedings regarding patent and other intellectual property rights in the pharmaceutical and biotechnology industries.

We may become involved in litigation to protect or enforce our patents or the patents of our collaborators or licensors, which could be expensive and time-consuming.

Competitors may infringe our patents or the patents of our collaborators or licensors. As a result, we may be required to file suit to counter infringement for unauthorized use. This can be expensive and time-consuming. In addition, in an infringement proceeding, a court may decide that a patent of ours is not valid or is unenforceable, or may refuse to stop the other party from using the technology at issue on the grounds that our patents do not cover its technology. An adverse determination of any litigation or defense proceeding could put one or more of our patents at risk of being invalidated or interpreted narrowly and could put our patent applications at the risk of not issuing.

Even if we are successful, litigation may result in substantial costs and distraction to our management. Even with a broad portfolio, we may not be able, alone or with our collaborators and licensors, to prevent misappropriation of our proprietary rights, particularly in countries where the laws may not protect such rights as fully as in the U.S.

Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during this type of litigation. In addition, during the course of litigation, there could be public announcements of the results of hearings, motions or other interim proceedings or developments. If investors perceive these results to be negative, the market price for our common stock could be significantly harmed.

The scope, validity, and ownership of our patent claims may be challenged in various venues and, if we do not prevail, our ability to exclude competitors may be harmed, potentially reducing our ability to succeed commercially.

We may be subject to a variety of challenges from third parties that relate to the scope of the claims or to their validity. Such challenges can be mounted in post-grant review, ex parte re-examination, and inter partes review proceedings before the USPTO, or similar adversarial proceedings in other jurisdictions. If we are unsuccessful in any such challenge, the scope of our claims could be narrowed or could be invalidated. Any such outcome could impair our ability to exclude competitors from the market in those countries, potentially impacting our commercial success.

Our patents may be subject to various challenges related to ownership and inventorship, including interference or derivation proceedings. Third parties may assert that they are inventors on our patents or that they are owners of the patents. While we perform inventorship analyses to insure that the correct inventors are listed on our patents, we cannot be certain that a court of competent jurisdiction would arrive at the same conclusions we do. If we are unsuccessful in defending against ownership or inventorship challenges, a court may require us to list additional inventors, may invalidate the patent, or may transfer ownership of the patent to a third party. Any of these outcomes may harm our ability to exclude competitors and potentially impact our commercial success. Further, if ownership is transferred to a third party we may be required to seek a license to those rights to preserve our exclusive ability to practice the invention. Such a license may not be available on commercially reasonable terms, or at all. If we are unable to obtain a license, we may be required to expend time, effort, and
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other resources to design around the patent. Any such license may be non-exclusive and if a competitor is able to obtain a license from the third party, our ability to exclude that competitor from the market may be negatively impacted.

Even if we are ultimately successful, defending any such challenges may cause us to incur substantial expenses and may require us to divert substantial financial and management resources that we would otherwise be able to devote to our business.

We may need to license intellectual property from third parties and, if our right to use the intellectual property we license is affected, our ability to develop and commercialize our vaccine candidates may be harmed.

We have in the past, and we expect in the future to license intellectual property from third parties and that these licenses will be material to our business. We will not own the patents or patent applications that underlie these licenses, and we may not control either the prosecution or the enforcement of the patents. Under such circumstances, we may be forced to rely upon our licensors to properly prosecute and file those patent applications and prevent infringement of those patents.

While many of the licenses under which we have rights provide us with rights in specified fields, the scope of our rights under these and other licenses may be subject to dispute by our licensors or third parties. In addition, our rights to use these technologies and practice the inventions claimed in the licensed patents and patent applications are subject to our licensors abiding by the terms of those licenses and not terminating them. Any of our licenses may be terminated by the licensor if we are in breach of a term or condition of the license agreement, or in certain other circumstances.

Further, any disputes regarding obligations in licenses may require us to take expensive and time-consuming legal action to resolve, and, even if we are successful, may delay our ability to commercialize products and generate revenue. Further, if we are unable to resolve license issues that arise we may lose rights to practice intellectual property that is required to make, use, or sell products. Any such loss could compromise our development and commercialization efforts for current or future product candidates and/or may require additional effort and expense to design around.

Our vaccine candidates and potential vaccine candidates will require several components that may each be the subject of a license agreement. The cumulative license fees and royalties for these components may make the commercialization of these vaccine candidates uneconomical.

If patent laws or the interpretation of patent laws change, our competitors may be able to develop and commercialize our discoveries.

Important legal issues remain to be resolved as to the extent and scope of available patent protection for biopharmaceutical products and processes in the U.S. and other important markets outside the U.S., such as Europe and Japan. In addition, foreign markets may not provide the same level of patent protection as provided under the U.S. patent system. Litigation or administrative proceedings may be necessary to determine the validity and scope of certain of our and others’ proprietary rights. Any such litigation or proceeding may result in a significant commitment of resources in the future and could force us to do one or more of the following: cease selling or using any of our products that incorporate the challenged intellectual property, which would adversely affect our revenue; obtain a license from the holder of the intellectual property right alleged to have been infringed, which license may not be available on reasonable terms, if at all; and redesign our products to avoid infringing the intellectual property rights of third parties, which may be time-consuming or impossible to do. In addition, changes in, or different interpretations of, patent laws in the U.S. and other countries may result in patent laws that allow others to use our discoveries or develop and commercialize our products. We cannot provide assurance that the patents we obtain or the unpatented technology we hold will afford us significant commercial protection.

If we do not obtain patent term extension and/or patent term adjustment in the United States under the Hatch- Waxman Act and similar extensions in foreign countries, our ability to exclude competitors may be harmed.

In the United States, the patent term is 20 years from the earliest U.S. non-provisional filing date. Extensions of patent term may be available under certain circumstances. Depending upon the timing, duration and conditions of FDA marketing approval of our product candidates, we may be able to extend the term of one patent that covers a marketed product under the Drug Price Competition and Patent Term Restoration Act of 1984, (the “Hatch-Waxman Amendments”) and similar legislation in the European Union.

The Hatch-Waxman Amendments permit patent term extension of up to five years for a patent covering an approved product as compensation for effective patent term lost during product development and the FDA regulatory review process. We may not receive any extension if we fail to apply within applicable deadlines, fail to apply prior to expiration of relevant patents or otherwise fail to satisfy applicable requirements. Moreover, the length of the extension could be less than we request. If we are unable to obtain patent term extension or the term of any such extension is less than we request, the period during which we can enforce our patent rights for that product will be shortened and our competitors may obtain approval to market competing products sooner.
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Patent term covering our products may also be extended for time spent during the prosecution of the patent application in the USPTO. This extension is referred to as Patent Term Adjustment (“PTA”). The laws and regulations governing how the USPTO calculates the PTA is subject to change and changes in the law can reduce or increase any such PTA. Further, the PTA granted by the USPTO may be challenged by a third party. If we do not prevail under such a challenge, the PTA may be reduced or eliminated, shortening the patent term, which may negatively impact our ability to exclude competitors.

Risks Related to Employee Matters, Managing Growth and Information Technology

Our business may be adversely affected if we do not successfully execute our business development initiatives.

We anticipate growing through both internal development projects, as well as external opportunities, which include the acquisition, partnering and in-licensing of products, technologies and companies or the entry into strategic alliances and collaborations. The availability of high quality opportunities is limited, and we may fail to identify candidates that we and our stockholders consider suitable or complete transactions on terms that prove advantageous. In order to pursue such opportunities, we may require significant additional financing, which may not be available to us on favorable terms, if at all. Even if we are able to successfully identify and complete acquisitions, like our business combinations with Novavax CZ (formerly Praha Vaccines) and Novavax AB, strategic transactions involve many risks, including, among others, those related to diversion of management’s attention from other business concerns, unanticipated expenses and liabilities, and increased complexity of our operations, which could prevent us from effectively exploiting acquired facilities, successfully integrating the acquired business and personnel, or fully realizing expected synergies.

To effectively manage our current and future potential growth, we will need to continue to enhance our operational, financial and management processes and to effectively expand, train and manage our employee base. Supporting our growth initiatives will require significant expenditures and management resources, including investments in research and development, manufacturing in-house and through third-party manufacturers and other areas of our business. If we do not successfully manage our growth and do not successfully execute our growth initiatives, then our business and financial results may be adversely impacted, and we may incur asset impairment or restructuring charges.

Security breaches and other disruptions could compromise our information and expose us to liability, and our failure to comply with data protection laws and regulations could lead to government enforcement actions, which would cause our business and reputation to suffer.

In the ordinary course of our business, we and many of our current and future strategic partners, vendors, contractors, and consultants collect and store sensitive data, including intellectual property, our proprietary business information and data about our clinical participants, suppliers and business partners and personally identifiable information. The secure maintenance of this information is critical to our operations and business strategy. Some of this information represents an attractive target of criminal attack by malicious third parties with a wide range of motives and expertise, including nation-states, organized criminal groups, “hacktivists,” patient groups, disgruntled current or former employees and others. Our ongoing operating activities also depend on functioning computer systems. Hacker attacks are of ever-increasing levels of sophistication, and, despite our security measures, our information technology and infrastructure are subject to such attacks or breaches. In 2020, several domestic and foreign security agencies announced that government actors or government-affiliated actors were specifically targeting organizations engaging in COVID-19 vaccine development and research. Our profile as an OWS recipient and progress on NVX-CoV2373 may result in greater risk of cyber-attack. Any such breach could result in a material compromise of our networks, our enterprise resource planning software and the information stored there could be accessed, publicly disclosed, lost, rendered, permanently or temporarily, inaccessible. Furthermore, we may not promptly discover a system intrusion. Like other companies in our industry, we have experienced attacks to our data and systems, including malware and computer viruses, and systems of others with connections to our systems, or with data relevant to our business, also have experienced attacks. Attacks could have a material impact on our business, operations or financial results. Any access, disclosure or other loss of information could result in legal claims or proceedings, liability under laws that protect the privacy of personal information, disrupt our operations, and damage our reputation, which could adversely affect our business. We also may need to pay "ransomware" to re-access our systems. In addition, privacy and data protection laws may be interpreted and applied differently from country to country and may create inconsistent or conflicting requirements, which increase the costs incurred by us in complying with such laws. The European Union’s GDPR, which greatly increases the jurisdictional reach of European Union law and became effective in May 2018, adds a broad array of requirements for handling personal data including the public disclosure of significant data breaches, and imposes substantial penalties for non-compliance of up to the greater of €20 million or 4% of global annual revenue for the preceding financial year. Our efforts to comply with GDPR and other privacy and data protection laws impose significant costs and challenges that are likely to increase over time, and we are exposed to substantial penalties or litigation related to violations of existing or future data privacy laws and regulations.

The GDPR imposes strict rules on the transfer of personal data to countries outside the European Economic Area (“EEA”), including the United States and, in response, the EU and United States agreed in 2016 to a transfer framework for data transferred from the European Union to the United States, called the EU-US Privacy Shield. On July 16, 2020, however,
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the Court of Justice of the European Union issued a decision that declared the Privacy Shield framework, one of the primary mechanisms U.S. companies used to import personal information from Europe, invalid, and raised questions about whether the European Commission’s Standard Contractual Clauses (“SCCs”), an alternative to the Privacy Shield, can lawfully be used for cross-border data transfers. On June 4, 2021, the European Commission adopted new SCCs under the GDPR for personal data transfers outside of the EEA Under this legal mechanism, we may have obligations to conduct transfer impact assessments for such cross-border data transfers and implement additional security measures. As we incorporate the new SCCs into our contractual arrangements, we may be required to expend significant resources to update our contractual arrangements and to comply with such obligations. If we are unable to implement a valid compliance mechanism for cross-border personal information transfers, we may face increased exposure to regulatory actions, substantial fines and injunctions against processing or transferring personal information from Europe. Inability to import personal information from Europe to the United States may significantly and negatively impact our business operations, including by limiting our ability to conduct clinical trials activities in Europe; limiting our ability to collaborate with contract research organizations, service providers, contractors and other companies subject to the GDPR; or requiring us to increase our data processing capabilities in Europe at significant expense.

Additionally, the California Consumer Privacy Act ("CCPA"), which became effective January 1, 2020, substantially expands privacy obligations of many businesses. The CCPA requires new disclosures to California consumers, imposes new rules for collecting or using information about minors, and affords consumers new abilities, such as the right to know whether the data is sold or disclosed and to whom, the right to request that a company delete personal information collected, the right to opt-out of the sale of personal information and the right to non-discrimination in terms of price or service when a consumer exercises a privacy right. Failure to comply with these regulations is subject to civil sanctions, including fines and penalties. The CCPA provides for civil penalties for violations, as well as a private right of action for data breaches that is expected to increase data breach litigation. Moreover, a newly passed ballot initiative, the California Privacy Rights Act (“CPRA”), which will become operational in 2023, expands on the CCPA, creating new consumer rights and protections, including the right to correct personal information, the right to opt out of the use of personal information in automated decision making, the right to opt out of “sharing” consumer’s personal information for cross-context behavioral advertising, and the right to restrict use of and disclosure of sensitive personal information, including geolocation data to third parties. We will need to evaluate and potentially update our privacy program to seek to comply with the CPRA and will incur additional costs and expenses in our effort to comply.

In addition to California, Colorado and Virginia have also enacted comprehensive privacy laws but it is quite possible that other states will follow suit. We anticipate that more states may enact legislation similar to the CCPA and the other recent consumer privacy laws. Such proposed legislation, if enacted, may add additional complexity, variation in requirements, restrictions and potential legal risk, require additional investment of resources in compliance programs, impact strategies and the availability of previously useful data and could result in increased compliance costs and/or changes in business practices and policies. The existence of comprehensive privacy laws in different states in the country will make our compliance obligations more complex and costly and may increase the likelihood that we may be subject to enforcement actions or otherwise incur liability for noncompliance.

Collaborations and contracts of our wholly owned subsidiaries Novavax AB and Novavax CZ, with regional partners, such as SIIPL, Takeda and SK bioscience, as well as with international providers, expose us to additional risks associated with doing business outside the U.S.

Swedish-based Novavax AB and Czech Republic-based Novavax CZ are wholly owned subsidiaries of Novavax, Inc. We also have entered into a supply and license agreement with SIIPL, collaboration and license agreements with each of Takeda and SK bioscience and other agreements and arrangements with foreign governments and companies in other countries. We plan to continue to enter into collaborations or partnerships with companies, non-profit organizations and local governments in various parts of the world. Risks of conducting business outside the U.S. include negative consequences of:

the costs associated with seeking to comply with multiple regulatory requirements that govern our ability to develop, manufacture and sell products in local markets;

failure to comply with anti-bribery laws such as the U.S. Foreign Corrupt Practices Act and similar anti-bribery laws in other jurisdictions;

new or changes in interpretations of existing trade protections measures, including tariffs, embargoes and import and export licensing requirements;

difficulties in and costs of staffing, managing and operating our international operations;

changes in environmental, health and safety laws;
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fluctuations in foreign currency exchange rates;

new or changes in interpretations of existing tax laws;

political instability and actual or anticipated military or potential conflicts;

economic instability, inflation, recession and interest rate fluctuations;

minimal or diminished protection of intellectual property in many jurisdictions; and

possible nationalization and expropriation.

These risks, individually or in the aggregate, could have a material adverse effect on our business, financial conditions, results of operations and cash flows.

If we are unable to attract or retain key management or other personnel, our business, operating results and financial condition could be materially adversely affected.

We depend on our senior executive officers, as well as key scientific and other personnel. The loss of these individuals could harm our business and significantly delay or prevent the achievement of research, development or business objectives. Turnover in key executive positions resulting in lack of management continuity and long-term history with our Company could result in operational and administrative inefficiencies and added costs.

We may not be able to attract qualified individuals for key positions on terms acceptable to us. Competition for qualified employees is intense among pharmaceutical and biotechnology companies, and the loss of qualified employees, or an inability to attract, retain and motivate additional highly skilled employees could hinder our ability to complete clinical trials successfully and otherwise develop marketable products.

We also rely from time to time on outside advisors who assist us in formulating our research and development and clinical strategy. We may not be able to attract and retain these individuals on acceptable terms, which could delay our development efforts.

Risks Related to Our Convertible Senior Notes

Servicing our 3.75% convertible senior unsecured notes due 2023 requires a significant amount of cash, and we may not have sufficient cash flow to pay our debt.

In 2016, we issued $325 million aggregate principal amount of Notes. Our ability to make scheduled payments of the principal of, to pay interest on, or to refinance our indebtedness, including the Notes, depends on our future performance, which is subject to economic, financial, competitive and other factors beyond our control. We do not expect our business to be able to generate cash flow from operations sufficient to service our debt and make necessary capital expenditures and may therefore be required to adopt one or more alternatives, such as selling assets, restructuring debt or obtaining additional equity capital on terms that may be onerous or highly dilutive. Our ability to refinance our indebtedness, which is non-callable and matures in 2023, will depend on the capital markets and our financial condition at such time. We may not be able to engage in any of these activities or engage in these activities on desirable terms, which could result in a default on our debt obligations, and limit our flexibility in planning for and reacting to changes in our business.

We may not have the ability to raise the funds necessary to repurchase the Notes as required upon a fundamental change, and our future debt may contain limitations on our ability to repurchase the Notes.

Holders of the Notes will have the right to require us to repurchase their Notes for cash upon the occurrence of a fundamental change at a fundamental change repurchase price equal to 100% of the principal amount of the Notes to be repurchased, plus accrued and unpaid interest, if any. A fundamental change may also constitute an event of default or prepayment under, and result in the acceleration of the maturity of, our then-existing indebtedness. We cannot assure that we will have sufficient financial resources, or will be able to arrange financing, to pay the fundamental change repurchase price in cash with respect to any Notes surrendered by holders for repurchase upon a fundamental change. In addition, restrictions in our then existing credit facilities or other indebtedness, if any, may not allow us to repurchase the Notes upon a fundamental change. Our failure to repurchase the Notes upon a fundamental change when required would result in an event of default with respect to the Notes which could, in turn, constitute a default under the terms of our other indebtedness, if any. If the repayment
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of the related indebtedness were to be accelerated after any applicable notice or grace periods, we may not have sufficient funds to repay the indebtedness and repurchase the Notes.

Capped call transactions entered into in connection with our Notes may affect the value of our common stock.

In connection with our Notes, we entered into capped call transactions (the “capped call transactions”) with certain financial institutions. The capped call transactions are expected to generally reduce the potential dilution upon conversion of the Notes into shares of our common stock.

In connection with establishing their initial hedges of the capped call transactions, these financial institutions or their respective affiliates entered into various derivative transactions with respect to our common stock and/or to purchase our common stock. The financial institutions, or their respective affiliates, may modify their hedge positions by entering into or unwinding various derivatives with respect to our common stock and/or purchasing or selling our common stock or other securities of ours in secondary market transactions prior to the maturity of the Notes. This activity could also cause or avoid an increase or a decrease in the market price of our common stock or the Notes, which could affect the value of our common stock.

Risks Related to Ownership of Our Common Stock

Because our stock price has been and will likely continue to be highly volatile, the market price of our common stock may be lower or more volatile than expected.

Our stock price has been highly volatile. From January 1, 2021 through October 31, 2021, the closing sale price of our common stock has been as low as $112.98 per share and as high as $319.93 per share. The stock market in general and the market for biotechnology companies in particular have experienced extreme volatility that has often been unrelated to the operating performance of particular companies. These broad market fluctuations may cause the market price of our common stock to be lower or more volatile than expected.

Furthermore, given the global focus on the COVID-19 pandemic and our investment in developing a COVID-19 vaccine, information in the public arena on this topic, whether or not accurate, has had and will likely continue to have an outsized impact (positive or negative) on our stock price. Information related to our development, manufacturing, regulatory and commercialization efforts with respect to NVX-CoV2373, or information regarding such efforts by competitors with respect to their COVID-19 vaccines and vaccine candidates, may meaningfully impact our stock price. As a result of this volatility, you may not be able to sell your common stock at or above your initial purchase price. The market price of our common stock may be influenced by many other factors, including:

future announcements about us or our collaborators or competitors, including the results of testing, technological innovations or new commercial products;

clinical trial results;

delays in making regulatory submissions;

depletion of our cash reserves;

sale of equity securities or issuance of additional debt;

announcement by us of significant strategic partnerships, collaborations, joint ventures, capital commitments or acquisitions;

changes in government regulations;

impact of competitor successes and in particular development success of vaccine candidates that compete with our own vaccine candidates;

developments in our relationships with our collaboration and funding partners;

announcements relating to health care reform and reimbursement levels for new vaccines and other matters affecting our business and results, regardless of accuracy;

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sales of substantial amounts of our stock by us or existing stockholders (including stock by insiders or 5% stockholders);

development, spread or new announcements related to pandemic diseases;

litigation;

public concern as to the safety of our products;

significant set-backs or concerns with the industry or the market as a whole;

regulatory inquiries, reviews and potential action, including from the FDA or the SEC;

recommendations by securities analysts or changes in earnings estimates; and

the other factors described in this Risk Factors section.

In the past, following periods of volatility in the market price of a company’s securities, securities class-action litigation often has been instituted against that company. Such litigation, if instituted against us, could cause us to incur substantial costs to defend such claims and divert management’s attention and resources, which could seriously harm our business, financial condition, and results of operations, and prospects.

Raising additional capital by issuing securities or through collaboration and licensing arrangements may cause dilution to existing stockholders or require us to relinquish rights to our technologies or vaccine candidates.

If we are unable to partner with a third-party to advance the development of one or more of our vaccine candidates, we will need to raise money through additional debt or equity financings. To the extent that we raise additional capital by issuing equity securities, our stockholders will experience immediate dilution, which may be significant. There is also a risk that such equity issuances may cause an ownership change under the Internal Revenue Code of 1986, as amended, and similar state provisions, thus limiting our ability to use our net operating loss carryforwards and credits. To the extent that we raise additional capital through licensing arrangements or arrangements with collaborative partners, we may be required to relinquish, on terms that may not be favorable to us, rights to some of our technologies or vaccine candidates that we would otherwise seek to develop or commercialize ourselves. In addition, economic conditions may also negatively affect the desire or ability of potential collaborators to enter into transactions with us. They may also have to delay or cancel research and development projects or reduce their overall budgets.

Provisions of our Second Amended and Restated Certificate of Incorporation and Amended and Restated By-Laws and Delaware law could delay or prevent the acquisition of the Company, even if such acquisition would be beneficial to stockholders, and could impede changes in our Board.

Provisions in our organizational documents could hamper a third party’s attempt to acquire, or discourage a third-party from attempting to acquire control of, the Company. Stockholders who wish to participate in these transactions may not have the opportunity to do so. Our organizational documents also could limit the price investors are willing to pay in the future for our securities and make it more difficult to change the composition of our Board in any one year. For example, our organizational documents provide for a staggered board with three classes of directors serving staggered three-year terms and advance notice requirements for stockholders to nominate directors and make proposals.

As a Delaware corporation, we are also afforded the protections of Section 203 of the Delaware General Corporation Law, which will prevent us from engaging in a business combination with a person who acquires at least 15% of our common stock for a period of three years from the date such person acquired such common stock, unless advance board or stockholder approval was obtained.

Any delay or prevention of a change of control transaction or changes in our Board or management could deter potential acquirers or prevent the completion of a transaction in which our stockholders could receive a substantial premium over the then current market price for their shares.

We have never paid dividends on our capital stock, and we do not anticipate paying any such dividends in the foreseeable future.

We have never paid cash dividends on our common stock. We currently anticipate that we will retain all of our earnings for use in the development of our business and do not anticipate paying any cash dividends in the foreseeable future.
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As a result, capital appreciation, if any, of our common stock would be the only source of gain for stockholders until dividends are paid, if at all.

General Risk Factors

Litigation or regulatory investigations could have a material adverse impact on our results of operation and financial condition.

In addition to intellectual property litigation, from time to time, we may be subject to other litigation or regulatory investigations. Regardless of the merits of any claims that may be brought against us, litigation or regulatory investigations could result in a diversion of management’s attention and resources and we may be required to incur significant expenses defending against these claims. If we are unable to prevail in litigation or regulatory investigations, we could incur substantial liabilities. Where we can make a reasonable estimate of the liability relating to pending litigation and determine that it is probable, we record a related liability. As additional information becomes available, we assess the potential liability and revise estimates as appropriate. However, because of uncertainties relating to litigation, the amount of our estimates could be wrong.

We or the third parties upon whom we depend may be adversely affected by natural or man-made disasters or public health emergencies, such as the COVID-19 pandemic.

Our operations, and those of our clinical research organizations, contract manufacturing organizations, vendors of materials needed in manufacturing, collaboration partners, distributors and other third parties upon whom we depend, could be subject to fires, extreme weather conditions, earthquakes, power shortages, telecommunications failures, water shortages, floods, hurricanes, typhoons, war, political unrest, sabotage or terrorism and other natural or man-made disasters, as well as public health emergencies, such as the COVID-19 pandemic. The occurrence of any of these business disruptions could prevent us from using all or a significant portion of our facilities and it may be difficult or impossible for us to continue certain activities for a substantial period of time. The disaster recovery and business continuity plans we have in place may prove inadequate in the event of a serious disaster or similar event and we may incur substantial expenses and delays as a result. Our ability to manufacture our product candidates and obtain necessary clinical supplies for our product candidates could be disrupted if the operations of our contract manufacturing organizations or suppliers are affected by a natural or man-made disaster, or a public health emergency.

The outbreak of COVID-19 may materially and adversely affect our business and our financial results.

The COVID-19 pandemic continues to present substantial global economic and public health challenges, which may materially and adversely impact our business, financial condition and results of operations. In response to COVID-19, various aspects of our business operations have been, and could continue to be, disrupted. We continue to implement a work from home policy, with our administrative employees working outside of our offices, and on-site staff restricted to only those required to execute certain laboratory and related support activities. Working remotely could increase our cybersecurity risk, create data accessibility concerns, and make us more susceptible to communication disruptions, any of which could adversely impact our business operations. In addition, as a result of state or local restrictions, our on-site staff conducting research and development may not be able to access our laboratories, and these core activities may be significantly limited or curtailed, possibly for extended periods of time. Travel restrictions and other governmental measures may also result in a disruption or delay in the performance of our third-party contractors and suppliers. If such third parties are unable to adequately satisfy their contractual commitments to us in a timely manner, our business could be adversely affected. Furthermore, while some jurisdictions have recently started to phase out restrictions imposed on commercial activities at varying degrees, a resurgence of COVID-19, coupled with a potential surge in variant strains of COVID-19, in certain geographies could result in restrictions being reinstated.

Our clinical trials, whether planned or ongoing, may be affected by the COVID-19 pandemic. Study procedures (particularly any procedures that may be deemed non-essential), site initiation, participant recruitment and enrollment, participant dosing, shipment of our product candidates, distribution of clinical trial materials, study monitoring, site inspections and data analysis may be paused or delayed due to changes in hospital or research institution policies, federal, state or local regulations, prioritization of hospital and other medical resources toward efforts to treat or prevent COVID-19, or other reasons related to the pandemic. In addition, there could be a potential effect of COVID-19 to the operations of the FDA or other health authorities, which could result in delays of reviews and approvals, including with respect to our product candidates. Any prolongation or de-prioritization of our clinical trials or delay in regulatory review resulting from such disruptions could materially affect the development and study of our product candidates.

The trading prices for our common stock and that of other biopharmaceutical companies have been highly volatile due to the COVID-19 pandemic, especially as a result of investor concerns and uncertainty related to the impact of the outbreak on the economies of countries worldwide. These broad market and industry fluctuations, as well as general economic, political and market conditions, may negatively impact the market price of shares of our common stock.

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The COVID-19 pandemic continues to rapidly evolve. The extent to which the outbreak impacts our business, preclinical studies and clinical trials will depend on future developments, which are highly uncertain and cannot be predicted with confidence, such as the ultimate geographic spread of the disease, the emergence of variant strains, the duration of the pandemic, travel restrictions and social distancing in the U.S. and other countries, business closures or business disruptions and the effectiveness of actions taken in the U.S. and other countries to contain and treat the disease.

The United Kingdom’s withdrawal from the European Union could result in increased regulatory and legal complexity, which may make it more difficult for us to do business in the UK and/or Europe and impose additional challenges in securing regulatory approval of our product candidates in the UK and/or Europe.

The United Kingdom’s exit from the European Union as of January 31, 2020, with a transitional period up to December 31, 2020, commonly referred to as “Brexit”, has caused political and economic uncertainty, including in the regulatory framework applicable to our operations and vaccine candidates in the United Kingdom and the European Union, and this uncertainty may persist for years. Brexit could, among other outcomes, disrupt the free movement of goods, services and people between the United Kingdom and the European Union, and result in increased legal and regulatory complexities, as well as potential higher costs of conducting business in Europe. As one of the Brexit consequences, the EMA has relocated from the United Kingdom to the Netherlands. This has led to a significant reduction of the EMA workforce, which has resulted and could further result in significant disruption and delays in its administrative procedures, such as granting clinical trial authorization or opinions for marketing authorization, disruption of importation and export of active substance and other components of new drug formulations, and disruption of the supply chain for clinical trial product and final authorized formulations. As any European Union marketing authorization for NVX-CoV2373 would be issued after January 1, 2021, if at all, it would not be grandfathered in the UK. We therefore must seek to obtain a separate marketing authorization for the UK, increasing our regulatory burden.

The cumulative effects of the disruption to the regulatory framework may add considerably to the development lead time to marketing authorization and commercialization of products in the European Union and/or the United Kingdom. It is possible that there will be increased regulatory complexities, which can disrupt the timing of our clinical trials and regulatory approvals. In addition, changes in, and legal uncertainty with regard to, national and international laws and regulations may present difficulties for our clinical and regulatory strategy. Any delay in obtaining, or an inability to obtain, any marketing approvals, as a result of Brexit or otherwise, would prevent us from commercializing our product candidates in the United Kingdom and/or the European Union and restrict our ability to generate revenues and achieve and sustain profitability.

In addition, as a result of Brexit, other European countries may seek to conduct referenda with respect to their continuing membership with the European Union. Given these possibilities and others we may not anticipate, as well as the absence of comparable precedent, it is unclear what financial, regulatory and legal implications the withdrawal of the United Kingdom from the European Union will have, how such withdrawal will affect us, and the full extent to which our business could be adversely affected.

We are increasingly a target for public scrutiny, and our business may be impacted by unfavorable publicity.

Given that COVID-19 represents an unprecedented urgent public health crisis, that we are developing NVX-CoV2373 as a COVID-19 vaccine candidate, and that we have received significant funding from the U.S. and foreign governments and other sources to support the development and potential commercialization of NVX-CoV2373, we have observed and are likely to continue to face significant public attention and scrutiny over the complex decisions we have made and will be making regarding the development, testing, manufacturing, allocation and pricing of NVX-CoV2373. If we are unable to successfully manage these risks, we could face significant reputational harm, which could negatively affect our stock price. The intense public interest, including speculation by the media, in the development of NVX-CoV2373 has caused significant volatility in our stock price, which we expect to continue as data and other information from our ongoing clinical trials become publicly available. If concerns should arise about the actual or anticipated efficacy or safety of any of our product candidates, such concerns could adversely affect the market’s perception of these candidates, which could lead to a decline in investors’ expectations and a decline in the price of our common stock.

The increasing use of social media platforms presents new risks and challenges to our business.

Social media is increasingly being used to communicate about pharmaceutical companies’ research, product candidates, and the diseases such product candidates are being developed to prevent. Social media practices in the pharmaceutical industry continue to evolve and regulations relating to such use are not always clear. This evolution creates uncertainty and risk of noncompliance with regulations applicable to our business, resulting in potential regulatory actions against us. For example, subjects may use social media channels to comment on their experience in an ongoing blinded clinical trial or to report an alleged adverse event. When such events occur, there is a risk that we fail to monitor and comply with applicable adverse event reporting obligations or we may not be able to defend our business or the public’s legitimate interests in the face of the political and market pressures generated by social media due to restrictions on what we may say about our investigational product candidates. There is also a risk of inappropriate disclosure of sensitive information or negative or
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inaccurate posts or comments about us on any social media or networking website. If any of these events were to occur or we otherwise fail to comply with applicable regulations, we could incur liability, face regulatory actions, or incur reputational or other harm to our business.

Item 6.    Exhibits
3.1
3.2
3.3
3.4
10.1*
10.2*
10.3*
10.4*±
10.5*±
10.6*±
10.7*±
10.8*±
31.1*
31.2*
32.1*
32.2*
101 The following financial information from our Quarterly Report on Form 10-Q for the quarter ended September 30, 2021, formatted in Inline Extensible Business Reporting Language (Inline XBRL): (i) the Consolidated Balance Sheets as of September 30, 2021 and December 31, 2020, (ii) the Consolidated Statements of Operations for the three- and nine-month periods ended September 30, 2021 and 2020, (iii) the Consolidated Statements of Comprehensive Loss for the three- and nine-month periods ended September 30, 2021 and 2020, (iv) the Consolidated Statements of Changes in Stockholders’ Equity for the three- and nine-month periods ended September 30, 2021 and 2020, (v) the Consolidated Statements of Cash Flows for the nine-month period ended September 30, 2021 and 2020, and (vi) the Notes to Consolidated Financial Statements.
104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
___________________________________
*Filed or furnished herewith.
±    Certain portions of this exhibit have been omitted pursuant to Item 601(b)(10)(iv) of Regulation S-K.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
NOVAVAX, INC.
Date: November 4, 2021 By: /s/ Stanley C. Erck
Stanley C. Erck
President and Chief Executive Officer
(Principal Executive Officer)
Date: November 4, 2021 By: /s/ James P. Kelly
James P. Kelly
Executive Vice President, Chief Financial Officer and Treasurer
(Principal Financial and Accounting Officer)



















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Exhibit 10.1

EMPLOYMENT AGREEMENT
This Employment Agreement (this “Agreement”) is dated as of July 12, 2021, between Novavax, Inc., (“Novavax” or the “Company”) a Delaware corporation having its principal office at 21 Firstfield Road, Gaithersburg, MD 20878, and James P. Kelly, an individual having a current mailing address of [***] (“Executive”).

WHEREAS, Executive will commence employment with the Company on or about August 16, 2021, now therefore the Company and Executive hereby agree as follows:

1.Employment. The Company hereby employs Executive and Executive hereby accepts employment as Executive Vice President & Chief Financial Officer upon the terms and conditions hereinafter set forth, effective the date of employment. As used throughout this Agreement, “Company” shall mean and include any and all of its present and future subsidiaries and any and all subsidiaries of a subsidiary. Executive warrants and represents that he is free to enter into and perform this Agreement and is not subject to any employment, confidentiality, non-competition or other agreement which prohibits, restricts, or would be breached by either his acceptance or his performance of this Agreement.

2.Duties. During the Term (as hereinafter defined), Executive shall devote his full business time to the performance of services as Executive Vice President & Chief Financial Officer of Novavax, performing such services, assuming such duties and responsibilities as prescribed by the Company’s President and CEO (“CEO”) and the Company’s “Board of Directors.” During the Term, Executive’s services shall be completely exclusive to the Company and he shall devote his entire business time, attention and energies to the business of the Company and the duties which the Company shall assign to him from time to time. Executive agrees to perform his services faithfully and to the best of his ability and to carry out the policies and directives of the Company. Notwithstanding the foregoing, it shall not be a violation of this Agreement for the Executive to serve as a director of any company whose products do not compete with those of the Company and to serve as a director, trustee, officer, or consultant to a charitable or non-profit entity; provided that such service does not adversely affect Executive’s ability to perform his obligations hereunder. Executive agrees not to take any action that is in bad faith and prejudicial to the interests of the Company during his employment hereunder. Notwithstanding the location where Executive shall be based, as set forth in this Agreement, he also may be required from time to time to perform duties hereunder for reasonably short periods of time outside of said area.

3.Term. The term of this Agreement shall be the period of time beginning on the Executive’s first date of employment as Executive Vice President & Chief Financial Officer and shall continue for so long as Executive shall be an at-will employee of the Company hereunder.

4.Compensation.
(a)Base Compensation. For all Executive’s services and covenants under this Agreement, the Company shall pay Executive an annual salary, which is $490,000 as of the date of this Agreement, as established or ratified by the Board of Directors or an authorized committee thereof (in accordance with established management processes), and payable in accordance with the Company’s payroll policy as constituted from time to time. The Company may withhold from any amounts payable under this Agreement all required federal, state, city or other taxes and all other deductions as may be required pursuant to any law or government regulation or ruling.




(b)Bonus Program. The Company agrees to pay the Executive a performance and incentive bonus in respect of Executive’s employment with the Company each year in an amount determined by the CEO and Board of Directors (or any committee of the Board of Directors authorized to make that determination) to be appropriate based upon Executive’s, and the Company’s, achievement of certain specified goals, with a target bonus of 45%, or any other percentage determined by the Board of Directors, of Executive’s base earnings during the year to which the bonus relates. The bonus shall be paid out partly in cash and partly in shares of stock options or restricted stock, at the discretion of the Board of Directors.

5.Reimbursable Expenses. Executive shall be entitled to reimbursement for reasonable expenses incurred by him in connection with the performance of his duties hereunder in accordance with such procedures and policies for executive officers as the Company has heretofore or may hereafter establish. The amount of expenses eligible for reimbursement during any calendar year shall not affect the expenses eligible for reimbursement in any other calendar year, and the reimbursement of an eligible expense shall be made as soon as practicable after Executive submits the request for reimbursement, but not later than December 31 following the calendar year in which the expense was incurred.
6.Benefits.

(a)    Executive shall be entitled to four weeks of paid vacation time per year starting from the date of commencement of employment, calculated and administered in accordance with Company policies for executive officers in effect from time to time. The Executive shall be entitled to all other benefits associated with normal full time employment in accordance with Company policies.

(b)    So long as the Executive remains in the Company’s employment at the level of Executive Vice President or above, the Executive shall be eligible to participate in the Company’s Amended and Restated Change of Control Severance Benefit Plan adopted on June 17, 2021, as may be further amended from time to time (the “Change of Control Severance Benefit Plan”), subject to the terms and conditions of the Change of Control Severance Benefit Plan.

7.Termination of Employment.
(a)Notwithstanding any other provision of this Agreement, Executive’s employment may be terminated, without such action constituting a breach of this Agreement:

(i) By the Company, for “Cause,” as defined in Section 7(b) below;

(ii) By the Company, without Cause

(iii) By the Company, upon 30 days’ notice to Executive, if he should be prevented by illness, accident or other disability (mental or physical) from discharging his duties hereunder for one or more periods totaling three consecutive months during any twelve- month period;

(iv) By the Executive with “Good Reason”, as defined in Section 7(c) below, within 30 days of the occurrence or commencement of such Good Reason;

(v) By the Executive without Good Reason upon 30 days prior written
notice; or




(vi) By the event of Executive’s death during the Term.

(b) “Cause” shall mean (i) Executive’s failure or refusal to perform in all material respects the services required of him hereby, (ii) Executive’s failure or refusal to carry out any proper and material direction by the CEO or the Board of Directors with respect to the services to be rendered by him hereunder or the manner of rendering such services, (iii) Executive’s misconduct in the performance of his duties hereunder, (iv) Executive’s commission of an act of fraud, embezzlement or theft or a felony involving moral turpitude, (v) Executive’s use or disclosure of confidential information (as defined in Section 10 of this Agreement), other than for the benefit of the Company in the course of rendering services to the Company, or (vi) Executive’s engagement in any activity prohibited by Section 11 or 12 of this Agreement. For purposes of this Section 7, the Company shall be required to provide Executive a specific written warning with regard to any occurrence of subsections (b)(i), (ii) and (iii) above, which warning shall include a statement of corrective actions and a 30 day period for the Executive to respond to and implement such actions, prior to any termination of employment by the Company pursuant to Section 7(a)(i) above.

(c) "Good Reason" shall mean (a) the Company’s material reduction or diminution of Executive’s responsibilities and authority, other than for Cause, without his consent or (b) the relocation of Executive’s primary place of employment without his consent.

8.Separation Pay.
(a)Subject to the Executive’s execution and delivery to the Company of the Company’s standard form of Separation and Release Agreement, the Company shall pay or provide the Executive with the Separation Pay as defined herein, upon the occurrence of the applicable Separation Event, as defined below. The Separation Pay shall be paid in a single lump sum as soon as administratively practicable following the date the Separation and Release Agreement becomes effective, but not later than the date that is sixty (60) days following the Separation Event. “Separation Pay” shall mean (i) an amount equal to 12 months of the Executive’s then effective base salary and (ii) an amount equal to one hundred percent (100%) of the monthly COBRA premiums, including the two percent (2%) administration fee, as in effect as of the date of termination for the Company’s group medical, dental, vision and hospitalization insurance benefits in which the Executive is enrolled as of the date of termination for the Executive and his or her eligible dependents for 12 months, subject to the Executive’s timely and proper election of coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”). The Separation Pay shall be subject to withholding of all applicable federal, state and local taxes and any other deductions required by applicable law.

(b)Section 8(a) above shall not apply should Executive receive severance benefits under the Company’s Change in Control Severance Benefit Plan.

(c)“Separation Event” shall mean:

(i) the Company’s termination of Executive’s employment by the Company without Cause, during the Term; or

(ii) the termination of Executive’s employment by the Executive for
Good Reason.




9.All Business to be Property of the Company; Assignment of Intellectual Property.

(a) Executive agrees that any and all presently existing business of the Company and all business developed by him or any other employee of the Company including without limitation all contracts, fees, commissions, compensation, records, customer or client lists, agreements and any other incident of any business developed, earned or carried on by Executive for the Company is and shall be the exclusive property of the Company, and (where applicable) shall be payable directly to the Company.

(b) Executive hereby acknowledges that any plan, method, data, know-how, research, information, procedure, development, invention, improvement, modification, discovery, design, process, software and work of authorship, documentation, formula, technique, trade secret or intellectual property right whatsoever or any interest therein whether patentable or non-patentable, patents and applications therefor, trademarks and applications therefor or copyrights and applications therefor (herein sometimes collectively referred to as “Intellectual Property”) made, conceived, created, invested, developed, reduced to practice and/or acquired by Executive solely or jointly with others during the Term is the sole and exclusive property of the Company, as work for hire, and that he has no personal right in any such Intellectual Property. Executive hereby grants to the Company (without any separate remuneration or compensation other than that received by him from time to time in the course of him employment) his entire right, title and interest throughout the world in and to, all Intellectual Property, which is made, conceived, created, invested, developed, reduced to practice and/or acquired by him solely or jointly with others during the Term.

(c) Executive shall cooperate fully with the Company, both during and after his employment with or engagement by the Company, with respect to the procurement, maintenance and enforcement of copyrights, patents and other intellectual property rights (both in the United States and foreign countries) relating to Intellectual Property. Without limiting the foregoing, Executive agrees that to the extent copyrightable, any such original works of authorship shall be deemed to be "works for hire" and that the Company shall be deemed the author thereof under the U.S. Copyright Act, as amended, provided that in the event and to the extent such works are determined not to constitute "works for hire" as a matter of law, Executive hereby irrevocably assigns and transfers to the Company all right, title and interest in such works, including but not limited to copyrights thereof. Executive shall sign all papers, including, without limitation, copyright applications, patent applications, declarations, oaths, formal assignments, assignments of priority rights and powers of attorney, which the Company may deem necessary or desirable in order to protect its rights and interests in any Intellectual Property (at the Company’s expense) and agrees that these obligations are binding upon his assigns, executors, administrators and other legal representatives. To that end, Executive shall provide current contact information to the Company including, but not limited to, home address, telephone number and email address, and shall update his contact information whenever necessary.

10.Confidentiality. Executive acknowledges his obligation of confidentiality with respect to all proprietary, confidential and non-public information of the Company, including all Intellectual Property. By way of illustration, but not limitation, confidential and proprietary information shall be deemed to include any plan, method, data, know-how, research, information, procedure, development, invention, improvement, modification, discovery, process, work of authorship, documentation, formula, technique, product, idea, concept, design, drawing, specification, technique, trade secret or intellectual property right whatsoever or any interest therein whether patentable or non-patentable, patents and applications therefor, trademarks and



applications therefor or copyrights and applications therefor, personnel data, records, marketing techniques and materials, marketing and development plans, customer names and other information related to customers, including prospective customers and contacts at customers, price lists, pricing policies and supplier lists of the Company, in each case coming into Executive’s possession, or which Executive learns, or to which Executive has access, or which Executive may discover or develop (whether or not related to the business of the Company at the time this Agreement is signed or any information Executive originates, discovers or develops, in whole or in part) as a result of Executive’s employment by (either full-time or part- time), or retention as a consultant of, the Company. Executive shall not, either during the Term or for a period of ten (10) years thereafter, use for any purpose other than the furtherance of the Company’s business, or disclose to any person other than a person with a need to know such confidential, proprietary or non-public information for the furtherance of the Company’s business who is obligated to maintain the confidentiality of such information, any information concerning any Intellectual Property, or other confidential, proprietary or non-public information of the Company, whether Executive has such information in his memory or such information is embodied in writing, electronic or other tangible form.

All originals and copies of any of the foregoing, however and whenever produced, shall be the sole property of the Company. All files, letters, memoranda, reports, records, data, sketches, drawings, program listings, or other written, photographic, or other tangible or electronic material containing confidential or proprietary information or Intellectual Property, whether created by Executive or others, which shall come into Executive’s custody or possession, shall be and are the exclusive property of the Company to be used by Executive only in the performance of his duties for the Company. All electronic material containing confidential or proprietary information or Intellectual Property will be stored on a computer supplied to Executive by the Company and, under no circumstances, will it be transferred to a personal computer. Executive will promptly deliver to the Company and/or a person or entity identified by the Company all such materials or copies of such materials and all tangible property of the Company in Executive’s custody or possession, upon the earlier of (i) a request by the Company or (ii) termination of employment or engagement by the Company. After such delivery, Executive will not retain any such materials or copies or any such tangible property or any summaries or memoranda regarding same.

11.Non-Competition Covenant. As the Executive has been granted options to purchase stock in the Company and as such has a financial interest in the success of the Company’s business and as Executive recognizes that the Company would be substantially injured by Executive competing with the Company, Executive agrees and warrants that within the United States, he will not, unless acting with the Company’s express prior written consent, directly or indirectly, while an employee of the Company and during the Non-Competition Period, as defined below, engage in the development, production, marketing or sale of products that compete (or, upon commercialization, would compete) with products or candidate products that, as of the date of Executive’s termination or any date during the following six (6) months, are in clinical development, awaiting regulatory licensure or being actively marketed or sold by the Company; provided, however, that Executive may own, and exercise rights with respect to, less than one percent of the equity of a publicly traded company. The “Non-Competition Period” shall be a period of twelve (12) months following termination of employment.

Executive and the Company are of the belief that the period of time and the area herein specified are reasonable in view of the nature of the business in which the Company is engaged and proposes to engage, the state of its business development and Executive’s knowledge of this business; however, if such period or such area should be adjudged unreasonable in any judicial proceeding, then the period of time shall be reduced by such



number of months or such area shall be reduced by elimination of such portion of such area, or both, as are deemed unreasonable, so that this covenant may be enforced in such area and during such period of time as is adjudged to be reasonable.

12.Non-Solicitation Agreement. Executive agrees and covenants that he will not, unless acting with the Company’s express written consent, directly or indirectly, during the Term of this Agreement or during the Non-Competition Period (as defined in Section 11 above) solicit, entice or attempt to entice away or interfere in any manner with the Company’s relationships or proposed relationships with any customer, officer, employee, consultant, proposed customer, vendor, supplier, proposed vendor or supplier or person or entity or person providing or proposed to provide research and/or development services to, on behalf of or with the Company.
13.Notices. All notices and other communications hereunder shall be in writing and shall be deemed to have been given on actual receipt after having been delivered by hand, mailed by first class mail, postage prepaid, or sent by Federal Express or similar overnight delivery services, as follows: (a) if to Executive, at the address shown at the head of this Agreement, or to such other person(s) or address(es) as Executive shall have furnished to the Company in writing and, if to the Company, to John A. Herrmann, III, Esq., Executive Vice President, General Counsel and Corporate Secretary, 21 Firstfield Road, Gaithersburg, MD 20878 or to such other person(s) or address(es) as the Company shall have furnished to Executive in writing
.
14.Assignability. In the event of a change of control (as defined in the Company’s Change of Control Severance Benefit Plan), the terms of this Agreement shall inure to the benefit of, and be assumed by, the acquiring person (as defined in the Company’s Change of Control Severance Benefit Plan). This Agreement shall not be assignable by Executive, but it shall be binding upon, and to the extent provided in Section 8 shall inure to the benefit of, his heirs, executors, administrators and legal representatives.

15.Entire Agreement. This Agreement along with (a) the Offer Letter to Executive from the Company dated October 23, 2020, and (b) with the Non-Disclosure, Proprietary Information and Invention Assignment Agreement contain the entire agreement between the Company and Executive with respect to the subject matter hereof and there have been no oral or other prior agreements of any kind whatsoever as a condition precedent or inducement to the signing of this Agreement or otherwise concerning this Agreement or the subject matter hereof. Notwithstanding the foregoing, Executive acknowledges that he is required as a condition to continued employment, to comply at all times, with the Company’s policies affecting employees, including the Company’s published Code of Business Ethics, as in effect from time to time.

16.Equitable Relief. Executive recognizes and agrees that the Company’s remedy at law for any breach of the provisions of Sections 9, 10, 11 or 12 hereof would be inadequate, and he agrees that for breach of such provisions, the Company shall, in addition to such other remedies as may be available to it at law or in equity or as provided in this Agreement, be entitled to injunctive relief and to enforce its rights by an action for specific performance. Should Executive engage in any activities prohibited by this Agreement, he agrees to pay over to the
Company all compensation, remuneration or monies or property of any sort received in connection with such activities; such payment shall not impair any rights or remedies of the Company or obligations or liabilities of Executive which such parties may have under this Agreement or applicable law.




17.Amendments. This Agreement may not be amended, nor shall any change, waiver, modification, consent or discharge be effected except by written instrument executed by the Company and Executive
.
18.Severability. If any part of any term or provision of this Agreement shall be held or deemed to be invalid, inoperative or unenforceable to any extent by a court of competent jurisdiction, such circumstances shall in no way affect any other term or provision of this Agreement, the application of such term or provision in any other circumstances, or the validity or enforceability of this Agreement. Executive agrees that the restrictions set forth in Sections
10 and 11 above (including, but not limited to, the geographical scope and time period of restrictions) are fair and reasonable and are reasonably required for the protection of the interests of the Company and its affiliates. In the event that any provision of Section 11 or 12 relating to time period and/or areas of restriction shall be declared by a court of competent jurisdiction to exceed the maximum time period or areas such court deems reasonable and enforceable, said time period and/or areas of restriction shall be deemed to become and thereafter be the maximum time period and/or areas which such court deems reasonable and enforceable.

19.Paragraph Headings. The paragraph headings used in this Agreement are included solely for convenience and shall not affect, or be used in connection with, the interpretation hereof.
20.Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the law of the State of Maryland, without regard to the principles of conflict of laws thereof.

21.Resolution of Disputes. With the exception of proceedings for equitable relief brought pursuant to Section 16 of this Agreement, any disputes arising under or in connection with this Agreement including, without limitation, any assertion by any party hereto that the other party has breached any provision of this Agreement, shall be resolved by arbitration, to be conducted in Baltimore, Maryland, in accordance with the rules and procedures of the American Arbitration Association. The parties shall bear equally the cost of such arbitration, excluding attorneys’ fees and disbursements which shall be borne solely by the party incurring the same; provided, however, that if the arbitrator rules in favor of Executive on at least one material component of the dispute, Company shall be solely responsible for the payment of all costs, fees and expenses (including without limitation Executive’s reasonable attorneys’ fees and disbursements) of such arbitration. The Company shall reimburse Executive for any such fees and expenses incurred by Executive in any calendar year within a reasonable time following Executive’s submission of a request for such reimbursement, which in no case shall be later than the end of the calendar year following the calendar year in which such expenses were incurred. Executive shall submit any such reimbursement request no later than the June 30th next following the calendar year in which the fees and expenses are incurred. In the event the arbitrator rules against Executive, Executive shall repay the Company the amount of such reimbursed expenses no later than 180 days following the date as of which such arbitrator’s decision becomes final. The provisions of this Section 21 shall survive the termination for any
reason of the Term (whether such termination is by the Company, by Executive or upon the expiration of the Term).

22.Indemnification; Insurance. The Executive shall be entitled to liability and expense indemnification and reimbursement to the fullest extent permitted by the Company’s current Amended and Restated By-laws and Second Amended and Restated Certificate of



Incorporation, whether or not the same are subsequently amended. During the Term, the Company will use commercially reasonable efforts to maintain in effect directors’ and officers’ liability insurance no less favorable to Executive than that in effect as of the date of this Agreement.

23.Survival. Sections 8 through 23 shall survive termination of this Agreement for the period and to the extent specified therein.

IN WITNESS WHEREOF, the parties have executed or caused to be executed under seal this Agreement as of the date first above written.

NOVAVAX, INC.

By: /s/ John A. Herrmann III
Name:    John A. Herrmann III
Title: Executive Vice President & Chief Legal Officer


EXECUTIVE:
/s/ James P. Kelly
James P. Kelly


Exhibit 10.2
20 Firstfield Road
Gaithersburg, MD 20878
T 240-268-2000
F 240-268-2100

www.novavax.com
Nasdaq: NVAX

July 12, 2021

James P. Kelly
[***]

Dear Jim,

I am pleased to offer you the full time position of Executive Vice President & Chief Financial Officer at Novavax, Inc. In this position you will report Stan Erck, President & Chief Executive Officer. Your first day of employment is expected to be on or about August 16, 2021.

This offer is contingent upon the following:

Successful and satisfactory completion of our standard background check. All information provided by you in your employment application, interviews, and any other verbal or written correspondence will be verified by a third party background checking company or by Novavax. Any discrepancies found may delay your start date or could potentially cause withdrawal of this offer. Candidates cannot begin employment until the background check is completed, including verification of current employment.

Your assurance that there are no contractual or other obligations owed by you to previous employers or other parties that would in any way limit your ability to perform your job at the Company. If there are any obligations that might limit your ability to perform, such matters must be disclosed and resolved prior to commencement of employment.

Successful verification of your employment eligibility in the United States. In order to verify this information, please be prepared to produce acceptable documents. BY FEDERAL LAW, IT IS REQUIRED THAT YOU PRESENT THIS DOCUMENTATION WITHIN THREE DAYS OF YOUR START AT WORK.

The specific terms of this offer are outlined in the enclosed Employment Agreement, and include the following:

SALARY: Your initial annualized base salary will be $490,000 per year, payable semi-monthly, less applicable payroll taxes and authorized deductions.

BONUS PROGRAM: You will be eligible to participate in the Company’s annual incentive bonus program beginning in 2021, under which award payments, if any, will be based on performance criteria and milestones to be determined by the Company, and you will be paid in
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the following year in which the compensation is earned. Your bonus at 100% of target will be 45% of your earnings for the performance year.

ONE TIME SIGNING BONUS: You are eligible to receive a one-time signing bonus of
$100,000, which will become payable within 30 days of commencement of your employment with Novavax. The signing bonus will be paid on a regularly scheduled pay date and is subject to applicable withholdings and deductions. You agree that in the event that (i) you resign from the company before you have completed twenty-four (24) full months of service or (ii) the Company terminates your employment for any reason other than a reduction in force before you have completed twenty-four (24) full months of service, you will then, within seven (7) days of such resignation or termination, refund to the Company the gross amount of the signing bonus paid hereunder; however the repayment will be reduced by 25% for each 6 month period of service completed.

EMPLOYEE EQUITY PLAN: As an employee, you will participate in the Employee Equity Plan (”Plan”) established from time to time by the Board of Directors. The objective of the Plan is to allow employees and other stakeholders to build an equity stake in the Company and thereby participate directly in the Company’s long-term success. Following hiring grants, equity is generally granted to all employees annually at the end of the calendar year.

STOCK OPTIONS: Upon approval by the Board of Directors or your employment start date (whichever is later) you will receive an initial stock option grant of 14,200 shares of Company common stock, at an exercise price equal to fair market value on the date the options are granted. These stock options are subject to plan limits within the 2015 Stock Option Plan and will vest 25% after the first year from the date of grant and monthly thereafter for the following 36 months. The options will be non- qualified stock options to the extent permitted by law and our plan.

RESTRICTED STOCK UNITS: Subject to approval by the Company’s Board of Directors and plan limits within the 2015 Stock Option Plan, you will be granted 7,100 Restricted Stock Units (“RSUs”). You will be restricted from any activity (selling or transferring) in such RSUs until vested; RSUs will vest in three years, one-third per year on the anniversary of the date of grant. You will be responsible for all taxes owed on such Stock as of the date of vesting, and Novavax will be entitled to sell sufficient Stock to address any tax withholdings as further specified in an RSU Agreement between you and the Company.

Your employment and compensation with Novavax are “at will”. At will employment is defined as an employee/employer relationship which may be ended by either the employee or employer at any time, without cause, except as otherwise provided by law or defined in the terms of the Employment Agreement.

Jim, if you agree with and accept the terms of this offer letter and the Employment Agreement, please sign below and return this letter and the Employment Agreement to my office. We are confident your employment with Novavax will prove mutually beneficial, and we look forward to you joining the Novavax team.




Sincerely,          Accepted by:


/s/ Jill Hoyt______________          /s/ James P. Kelly_________________
Jill Hoyt
Executive Vice President         James P. Kelly Date Chief Human Resources Officer

Exhibit 10.3
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT (“Agreement”) is made effective as of August 10, 2021 (the “Effective Date”) and entered into by and between NOVAVAX, INC. (“Novavax”), a Delaware corporation, having a place of business at 21 Firstfield Road, Gaithersburg, Maryland 20878 and GREGORY F. COVINO (“Consultant”), an individual, having an address at [***]. Novavax and Consultant may be referred to in this Agreement individually as a “Party” and collectively as the “Parties.”
Consultant and Novavax, intending to be legally bound, hereby agree as follows:
1.Engagement. Upon the terms and subject to the conditions set forth in this Agreement, Novavax hereby agrees to engage Consultant as an independent contractor, to render services to and on behalf of Novavax and Consultant hereby agrees to render such services to and on behalf of Novavax.
2.Consultant Services. Consultant shall provide the services described on Exhibit A and such other services as requested by Novavax in writing or as suggested by Consultant and approved by Novavax in writing (the “Services”), each of which shall thereafter deemed to be an addendum of Exhibit A.
3.Provisions of Services – Prior Approval.
3.1Production of Deliverables. Consultant shall provide a written “Proposal” for Novavax to review and approve; upon written approval by the Parties, any such Proposal shall be deemed an Exhibit to this Agreement. Consultant’s performance of Services shall only include the completion and delivery of deliverables that may be set forth on each approved Proposal (“Deliverables”). Novavax shall not be liable to Consultant for the cost of any Deliverables not performed pursuant to Novavax’ request for or assent to the production of such Deliverables in writing.
3.2Meetings. Consultant shall attend meetings at Novavax or elsewhere pursuant to the written agreement of Novavax and Consultant. Novavax shall be liable for Consultant’s fees and related expenses only for attendance at meetings according to the scope outlined in any mutually accepted Proposal, or other meetings as mutually agreed to in writing by both Parties.
4.Fees and Invoicing.
4.1Fees. In full consideration of the provision of the Services and the obligations undertaken pursuant to this Agreement, Novavax agrees to pay Consultant at the rates described on Exhibit A or in each Proposal unless otherwise specified in writing. Consultant shall not exceed dollar limits established in any exhibit or Proposal without prior written authorization from Novavax. Furthermore, Consultant represents and agrees that any and all compensation received under this Agreement constitutes fair market value for the Services performed.
4.2Expenses. Novavax shall reimburse Consultant for the reasonable transportation costs and related expenses incurred by Consultant in connection with the Services that are approved in advance by Novavax, payable upon receipt of invoice with copies of receipts for such expenses. Travel time will not be reimbursed. Novavax will provide reimbursement for legitimate, approved business related expenses. These include travel, meals, hotel, rental car, use of own car, telephone, and other items. Consultant shall submit itemized documentation and receipts to Novavax at the time reimbursement is requested. Such documentation will be audited to ensure that charges are reasonable and customary. Consultant shall bear the cost of all other expenses incurred by Consultant in connection with the performance of the Services, unless otherwise agreed in writing.
4.3Invoicing. Consultant shall provide Novavax with an invoice, expressed in U.S. dollars, no later than the 5th day of each month, detailing all time spent by Consultant in performing the Services, the expenses incurred by Consultant in connection therewith that were approved by Novavax, and the total amount due to Consultant. The invoices shall provide a narrative description of the activity performed, the time spent by Consultant performing such activities, and shall contain such other information in such detail as Novavax may reasonably request. Subject to the terms and conditions set forth herein, Novavax shall pay all amounts due hereunder, and not disputed in good faith, within thirty (30) days after its receipt of such invoice.
4.4Relationship of the Parties. The relationship of Consultant to Novavax hereunder is that of independent contractor. Nothing herein shall be deemed to create any partnership, association, or
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joint venture between the Parties. Consultant shall not be construed for any purpose to be an employee subject to the control and direction of Novavax or any of its affiliates. Consultant shall not be entitled to any of the benefits, coverages or privileges, including, without limitation, social security, unemployment, medical or pension payments, made available to employees of Novavax. Consultant shall have sole responsibility, subject to rules promulgated by the U.S. Internal Revenue Service (the “IRS”) or any other tax authority, for the proper reporting and payment of any and all applicable U. S. or any other taxes due on payments made to Consultant by Novavax hereunder.
4.5    Prior Equity Awards. Consultant acknowledges and agrees that any equity awards outstanding as of the termination of his employment will not continue to vest during his service as a consultant and that any vested stock options outstanding will expire three months following his termination of employment, regardless of his consulting period, pursuant to the terms of the underlying equity award agreements.

5.Term and Termination.
5.1Term and Termination. This Agreement shall commence on the Effective Date and expire, unless terminated earlier as set forth in this Paragraph 5.1. The Parties may agree in writing to extend the Term of this Agreement.
(a)Novavax may terminate this Agreement before its expiration or any specific Services for any reason upon thirty (30) days advance written notice to Consultant.
(b)Consultant may terminate this Agreement and/or any specific Services if Novavax is in default of any of its material obligations set forth herein, and such breach is not cured within thirty (30) days after Novavax’ receipt of a written notice from Consultant that describes such breach in reasonable detail.
5.2Duties Upon Termination.
(a)Upon termination of this Agreement for any reason, Consultant shall promptly deliver to Novavax all Confidential Information and all copies thereof and immediately cease all use of Confidential Information and the Intellectual Work Product.
(b)Upon termination of this Agreement for any reason and within 30 days of submission of a final invoice to Novavax, Novavax shall promptly pay all undisputed outstanding amounts to Consultant for hours worked, expenses incurred, and fees identified in each Exhibit to this Agreement.
6.Confidential Information.
6.1Without the express prior written consent of Novavax, Consultant shall only use for the purpose of rendering the Services and shall not disclose or use any Confidential Information (as defined below) of Novavax for Consultant’s direct or indirect benefit or the direct or indirect benefit of any third party, and Consultant shall maintain, both during and for seven (7) years after Consultant’s engagement, the confidentiality of all Confidential Information of Novavax. The term “Confidential Information” shall include all information disclosed to Consultant by Novavax including without limitation: trade secrets, know-how, patent applications or patentable improvements thereto, biomedical technology, inventions, writings, blueprints, computer programs, documents, engineering specifications, diagrams, charts, models, research studies, assays, marketing studies, process descriptions, manufacturing processes, projections, information relating to customers, suppliers, distributors, licensees, profits, costs, pricing or tooling, and all other materials or information relating to or dealing with the business operations, technologies or activities of Novavax, whether written, oral, electronic or visual, tangible or intangible, whether machine readable or otherwise and shall also include the existence of any relationship between Novavax and Consultant, including but not limited to the terms of this Agreement and the terms of the engagement by Novavax of Consultant, except to the extent Consultant reasonably is required to notify another for purposes of soliciting legal, accounting and/or tax services and/or advice; and all information and materials prepared by Consultant in the course of, relating to or arising out of
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Consultant’s engagement by Novavax, or prepared by any other Novavax employee or contractor for Novavax or its customers. Failure to mark any of the Confidential Information as confidential or proprietary shall not affect its status as Confidential Information under the terms of this Agreement.
6.2At Novavax’ request, Consultant shall immediately: (i) discontinue all use of all Confidential Information; (ii) return to Novavax all materials then in Consultant’s possession or subject to its control that contain Confidential Information, including all copies thereof and all summaries, analyses and notes thereon; (iii) erase or destroy all Confidential Information contained in computer memory or data storage apparatus under the ownership or control of Consultant; and (iv) warrant in writing to Novavax that Consultant has taken all actions described in the foregoing Subparagraphs 6.2(i)-(iii).
6.3The restrictions set forth in this Section 6 shall not apply to Confidential Information that:
(a)is rightfully in the possession of Consultant prior to the date of the disclosure of such information to Consultant by the disclosing party;
(b)is in the public domain prior to the date of the disclosure of such information to the receiving party by the disclosing party;
(c)becomes part of the public domain by publication or by any other means except an unauthorized act or omission on the part of Consultant or its employees, consultants or advisors;
(d)is or was supplied to Consultant on a non-confidential basis by a third party who is under no obligation to the disclosing party to maintain such information in confidence. Specific information disclosed as part of the Confidential Information shall not be deemed to be in the public domain or in the prior possession of Consultant merely because it is embraced by more general information in the public domain or in the prior possession of Consultant.
6.4Securities Trading. Consultant further agrees that Consultant will not buy, sell or otherwise trade any securities of Novavax based on any material Confidential Information learned as a consultant of Novavax, or tip others to do so. If Consultant is ever unsure about Consultant’s compliance with this Section 6.4, Consultant shall contact the Chief Financial Officer of Novavax.
6.5Trade Secrets. Pursuant to 18 USC Section 1833(b), Consultant shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that is made: (1) in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney, and solely for the purpose of reporting or investigating a suspected violation of law; or (2) in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.
7.Property Rights. All work produced hereunder, including, without limitation, all inventions, ideas, creations, designs, discoveries, developments, techniques, expressions, improvements, computer programs, specifications, operating instructions and all other documentation, data or other work product related to the Services provided by Consultant under this Agreement (whether patentable or subject to copyright, or not), which are first conceived, made or otherwise originated or acquired or first actually constructively reduced to practice during the Term or within six (6) months following the expiration or termination of the Term, whether preliminary or final, and on whatever media rendered (collectively, the “Work Product”), shall be deemed work made for hire and made in the course of services rendered for Novavax and shall be the sole and exclusive property of Novavax. Novavax shall have the sole, absolute and unlimited right to protect by patent or copyright, and to make, have made, use, and sell the Work Product as it sees fit. To the extent that title to the Work Product may not be considered work for hire, Consultant irrevocably agrees to transfer and assign to Novavax in perpetuity all worldwide right, title and interest in and to the patent rights, copyrights, trade secrets and other proprietary rights (including, without limitation, applications for registrations thereof) in, and ownership of, the Work Product that Consultant may have, as and when such rights arise. Novavax further agrees that it will execute, and will cause its applicable employees to execute, all documents necessary to enable Novavax to protect and record its ownership of the Work Product.
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8.Authority to Contract. Novavax represents and warrants to Consultant that the execution and delivery of this Agreement and the performance of the provisions hereof have been duly authorized by all necessary action on Consultant’s part, that this Agreement has been duly and validly executed and delivered by Consultant, that this Agreement constitutes a valid and legally binding agreement enforceable against Consultant in accordance with its terms. Consultant represents and warrants to Novavax that this Agreement has been duly and validly executed and delivered by Consultant, that this Agreement constitutes a valid and legally binding agreement enforceable against Consultant in accordance with its terms, and that neither the execution and delivery of this Agreement nor the performance of the provisions hereof constitute or will constitute a violation of any contract, or other agreement or relationship to which Consultant is a party or by which Consultant is bound.
9.Equitable Relief. In the event that any provision of Section 6 or 7 shall be declared by a court of competent jurisdiction to exceed the maximum time period or areas such court deems reasonable and enforceable, said time period and/or areas of restriction shall be deemed to become and thereafter be the maximum time period and/or areas which such court deems reasonable and enforceable. Consultant recognizes and agrees that Novavax’ remedy at law for any breach of the provisions of Sections 6 or 7 hereof would be inadequate, and Consultant agrees that for breach of such provisions, Novavax shall, in addition to such other remedies as may be available to it at law or in equity or as provided in this Agreement, be entitled to injunctive relief and to enforce its rights by an action for specific performance.
10.Miscellaneous.
(a)Debarment. Consultant has not been debarred under the provisions of the Generic Drug Enforcement Act of 1992, including without limitation, 21 U.S.C. Section 335a. Consultant represents and warrants that Consultant will not use in any capacity, in connection with any Services to be performed under this Agreement, any individual who has been debarred pursuant to the aforementioned act, or excluded from a federal healthcare program (each, a “Representative”). If at any time during the term of this Agreement Consultant or a Representative (a) becomes debarred, or (b) receives notice of action or threat of action with respect to debarment, Consultant shall notify Novavax immediately. In the event that Consultant becomes debarred as set forth in (a) above, this Agreement shall automatically terminate upon Novavax’ receipt of such notice without any further action or notice by or from Novavax. In the event that Consultant receives notice of action as set forth in (b) above, Novavax shall have the right to terminate this Agreement immediately.
(b)Waiver. No provision hereof shall be deemed waived and no breach excused, unless such waiver or consent excusing the breach shall be in writing and signed by the Party to be charged with such waiver or consent. A waiver by a Party of any provision of this Agreement shall not be construed as a continuing waiver of the same provision.
(c)Notice. Any notice, request, demand, consent or other communication required or permitted hereunder shall be in writing and effectively given if delivered personally or by FedEx or other nationally recognized overnight courier service (with evidence of receipt thereof), or sent by first class mail, using certified or registered mail, postage prepaid, addressed to the Party for which it is intended at the address as set out below or as may be designated by notice pursuant hereto.
To Novavax:    NOVAVAX, INC.
21 Firstfield Road
Gaithersburg, MD 20878
Attention: General Counsel

To Consultant:    GREGORY F. COVINO
[***]
[***]

(d)Headings; Interpretation. The titles and descriptive headings of the sections of this Agreement are inserted solely for convenience and shall not affect in any way the meaning or interpretation of this Agreement. In the event of a conflict with, or inconsistencies between, the provisions of this
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Agreement and an Exhibit, such conflicts or inconsistencies shall be resolved by giving precedence to the Agreement.
(e)Severability. If any provision herein is found to be unenforceable, it is the intent of the Parties that such provision be replaced, reformed or narrowed so that its original business purpose may be accomplished to the extent permitted by law. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provisions of this Agreement, which shall remain in full force and effect.
(f)Amendments. No supplement, amendment, modification or rescission of this Agreement shall be valid or enforceable unless set forth in writing and signed by both Parties.
(g)Survival. The rights and duties under Section 6 [Confidential Information] and this Section 10 of this Agreement shall survive the expiration or termination of this Agreement.
(h)Assignment. This Agreement, and all rights and obligations of the Parties hereunder, shall not be assigned or delegated by either Party without the prior written consent of the other Party, provided, however, that Novavax may assign this Agreement to any affiliate or successor in interest without obtaining the consent of Consultant. Subject to the foregoing, this Agreement shall be binding upon and shall inure to the benefit of the Parties and the respective successors and assigns. The term “affiliate” shall mean all entities controlling, controlled by, or under common control with the subject entity as the case may be. The term “control” shall mean the ability to vote more than fifty percent (50%) of the voting securities of any entity or otherwise having the ability to direct the management and policies of an entity.
(i)Governing Law. This Agreement and all matters arising out of or relating to this Agreement shall be governed by the laws of the State of Maryland, without regard to choice of law principles.
(j)No Publicity. Neither Party shall directly or indirectly cause or permit (a) the oral or written release of any public statement referring to the existence or terms of this Agreement or any Exhibit, or (b) any use of the other Party’s name or trademarks, without the other Party’s prior written consent, save and except as such disclosure is required by law or any securities exchange or governmental body to which either Party is subject or submits, wherever situated, including (without limitation) the Securities and Exchange Commission, The NASDAQ OMX Group, or the Food and Drug Administration whether or not the requirement has the force of law.
(k)Entire Agreement. This Agreement and all attachments hereto, including any amendments, constitute the entire agreement between the Parties with respect to the subject matter hereof and supersede all prior agreements, understandings, discussions, and negotiations, whether oral or written, express or implied, of the Parties with respect hereto. The Exhibits hereto form an integral part of this Agreement.
(l)Counterparts. This Agreement may be signed in any number of counterparts which, when taken together, will constitute one and the same instrument. Transmission by fax or by electronic mail of an executed counterpart of this Agreement shall be deemed to constitute due and sufficient delivery of such counterpart. This Agreement and any exhibit, amendment or modification may not be denied legal effect or enforceability solely because it is in electronic form, or because an electronic signature or electronic record was used in its formation.
(m)Manner of Performance. Consultant hereby represents that Consultant has the requisite expertise, ability and legal right to render the Services, and that Consultant’s current employer is aware and consents to this consulting relationship. Consultant also agrees to abide by all laws, rules and regulations that apply to Consultant’s performance.
(n)Conflicts of Interest. Consultant has advised Novavax of any relationship with third parties, including competitors of Novavax, which would in Consultant’s reasonable estimate present a conflict of interest with Consultant’s rendering services to Novavax. Consultant will also advise Novavax of any such relationships that arise during the term of this Agreement. Consultant agrees that any such relationship Consultant may have now or in the future will not prevent Consultant from carrying out any of Consultant’s obligations under this Agreement, including, but not limited to, those set forth in Section 6 [Confidential Information]. Consultant further agrees that, in the
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event any relationship Consultant has or may have with any such third parties does present a conflict of interest, Consultant will seek to resolve such conflict as quickly as reasonably practicable.
(o)Sunshine Act. The Parties acknowledge that certain state or federal laws now or in the future may require Novavax to disclose information regarding compensation, funding, gifts, payments or other remuneration (“Remuneration”) provided to physicians and other members of the health care community. Novavax may report information about Remuneration provided under this Agreement as required by applicable law. Once reported, such information will be publicly accessible.

    IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed as of the day and year first above written.

NOVAVAX, INC.

By:    /s/ Jesse Oropesa
                  Signature

Name:    Jesse Oropesa    

Title:    Senior Director, Legal Affairs    

Date:    08/03/02021    
GREGORY F. COVINO

By:    /s/ Gregory F. Covino    
    Signature

Name:    Greg Covino    

Title:    Consultant    

Date:    08/03/2021    



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EXHIBIT A

Services:     “Services” shall mean those services provided by Consultant relating to general assistance to the company including, but not limited to, assessments of new contracts, commercialization readiness and set up, staffing and finance department organization consulting, financial reporting insights, and CFO on boarding, as requested.

Deliverables:     Consultant will provide reports/summaries in a mutually agreed to format (outlines, notes, written summaries, track changes) and timeframe.

Meetings:     Consultant will participate in meetings and discussions (face-to-face meetings/conference calls) as appropriate and reasonably requested by Novavax.

Fees:    Hourly rate $300.00/hr. – Not-to Exceed $75,000
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Exhibit 10.4

CERTAIN INFORMATION IDENTIFIED WITH [***] HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) IS THE TYPE THAT THE REGISTRANT TREATS AS PRIVATE OR CONFIDENTIAL.
AMENDED AND RESTATED SUPPLY AND LICENSE AGREEMENT

BETWEEN

SERUM INSTITUTE OF INDIA PRIVATE LIMITED

AND

NOVAVAX, INC.
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AMENDED AND RESTATED SUPPLY AND LICENSE AGREEMENT
This Amended and Restated Supply and License Agreement (the “Restated Agreement”) is entered into and made effective as of the last date of signature by the Parties to this Agreement (the “Effective Date of Restatement”), by and between Serum Institute of India Private Limited., an Indian company having its principal place of business at 212/2, Off Soli Poonawalla Road, Hadapsar, Pune 411028 (“SIIPL”, which expression shall, unless repugnant to the context thereof, mean and include its Affiliates, successors and permitted assigns), and Novavax, Inc., a Delaware, USA corporation having its principal place of business at 21 Firstfield Road, Gaithersburg, MD 20878 USA (“Novavax”, which expression shall, unless repugnant to the context thereof, mean and include its Affiliates). Novavax and SIIPL may each be referred to herein individually as a “Party” and collectively as the “Parties.”
RECITALS
WHEREAS, Novavax has developed and is the exclusive owner of one or more Novavax antigens developed for use as a human vaccine against the COVID-19 coronavirus in prototype or variant form, which at a minimum includes BV2373, and may include additional evolved, mutated or variant antigens whether being developed separately, collectively, or in combination with each other (“Drug Substance”) (which subsequent antigens will be separately detailed by the Parties from time to time during the Term), and Matrix-M™ (“Adjuvant”);
WHEREAS, SIIPL is a global vaccine manufacturer specializing in life saving vaccines;
WHEREAS, the Parties entered into a Supply and License Agreement, dated July 30, 2020 (“Original Agreement”) pursuant to which SIIPL has the right use the Drug Substance (BV2373), and the Adjuvant and the Licensed Know-How to Develop, Manufacture, and Commercialize, by SIIPL, a vaccine product derived from a coformulation of the Drug Substance (BV2373) and the Adjuvant (not as a combination product with any other active ingredient), and use such vaccine product in the Field and now (the “Product(s)”);
WHEREAS, under the Original Agreement, Novavax agreed to (a) continuously supply to SIIPL the Drug Substance (BV2373) and the Adjuvant as per the Forecast requirement of SIIPL in the SIIPL Territory, (b) grants to SIIPL an exclusive license in the SIIPL Exclusive Territory to use the Drug Substance (BV2373) and the Adjuvant to enable SIIPL to Manufacture, and Commercialize the Product, (c) grant to SIIPL a nonexclusive license in the SIIPL Non-Exclusive Territory to use the Drug Substance (BV2373) and the Adjuvant to enable SIIPL to Manufacture, and Commercialize the Product, and (d) provide to SIIPL the Licensed Know-How Controlled by Novavax or its Affiliates (including the improvements if any), in accordance with the terms and conditions of the Original Agreement;
WHEREAS, subsequently, Parties negotiated in good faith and mutually agreed that Novavax would additionally grant SIIPL a non-exclusive license to Manufacture the Drug Substance solely for the purpose of Manufacturing the Product and accordingly executed an Amendment dated 14th September 2020 to the Supply and License Agreement (“Amendment No. 1”);
WHEREAS, both Parties now wish to combine, and restate and replace in their entirety, the Original Agreement and the Amendment No. 1, along with additional terms and conditions, into
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a single supply and license agreement which shall, from the Effective Date of Restatement, take full force and effect, hence this Restated Agreement.
NOW THEREFORE, SIIPL AND NOVAVAX AGREE AS FOLLOWS:
ARTICLE 1. DEFINITIONS
Capitalized terms used in this Restated Agreement will have the meaning ascribed to them in the preamble and recitals to this Restated Agreement above, Appendix A, or otherwise as defined in this Restated Agreement below.
ARTICLE 2. SUPPLY OF ADJUVANT AND OTHER RESPONSIBILITIES
2.1Supply of Adjuvant.
a.Supply of Adjuvant to SIIPL. During the Term, Novavax will supply to SIIPL its requirements of Adjuvant as per a Forecast to Manufacture and Commercialize the Product in the SIIPL Territory. Adjuvant shall be in mutually acceptable standard fill volumes, concentration, and bulk packaging and meet other specifications and requirements set forth in a Quality Agreement to be negotiated and executed by the Parties within [***] of the Effective Date of Restatement (the “Adjuvant Specifications”). The Parties agree that the Quality Agreement will be executed between the Parties.
b.Pharmacovigilance Agreement. The Parties have negotiated and entered into a safety reporting agreement on customary, [***] mutually agreeable terms, which shall govern the Parties’ pharmacovigilance activities and responsibilities in connection with the performance of this Restated Agreement.
2.2Safety Stock for Adjuvant.
a.Subject to the last sentence of this Section 2.2 a., Novavax shall establish a safety stock of the Adjuvant and shall thereafter maintain such safety stock exclusively available to SIIPL in quantities [***] (the “Safety Stock”). Novavax shall keep SIIPL [***] informed of the level of the Safety Stock. If the Safety Stock drops below [***], Novavax shall use [***] to replenish the Safety Stock [***]. [***]. Parties agree that the quantity of Adjuvant to be kept in the Safety Stock shall be [***].
b.In the event Novavax [***], the Parties shall [***].
2.3Responsibilities of Novavax.
a.Supply of Adjuvant. During the Term, Novavax will have [***] with respect to obtaining and maintaining the facilities and necessary raw materials, equipment, qualified personnel, Regulatory Approvals, licenses, and permits, to Manufacture and deliver to SIIPL the Adjuvant in accordance with this Restated Agreement. Novavax will solely be responsible for all vendors, employees, contractors, and
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other Persons employed or engaged by it to Manufacture the Adjuvant. Novavax will provide to SIIPL [***] necessary to enable SIIPL to formulate the Adjuvant with the Drug Substance to enable SIIPL to Manufacture the Product.
b.Novavax Improvements. In the event Novavax makes any Novavax Improvements during the Term to the Adjuvant, the same shall be provided to SIIPL [***] under the terms and conditions agreed herein this Restated Agreement.
c.Transfer of Licensed Know-How to SIIPL. Novavax will provide to SIIPL all of the Licensed Know-How to the extent necessary to Manufacture the Drug Substance and Manufacture and Commercialize the Product in the SIIPL Territory.
2.4Responsibilities of SIIPL.
a.Manufacture of the Drug Substance.
The Parties hereby agree that SIIPL shall perform/ receive Technology Transfer from Novavax, process Development and any Manufacture and further Development of Drug Substance at SIIPL’s manufacturing facility, subject to the terms and conditions set forth in this Restated Agreement.
Provision Raw Materials. [***]
b.Manufacture of the Product. Subject to and as further described in Sections 2.4.c and 2.4.d, SIIPL will have [***], and shall use its [***], with respect to obtaining and maintaining the facilities and all necessary raw materials, equipment, qualified personnel, Regulatory Approvals, licenses, and permits to Develop and Manufacture the Product as necessary to perform its obligations under this Restated Agreement within the SIIPL Territory. SIIPL will solely be responsible for all vendors, employees, contractors, and other Persons employed or engaged by it, and all costs and expenses incurred, in the performance of such obligations. Notwithstanding the previous, SIIPL agrees to provide rights of access to regulatory files related to countries that at any time during the Term belonged in the SIIPL Non-Exclusive Territory and agrees to work in collaboration with Novavax or its designee. SIIPL and Novavax, including any of their licensees agree that in no case will it use a permit, regulatory licenses or a contractual arrangement as a means of preventing the other Party or any of its licensees from Developing, Manufacturing and/or Commercializing the Product in the SIIPL Non-Exclusive Territory.
c.Development of the Product. SIIPL will have [***] with respect to the Development of the Product throughout the SIIPL Territory, subject to and as further described in this Section 2.4.c. SIIPL will obtain and maintain all Regulatory Approvals required to Develop and Commercialize the Product throughout the SIIPL Territory. SIIPL will perform all Development of the Product (including all regulatory actions) in accordance with the written plan for
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such Development (the “Development Plan”). The Development Plan any updates thereto will include a [***] Development activities for the Product and approximate timelines for such activities, provided that such timelines are subject to change due to applicable timelines and requirements of Governmental Authorities, including for obtaining and maintaining permissions and other Regulatory Approvals. The Development Plan and updates thereto will include all Development activities necessary to file each BLA and to obtain and maintain all Regulatory Approvals to Commercialize the Product in each country in the SIIPL Territory and any other activities otherwise recommended or required by the applicable regulatory authority in any country in the SIIPL Territory to obtain or maintain such Regulatory Approvals. SIIPL will update the Development Plan [***], and will provide each such update to Novavax for review and approval. In addition, any such update shall be provided to the JSC in accordance with Section 2.7 (Governance). SIIPL will incorporate all reasonable comments received from Novavax regarding Development activities for the Product that are relevant to obtaining or maintaining Regulatory Approvals to Commercialize the Product in any country in the SIIPL Territory.
d.Regulatory Activities. Subject to and as further described in this Section 2.4.(d), SIIPL will have [***] with respect to all regulatory activities for the Product in the SIIPL Territory, including obtaining and maintaining, in its name or the name of its designee / Affiliates, all Regulatory Approvals, licenses, and permits required to Commercialize the Product in the SIIPL Territory, and any correspondence or meetings with regulatory authorities regarding any of the foregoing, provided that SIIPL shall give Novavax [***] notice that SIIPL will be providing any such submissions for Novavax’ review, which review shall not unreasonably delay such filings, or as may be decided by the Parties mutually, in advance of SIIPL’s filing or submission thereof, and SIIPL will incorporate any reasonable comments received from Novavax into such regulatory submissions (including with respect to the inclusion or exclusion of Novavax’ Confidential Information). SIIPL will conduct such regulatory activities in accordance with the then-current Development Plan. SIIPL will be solely responsible for all costs and expenses incurred by it to obtain and maintain such Regulatory Approvals required to Commercialize the Product in the SIIPL Territory. [***]. Novavax will [***] and Novavax may, at either Party’s request, participate in any meetings (in person or by teleconference) with any regulatory authority regarding any Regulatory Approval necessary to Commercialize the Product in the SIIPL Territory, [***].
e.Diligence Obligations. SIIPL will perform all activities set forth in the Development Plan and use its [***] to perform all such activities in accordance with the applicable timeframes set forth in the Development Plan. In addition, SIIPL will use [***] to Develop and obtain Regulatory Approval for the Product in all countries in the SIIPL Territory.
2.5Restrictions on Use. SIIPL may use the Adjuvant supplied by Novavax and the Licensed Know How under this Restated Agreement to (i) Manufacture the Product in the
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Field for the SIIPL Territory, (ii) conduct analytical and process development activities, and (iii) Commercialize the Product in the SIIPL Territory, or any other reason as stipulated under this Restated Agreement. SIIPL will not, and will cause its Affiliates and other Permitted Recipients not to, (a) attempt to reverse engineer the Adjuvant or otherwise analyze, circumvent, or design around the Adjuvant, or (b) sell the Adjuvant to any third party. Notwithstanding the foregoing. Upon [***] to Novavax, SIIPL may transfer Adjuvant to Affiliates. Further, SIIPL may transfer the Adjuvant to third party manufacturers engaged to Manufacture of the Product (“Permitted Recipients”) [***], provided that Permitted Recipients are bound by written restrictions on use and confidentiality no less stringent than those specified in this Restated Agreement, and SIIPL remains liable to Novavax for such Permitted Recipient’s use of Adjuvant. Nothing set forth in this Restated Agreement will limit Novavax’ ability to Manufacture or supply Adjuvant to any third party or to use the Adjuvant for any other purposes.
2.6Product Branding. SIIPL will have [***] with respect to, the creation, development, selection, and approval of all trademarks and trade dress under which the Product is Commercialized in the SIIPL Territory, provided that SIIPL will [***] on all substantive matters relating to the creation, development, selection, and approval of the trademarks and trade dress to be used in the Commercialization of the Product in the SIIPL Territory, and [***] with respect thereto. In addition, SIIPL will have [***] with respect to, filing, prosecuting, registering, maintaining, and protecting the trademarks and trade dress to be used to Commercialize the Product in the SIIPL Territory at [***] costs and expense.
2.7Governance.
a.Joint Collaboration Steering Committee.
1.JSC Establishment. Under the Original Agreement, the Parties formed a joint collaboration steering committee (“JSC”) to monitor and coordinate the Exploitation of the Product throughout the SIIPL Territory, which JSC shall continue under this Restatement. The JSC will be composed of [***] representatives from each Party and a minimum of [***] representatives of each Party who are fluent in English and who have the appropriate and direct knowledge and expertise and requisite decision-making authority. Each Party may replace any of its representatives on the JSC and appoint a person to fill the vacancy arising from each such replacement. A Party that replaces a representative will notify the other Party of such replacement at least [***] prior to the next scheduled meeting of the JSC. Each Party will use [***] to keep an appropriate level of continuity in representation. The JSC will have a chairperson (“JSC Chairperson”). A designated representative of Novavax will be the JSC Chairperson until ***], and thereafter the JSC Chairperson will be selected alternately, [***], by SIIPL and then by Novavax. The JSC Chairperson will be responsible for setting the agenda for JSC meetings, with input from the other members, and for conducting the JSC meetings. The JSC will conduct its responsibilities hereunder in good faith and with reasonable care and diligence. Each Party’s representatives on the JSC will inform and
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coordinate within their respective organization to enable each Party to fulfill its obligations as agreed upon between the Parties under this Restated Agreement, including within the time frames set forth hereunder.
2.JSC Responsibilities. The JSC will have oversight and information sharing responsibilities and functions with respect to the worldwide Development, Manufacture, Commercialization, and other Exploitation of the Products or the Development and Manufacture or the Drug Substance. The JSC will, amongst other duties and responsibilities:
i)[***];
ii)[***];
iii)[***]; and
iv)[***].
3.Global Allocation Tenets. The Parties are aware that Novavax is under a contractual arrangement with the Coalition for Epidemic Preparedness Innovations (“CEPI”) under which Novavax has committed to sell [***] Product to a global allocation body endorsed by CEPI. Given the uncertainty associated with the global purchase of COVID-19 vaccine during the Pandemic Period, including the Product, the Parties agree that the JSC shall operate in full conformity with Novavax’ obligations to CEPI and to the global allocation body it endorses. Furthermore, the Parties agree that during the Pandemic Period, all Product for which the Drug Substance component has been Manufactured at any other location besides at a facility owned or controlled by SIIPL or an Affiliate, shall only be made available for purchase by the “COVAX Facility” or such other purchasing authority that Novavax in good faith represents has been endorsed and approved by CEPI. The JSC agrees to review and approve all such purchases during the Pandemic Period as directed by Novavax under its arrangement with CEPI.
b.JSC Meetings.
1.Meeting Agendas. Each Party will disclose to the other Party the proposed agenda items for each meeting of the JSC along with appropriate information at least [***] in advance of each such meeting; provided that under exigent circumstances requiring JSC input, a Party may provide its agenda items to the other Party within a shorter period of time in advance of a meeting, or may propose that there not be a specific agenda for a particular meeting, so long as such other Party consents to such later addition of such agenda items or the absence of a specific agenda for such JSC meeting. Each Party will submit to the JSC at least [***] prior to any meeting of the JSC all reports and other information required to be
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submitted by such Party to the JSC at such meeting under this Restated Agreement.
2.Meetings. The JSC will hold meetings at such times as it elects to do so, but will meet no less frequently than [***], unless otherwise agreed by the Parties. The JSC may meet in person or by means of teleconference, Internet conference, videoconference, or other similar communication method. [***] costs and expenses relating to attendance at and participation in any JSC meetings.
3.Meeting Minutes. Within [***] following each meeting of the JSC, the chairperson of the JSC will cause to be prepared and will provide to the other Party a draft of [***] detailed written minutes describing all matters reviewed or considered by the JSC, together with all determinations made and actions taken by the JSC and a summary of the reasons therefor stated by the members at the meeting. The minutes of any meeting of the JSC must be finalized by approval of the members of the JSC within [***] after the meeting. The minutes, including all drafts thereof, will be the Confidential Information of both Parties.
4.Non-Member Attendance. Each Party may from time to time invite a [***] number of participants (which may include legal counsel), in addition to its representatives, to attend a meeting of the JSC in a non-voting capacity, if such participants have expertise that is relevant to the planned agenda for such JSC meeting; provided that if a Party intends to have any third party (including any consultant) attend such a meeting, then such Party will provide [***] notice to the other Party reasonably in advance of such meeting and will ensure that such Third Party is bound by obligations of confidentiality and non-use at least as stringent as those set forth in Article 12 (Confidential Information). Notwithstanding anything to the contrary set forth in this Restated Agreement, if the other Party objects in good faith to the participation of such third party in such meeting due to a bona fide concern regarding competitively sensitive information that is reasonably likely to be discussed at such meeting, then such third party will not be permitted to participate in such meeting (or the portion thereof during which such competitively sensitive information is reasonably likely to be discussed).
c.Decision Making.
1.General Process. The JSC will only have the powers expressly assigned to it in this Section 2.7 (Governance) and elsewhere in this Restated Agreement and will not have the authority to: (a) [***]; or (b) [***]. All decisions of the JSC will be made [***]. No action taken at any meeting of the JSC will be effective unless there is a quorum at such meeting, and at all such meetings, a quorum will be reached if [***] voting representatives of each Party are present or participating in such meeting.
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2.Decisions of JSC. The JSC will use good faith efforts, in compliance with this Section 2.7c.2 (Decisions of the JSC), to [***] resolve any such matter for which it has authority. If, after the use of good faith efforts, the JSC is unable to resolve any such matter that is within the scope of the JSC’s authority or any other disagreement between the Parties that may be referred to the JSC, in each case, within a period of [***], then a Party may refer such matter for resolution in accordance with Section 2.7d.l (Referral to Executive Officers) to the Chief Executive Officer of Novavax (or an executive officer of Novavax designated by the Chief Executive Officer of Novavax who has the power and authority to resolve such matter) and the Chief Executive Officer of SIIPL (or an executive officer of SIIPL designated by the Chief Executive Officer of SIIPL who has the power and authority to resolve such matter) (collectively, the “Executive Officers”).
d.Resolution of JSC Disputes.
1.Referral to Executive Officers. If a Party makes an election under Section 2.7c.2 (Decisions of the JSC) to refer a matter on which the JSC cannot reach a [***] decision for resolution by the Executive Officers, then the JSC will submit in writing the respective positions of the Parties to their respective Executive Officers. The Executive Officers will use good faith efforts to resolve any such matter so referred to them [***], and any final decision that the Executive Officers agree to in writing will be conclusive and binding on the Parties.
2.Final Decision-Making Authority. If the Executive Officers are unable to reach agreement on any such matter referred to them within [***] after such matter is so referred (or such longer period as the Executive Officers may agree upon), then:
i)[***] will have final decision making authority on all aspects related to [***];
ii)[***] will have final decision making authority on all aspects related to [***]; or
iii)In relation to [***], [***] will have the final decision making authority for that country.
e.Limitations on Decision-Making. Notwithstanding anything to the contrary set forth in this Restated Agreement, without the other Party’s [***] consent, no decision of the JSC or a Party’s Executive Officer (in the exercise of a Party’s final decision making authority on any such matters), in each case, may [***].
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ARTICLE 3. FORECASTS AND ORDERS FOR ADJUVANT TO BE SUPPLIED BY NOVAVAX.
3.1Forecast for Adjuvant supply by Novavax. Within [***] of the Effective Date of Restatement, SIIPL will provide Novavax with a [***] forecast (on a [***] basis) of SIIPL’s anticipated demand for the Adjuvant for Manufacture of the Product in SIIPL Territory (each, the “Forecast”) as detailed hereunder, for Novavax’ review and acceptance -
a.SIIPL shall issue a Purchase Order (as defined in Section 3.2) for the quantity specified in the [***] of the Forecast.
b.From the remainder of the [***] of the Forecast accepted by Novavax (an “Accepted Forecast”), the quantity specified for [***] of the Accepted Forecast will be binding upon both Parties and not subject to change (a “Firm Order”).
c.Thereafter, it is agreed that the [***] of each Accepted Forecast (the “Non-Binding Period”) will be a good faith, non-binding estimate of the quantities of Adjuvant required by SIIPL for the Manufacturing of the Product, provided that the forecasted volumes for [***] of the Non-Binding Period may not change by greater than [***]% for the same period.
3.2Purchase Order for Adjuvant. SIIPL will issue purchase orders for each Firm Order at least [***] prior to the applicable delivery date of each Firm Order. Each purchase order will specify the quantity of Adjuvant being ordered (which will be in whole Batches), the requested delivery date (the “Delivery Date”), SIIPL’s purchase order number, and any other information necessary to ensure the timely Manufacture and delivery of such Adjuvant (a “Purchase Order”). If any such purchase order requests a quantity of Adjuvant in excess of the Firm Order, Novavax has the discretion to reject any such excess quantity. Novavax shall notify SIIPL in writing of the actual delivery date for delivery of Adjuvant ordered (including whether Novavax agrees to supply any excess quantity) under a Purchase Order. No terms, provisions, or conditions of any Purchase Order or other business form or written authorization used by SIIPL or Novavax will have any effect on the rights, duties, or obligations of the Parties under or otherwise modify this Restated Agreement or any Purchase Order, regardless of any failure of SIIPL or Novavax to object to such terms, provisions, or conditions.
3.3Delivery; Title; Risk of Loss. Unless otherwise agreed by the Parties, Novavax will deliver [***]. Title and risk of loss will pass [***]. SIIPL will select, oversee, and be responsible for the acts of its designated carrier. SIIPL will, [***], be responsible for securing all necessary import permissions or other rights that may be required by local law or regulation throughout the SIIPL Territory to use the Adjuvant and Know How to Manufacture the Products.
ARTICLE 4. INSPECTION, QUALITY, AND AUDIT OF SUPPLIED ADJUVANT
4.1Inspection; Acceptance and Rejection. SIIPL will inspect shipments upon receipt for any visible damage or missing quantities of the Adjuvant or any other physical materials
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supplied as part of the Licensed Know-How (if and where applicable). SIIPL may also test shipments of Adjuvant using the applicable methods of analysis specified in the Quality Agreements. If there are any issues with a shipment of Adjuvant or Licensed Know-How or if SIIPL [***] believes that the Adjuvant does not comply with the Adjuvant Specification, cGMP, or other applicable requirements under the Quality Agreements, then SIIPL must notify Novavax [***] after its receipt of a shipment. If SIIPL does not notify Novavax within such period, then SIIPL will be deemed to have accepted the Adjuvant or Licensed Know-How as conforming to the order and meeting the applicable Adjuvant Specifications and quality requirements under this Restated Agreement.
4.2Rejection Procedure. Upon Novavax’ receipt of a [***] from SIIPL pursuant to Section 4.1(Inspection; Acceptance and Rejection), unless Novavax informs SIIPL to the contrary within [***] after receipt of such notice, Novavax will replace such missing, damaged, or defective Adjuvant or License Know-How at [***] cost and expense. To the extent a defect of the Adjuvant or Licensed Know-How cannot be ascertained by the exercise of [***] diligence by SIIPL within [***] after a delivery, SIIPL will notify Novavax in writing of such defect [***], then the Parties will thereafter use [***] to have Novavax replace such defective Adjuvant or Licensed Know-How at Novavax’ [***]; provided any such notice must be provided [***].
4.3Disagreement Regarding Defect. In the event of any disagreement between the Parties as to any defect in or non-conformance of any Adjuvant and Licensed Know-How, including any non-conformity with the Adjuvant Specifications and defect in the Licensed Know-How, either Party may require that the matter be submitted to [***] to determine whether or not such Adjuvant or License Know-How is nonconforming or otherwise defective, and the Parties [***]. Notwithstanding the general dispute resolution mechanisms set forth in this Restated Agreement, the decision by [***] will be final and binding, and not subject to appeal. All costs and expenses related to such laboratory services will be borne by [***].
4.4Records. Each Party will provide [***] to support the other Party’s efforts to obtain or maintain Regulatory Approvals related to the Adjuvant or Product.
4.5Right of Reference; Regulatory Cooperation.
a.Documentation. Novavax will provide SIIPL with applicable information, reports, documents, certificates, and any other materials regarding Adjuvant and Licensed Know-How that are [***] for SIIPL to Manufacture the Product, to Develop the Product and to obtain and maintain Regulatory Approval for the Product in the SIIPL Territory. Novavax will submit, maintain, and keep updated drug master files for the Adjuvant and each facility in which Novavax Manufactures the Adjuvant, SIIPL will submit, maintain, and keep updated drug master files for the Product and each facility in which SIIPL Manufactures the Product, and, following the Technology Transfer, for the Drug Substance, and each facility in which SIIPL Manufactures the Drug Substance.
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b.Right of Reference. Each Party hereby grants to the other Party a right of reference to the drug master files described in the forgoing Section 4.5(a) (Documentation) for use in obtaining Regulatory Approvals for the Adjuvant or the Product as permitted under this Restated Agreement. Each Party will, at the other Party’s reasonable written request, provide accurate and complete copies of the applicable clinical study reports, authorize the appropriate regulatory authorities to reference such drug master files in support of BLAs and other regulatory submissions for the Adjuvant or the Product (as applicable), and/or provide copies of all such authorization letters and take other [***] actions with regulatory authorities with respect to the Adjuvant or the Product [***] in connection with obtaining and maintaining Regulatory Approvals for the Adjuvant and the Product as set forth in this Restated Agreement.
4.6Quality Inspection. SIIPL will have the right to inspect Novavax’ facilities, offices, or other properties used or utilized for the manufacture, storage, handling, and shipping of the Adjuvant pursuant to the Quality Agreements [***] at [***] sole expense. All such audits will occur with [***] notice (but no less than [***]) on Novavax’ premises during Novavax’ normal business hours. If Novavax uses any contract manufacturer(s) to satisfy its obligations under this Restated Agreement, Novavax will provide its quality inspection reports for such contract manufacturer(s) upon request from SIIPL.
4.7Regulatory Inquiries. Novavax will [***] notify SIIPL in writing of any governmental or regulatory inquiries, inspections, or audits directly related to the Adjuvant and Licensed Know-How and any findings related to the same. SIIPL will [***] notify Novavax in writing of any governmental or regulatory inquiries, inspections, or audits directly related to the Drug Substance or Product and any findings related to the same. SIIPL will permit such governmental or regulatory body to inspect and audit its facilities and documents, including facilities and documents of its contract manufacturer(s), related to Adjuvant at [***] cost and expense, and notify and update Novavax of such inquiries, inspections and audits.
4.8Recalls. Each Party will [***] notify the other in writing in detail if (a) any batch of Product is alleged or proven to be the subject of a recall, market withdrawal, or correction in such Party’s territory; (b) such Party [***] determines that a recall is necessary; or (c) such Party becomes aware of any quality or risk issues related to Product. SIIPL will be responsible for instituting a recall, market withdrawal, or correction of the Product at [***] cost and expense, unless a recall is required due solely to the failure of the Adjuvant Manufactured by Novavax to meet the Adjuvant Specification at the time of delivery, or failure of Novavax to Manufacture Adjuvant in accordance with cGMP or other Applicable Laws, in which case SIIPL will also be responsible for instituting a recall, market withdrawal, or correction at [***] cost and expense. Each Party will cooperate as [***] requested by the Party responsible for recall.
4.9Safety Reporting. Each Party will advise the other Party in writing of any adverse event related to the Product within [***] after becoming aware of such event, and provide any and all information, document, and materials that are related to such adverse event.
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Further details of the Parties’ obligations in regard to safety reporting will be set forth in the Pharmacovigilance Agreements.
ARTICLE 5. TECHNOLOGY TRANSFER
5.1Technology Transfer. Novavax has/shall have transferred/shall transfer to SIIPL (a) all Licensed Know-How Controlled by Novavax that is (a) necessary to Manufacture the Drug Substance, including transfer of [***], and (b) necessary to use the Adjuvant and Drug Substance for the Manufacture of the Product (DP Services), including assays, specifications, diagrams, technology, manufacturing process descriptions, protocols, and other written know-how by providing copies or samples of relevant documentation, materials, and other embodiments of any such Licensed Know-How (“Technology Transfer”).
ARTICLE 6. LICENSE GRANTS
6.1License Grants to SIIPL.
a.Exclusive License. Subject to the terms and conditions of this Restated Agreement, Novavax hereby grants to SIIPL an exclusive but royalty bearing license under the Novavax Proprietary Rights to the extent necessary to use Adjuvant, Drug Substance and Licensed Know-How to Develop, formulate, Manufacture, make, have made, import, export, use, have used, offer for sale, sell, and have sold or otherwise and Commercialize the Product within the SIIPL Exclusive Territory in the Field during the Term (the “SIIPL Exclusive License”). For the purpose of clarity, the SIIPL Exclusive License does not and will not be deemed to allow SIIPL to make or have made the Adjuvant in whole or part under this Restated Agreement. This SIIPL Exclusive License shall continue until expiration or termination of this Restated Agreement.
b.Non-Exclusive License. Subject to the terms and conditions of this Restated Agreement, Novavax hereby grants to SIIPL a non-exclusive but royalty bearing license under the Novavax Proprietary Rights to the extent necessary to use Adjuvant, Drug Substance and Licensed Know-How to Develop, formulate, Manufacture, make, have made, import, export, use, have used, offer for sale, sell, and have sold or otherwise and Commercialize the Product within the SIIPL Non-Exclusive Territory in the Field during the Pandemic Period. For the purpose of clarity, this non-exclusive license does not and will not be deemed to allow SIIPL to make or have made the Adjuvant in whole or part under this Restated Agreement.
After the Pandemic Period, Novavax may, during the Term, notify in writing to SIIPL of any bona fide opportunity to license to a third party one or more countries in the SIIPL Non-Exclusive Territory. Upon any such written notice, SIIPL shall have [***] from receipt of the written notice to match or improve such bona fide terms with Novavax or, failing that, Novavax has the sole discretion to remove such country or countries from the SIIPL Non-Exclusive Territory with due written notice to SIIPL.
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[***].
c.Drug Substance Manufacturing License. Subject to the terms and conditions of this Restated Agreement, Novavax hereby grants to SIIPL (i) a non-exclusive sublicensable (subject to Novavax’ prior written consent) license within the SIIPL Non-Exclusive Territory, (ii) an exclusive license within the SIIPL Exclusive Territory, both under the Licensed Know-How and Licensed Patents to Manufacture the Drug Substance solely for use in the Manufacture of the Product in the SIIPL Territory during the Term in the performance of this Restated Agreement.
d.Sub-License. SIIPL may grant a sub-license to a third party in the SIIPL Territory, under the rights granted pursuant to Section 6.1 (a through c), with prior written consent of Novavax [***].
6.2Covenant Not to Sue. Both Parties on behalf of itself and its Affiliates, hereby covenants not to assert or cause to be asserted, and will cause its Affiliates not to assert or cause to be asserted, against any Covenant Beneficiary [***] and Novavax Improvement, as the case may be. Each Covenant Beneficiary that is not party to this Restated Agreement is a third party beneficiary solely of this Section6.2 (Covenant Not to Sue). If either Party or any of its Affiliates sells, assigns, exclusively licenses, transfers, or otherwise grants any right under any SIIPL Improvement and Novavax Improvement, as the case may be to a third party, then SIIPL and/or Novavax or such Affiliate, as applicable, will require such purchaser, assignee, licensee, or transferee to agree in writing to be bound by the same covenant to the same extent as made by SIIPL and / or Novavax and its Affiliates in this Section 6.2(Covenant Not to Sue).
6.3No Implied Licenses. Neither Party is granted any rights to any Patent Rights, Know-How, or other intellectual property rights owned or Controlled by the other Party, other than as explicitly identified herein. Nothing herein will affect the Parties’ respective ownership of any Patent Rights, Know-How, or other intellectual property rights owned by such Party.
ARTICLE 7. PAYMENT, INVOICING AND TERMS
7.1SIIPL Royalty Payment. SIIPL shall pay Novavax with respect to SIIPL’s sale of Product a royalty in an amount equal to percent (50%) of the Revenue on a [***] bases (the “SIIPL Royalty Payment”). All payments under this Restated Agreement shall be made in United States Dollars. Payments pertaining to SIIPL Royalty Payment, as applicable, shall be fully paid [***] on the basis of the applicable sales of Product recognized under US GAAP for the [***].
7.2Adjuvant Payment. The payments pertaining to Adjuvant Price to be paid by SIIPL to Novavax or its designee will be initiated [***] and will thereafter be due and payable upon receipt of the applicable invoice from Novavax (the “Adjuvant Payment”).
7.3Taxes. The amounts payable by one Party (the “Paying Party”) to the other Party (the “Payee Party”) pursuant to this Restated Agreement (each, a “Payment”) shall be paid
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free and clear of any and all taxes, except for any withholding taxes required by Applicable Law. Except as provided in this Section 7.3, the Payee Party shall be solely responsible for paying any and all taxes on income (other than withholding taxes required by Applicable Law to be deducted from Payments and remitted by the Paying Party), excluding applicable Indian GST levied on account of, or measured in whole or in part by reference to, any Payments it receives. The Paying Party shall deduct or withhold from the Payments any taxes that it is required by Applicable Law to deduct or withhold. Notwithstanding the foregoing, if the Payee Party is entitled under any applicable Tax treaty to a reduction of rate of, or the elimination of, applicable withholding Tax, it may deliver to the Paying Party or the appropriate Governmental Authority (with the assistance of the Paying Party to the extent that this is [***] required and is requested in writing) the prescribed forms necessary to reduce the applicable rate of withholding or to relieve the Paying Party of its obligation to withhold such Tax and the Paying Party shall apply the reduced rate of withholding or dispense with withholding, as the case may be; provided that the Paying Party has received evidence of the Payee Party’s delivery of all applicable forms (and, if necessary, its receipt of appropriate governmental authorization) at least [***] prior to the time that the Payments are due. If, in accordance with the foregoing, the Paying Party withholds any amount, it shall pay to the Payee Party the balance when due, make timely payment to the proper Governmental Authority of the withheld amount and [***] send to the Payee Party necessary certificates as issued by the Governmental Authorities for such payment along with the relevant withholding tax certificates. The Parties will cooperate and use [***] to reduce, mitigate, or eliminate adverse tax consequences.
ARTICLE 8. RECORDS AND REPORTS OF BOOKS OF ACCOUNTS
8.1Records; Reports. During the term of this Restated Agreement and for a minimum period of [***] thereafter, SIIPL shall keep detailed, accurate and up to date records and books of account [***], showing [***] such during the previous [***]. SIIPL shall ensure that such records and books of accounts are sufficient to ascertain the [***] with respect to the Product supplied in each country under this Restated Agreement.
8.2[***] Reports. As agreed in this Restated Agreement, SIIPL shall furnish a certificate from its Certified Auditors for the calculation of SIIPL Royalty Payment and Adjuvant Payment as per ARTICLE 7 for [***] within [***]. As used herein, “Certified Auditors” means an auditor firm duly licensed to practice as an auditor and whose lead individual responsible for [***] audits will have [***] and who is responsible and liable under Applicable Law.
8.3Royalty Certifications.
a.As agreed in this Restated Agreement, SIIPL shall furnish [***] Certificates from their Certified Auditors for the calculation of SIIPL Royalty Payment and Adjuvant Payment. SIIPL shall pay to Novavax any underpayment reflected in a [***] Certificate within [***] of the applicable [***], and may credit any overpayment based on the results disclosed by such [***] Certificates against future SIIPL Royalty Payment or Adjuvant Payment due Novavax.
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b.The Parties agree to conduct ***] reconciliation of the payments made in accordance with Section 8.3 a. Within [***], SIIPL shall furnish Novavax with a certificate issued by [***] certifying the total amount of the SIIPL Royalty Payment accrued in such preceding calendar year (the “[***] Recalculation Certificate”). Along with the delivery of an [***] Recalculation Certificate, SIIPL shall to Novavax pay any underpayment reflected in such [***] Recalculation Certificate, and may credit any overpayment against future SIIPL Royalty Payment or Adjuvant Payment due Novavax.
c.Any disputes with respect to any amount due under this Section 8.3 may be referred by either Party for dispute resolution in accordance with Section 14.5 (Negotiation; Resolution).
ARTICLE 9. INTELLECTUAL PROPERTY
9.1Ownership of Intellectual Property Rights
a.Subject to Sections 9.1(c), 9.1(d) and 9.1(e), all proprietary rights, including any and all Intellectual Property Rights in the Product shall be exclusively owned and Controlled by and, shall remain exclusive property of [***].
b.All proprietary rights, including any Intellectual Property Rights, in the [***] shall be exclusively owned and Controlled by [***].
c.All proprietary rights, including any Intellectual Property Rights, in the [***] shall be exclusively owned and Controlled by [***].
d.Nothing herein will affect the Parties’ respective ownership of any Intellectual Property Rights or Know-How (i) existing and Controlled by such Party as on the Effective Date of the Original Agreement or (ii) was developed or obtained by or on behalf of such Party independent of this Restated Agreement, and without reliance upon the Confidential Information of the other Party (“Background IP”). For the sake of clarity all Intellectual Property Rights in relation to the Adjuvant, Drug Substance and the Licensed Know-How, shall be the exclusive proprietary concern of Novavax.
e.Inventorship of [***] pertaining to manufacturing of the Drug Substance and/or Product shall be determined in accordance with applicable laws, and ownership shall follow inventorship. Each Party shall [***] disclose to the other any improvements made by such Party with respect to the Drug Substance and/or Product manufacturing. Novavax shall [***] disclose in writing to SIIPL of any [***] conceived, developed or reduced to practice during the Term and which are necessary for SIIPL to Manufacture the Product under this Agreement. SIIPL shall [***] disclose in writing to Novavax of any [***] conceived, developed or reduced to practice during the Term.
9.2Prosecution and Maintenance. As between the Parties, [***] would be responsible for the filing, prosecution and maintenance of any and all Intellectual Property Rights in
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relation to [***] and, during the Term, would take into account any [***] comments and suggestions of [***] in relation to the filing, prosecution and maintenance of such patents.
9.3Notification of Infringement. Either Party shall [***] notify the other Party with such details as it has in its possession of any infringement any of any Intellectual Property Rights licensed under this Restated Agreement (an “Infringement”) as and when it becomes aware of such Infringement.
9.4Enforcement. As between the Parties, [***] shall have the sole right, but not the obligation, to bring at [***] own expense, an infringement action against any Person (an “Infringer”) infringing its Intellectual Property Rights in relation to the [***]. [***] shall be entitled to name [***] as a party to any such infringement action in the [***] if required to do so by Applicable Law or with [***] consent.
9.5Back-Up Enforcement Rights. If for any reason [***] fails to (1) initiate proceedings against any Infringer in the SIIPL Territory within [***] of receipt of the notice of Infringement from [***] or [***] of otherwise becoming aware of the Infringement or (2) continue to prosecute such proceedings thereafter then [***] shall, at [***] own cost and expense, have the right, but not the obligation, to bring proceedings (or continue any existing proceedings commenced by [***]) against such Infringer and [***] shall [***] cooperate in any such proceedings as requested.
9.6Infringement Actions. The Party exercising any enforcement rights under Section 9.4 or Section 9.5:
a.shall have full control over the conduct of the action;
b.shall keep the other Party [***] informed of the progress of and developments in any proceedings against Infringers; and
c.may negotiate settlements with Infringers; provided any such settlement negotiated under Section 9.5 shall be subject to [***] consent, [***], which decision to grant or deny shall be communicated to [***] in writing within a period of [***] from [***] receipt the applicable written request by [***].
ARTICLE 10. WARRANTIES, REPRESENTATIONS AND COVENANTS
10.1Novavax Representations and Warranties. Novavax represents and warrants to SIIPL that:
a.the Adjuvant supplied to SIIPL hereunder has been Manufactured according to all Applicable Laws and cGMPs; and
b.to its knowledge as of the Effective Date of the Original Agreement, Novavax Controls all rights, title, and interests in and to Intellectual Property Rights in the Adjuvant and/or Drug Substance and the Licensed Know-How necessary for it to grant the licenses under Section 6.1 (License Grant);
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10.2SIIPL Representation and Warranty.
a.SIIPL represents and warrants to Novavax that all Product and Drug Substance shall be manufactured and commercialized by SIIPL according to all Applicable Laws and cGMPs.
b.SIIPL Controls all rights, title, and interests in and to its Background Intellectual Property it will use for the performance of this Restated Agreement; including, without limitation, the Development, Manufacture, Commercialization or Exploitation, as applicable, of the Product and Drug Substance, and such use shall not violate or infringe, to the best of its knowledge, any Intellectual Property Rights of any third party.
10.3Mutual. Each Party represents, warrants and covenants to the other Party:
a.Organization; Good Standing; Authority. It is duly organized, validly existing, and in good standing under the laws of its country of organization. It has the full right, power, and authority to enter into and perform this Restated Agreement. This Agreement has been duly executed and delivered by an authorized signatory of each Party and constitutes a legal, valid, and binding obligation of such Party, enforceable in accordance with its terms.
b.No Conflicts. The execution, delivery, and performance of this Restated Agreement by such Party does not conflict with such Party’s charter documents, bylaws, or other organizational documents, any material agreement, instrument or understanding, oral or written, to which it is a party or by which it is bound, nor violate Applicable Law or any order, writ, decree, judgment, injunction, determination, or award of any Governmental Authority having jurisdiction over it.
c.Compliance with Law. It will, and will ensure that its Affiliates, comply with all Applicable Laws and, to the extent applicable, professional certification or licensing requirements, with respect to the performance of its obligations under this Restated Agreement.
d.No Litigation. There is no action or proceeding pending or, to the knowledge of such Party, threatened that could reasonably be expected to impair or delay the ability of such Party to perform its obligations under this Restated Agreement.
e.No Debarment. Neither Party nor any of its Affiliates, or any of their employees, contractors or agents performing any activities under this Restated Agreement, has been debarred or is subject to debarment pursuant to the relevant sections of the U.S. Food Drug & Cosmetic Act, as amended, or any foreign equivalent or that is the subject of a conviction described in such statutes and regulations.
f.Authorization. Each Party’s representative signing below has the authority to bind its respective Party. Each Party hereto has the power and authority to execute and deliver the Agreement and to perform the obligations hereunder.
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g.Anti-Corruption. The Parties agree that, at all times in connection with and throughout the term of this Restated Agreement, they and their Affiliates will comply with and that they will take [***] to ensure that their subcontractors, agents or other third parties will comply with all applicable anti-corruption legislation including the United States Foreign Corrupt Practices Act 1977, as amended, and their foreign equivalents under Applicable Law.
h.Disclaimer. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS AGREEMENT, NEITHER PARTY MAKES ANY REPRESENTATION OR EXTENDS ANY WARRANTY OF ANY KIND, EITHER EXPRESS OR IMPLIED, TO THE OTHER PARTY WITH RESPECT TO ANY TECHNOLOGY OR OTHER SUBJECT MATTER OF THIS AGREEMENT AND HEREBY DISCLAIMS ALL IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, WITH RESPECT TO ANY AND ALL OF THE FOREGOING.
ARTICLE 11. INDEMNIFICATION; INSURANCE; LIABILITY
11.1By SIIPL. SIIPL will indemnify, defend, and hold harmless Novavax, its Affiliates, and their respective directors, officers, employees, and agents (collectively, the “Novavax Indemnitees”) from and against any and all losses, liabilities, damages, costs, fees, and expenses (including reasonable attorneys’ fees) (collectively, “Losses”) suffered by Novavax Indemnities in connection with any suits or claims brought by third parties (“Claims”) arising out of or resulting from [***], except to the extent the Losses arise out of or result from an obligation of Novavax to indemnify SIIPL Indemnitees pursuant to Section 11.2 (Indemnification By Novavax).
11.2By Novavax. Novavax will indemnify, defend, and hold harmless SIIPL, its Affiliates, and their respective directors, officers, employees, and agents (collectively “SIIPL Indemnitees”) from and against any and all Losses suffered by SIIPL Indemnitees in connection with Claims arising out of or resulting from [***], except to the extent the Losses arise out of or result from an obligation of SIIPL to indemnify the Novavax Indemnitees pursuant to Section 11.1 (Indemnification By SIIPL).
11.3Indemnification Procedures. Each indemnified Party will give the indemnifying Party [***] written notice of any claim for which indemnification is sought hereunder. The indemnifying Party will have the right to control the defense and settlement of a claim, at [***] expense, and the indemnifying Party will act reasonably and in good faith with respect to all matters relating to the settlement or disposition of the Claim. The indemnified Party will reasonably cooperate in the investigation, defense, and settlement of such claim at the indemnifying Party’s expense. Neither Party will enter into any settlement agreement that [***]. Any indemnified Party will have the right to participate in, but not control, the defense and settlement of a claim and to employ separate legal counsel of its own choice; provided, however, that such employment will be at [***] expense, unless (a) the employment thereof has been specifically authorized by the indemnifying Party, or (b) the indemnifying Party has failed to assume the defense and
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employ counsel (in which case the indemnified Party may control the defense and settlement of such claim). Notwithstanding the aforesaid, Parties agree that, [***].
11.4Insurance. Each Party will obtain and maintain, at its own cost and expense, the insurance policies in such amounts and with such scope of coverage as are adequate to cover such Party’s obligations under this Restated Agreement.
11.5Limitation of Liability. IN NO EVENT WILL EITHER PARTY BE LIABLE TO THE OTHER PARTY OR ANY THIRD PARTY FOR ANY [***]. NOTWITHSTANDING THE FOREGOING, NOTHING IN THIS SECTION 11.5 (LIMITATION OF LIABILITY) IS INTENDED TO OR WILL LIMIT OR RESTRICT [***].
ARTICLE 12. CONFIDENTIAL INFORMATION
12.1Definition. “Confidential Information” means any and all proprietary scientific, technical, clinical, financial, business, and other information and material disclosed by one Party in the performance of this Restated Agreement (the “Disclosing Party”) to the other Party (the “Receiving Party”), including ideas, concepts, technology, inventions, discoveries, improvements, intellectual property, know-how, trade secrets, operations, plans, pricings, personnel, customers, business opportunities, research, development, data, notes, reports, samples, formulations, analyses, protocols, techniques, manuals, statements, schedules, forecasts, studies, records, systems and programs, disclosed in writing or orally or visually, whether or not marked “confidential.” Confidential Information will also include the existence, terms, and conditions of this Restated Agreement, as well as all information and documents regarding the conclusion, implementation, and termination of this Restated Agreement, which information shall be deemed the Confidential Information of each Party. All reports provided by one Party to the other Party hereunder will be the Confidential Information of the reporting Party, who will be deemed the Disclosing Party with respect thereto.
12.2Reasonable Precautions. The Receiving Party agrees (a) to hold the Disclosing Party’s Confidential Information in confidence and to take all reasonable precautions to protect such Confidential Information (including all precautions the Receiving Party employs with respect to its confidential materials), (b) not to divulge any such Confidential Information to any third party, and (c) not to make any use whatsoever at any time of such Confidential Information, except, in the case of (b) or (c), solely as necessary to perform the obligations or exercise the rights of the Receiving Party. Any employee, consultant, professional advisor or agent of a Party or is Affiliates given access to any such Confidential Information must have a legitimate “need to know” and be subject to written obligations of non-disclosure and non-use no less stringent than those set forth in this Restated Agreement.
12.3Exceptions. The following will not be considered Confidential Information to the extent that the Receiving Party can establish with competent written proof that such information (a) is, at the time of disclosure to the Receiving Party, in the public domain, or through no fault of the Receiving Party enters the public domain, (b) was rightfully in the Receiving Party’s possession or known by it prior to receipt from the Disclosing Party, (c) was
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rightfully disclosed to it by another Person without restriction, or (d) was independently developed by it by persons without access to such information and without use of any Confidential Information of the Disclosing Party.
12.4Permitted Disclosure. In the event that a Receiving Party is required to disclose any of the Disclosing Party’s Confidential Information bylaw, regulation, rule, court order, or any governmental authority, the Receiving Party will use [***] to provide [***] notice thereof to the Disclosing Party and cooperate [***] with the Disclosing Party in seeking additional measures to guard the confidentiality thereof.
12.5Termination of the Agreement. Upon termination or expiration of the Agreement, the Receiving Party will turn over to the Disclosing Party, or destroy (at the Disclosing Party’s request), all Confidential Information of the Disclosing Party and all documents, media, or other items containing any such Confidential Information and any and all copies or extracts thereof at the cost of the Disclosing Party; provided, however, the Receiving Party may retain one archival copy of the Confidential Information at a secure location for archival purposes only and all provisions of confidentiality agreed herein this ARTICLE 12 shall continue to apply to such archival copy retained by the Receiving Party.
12.6Survival. This ARTICLE 12 (Confidential Information) will survive the termination or expiration of this Restated Agreement for a period [***].
ARTICLE 13. TERM AND TERMINATION
13.1Term. This Agreement will come into full force and effect on the Effective Date of the Restatement and will remain in full force and effect on a country-by-country basis until the fifteenth (15th) anniversary of the First Commercial Sale of the Product in the SIIPL Territory, unless earlier terminated pursuant to the terms of this Restated Agreement (the “Term”).
13.2Termination. This Agreement may be terminated by either Party:
a.For Material Breach. Immediately upon written notice to the other Party if the other Party materially breaches this Restated Agreement and such material breach is not discontinued or cured within [***] after the breaching Party’s receipt of an initial written notice by the non-breaching Party with reasonable detail as to the nature and scope of the applicable breach; or
b.For Bankruptcy. By giving [***] notice to the other Party if the other Party becomes insolvent or a bankruptcy action or any other insolvency proceeding is instituted against it and not dismissed within [***].
13.3Effects of Expiration and Termination by SIIPL for Cause.
a.Upon expiration of this Restated Agreement on a country-by-country basis in accordance with Section 13.1, Novavax hereby grants and agrees to grant to SIIPL a fully-paid, non-exclusive, royalty-free license under its Intellectual
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Property Rights in the Drug Substance / Adjuvant and/or Licensed Know-How (as they exist upon such expiration) to Manufacture and Commercialize the Product in any such country in the SIIPL Territory as constituted as of the date of the applicable expiration.
b.Upon early termination of this Restated Agreement by SIIPL for a (i) material breach by Novavax in accordance with Section 13.2.a. (For Material Breach), or (ii) Bankruptcy of Novavax in accordance with Section 13.2.b. (For Bankruptcy), Novavax hereby grants and agrees to grant to SIIPL a non-exclusive, royalty bearing (as described in the last sentence of this Section 13.3) license under its Intellectual Property Rights in the Adjuvant and/or Drug Substance and/or Licensed Know-How (as they exist upon such termination) to Manufacture and Commercialize the Product in the SIIPL Territory for the remainder of what would have been the Term on a country-by-country basis if this Restated Agreement were not terminated under Section 13.2 (Termination); provided that in the event of bankruptcy SIIPL shall reasonably insure that the then-existing economic arrangements will be paid to Novavax, or its successor in bankruptcy as the case may be, to the extent reasonably feasible for SIIPL to do so. In the event of such termination under Section 13.3 b.(i) or Section 13.3b.(ii), SIIPL shall pay a royalty in an amount equal to [***].
13.4Survival. In the event of any termination or expiration of this Restated Agreement, each of the provisions of ARTICLE 4 (Inspection, Quality and Audit of supplied Adjuvant), Section 6.2 (Covenant Not to Sue), ARTICLE 8 (Records and Reports of Books of Accounts, Section 9.1 (Ownership of Intellectual Property Rights), ARTICLE 11 (Indemnification; Insurance; Liability), ARTICLE 12 (Confidential Information), Section 13.3 (Effects of Termination by SIIPL for Cause)(in which case, Article 7 shall also survive), Section 13.4. (Survival), ARTICLE 14 (General Provisions), and Appendix A will survive termination or expiration of this Restated Agreement and continue to be enforceable. In no event will termination of this Restated Agreement release either Party from any accrued obligation, including SIIPL’s obligation to pay any amounts that became due on or before the effective date of termination.
ARTICLE 14. GENERAL PROVISIONS
14.1Further Actions. Each Party agrees to execute, acknowledge, and deliver such further instruments, and to do all such other acts, as necessary in order to carry out the purposes and intent of this Restated Agreement.
14.2Supply and Purchase of Drug Substance and / or Product by SIIPL.
14.2.1Supply of Drug Substance and / or Product to Novavax. Parties agree that in the event Novavax requires SIIPL to supply the Drug Substance and / or Product to Novavax Manufactured by SIIPL in such quantities as may be required by Novavax for its own use, then the same shall be done under terms and conditions (including, without limitation, [***]) mutually agreed to between the Parties in an agreement / document.
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14.2.2Purchase of Drug Substance and / or Product manufactured by Novavax’ designated assignee. In the event the Parties agree that Drug Substance and / or Product shall be supplied by Novavax or its third-party designee, then the Parties shall execute any and all necessary additional agreements or instruments to such supply at the relevant time.
14.3Force Majeure. No Party will be liable for failure to perform any obligation under this Restated Agreement(other than any obligations to make payments as and when due hereunder) where such failure is caused by earthquake, storms, flood, fire, other acts of nature, epidemics (excluding the Sars-Cov-2 Corona Virus pandemic and any quarantine period thereunder), war, rebellions, riots, public disturbance, acts of terrorism, acts or omissions of any government, any rules, regulations, or orders issued by any Governmental Authority or by any office, department, agency, or instrumentality thereof, ban on imports, strikes, or other labor disputes, provided [***]. If the state of force majeure continues for more than [***], then [***].
14.4Governing Law. This Agreement will be governed by and construed in accordance with [***], without giving effect to the principles of choice or conflict of laws provisions thereof, and the Parties expressly agree that the 1980 United Nations Convention on Contracts for the International Sale of Goods will not apply to or affect any term of this Restated Agreement.
14.5Negotiation; Escalation. The Parties will negotiate in good faith and use [***] to settle any dispute under this Restated Agreement, other than matters subject to resolution under Section 2.7 (Governance). Any dispute as to the breach, enforcement, interpretation, or validity of this Restated Agreement will be referred to the Executive Officers. If the Executive Officers are unable to resolve such dispute within [***] after such dispute is referred to them ([***]), then, upon the written request of either Party to the other Party, other than a dispute relating to the scope, validity, enforceability, or infringement of any Patent Rights or trademark rights ([***]), the dispute will be subject to remedial action by any such Party in compliance with Section 14.4 (Governing Law).
14.6Equitable Remedy. The Parties acknowledge and agree that there may be no adequate remedy at law for any breach of a Party’s obligations under ARTICLE 10 (Warranties) or ARTICLE 12 (Confidential Information) and, which breaches may result in irreparable harm to the other Party, and therefore, that upon any such breach or any threat thereof, the non-breaching Party will be entitled to seek appropriate equitable relief (without the posting of any bond) in addition to whatever remedies it might have at law.
14.7Rights in Bankruptcy. All rights and licenses granted under or pursuant to this Restated Agreement by a Party to the other Party are and shall otherwise be deemed to be, for purposes of Section 365(n) of the U.S. Bankruptcy Code or any foreign counterpart thereto, licenses of right to “intellectual property” as defined under Section 101 of the U.S. Bankruptcy Code or any foreign counterpart thereto. Subject to Section 13.3, (Effects of Expiration or Termination by SIIPL for Cause), the Parties agree that the Parties shall retain and may fully exercise all of their rights and elections under the U.S. Bankruptcy Code and any foreign counterpart thereto. All payments to be made by SIIPL under this Restated Agreement, including the royalty payments pursuant to ARTICLE 7
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(SIIPL Royalties), shall be considered “royalties” for purposes of Section 365(n) of the U.S. Bankruptcy Code.
14.8Notices. All notices that are required or permitted hereunder will be in writing and sufficient if delivered by internationally-recognized overnight courier (return receipt requested) addressed as follows (with a courtesy copy sent by email, which will not constitute notice):
If to Novavax:
Novavax, Inc.
21 Firstfield Road
Gaithersburg, MD 20878
Attn: [***]
If to SIIPL:
Serum Institute of India Pvt. Ltd.
212/2 off Soli Poonawalla Road
Hadapsar, Pune 411028
India
Attention: [***]
with a copy to:
[***]
Serum Institute of India Private Limited
212/2, Off Soli Poonawalla Road,
Hadapsar Pune 411028
or to such other address as the Party to whom notice is to be given may have furnished to the other Party in writing in accordance herewith. Any such notice will be deemed to have been given when received on the date indicated in the applicable return receipt.
14.9Publicity. Except as expressly permitted herein, neither Party may issue any press release or make any other public announcement concerning the execution or existence of this Restated Agreement or any of the terms hereof (i) without the [***] consent of the other Party, [***] or (ii) unless required by Applicable Law, provided that such Party shall give the other Party a prior [***] intimation of the same.
14.10Severability. If any provision of this Restated Agreement is determined to be invalid, illegal, or unenforceable, then such provision will be deemed to be severable from the remainder of this Restated Agreement and will not cause the invalidity or unenforceability of the remainder of this Restated Agreement. The Parties will substitute, by written agreement, valid provisions for such invalid, illegal, or unenforceable provisions, which valid provisions in their economic effect are sufficiently similar to the invalid, illegal, or unenforceable provisions that it can be [***] assumed that the Parties would have entered into this Restated Agreement with such valid provisions.
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14.11Waiver. No failure on the part of either Party to exercise, and no delay in exercising, any right, power, remedy, or privilege under this Restated Agreement or provided by statute or law or in equity or otherwise, will impair, prejudice, or constitute a waiver of any such right, power, remedy, or privilege or be considered as a waiver of any breach of this Restated Agreement or as an acquiescence therein, nor will any single or partial exercise thereof or the exercise thereof or the exercise of any other right, power, remedy or privilege.
14.12Assignment. Each Party’s rights and obligations under this Restated Agreement may not be directly or indirectly assigned, delegated or transferred, in whole or in part, to a third party by assignment or other means without the [***] consent of the other Party, [***], however, SIIPL may transfer any and all of its rights and/or obligations hereunder to any of its Affiliates [***].
14.13Change of Control. This Agreement will be binding on and inure to the benefit of the Parties, their, executors, administrators, successors, and permitted assigns. In the event of any merger, acquisition or any such Change of Control with respect to Novavax occurs, then such acquiring party of Novavax shall be bound by the terms and conditions of this Restated Agreement and in the event such acquiring party does not materially agree or is materially restricted under Applicable Laws to be bound by the terms of this Restated Agreement, [***]. [***]. [***].
14.14Data Protection. The Parties do not envisage that any material personal data will be exchanged between the Parties in the performance of this Restated Agreement and hence no data protection act(s) / law(s) will be applicable to either Party.
14.15Interpretation. Except where the context expressly requires otherwise, (a) the use of any gender herein will be deemed to encompass references to either or both genders, and the use of the singular will be deemed to include the plural (and vice versa), (b) the words “include,” “includes,” and “including” will be deemed to be followed by the phrase “without limitation,” (c) the word “will” will be construed to have the same meaning and effect as the word “shall,” (d) any definition of or reference to any agreement, instrument, or other document herein will be construed as referring to such agreement, instrument, or other document as from time to time amended, supplemented, or otherwise modified(subject to any restrictions on such amendments, supplements or modifications set forth herein), (e) any reference herein to any person will be construed to include the person’s successors and assigns, (f) the words “herein,” “hereof,” and “hereunder” and words of similar import, will each be construed to refer to this Restated Agreement in its entirety and not to any particular provision hereof, (g) all references herein to Articles, Sections, Schedules, or Exhibits will be construed to refer to Articles, Sections, Schedules, or Exhibits of this Restated Agreement, and references to this Restated Agreement include all Schedules hereto, (h) the word “notice” means notice in writing (whether or not specifically stated) and will include notices, consents, approvals and other written communications contemplated under this Restated Agreement, (i) provisions that require that a Party, the Parties or any committee hereunder “agree,” “consent, “approve,” or the like will require that such agreement, consent, or approval be specific and in writing, whether by written agreement, letter, approved minutes, or
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otherwise (but excluding e-mail and instant messaging), (j) references to any specific law, rule or regulation, or Section or other division thereof, will be deemed to include the then-current amendments thereto or any replacement or successor law, rule or regulation thereof, (k) the term “or” will be interpreted in the inclusive sense commonly associated with the term “and/or,” and (l) in the event of any conflict between the terms and conditions of this Restated Agreement and any terms and conditions that may be set forth on any order, invoice, verbal agreement, in the Quality Agreements, in the Pharmacovigilance Agreements, or otherwise, the terms and conditions of this Restated Agreement will govern, provided that the terms of the Quality Agreements or Pharmacovigilance Agreements (as applicable) will control with respect to any such conflict with the terms of this Restated Agreement relating to quality or safety matters for the Adjuvant or Drug Substance or Product.
14.16Performance by Affiliates. Only in the event either Party assigns any of its rights and obligations under this Restated Agreement to any of its Affiliates, then in such event, each Party hereby guarantees the performance by such Affiliates of such Party’s obligations under this Restated Agreement and will cause such assignee Affiliate to comply with the provisions of this Restated Agreement in connection with such performance.
14.17Independent Contractors. Nothing in this Restated Agreement is intended or will be deemed to constitute a partnership, agency, employer-employee, or a joint venture relationship between the Parties. The respective activities of the Parties hereunder will be provided as independent contractors. Neither Party will incur any debts or make any commitments for the other, except to the extent, if at all, specifically provided herein.
14.18No Third Party Beneficiaries. No Person other than each Party and any of its and permitted assignees and assignee Affiliates hereunder will be deemed an intended beneficiary hereunder or have any right to enforce any obligation of this Restated Agreement.
14.19Entire Agreement. This Agreement together with the Pharmacovigilance Agreements and the Quality Agreements sets forth all intentions, understandings, covenants, promises, warranties, representations, conditions, rights, and obligations of the Parties and supersedes all previous and contemporaneous agreements, understandings, negotiations and proposals relating to the subject matter hereof. No subsequent modifications or amendments to this Restated Agreement will be binding upon the Parties unless reduced in writing and signed by the respective authorized officers of the Parties.
14.20Execution in Counterparts. This Agreement may be executed in counterparts, each of which counterparts, when so executed and delivered, will be deemed an original, and all of which counterparts, taken together, will constitute one and the same instrument.
[Signature Page Follows]
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IN WITNESS WHEREOF, the Parties hereto have caused their authorized representatives to execute this Restated Agreement on the date first above written.
SERUM INSTITUTE OF INDIA PRIVATE LIMITED NOVAVAX, INC.

By:    /s/ [***]                

By:    /s/ John A. Herrmann III
Name: [***]
Title: [***]
Date: 1st / July / 21
Name: John A. Herrmann III
Title: EVP, CLO
Date: 1 July 2021

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Appendix A
Definitions
A-l     “Accepted Forecast” shall have the meaning ascribed in Section 3.1 (Forecast).
A-2     “Adjuvant” shall have the meaning ascribed to it in the Recitals.
A-3     “Adjuvant Payment” shall have the meaning ascribed to it in Section 7.2 (Adjuvant Payment).
A-4     “Adjuvant Price” means [***].
A-5     “Adjuvant Specifications” shall have the meaning ascribed to it in the Section 2.1.a (Supply of Adjuvant to SIIPL) as further described in the Quality Agreement.
A-6     “Affiliate” means:
(ii)    with respect to Novavax, any Person that controls, is controlled by, or is under common control with another Person, and
(iii)    with respect to SIIPL, mean any [***].
For purposes of the preceding definition, “control” (including, with correlative meanings, the terms “controlled by” and “under common control with “) shall mean the possession, directly or indirectly, of more than 50% of the outstanding voting securities of or comparable equity interest in any other type of a Person, or otherwise having the legal power to direct the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise.
A-7     “Agreement” has the meaning set forth in the preamble.
A-8     “[***] Recalculation Certificate” shall have the meaning ascribed in Section 8.3.b. (Royalty Certifications).
A-9     “Applicable Law” means collectively all laws, rules, regulations, ordinances, decrees, judicial and administrative orders (and any license, franchise, permit, or similar right granted under any of the foregoing), and any policies and other requirements of any applicable Governmental Authority that govern or otherwise apply to a Party.
A-10     “Background IP” shall have the meaning ascribed to it in Section 9.1.e (Ownership of Intellectual Property Rights).
A-11     “BLA” or “Biologics License Application” means a Biologics License Application submitted under section 351(a) of the United States Public Health Service Act, 42 U.S.C. §§ 201 et seq., as amended from time to time, or substantially similar application or submission filed with a regulatory authority in a country or group of countries to obtain Regulatory Approval to Commercialize a Product in that country or in that group of countries, including all supplements and amendments thereto.
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A-12     “Calendar Quarter” means each successive period of three months commencing on January 1, April 1, July 1, and October 1.
A-13     “Calendar Year” means each successive period of 12 months commencing on January 1 and ending on December 31.
A-14     “cGMPs” means current Good Manufacturing Practices regulations and standards enforced by the U.S. Food and Drug Administration, European Medicines Agency, or other applicable regulatory bod(ies) in other jurisdictions.
A-15     “Change of Control” means, with respect to a Party, that: (a) any third party acquires directly or indirectly the beneficial ownership of any voting security of such Party, or if the percentage ownership of such third party in the voting securities of such Party is increased through stock redemption, cancellation, or other recapitalization, and immediately after such acquisition or increase such third party is, directly or indirectly, the beneficial owner of voting securities representing more than 50% of the total voting power of all of the then outstanding voting securities of such Party; (b) any merger, consolidation, recapitalization, or reorganization of such Party is consummated that would result in shareholders or equity holders of such Party immediately prior to such transaction owning 50%or less of the outstanding voting securities of the surviving entity (or its parent entity) immediately following such transaction; (c) the shareholders or equity holders of such Party approve any plan of complete liquidation of such Party, or an agreement for the sale or disposition by such Party of all or substantially all of such Party’s assets, in each case, through one or more related transactions, other than to an Affiliate or pursuant to one or more related transactions that would result in shareholders or equity holders of such Party immediately prior to such transaction owning more than 50% of the outstanding voting securities of the surviving entity (or its parent entity) immediately following such transaction; or(d) the sale or transfer to any third party, in one or more related transactions, of all or substantially all of such Party’s consolidated assets taken as a whole.
A-16     “Claims” shall have the meaning ascribed to it in Section 11.1 (Indemnification by SIIPL).
A-17     “Commercialize”, “Commercializing” or “Commercialization” means any and all activities directed to the marketing, promotion, distribution, pricing, reimbursement, offering for sale, and sale of a pharmaceutical, biologic, or vaccine product and interacting with Governmental Authority in the applicable country or region for such pharmaceutical, biologic, or vaccine product regarding the foregoing, but excluding activities directed to Manufacturing, Medical Affairs, or Development. “Commercialize,” “Commercializing”, “Commercialized” will be construed accordingly.
A-18     “Commercialization Plan” means a written plan for the Commercialization of Product in the SIIPL Territory (as such plan may be amended from time to time) setting forth the Commercialization activities to be performed by SIIPL in accordance with the terms and conditions of this Restated Agreement. The Commercialization Plan must include in reasonable detail the: (a) [***]; and (b) [***]. At least [***] prior to the anticipated First
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Commercial Sale of a Product, SIIPL will prepare an initial SIIPL Commercialization Plan and submit each such initial SIIPL Commercialization Plan to the JSC to review, discuss, and determine whether to approve.
A-19     “Commercialization Report” means a written executive summary outlining SIIPL’s Commercialization activities by Calendar Quarter with respect to each Product in the SIIPL Territory, [***], which report shall be provided at least [***] in advance of each JSC meeting.
A-20     “Commercially Reasonable Efforts” means, with respect to the Exploitation of a Product by a Party, those efforts and resources, including allocation of [***] personnel, equivalent to [***]. Commercially Reasonable Efforts requires, with respect to an obligation, that the Party: (a) [***], (b) [***], and (c) [***].
A-21     “Confidential Information” shall have the meaning ascribed to it in Section 12.1.
A-22     “Control” or “Controlled” the possession by a Party (whether by ownership, license, or otherwise other than pursuant to this Restated Agreement) of, (a) with respect to any tangible Know-How, the legal authority or right to physical possession of such tangible Know-How, with the right to provide such tangible Know-How to the other Party on the terms set forth herein, (b) with respect to Patent Rights, Regulatory Approvals, regulatory submissions, intangible Know-How, or other intellectual property rights, the legal authority or right to grant a license, sublicense, access, or right to use (as applicable) to the other Party under such Patent Rights, Regulatory Approvals, regulatory submissions, intangible Know-How, or other intellectual property rights on the terms set forth herein, in each case((a) and (b)), without (i) breaching or otherwise violating the terms of any arrangement or agreement with a third party in existence as of the time such Party or its Affiliates would first be required hereunder to grant the other Party such access, right to use, licenses, or sublicense, or (ii) incurring any additional payment obligations to a third party as a result of such access, right to use, license, or sublicense, and(c) with respect to any product or materials, the legal authority or right to grant a license or sublicense under Patent Rights that cover such product or materials or Know-How that relates to such product or materials on the terms set forth herein.
A-23     “Covenant Beneficiary” means Novavax or any of Novavax’ Affiliates, or any of its or their direct or indirect licensees, sublicensees, importers, exporters, suppliers, manufacturers, distributors, contractors, agents, or customers.
A-24     “Delivery Date” shall have the meaning ascribed in Section 3.1 (Forecast).
A-25     “Develop”, “Developing” or “Development” means all internal and external research, development, and regulatory activities related to pharmaceutical, biologic, or vaccine products, including (a) research, non-clinical testing, toxicology, testing and studies, non-clinical and preclinical activities, and clinical trials, and (b) preparation, submission, review, and development of data or information for the purpose of submission to a regulatory authority to obtain authorization to conduct clinical trials and to obtain, support, or maintain Regulatory Approval of a pharmaceutical, biologic, or vaccine product, but excluding activities directed to Manufacturing, Medical Affairs, or
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Commercialization. Development will include development and regulatory activities for additional forms, formulations, or indications for a pharmaceutical, biologic, or vaccine product after receipt of Regulatory Approval of such product (including label expansion), including clinical trials initiated following receipt of Regulatory Approval or any clinical trial to be conducted after receipt of Regulatory Approval that was mandated by the applicable regulatory authority as a condition of such Regulatory Approval with respect to an approved formulation or indication (such as post-marketing studies, observational studies, pediatric studies, implementation and management of registries and analysis thereof, in each case, if required by any regulatory authority in any region worldwide to support or maintain Regulatory Approval for a pharmaceutical, biologic, or vaccine product in such region).”Develop,” “Developing,” and “Developed” will be construed accordingly.
A-26     “Development Plan” has the meaning set forth in Section 2.4.c. (Development of the Product).
A-27     “Development Report” means a [***] written executive summary report outlining by Calendar Quarter the progress of the Development activities taken by SIIPL with respect to the Product in the SIIPL Territory, which report shall be provided to the JSC as least [***] in advance of each JSC meeting. For clarity, such reports will contain [***] to allow the Parties to evaluate the progress of the Development activities in each such meeting, including against the objectives and timelines included therefor in the Development Plan. In addition, SIIPL will include in such report such other data and information generated in the performance of activities under the Development Plan or as may be [***] requested by Novavax related to the Development of the Product.
A-28     “Disclosing Party” shall have the meaning ascribed to it in Section 12.1 (Confidential Information ‒ Definition).
A-29     “DP Cost” means [***].
A-30     “DP Services” shall have the meaning ascribed to it in Section 5.1.
A-31     “Drug Substance” shall have meaning ascribed to it in the Recitals.
A-32     “DS Price” means [***].
A-33     “Effective Date of Restatement” has the meaning set forth in the preamble.
A-34     “Executive Officers” shall have the meaning ascribed to it in Section 2.7.c.2 (Decisions of JSC).
A-35     “Exploit” means to make, have made, use, offer to sell, sell, Develop, Manufacture, perform Medical Affairs, Commercialize, or otherwise exploit. When used as a noun, Exploitation means any and all activities involved in Exploiting.
A-36     “Field” means human prophylactic uses of a vaccine for SARS-CoV-2 disease.
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A-37     “Firm Order” shall have the meaning ascribed in Section 3.1 (Forecast).
A-38     “First Commercial Sale” means, with respect to a Product in any country or region, the first sale of the Product to a third party for distribution, use, or consumption in such country or region after receipt of Regulatory Approval for such Product in such country or region.
A-39     “Forecast” shall have the meaning ascribed in Section 3.1 (Forecast).
A-40     “Fully-Loaded Cost” means [***].
A-41     “Governmental Authority” means any legislative, executive, or judicial unit of any governmental authority or instrumentality (international, national, federal, state, provincial, or municipal, in any country or other jurisdiction), or any tribunal, department, agency, board, bureau, commission, official, or other regulatory, administrative, or judicial authority thereof, including any administrative or regulatory agency or commission, and any court, in each instance having legal jurisdiction over the subject matter before it.
A-42     “Infringement” shall have the meaning ascribed to it in Section 9.3 (Infringement).
A-43     “Infringer” shall have the meaning ascribed to it in Section 9.4 (Infringer).
A-44     “Intellectual Property Rights” shall mean and refer to Patent Rights as well as rights in all other intellectual property including trademarks, trade names, service marks, domain names, copyrights, trade secrets, rights in and to databases (including rights to prevent the extraction or reutilisation of information from a database), design rights, topography rights and all rights or forms of protection of a similar nature whether registered or applications for registration thereof.
A-45     “JSC” shall have the meaning ascribed to it in Section 2.7.a.1 (JSC Establishment).
A-46     “JSC Chairperson” shall have the meaning ascribed to it in Section 2.7a.1 (JSC Establishment).
A-47     “Know-How” means any proprietary information and materials, including records, discoveries, improvements, modifications, processes, techniques, methods, assays, chemical or biological materials, designs, protocols, formulas, data (including physical data, chemical data, toxicology data, animal data, raw data, clinical data, and analytical and quality control data), dosage regimens, control assays, product specifications, marketing, pricing and distribution costs, inventions, algorithms, technology, forecasts, profiles, strategies, plans, results in any form whatsoever, know-how, and trade secrets (in each case, patentable, copyrightable, or otherwise).
A-48     “Licensed Know-How” means all Know-How that is Controlled by Novavax or its Affiliates as of the Effective Date of the Restated Agreement in relation to the (a) Adjuvant and (b) Manufacture of the Drug Substance, including any biological materials
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to be mutually agreed by the Parties, which is necessary for the Development, Manufacture or Commercialization of Product
A-49     “Licensed Patents” means the Patent Rights of Novavax in relation to the (a) Adjuvant and (b) Drug Substance (including any variants of the Drug Substance), which are licensed to SIIPL under this Restated Agreement, and which are annexed herein as Appendix B.
A-50     “Losses” has the meaning set forth in Section 11.1 (Indemnification By SIIPL).
A-51     “Manufacture” or “Manufacturing” means activities which include, without limitation, the formulation, processing, packaging, labeling, filling, finishing, assembly, shipping, storage, or freight of any pharmaceutical, biologic, or vaccine product (or any components or process steps involving any product or any companion diagnostic), placebo, or comparator agent, as the case may be, including quality assurance and stability testing, characterization testing, quality control release testing of drug substance and drug product, quality assurance batch record review and release of product, process development, qualification, and validation, scale-up, preclinical, clinical, and commercial manufacture and analytic development, and product characterization, but excluding activities directed to Development, Medical Affairs, or Commercialization. “Manufacturing” and “Manufactured” will be construed accordingly.
A-52     “Medical Affairs” means any and all activities conducted by or on behalf of a Party’s or any of its Affiliates’ medical affairs departments, including communications with key opinion leaders, medical education, symposia, advisory boards (to the extent related to medical affairs or clinical guidance), activities performed in connection with patient registries, and other medical programs and communications, including educational grants, research grants (including conducting investigator initiated studies), and charitable donations to the extent related to medical affairs and not to activities that involve the promotion, marketing, sale, or other Commercialization of the Product and are not conducted by or on behalf of a Party’s or any of its Affiliates’ medical affairs departments. Medical Affairs excludes any activities directed to Manufacturing, Development, or Commercialization.
A-53     “Net Sales” means the gross receipts representing sales of the Product to third parties (whether an end-user, a distributor or otherwise) by SIIPL or its Affiliates less applicable deductions for the following invoiced or itemized items to the extent actually allowed and taken by such third parties and not otherwise recovered by or reimbursed to SIIPL or its Affiliate in connection with such Product:
[***]

If SIIPL or its Affiliate receives non-cash consideration for a Product sold to a third party during the Term, then [***].
No deduction will be made for any cost incurred by SIIPL in [***]. If a single item falls into more than one of the categories set forth in clauses (i)-(vi) above, then such item may not be deducted more than once.
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Transfers or sales between SIIPL and its Affiliates will be disregarded for purposes of calculating Net Sales, except if such purchaser is an end user.
A-54     “Non-Binding Period” shall have the meaning ascribed in Section 3.1 (Forecast).
A-55     “Novavax Exclusive Territory” shall the countries of [***].
A-56     “Novavax Improvements” shall mean and include all Know-How related to the Adjuvant invented or developed solely by either Party or jointly by both Parties during the Term in the performance of this Restated Agreement.
A-57     “Novavax Indemnitees” shall have the meaning ascribed to it in Section 11.1 (Indemnification by SIIPL).
A-58     “Novavax Proprietary Rights” shall mean all proprietary rights, including any and all Intellectual Property Rights, in the Licensed Patents and Novavax Improvements.
A-59     “Pandemic Period” shall mean worldwide situation / period which the World Health Organization declares as Public Health Emergency of International Concern in relation to the SARS-CoV-2 virus.
A-60     “Payee Party” shall have the meaning ascribed to it in Section 7.3 (Taxes).
A-61     “Paying Party” shall have the meaning ascribed to it in Section 7.3 (Taxes).
A-62     “Payment” shall have the meaning ascribed to it in Section 7.3 (Taxes).
A-63     “Patent Rights” means all rights, title and interests in and to (a) all national, regional, and international patents and patent applications filed in any country of the world including provisional patent applications and all supplementary protection certificates, (b) all patent applications filed either from such patents, patent applications, or provisional applications or from an application claiming priority from any of these, including any continuation, continuation-in part, divisional, provisional, converted provisional, or continued prosecution application, or any substitute applications, (c) any patent issued with respect to or in the future issued from any such patent applications, including utility models, petty patents and design patents and certificates of invention, and (d) any and all extensions or restorations by existing or future extension or restoration mechanisms, including revalidations, reissues, reexaminations, and extensions (including any supplementary protection certificates and the like) of the foregoing patents or patent applications. For sake of clarity, in relation to Novavax, Patent Rights in the Adjuvant shall include the Licensed Patents, list of which is annexed to this Restated Agreement in Appendix B.
A-64     “Permitted Recipients” shall have the meaning ascribed to in Section 2.5 (Restrictions on Use).
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A-65     “Person” means any individual, corporation, partnership, limited liability company, firm, association, joint venture, joint stock company, trust, unincorporated organization, or other entity, or any Governmental Authority.
A-66     “Pharmacovigilance Agreement” has the meaning set forth in Section 2.1.b. (Pharmacovigilance Agreement).
A-67     “Product” has the meaning set forth in the Recitals.
A-68     “Purchase Order” shall have the meaning ascribed in Section 3.1 (Forecast).
A-69     “Quality Agreement” means an agreement containing customary and commercially reasonable terms that will provide, among other things, quality standards for the Adjuvant or Product, as applicable, the requirements for product release, the respective roles and responsibilities of each Party in these processes, the standards and procedures for the handling of any deviations from the usual quality standards or product release requirements, and/or any complaints, the processes and allocation of responsibilities for reporting of these matters, and related topics.
A-70     [***].
A-71     “Receiving Party” shall have the meaning ascribed to it in Section 12.1 (Confidential Information ‒ Definition).
A-72     “Regulatory Approval” means any and all approvals (including supplements, amendments, pre-and post-approvals, and all pricing and reimbursement approvals), licenses, registrations or authorizations, including marketing approvals and authorizations, required by relevant Governmental Authorities for the Development, Manufacture, or Commercialization of the Adjuvant or Product, as applicable.
A-73     “Regulatory Report” means a brief description in English of [***] provided to the JSC [***] of receipt thereof.
A-74     “Revenue” means the Net Sales of Product, less (a) DS Price, (b) Adjuvant Price and (c) DP Cost, (a), (b) and (c) collectively referred to as “Agreed Cost Price”.
A-75     “Safety Stock” shall the meaning ascribed to it in 2.2 (Safety Stock).
A-76     “SIIPL Exclusive License” shall have the meaning ascribed to it in Section 6.1.a. (Exclusive License).
A-77     “SIIPL Exclusive Territory” shall mean India.
A-78     “SIIPL Improvements” shall mean and include all Know-How, invented or developed during the Term (a) by SIIPL during the formulation, Manufacture, Development and further Commercialization of the Product or (b) solely by SIIPL during the Manufacture of the Drug Substance; provided in no case shall SIIPL Improvements include Novavax Improvements.
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A-79     “SIIPL Indemnitees” shall have the meaning ascribed to it in Section 11.2 (Indemnification by Novavax).
A-80     “SIIPL Proprietary Rights” shall mean all proprietary rights, including any and all Intellectual Property Rights, in the SIIPL Improvements.
A-81     “SIIPL Royalty Payment” shall have the meaning ascribed to it in Section 7.1 (SIPL Royalty Payment).
A-82     “SIIPL Non-Exclusive Territory” shall mean a) during the Pandemic Period all the other countries EXCEPT SIIPL Exclusive Territory and Novavax Exclusive Territory and b) immediately following the Pandemic Period only those countries designated as low or middle income countries (including any sub-designations of low or middle income countries (e.g., a “high middle income country”) according to the then most recent published Word Bank classification of countries as of the first day of the end of the Pandemic Period (“LMIC”), subject to and may be modified in accordance with Section 6.1.b. (Non-Exclusive License).
[***]
A-83     “SIIPL Territory” shall mean SIIPL Exclusive Territory and SIIPL Non-Exclusive Territory together.
A-84     “Term” has the meaning set forth in Section 13.1 (Term).
A-85     “Technology Transfer” has the meaning set forth in ARTICLE 5 (Technology Transfer).
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Appendix B
Licensed Patents
[Beginning on the following page]
[Pursuant to Regulation S-K, Item 601(a)(5), this Appendix setting forth the licensed patents has not been filed. The Registrant agrees to furnish supplementally a copy of any omitted appendixes to the Securities and Exchange Commission upon request; provided, however, that the Registrant may request confidential treatment of omitted items.]

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[***]
    -37-
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Appendix C
Authorized Vendors for Supply of Raw Materials from Novavax
[Pursuant to Regulation S-K, Item 601(a)(5), this Appendix setting forth the authorized vendors for the supply of raw materials from Novavax has not been filed. The Registrant agrees to furnish supplementally a copy of any omitted appendixes to the Securities and Exchange Commission upon request; provided, however, that the Registrant may request confidential treatment of omitted items.]

[***]
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Appendix D
Draft Authorization Letter
[Pursuant to Regulation S-K, Item 601(a)(5), this Appendix setting forth the draft authorization letter has not been filed. The Registrant agrees to furnish supplementally a copy of any omitted appendixes to the Securities and Exchange Commission upon request; provided, however, that the Registrant may request confidential treatment of omitted items.]

[***]
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Exhibit 10.5
CERTAIN INFORMATION IDENTIFIED WITH [***] HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) IS OF THE TYPE THAT THE REGISTRANT TREATS AS PRIVATE OR CONFIDENTIAL.
IMAGE_01.JPG
July 16, 2021
Novavax, Inc.
21 Firstfield Road
Gaithersburg, MD 20878
Attention:    [***], Senior Vice President, Commercial Strategy
Subject:    Modification No. 09 to Project Agreement No. 01; MCDC2011-001
Reference:    MCDC Base Agreement No. 2020-530
Dear [***]:
In accordance with the terms and conditions of the referenced MCDC Base Agreement, Modification No. 09 hereby amends Project Agreement No. 01 as follows:
DESCRIPTION OF MODIFICATION
1)    The Technical and Administrative Representatives clause of the Project Agreement is hereby amended to read as indicated in bold below:
9. TECHNICAL AND ADMINISTRATIVE REPRESENTATIVES
The following technical and contractual representatives of the Parties are hereby designated for this Undefinitized Project Agreement. Either party may change their designated representatives by written notification to the other.
MCDC CMF Contractual Representative:
MCDC Contracts
Advanced Technology International
315 Sigma Drive
Summerville, SC 29486
Email: [***]
Phone: [***]
Government Technical Representatives:
Agreements Officer Representative (AOR):
[***]
Email: [***]
Phone: [***]
Project Agreement Holder’s Representatives:
Technical Representative:
[***]
21 Firstfield Road
Gaithersburg, MD 20878
Email: [***]
Phone: [***]
Contractual Representative:
[***]
21 Firstfield Road
Gaithersburg, MD 20878
Email: [***]
Phone: [***]

110228705_4


Except as provided herein, all Terms and Conditions of the referenced MCDC Base Agreement, Project Agreement and preceding modifications remain unchanged and in full force and effect.
This modification is issued unilaterally. The Project Agreement Holder is not required to sign to finalize this action.
Advanced Technology International

By: /s/[***]
Name: [***]
Title: Subcontracts Administrator
Date: 7/16/2021

110228705_4
Exhibit 10.6
CERTAIN INFORMATION IDENTIFIED WITH [***] HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) IS OF THE TYPE THAT THE REGISTRANT TREATS AS PRIVATE OR CONFIDENTIAL.
IMAGE_02.JPG
August 6, 2021
Novavax, Inc.
21 Firstfield Road
Gaithersburg, MD 20878
Attention:    [***], Senior Vice President, Commercial Strategy
Subject:    Modification No. 10 to Project Agreement No. 01; MCDC2011-001
Reference:    MCDC Base Agreement No. 2020-530
Dear [***]:
In accordance with the terms and conditions of the referenced MCDC Base Agreement, Modification No. 10 hereby amends Project Agreement No. 01 as follows:
DESCRIPTION OF MODIFICATION
1)    The Technical and Administrative Representatives clause of the Project Agreement is hereby amended to read as indicated in bold below:
10. TECHNICAL AND ADMINISTRATIVE REPRESENTATIVES
The following technical and contractual representatives of the Parties are hereby designated for this Project Agreement. Either party may change their designated representatives by written notification to the other.
MCDC CMF Contractual Representative:
MCDC Contracts
Advanced Technology International
315 Sigma Drive
Summerville, SC 29486
Email: [***]
Phone: [***]
Government Technical Representatives:
Agreements Officer Representative (AOR):
[***]
Email: [***]
Phone: [***]
Alternate AOR:
[***]
Email: [***]
Phone: [***]
Project Agreement Holder’s Representatives:
Technical Representative:
[***]
21 Firstfield Road
Gaithersburg, MD 20878
Email: [***]
Phone: [***]
Contractual Representative:
[***]
21 Firstfield Road
Gaithersburg, MD 20878
Email: [***]
Phone: [***]
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Except as provided herein, all Terms and Conditions of the referenced MCDC Base Agreement, Project Agreement and preceding modifications remain unchanged and in full force and effect.
This modification is issued unilaterally. The Project Agreement Holder is not required to sign to finalize this action.
Advanced Technology International

By: /s/[***]
Name: [***]
Title: Subcontracts Administrator
Date: 8/6/2021

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Exhibit 10.7
CERTAIN INFORMATION IDENTIFIED WITH [***] HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) IS OF THE TYPE THAT THE REGISTRANT TREATS AS PRIVATE OR CONFIDENTIAL.
IMAGE_0.JPG
August 26, 2021
Novavax, Inc.
21 Firstfield Road
Gaithersburg, MD 20878
Attention:    [***], Senior Vice President, Commercial Strategy
Subject:    Modification No. 11 to Project Agreement No. 01; MCDC2011-001
Reference:    MCDC Base Agreement No. 2020-530
Dear [***]:
In accordance with the terms and conditions of the referenced MCDC Base Agreement, Modification No. 11 hereby amends Project Agreement No. 01 as follows:
DESCRIPTION OF MODIFICATION
1)    The Estimated Cost and Fixed Fee clause of the Project Agreement is hereby amended to read as indicated in bold below:
4. ESTIMATED COST AND FIXED FEE
The total estimated cost and fixed fee for the services to be provided by the Project Agreement Holder is as follows:
ESTIMATE COST
Estimated Cost    $1,667,287,946 (increase of $49,057,086)
Fixed Fee    $133,383,035 (increase of $3,924,567)
Total Cost    $1,800,670,981 (increase of $52,981.653)
2)    Attachment A, Statement of Work, of the Project Agreement is hereby amended as attached herein.
Except as provided herein, all Terms and Conditions of the referenced MCDC Base Agreement, Project Agreement, and preceding modifications remain unchanged and in full force and effect.
The Project Agreement Holder is required to sign this document and return to Advanced Technology International to finalize this action.
Novavax, Inc.    Advanced Technology International
By: /s/ John A Herrmann III By: /s/ [***]
Name: John A Herrmann III Name: [***]
Title: EVP, CLO Title: Director of Contracts and Procurement
Date:
03-Sep-21 14:41 EDT
Date: Sep 7 2021
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Attachment A
Statement of Work
(Incorporated as of Modification No. 11)
This page is intentionally blank. See separate Attachment A.
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Attachment A
Statement of Work
(Incorporated as of Modification No. 11; Changes to Sections 1, 3, 4, 5, 7, and 10 are indicated in bold italics.)

For
Rapid (WF10) Advanced Research & Development to Large Scale Manufacturing of NVX-CoV-2373 as a Vaccine for SARS-CoV-2 Coronavirus

RPP #: 20-11
Project Identifier: MCDC2011-001
Consortium Member: Novavax, Inc.
Title of Proposal: Rapid (WF10) Advanced Research & Development to Large Scale Manufacturing of NVX-CoV-2373 as a Vaccine for SARS-CoV-2 Coronavirus
Requiring Activity: Joint Mission between the Department of Health and Human Services and Department of Defense to Combat COVID-19

1.0    INTRODUCTION, SCOPE, AND OBJECTIVES

1.1    Introduction

To meet the needs of the Coronavirus Disease 2019 (COVID-19) pandemic, the United States Government (USG) is identifying and will support development and at-scale manufacturing of selected vaccine candidates, to ensure timely availability to the US population when needed. This is the primary focus of the mission being executed by the Department of Health and Human Services (HHS) and Department of Defense (DoD), in support of Operation Warp Speed (OWS).

The USG is interested in pursuing prototype vaccines that are in an advanced stage of development, and will support companies that can, in parallel with nonclinical, clinical and regulatory development, rapidly establish the manufacturing capacity required to meet the USG’s objective of supplying a safe and effective Severe Acute Respiratory Syndrome Coronavirus 2 (SARS-CoV-2) vaccine to the entire US population. The USG is tasked with marshaling the efforts of the US biotechnology industry to achieve this goal.

1.2    Definition of the Prototype Project

Consistent with USG objectives, the “prototype project” under this agreement is defined as the manufacture and delivery of 100M doses of a SARS-CoV-2 vaccine, NVX-CoV-2373, which is suitable for use in humans under a sufficiently informed deployment strategy, and the advanced positioning of a stockpile of critical long lead raw materials for the Matrix-M adjuvant. As such, the “prototype project” will effectively demonstrate Novavax’s ability to rapidly stand up large scale manufacturing and seamlessly transition into ongoing production.
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The NVX-CoV-2373 vaccine is comprised of the Matrix-M™ adjuvant, and antigen (SARS-CoV-2 spike protein). The vaccine is filled into a multi-dose vial ([***]) and is stored at refrigerated temperature (2-8oC).

Successful development of the prototype will demonstrate Novavax’s ability to rapidly stand up large scale manufacturing and seamlessly transition into ongoing production capability, in order to rapidly manufacture to meet surge requirements with little advance notification, and demonstrate capability to stockpile and distribute large quantities of the vaccine to respond when needed, including in order to supply use in clinical studies, under an Emergency Use Authorization (EUA), or pursuant to other clearance from the U.S. Food and Drug Administration (FDA).

Successful completion of the prototype will require three coordinated and integrated lines of effort:

a)Large scale manufacturing, compliant with 21 CFR Parts 210 and 211, and the Drug Supply Chain Security Act (DSCA), to the extent applicable at the time of manufacturing by statute and FDA interpretive guidance thereof.
b)Parallel nonclinical and clinical studies required to determine if the vaccine is safe and effective.
c)Compliance with all applicable U.S. regulatory requirements.

It is important to note that while results of nonclinical and clinical studies are critical to develop use case scenarios and, in turn, inform the USG’s deployment strategy as it relates to product manufactured under this agreement, successful development of the prototype is dependent only on the validity of data from these studies. The degree to which the data are “positive” or “negative” is not a factor in demonstration of the prototype.

1.3    Follow-on Activity

This prototype project includes unpriced options for follow-on production/procurement. During the performance of the prototype, the USG and Novavax will negotiate the scope and price of production/procurement. If the prototype project is successful, the USG may then enter into follow-on production/procurement by executing these options through a separate stand-alone production/procurement agreement, to be negotiated in terms of scope and price as described in the following paragraph.

In accordance with 10 U.S.C. 2371b(f), and upon demonstration of the prototype, or at the accomplishment of particularly favorable or unexpected results that would justify transitioning to production/procurement, EUA, or Biologics License Application (BLA) approved by the FDA, the USG and Novavax may enter into a non-competitive production/procurement follow-on
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agreement or contract for additional production/procurement, to partially or completely meet the USG objective of supplying a safe and effective SARS-CoV-2 vaccine to vaccinate up to 300M people in the targeted population (≈560M additional doses).

1.4    Scope

Novavax has defined a scope of activities in order to successfully develop the prototype, as defined above. The scope is based on the following assumptions regarding manufacturing and clinical dose:

Manufacturing Assumptions and Clinical Dose
The NVX-CoV-2373 vaccine is comprised of the Matrix-M™ adjuvant, and antigen (SARS-CoV-2 spike protein).
A dose range of 5-25 µg of antigen is under clinical study. The anticipated dose based on clinical data obtained to date is [***]µg of antigen with [***]µg of Matrix-M adjuvant.
For planning purposes, the [***] ([***]µg antigen/dose) has been used and the calculations in this scope of work have been based on this dose.
The antigen production is the rate-limiting step in vaccine production. The Matrix-M adjuvant will be available prior to antigen production. Dose production has been calculated based on the availability of antigen. Novavax is planning on a batch-by-batch rapid fill/finish once antigen is manufactured and available.
The estimated production schedule based on the [***]µg antigen/dose (base case) and [***] µg antigen /dose (anticipated case) is in the table below:

Estimated Schedule of Cumulative Doses Manufactured by Month
Dosage Oct 2020 Nov 2020 Dec 2020 Jan 2021 Feb 2021
[***] µg/dose (base case) [***] [***] [***] [***] [***]**
[***] µg/dose (anticipated case) [***]
[***]
100,000,000*
*Actual cumulative projected production at [***] µg/dose is [***] in December 2020. Some doses may be in progress at the end of December 2020.
**Actual cumulative projected production at [***] µg/dose is [***] in February 2021.

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The scope includes the following activities:

Manufacturing
Manufacturing of 100M doses (at [***]µg/dose, ≈[***]) of NVX-CoV-2373 vaccine in 2020 for distribution to the Government upon EUA under section 564 of the Food, Drug, and Cosmetic (FD&C) Act or a biologics licensure granted under Section 351(a) of the Public Health Service Act by the U.S. FDA.
Establishment of large-scale current Good Manufacturing Practice (cGMP) manufacturing capacity compliant with 21 CFR Parts 210 and 211, and the DSCA to the extent applicable at the time of manufacturing by statute and FDA interpretive guidance thereof.
Comparability among clinical vaccine lots and commercial lots using a comparability protocol linked to the product associated with the Phase 1 clinical study. For adjuvant components, the same raw material lot(s) will be used for the current and new Contract Manufacturing Organization (CMO) processes for the comparability protocol, and the same test lab will be used to ensure only process differences are being evaluated.
Validation of manufacturing processes will be performed to cGMP standards.

Clinical
Phase 3 pivotal clinical trial harmonized with USG clinical strategies.
A Phase 3 clinical trial in pediatric populations (<18 years).
Phase 2 studies in at-risk subpopulations (co-morbidities, [***], immunocompromised), as well as studies to support manufacturing site comparability.

Non-clinical
Studies to support EUA and regulatory approval (BLA).

Regulatory
EUA submission when data supports it, while maintaining progress toward eventual BLA submission.
BLA submission when appropriate.
Regulatory support activities (Investigational New Drug (IND) submissions) for manufacturing, clinical, non-clinical studies.
Meetings as-needed with regulators.

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Project Management
Mandatory reporting requirements, as described in the Base Agreement.
Submission of Quarterly Progress Reports. Format will be agreed on by the contractor and Agreements Officer’s Representative (AOR), and will include both technical and financial status and expenditure forecast.
Facilitation of biweekly teleconferences with Novavax and USG Subject Matter Experts.
Final prototype project report and applicable patents report(s).
Work Breakdown Structure (WBS) and Integrated Master Schedule (IMS).
All Regulatory correspondence relevant to the scope of work proposed, including communications with the FDA, and all submissions.

1.4.1    Novavax Project Plan
This is Novavax’s plan as of the date of the submission. Novavax desires to move quickly to large scale development as rapidly as possible, in order to meet the objectives of this proposal. As the COVID-19 pandemic is an evolving situation, Novavax may need to adapt its plan in response to FDA guidance, opportunities for manufacturing efficiencies, and clinical trial data.

1.5    Resolution of Conflicting Language

If there is a conflict between the Project Agreement (of which this Statement of Work is part) and the Base Agreement (Medical CBRN Consortium (MCDC) Base Agreement No.: 2020-530), the Project Agreement language will supersede and control the relationship of the parties.

2.0    APPLICABLE REFERENCES

N/A

3.0    REQUIREMENTS

3.1    Major Task: cGMP Manufacturing of NVX-CoV-2373 compliant with 21 CFR 210 and 211
3.1.1    Subtask: Raw Materials – Obtain Critical Starting Materials for Adjuvant Manufacturing
Sufficient Saponin to manufacture up to 100M vaccine doses will be purchased (Desert King, headquartered in San Diego, CA, facilities in Chile). Long-lead, critical, and limited-supply materials ([***]) will be purchased for the additional 560M vaccine doses to meet the contact requirement, in order to ensure capability to rapidly manufacture to meet surge requirements with little advance notification and demonstrate capability to stockpile and distribute large quantities of the vaccine to respond when needed.
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3.1.2    Subtask: Raw Materials – Obtain Critical Starting Materials for Antigen and Fill/Finish Manufacturing
Sufficient materials (vials, stoppers, other consumables) to manufacture up to 100M vaccine doses will be purchased (sources TBD).
3.1.3    Subtask: Raw Materials – [***] Intermediates to Produce Matrix-M Adjuvant Matrix-M Adjuvant
[***] to supply large-scale manufacturing of vaccine doses will be manufactured at [***] and PolyPeptide (Torrance, CA & Malmö, Sweden). Technology transfer and start-up of the PolyPeptide facility in Torrance, CA will be completed. Long lead, critical, and limited supply materials will be purchased in order to achieve the goal of large-scale production.
3.1.4    Subtask: Matrix-M Adjuvant Manufacturing to Supply 100M Vaccine Doses
Matrix-M Adjuvant bulk components will be manufactured at ACG Biologics (Seattle, WA) to supply 100M vaccine doses. Technology transfer and start-up of the AGC Bio facility in Seattle will be completed. An analytical comparability manufacturing study and validation studies will be performed as part of the tech transfer to each manufacturing site.
3.1.5    Subtask: Antigen Manufacturing to Supply 100M Vaccine Doses
Antigen will be manufactured at Fuji (2 sites – College Station, TX and Research Triangle Park, NC) to supply 100M vaccine doses. Technology transfer and scale-up activities will be completed. An analytical comparability manufacturing study and validation studies will be performed as part of the tech transfer to each manufacturing site.
3.1.6    Subtask: Fill/Finish of 100M Vaccine Doses
100M doses of finished vaccine in [***] vials will be manufactured at Baxter (Bloomington, IN, USA). This will include secondary packaging. Technology transfer and scale-up activities will be completed. An analytical comparability manufacturing study and validation studies will be performed as part of the tech transfer to each manufacturing site.
3.1.7    Subtask: Shipping and Storage
Novavax assumes that it will maintain a Vendor Managed Inventory (VMI) system for a period of 12 months, with shipments to 10 geographic zones in the USA. Novavax will perform activities to establish compliance with DSCA to the extent applicable at the time of manufacturing, by statute and FDA interpretive guidance thereof.

3.2    Major Task: Clinical Studies
Novavax will perform these clinical trials and deliver the results in an interim Clinical Study Report (CSR) at the completion of enrollment, and the final CSR when available. These trials will be conducted using a Clinical Research Organization (CRO) that is to be determined.
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3.2.1    Subtask: Phase 3 Global Efficacy Study, Adults ≥ 18 and < 75 years
Study: Phase 3 – Global Efficacy Study (to be harmonized with other USG studies), 2019nCoV-301. This includes a “crossover” component where patients that received placebo were offered the vaccine after [***].
Population: Adults ≥ 18 years, inclusive of subjects with more severe co-morbid conditions.    
Locations: North America, Europe; may include Africa, Asia, Oceania, South America.    
Primary Objectives: Clinical efficacy, safety, immunogenicity.     
Design: Randomized, observer-blinded, placebo-controlled.    
Test Product(s); Dose Regimen; Route of Administration: Vaccine + Matrix-M – dose determined by Phase 2 dose confirmation study, Placebo; ~0.5 mL dose Intramuscular (IM) injection, up to 2 doses at Day 0 and Day 21.
Enrollment: TOTAL N: ~30,000 (adjusted for expected endpoint incidence). [***].
3.2.2    Subtask: Phase 2 Efficacy Expansion (US), Adults ≥ 18 and < 75 years
Study: Phase 2 - Part 3 efficacy expansion (US), 2019nCoV-204.
Population: Adults ≥ 18 and < 75 years.     
Locations: USA.
Primary Objectives: Clinical efficacy, safety, immunogenicity.     
Design: Randomized, observer-blinded, placebo-controlled.    
Test Product(s); Dose Regimen; Route of Administration: Vaccine + Matrix-M – [***]; not greater than 25 µg antigen + 50 µg adjuvant, [***] to allow for rapid initiation. Placebo. ~0.5 mL dose IM injection, up to 2 doses at Day 0 and Day 21.
Enrollment: TOTAL: [***]. [***]. Adjusted for expected event occurrence. Event driven analysis. Initiation of study gated on completion of Phase 1 study, dose-selection and regulatory approval.
3.2.3    Subtask: Phase 2 Study in Immunocompromised Persons (HIV-positive adult subjects) (Africa)
Study: Phase 2 study in immunocompromised persons (HIV-positive adult subjects) (Africa).
Population: Adults ≥ 18 and < 65 years.     
Locations: Republic of South Africa (RSA)
Primary Objectives: Safety, immunogenicity (serum and cellular).
Design: Randomized, observer-blinded, placebo-controlled.    
Test Product(s); Dose Regimen; Route of Administration: Vaccine + Matrix-M; Placebo, 0.5 mL dose IM injection, up to 2 doses at Day 0 and Day 21.
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Enrollment: Total N = 2,640 – 2,880 (with n=240 - 480 HIV+); 1:1 Vaccine to placebo. Initiation gated on completion of Phase 1 study, dose selection, and regulatory approval.
3.2.4    Subtask: [***]
Study: [***].
Population: [***].    
Locations: [***].    
Primary Objectives: [***].
Design: Randomized, observer-blinded, placebo-controlled.    
Test Product(s); Dose Regimen; Route of Administration: Vaccine + Matrix-M [***].
Enrollment: [***]. Initiation gated on benefit:risk assessment (derived from Task 2.3.1 and/or 2.3.2 and/or other Phase 2 studies) and regulatory approval to conduct studies in this vulnerable population.
3.2.5    Subtask: Phase 2 Manufacturing Site Lot Consistency/Comparability Study (US or other)
Study: Phase 2 manufacturing site lot consistency/comparability study (US or other), 2019nCoV-201.
Population: Adults ≥ 18 to < 50 years.    
Locations: USA.
Primary Objectives: Safety, immunogenicity.
Design: Randomized, observer-blinded, placebo-controlled.    
Test Product(s); Dose Regimen; Route of Administration: Vaccine + Matrix-M; [***].
Enrollment: ~600 per cohort, each cohort having [***]. Study size may be adjusted to allow non-inferiority testing.
3.2.6    Subtask: [***]
Study: [***].
Population: [***].    
Locations: [***].
Primary Objectives: [***].
Design: Randomized, observer-blinded, placebo-controlled.    
Test Product(s); Dose Regimen; Route of Administration: Vaccine + Matrix-M; [***].
Enrollment: Total = 800 mothers + baby. Initiation gated on benefit:risk assessment (derived from Task 2.3.1 and/or 2.3.2 and/or other Phase 2 studies) and regulatory approval to conduct studies in this vulnerable population.
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3.2.7    Subtask: Pharmacovigilance; Establishment of Registration Safety Database
A registration safety database will be established to comply with FDA requirements for product safety and licensure.
3.2.8    Subtask: [***]
Study: [***].
Population: [***].
Location: [***].
Primary Objective: [***].
Design: Randomized, observer-blinded, placebo (or active vaccine) control.
Test Product(s); Dose Regimen; Route of Administration: Vaccine + Matrix-M – [***].
Enrollment: TOTAL: N ~12,500 (based on agreed VE, power, and LBCI). [***]. Adjusted for expected event occurrence if robust demonstration of clinical efficacy is required by the FDA. Event driven analysis for study termination.

3.3    Major Task: Non-Clinical Studies
Novavax will perform these non-clinical studies and deliver the results in a study report at completion.
3.3.1    Mouse Study, Immunogenicity
Study 702-100. [***] in mice for vaccine efficacy profile to comply with FDA guidelines.
3.3.2    Rhesus Study, Immunogenicity
Study 702-099. [***] in rhesus monkeys for vaccine efficacy profile to comply with FDA guidelines.
3.3.3    Hamster Study, Immunogenicity
Study 702-102. Immunogenicity/challenge study in hamster [***] for vaccine efficacy profile to comply with FDA guidelines.
3.3.4    Mouse Study, T-Cell Immunogenicity
Study 702-103. T-cell immunogenicity/challenge study in mice [***] for vaccine efficacy profile to comply with FDA guidelines.
3.3.5    Hamster Study, T-Cell Immunogenicity
Study 702-105. Immunogenicity/challenge study in hamster [***] for vaccine efficacy profile to comply with FDA guidelines.
3.3.6    Mouse Study, T-Cell Immunogenicity
Study 702-104. Immunogenicity/challenge study in hamster [***] for vaccine efficacy profile to comply with FDA guidelines.
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3.3.7    Non-Clinical Studies: Collaboration with Univ. of Maryland School of Medicine
Three studies to study enhancement/inhibition and neutralization, and virus challenge of vaccinated mice:
1.Validation of Spike nanoparticles in cell inhibition studies: In vitro inhibition studies on cell line permissive to r2019-nCoV, readout TBD.
2.Neutralization studies with virus against bleeds from mice, In vitro microneutralization studies on cell line permissive to r2019-nCoV, TCID50 or fluorescence readout (TBD).
3.Virus challenge of vaccinated mice (mice vaccinated outside and shipped to UM for challenge), Challenge of vaccinated mice (shipped in for infection from Novavax), Lung pathology, Titer, viral Ribonucleic Acid (RNA) quantitation, pathology scoring and reports.
3.3.8    Structural Study of COVID-19 Spike Protein and its Complex with Host Receptor (cooperation with Baylor College of Medicine)
Study to determine the structures of recombinant COVID-19. Spike protein in nanoparticles used in Novavax’s human vaccine and in complex with its host receptor ACE2. Will obtain a high-resolution cryoEM structure of full-length COVID-19 Spike protein and a high-resolution cryoEM structure of full-length COVID-19 Spike protein in complex with human receptor ACE2.
3.3.9    Neutralizing Assay Histopathology for On-going [***]
Histopathology readings for current neutralization studies in [***]. This will support the safety profile of the vaccine for FDA approval.
3.3.10    Mouse Study, Immunogenicity [***] Studies
Individual immunogenicity studies [***] in mice for vaccine efficacy profile in different sub-populations to comply with FDA guidelines.
3.3.11    Durability of NVX-CoV-2373 Vaccine Immunity and SARS-CoV-2 Protection at [***] in Rhesus Macaques
Study 702-110. This study is designed to evaluate the long-term immunogenicity and protective efficacy of NVX-CoV-2373 nanoparticle vaccine when administered with Matrix-MTM by IM injections on Study Days 0 and 21, to Non-Human Primates (NHP). Each study group will contain [***] NHPs ([***] per sex). Blood samples will be collected prior to vaccination and at multiple time points following vaccination as outlined below. Samples will be shipped to Novavax Inc. for performance of assays to determine the vaccine immunogenicity. Animals from placebo and active treatment groups will be challenged with SARS-CoV-2 virus at [***] following last treatment and monitored for clinical illness, viral RNA and sgRNA (nasal swabs, BAL) to assess the protective efficacy of the vaccine.
3.3.12    Immunogenicity and Protective Efficacy of Sub-Protective Doses of NVX-CoV-2373 in Rhesus Macaques
Study 702-111. This study is designed to evaluate the immunogenicity and protective efficacy of sub-optimal doses of NVX-CoV-2373 nanoparticle vaccine administered with a fixed dose of Matrix-MTM by IM injections on Study Days 0 and 21, to NHPs. Each study group will contain [***] NHPs ([***] per sex). Blood samples will be collected prior to vaccination and at various time points following vaccination as outlined below. Samples will be shipped to Novavax Inc. for performance of assays to determine the vaccine immunogenicity. Animals from placebo and active treatment groups will be
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challenged with SARS-CoV-2 virus at [***] following last treatment and monitored for clinical illness, viral RNA and sgRNA (nasal swabs, BAL) to assess the protective efficacy of the vaccine.
3.4    Major Task: Regulatory Affairs
Novavax will conduct the regulatory activities below, including BLA prep and submission, and provide the meeting minutes and applications to the USG.
3.4.1    Subtask: EUA Submission and Supporting Meetings and Regulatory Filings
An EUA will be submitted to the FDA upon obtaining sufficient clinical data. EUA, FDA meetings to support EUA, submission planning support for the Chemistry, Manufacturing, and Controls (CMC) team, EUA strategy and meeting support, and submission preparation support activities, will all be completed.
3.4.2    Subtask: IND Submission Updates and FDA Meetings
This task will include submissions to the IND and possible FDA meetings that will be required prior to the BLA submission.
3.4.3    Subtask: BLA Submission
A BLA will be submitted to the FDA upon obtaining sufficient clinical data, FDA meetings to support BLA, submission planning support for the CMC team, BLA strategy and meeting support, and submission preparation support activities, will all be completed.

3.5    Major Task: Project Management and Reporting
3.5.1    Subtask: Kick-Off Meeting and Initial Baseline Review of IMS
Novavax shall conduct a Kick-Off Meeting and an initial review with the USG of the IMS, upon initiation of the program.
3.5.2    Subtask: Biweekly Meetings with OWS
Novavax shall submit the agenda in advance. Any technical updates shall be provided in advance for the Government team to review. Minutes shall be submitted after the biweekly meeting to the USG.
3.5.3    Subtask: Written Quarterly Reports
Novavax shall submit quarterly reports to the USG.
3.5.4    Subtask: Written Annual Reports
Novavax shall submit the annual reports to the USG.
3.5.5    Subtask: Written Final Report
Novavax shall submit the final report to the USG.

3.6    Optional Task: Follow-On Production
Follow-on production of finished doses of vaccine up to 560M doses.

4.0    DELIVERABLES
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Del. # Deliverable Description Due Date Milestone Reference SOW Reference Government Role Data Type/Data Rights
Manufacturing
4.1 [***] [***] 5.1 3.1.1 Reviewer [***]
4.2 [***] [***] 5.2 3.1.2 Reviewer [***]
4.3 [***] [***] 5.3 3.1.3 Reviewer [***]
4.4 [***] [***] 5.4 3.1.4 Reviewer [***]
4.5 [***] [***] 5.5 3.1.5 Reviewer [***]
4.6 [***] [***] 5.6 3.1.6 Reviewer [***]
4.7 [***] [***] 5.7 3.1.7 Reviewer [***]
Clinical
4.8 [***] [***] 5.8 3.2.1 Reviewer [***]1
4.9 [***] [***] 5.9 3.2.2 Reviewer [***]
4.10 [***] [***] 5.10 3.2.3 Reviewer [***]
4.11 [***] [***] 5.11 3.2.4 Reviewer [***]
4.12 [***] [***] 5.12 3.2.5 Reviewer [***]
4.13 [***] [***] 5.13 3.2.6 Reviewer [***]
4.14 [***] [***] 5.14 3.2.7 Reviewer [***]
4.15 [***] [***] 5.15 3.2.8 Reviewer [***]
1 As used herein, “Government Purpose Rights“ has the meaning set forth in Article XI, Section 11.01(9) of the Base Agreement, as modified by Section 8.2(b) below.
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Non- Clinical
4.16 [***] [***] 5.16 3.3.1 Reviewer [***]
4.17 [***] [***] 5.17 3.3.2 Reviewer [***]
4.18 [***] [***] 5.18 3.3.3 Reviewer [***]
4.19 [***] [***] 5.19 3.3.4 Reviewer [***]
4.20 [***] [***] 5.20 3.3.5 Reviewer [***]
4.21 [***] [***] 5.21 3.3.6 Reviewer [***]
4.22 [***] [***] 5.22 3.3.7 Reviewer [***]
4.23 [***] [***] 5.23 3.3.8 Reviewer [***]
4.24 [***] [***] 5.24 3.3.9 Reviewer [***]
4.25 [***] [***] 5.25 3.3.10 Reviewer [***]
4.26 [***] [***] 5.26 3.3.11 Reviewer [***]
4.27 [***] [***] 5.27 3.3.12 Reviewer [***]
Regulatory Affairs
4.28 [***] [***] 5.28 3.4.1 Reviewer [***]
4.29 [***] [***] 5.29 3.4.2 Reviewer [***]
4.30 [***] [***] 5.30 3.4.3 Reviewer [***]
Project Management
4.31 [***] [***] 5.31 3.5 Reviewer [***]
4.32 [***] [***] 5.32 3.5.1 Reviewer [***]
4.33 [***] [***] 5.33 3.5.2 Reviewer [***]
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4.34 [***] [***] 5.34 3.5.3 Reviewer [***]
4.35 [***] [***] 5.35 3.5.4 Reviewer [***]
4.36 [***] [***] 5.36 3.5.4 Reviewer [***]
4.37 [***] [***] 5.37 3.5.5 Reviewer [***]
4.38 [***] [***] 5.35 N/A Reviewer [***]
TBD [***] [***] Option 1 3.6 Reviewer [***]

Note 1: Attachment D of the Project Agreement shall be referenced for supplemental security requirements associated with deliverables under this project.

Note 2: The USG agrees to permanently transfer USG material, in the form of mutually agreed upon quantities of Clinical Drug Substance/Product, to Novavax for its own use in related drug trials. To enable the foregoing, the USG transfers all its right, title and interest in and to the Clinical Drug Substance/Product to Novavax. In consideration of such right, Novavax agrees (a) that Novavax shall [***]; (b) that Novavax agrees to [***]; and, (c) Novavax will, upon reasonable request from the USG, obtain and share data from the use of the Clinical Drug Substance/Product, in a mutually agreed upon format. All transfers of material produced under the project, shall obtain prior written approval by the Government, with material quantities, destinations, applications, and USG benefits clearly delineated in a mutually agreed upon format.

5.0    MILESTONE PAYMENT SCHEDULE
The milestones below are for reference and costs for the project will be invoiced monthly on a cost reimbursable basis as the work progresses.

Milestone #
Milestone Description
(Deliverable Reference)
Due Date Total Program Funds
Manufacturing [***]
5.1 [***] [***] [***]
5.2 [***] [***] [***]
5.3 [***] [***] [***]
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5.4 [***] [***] [***]
5.5 [***] [***] [***]
5.6 [***] [***] [***]
5.7 [***] [***] [***]
Clinical
[***]
5.8 [***] [***] [***]
5.9 [***] [***] [***]
5.10 [***] [***] [***]
5.11 [***] [***] [***]
5.12 [***] [***] [***]
5.13 [***] [***] [***]
5.14 [***] [***] [***]
5.15 [***] [***] [***]
Non- Clinical [***]
5.16 [***] [***] [***]
5.17 [***] [***] [***]
5.18 [***] [***] [***]
5.19 [***] [***] [***]
5.20 [***] [***] [***]
5.21 [***] [***] [***]
5.22 [***] [***] [***]
5.23 [***] [***] [***]
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5.24 [***] [***] [***]
5.25 [***] [***] [***]
5.26 [***] [***] [***]
5.27 [***] [***] [***]
Regulatory Affairs [***]
5.28 [***] [***] [***]
5.29 [***] [***] [***]
5.30 [***] [***] [***]
Project Management [***]
5.31 [***] [***] [***]
5.32 [***] [***] [***]
5.33 [***] [***] [***]
5.34 [***] [***] [***]
5.35 [***] [***] [***]
5.36 [***] [***] [***]
5.37 [***] [***] [***]
5.38 [***] [***] [***]
Reservation Fees
5.39 [***] [***] [***]
5.40 [***] [***] [***]
5.41 [***] [***] [***]
Total (Cost Plus Fixed Fee) $1,800,670,981
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Period of Performance (July 6, 2020 – December 31, 2021) 18 Months (Base)
Option 1: Follow-On Production Cost: [***]

6.0    SHIPPING PROVISIONS

The shipment of physical deliverables shall be coordinated with the AOR. Data deliverables shall be provided in accordance with the agreement, and in coordination with the AOR.

7.0    INTELLECTUAL PROPERTY, DATA RIGHTS, AND COPYRIGHTS

7.1    BACKGROUND IP

(a)    Ownership. Prior to June 8, 2020, Novavax had funded the development of NVX-CoV-2373, and other antecedent vaccine programs relevant to Novavax’ proprietary position in the development of NVX-CoV-2373, as well as its sf9/baculovirus manufacturing platform, (all “Background IP”) through private funding or in collaboration with a funding partner other than the U.S. Government. Such private and non-governmental funding has continued since June 8, 2020 and is expected to continue during the performance of the Project Agreement. A list of all patents and patent applications included in the Background IP is provided below as Enclosure 4. Background IP also consists of (a) manufacturing know-how, including, without limitation, the NVAX-Cov-2373 manufacturing process definitions, process development/characterization reports, laboratory scale process procedures, manufacturing records, analytical test methods, product quality target ranges/specifications, quality target product profile, critical quality attributes (collectively “Background Know-How”), (b) data from pre-clinical and clinical research studies, analytical and process development research, and data related to, or generated using, the Background Know-How (collectively, “Background Data”), and (c) proprietary manufacturing materials, including, without limitation, sf9 cell banks (master and working), baculovirus virus stock (master and working), product standards, reference standards, and critical reagents (“Background Materials”). On June 8, 2020, Novavax and the U.S. Department of Defense entered into a Letter Contract for specified U.S.-based clinical and manufacturing development of NVX-CoV-2373 which acknowledged Background IP and made no explicit U.S. Government claims to Background IP or subsequent data arising therefrom. The U.S. Government hereby acknowledges such Background IP in full and further acknowledges that it has no ownership rights to Novavax Background IP under this Project Agreement.

(b)     Background IP Limited License to Government. Subject to the terms of the Project Agreement, Novavax grants the U.S. Government a nonexclusive, worldwide, nontransferable, non-sublicenseable license to use the Background IP to the limited extent necessary for the U.S.
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Government to review and use the Deliverables tendered by Novavax under this Agreement identified in Section 4.0 above, and for no other purpose; provided that the U.S. Government agrees that it may not disclose the Background IP to third parties, or allow third parties to have access to, use, practice or have practiced the Background IP, without Novavax’s prior written consent. To the extent that a Deliverable with Foreground IP incorporates or uses Background IP, the Deliverable shall be deemed and considered to comprise Background IP and shall be used by the U.S. Government in accordance with this Background IP Limited License.

(c)     Background IP License to Novavax. Subject to the terms of the Project Agreement, the U.S. Government grants to Novavax a nonexclusive, worldwide, nontransferable, irrevocable, paid-up license to any intellectual property (including patents and patent applications) to which the U.S. Government has rights thereto, provided that such license is limited to such intellectual property rights necessary to perform Novavax’s obligations under the Project Agreement. 

7.2    FOREGROUND IP

(a)    Ownership.    Notwithstanding anything in the Base Agreement to the contrary, Novavax owns all rights, title and interest in and to any development, modification, discovery, invention or improvement, whether or not patentable, conceived, made, reduced to practice, or created in connection with activities funded under the Project Agreement, including, without limitation, all data and inventions, and intellectual property rights in any of the foregoing (“Foreground IP”).

(b)    Foreground IP Special License. Subject to the terms of the Project Agreement, Novavax grants the U.S. Government a nonexclusive, worldwide, nontransferable, irrevocable, paid-up license to practice or have practiced the Foreground IP for or on behalf of the U.S. Government (“Foreground IP Special License”).

8.0     DATA RIGHTS

Article XI, §11.03 of the Base Agreement is hereby amended, consistent with the “Specifically Negotiated License Rights” capability at Article XI, §§11.01(12) and 11.03(4), as follows:

8.1 Data Ownership.

Novavax owns all rights, title and interest to all Data (as defined in Article XI, Section 11.01(7) of the Base Agreement) generated as a result of the work performed under this Project Agreement, including Subject Data.

8.2 Rights to Data.

(a)    Subject Data. Subject to the terms of the Project Agreement, Novavax grants to the U.S. Government a Government purpose rights license to Subject Data that will convert to an
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unlimited rights license (as the term is defined in Article XI, Section 11.01(14) of the Base Agreement)2 after three (3) years from the date of delivery. As used herein, “Subject Data” shall mean Technical Data under Article XI, §11.01(13) of the Base Agreement Deliverables that are considered Subject Data are identified in the Deliverable Table set forth in Section 4.0 above.

(b)    Transfer of Data. Each party, upon written request to the other party, shall have the right to review and to request delivery of Subject Data, and delivery of such Data shall be made to the requesting party within two weeks of the request, except to the extent that such Data are subject to a claim of confidentiality or privilege by a third party.

(c)    Background IP Limited License. To the extent that Subject Data incorporates or uses Background IP, the data shall be deemed and considered to comprise Background IP and shall be used by the U.S. Government in accordance with the Background IP Limited License set forth in Section 7.3 above.

8.3 Background Technical Data Rights Assertions.

Novavax asserts background technical data rights as follows:

The Background Data, as defined in Section 7.1 above, was developed through private funding or in collaboration with a funding partner other than the U.S. Government. Such funding is expected to continue; accordingly, Novavax asserts Background Data as Category A Data pursuant to section 11.02(1) of the Base Agreement and the U.S. Government shall have no rights therein.

9.0     REGULATORY RIGHTS

This agreement includes research with an investigational drug, biologic or medical device that is regulated by the U.S. Food and Drug Administration (FDA) and requires FDA pre-market approval or clearance before commercial marketing may begin. It is expected that this agreement will result in the FDA authorization, clearance and commercialization of NVX-CoV-2373 as a Vaccine for SARS-CoV-2 Coronavirus (the “Technology”). Novavax is the Sponsor of the Regulatory Application (an investigational new drug application (IND), investigational device exemption (IDE), emergency use authorization (EUA), new drug application (NDA), biologics license application (BLA), premarket approval application (PMA), or 510(k) pre-market notification filing (510(k)) or another regulatory filing submitted to the FDA) that controls research under this contract. As the Sponsor of the Regulatory Application to the FDA (as the terms “sponsor” and “applicant” are defined or used in at 21 CFR §§3.2(c), 312.5, 600.3(t), 812.2(b), 812 Subpart C, or 814.20), Novavax has certain standing before the
2 As used herein, “Government Use” as used “Purpose Rights“ has the meaning set forth in this Section 4.0 means Government purpose rights as defined in the Base Agreement, Article XI, Section 11.01(9).) of the Base Agreement, as modified by Section 8.2(b) below.
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FDA that entitles it to exclusive communications related to the Regulatory Application. This clause protects the return on research and development investment made by the U.S. Government in the event of certain regulatory product development failures related to the Technology.

Novavax agrees to the following:

a. Communications. Novavax will provide the U.S. Government with all communications and summaries thereof, both formal and informal, to or from FDA regarding the Technology and ensure that the U.S. Government representatives are invited to participate in any formal or informal Sponsor meetings with FDA;

b. Rights of Reference. The U.S. Government is hereby granted a right of reference as that term is defined in 21 C.F.R. § 314.3(b) (or any successor rule or analogous applicable law recognized outside of the U.S.) to any Regulatory Application submitted in support of the statement of work for the Project Agreement. When it desires to exercise this right, the U.S. Government agrees to notify Novavax in writing describing the request along with sufficient details for Novavax to generate a letter of cross-reference for the U.S. Government to file with the appropriate FDA office. The U.S. Government agrees that such letters of cross-reference may contain reporting requirements to enable Novavax to comply with its own pharmacovigilance reporting obligations to the FDA and other regulatory agencies. Nothing in this paragraph reduces the U.S. Government’s data rights as articulated in other provisions of the Project Agreement.

c. DoD Medical Product Priority. PL-115-92 allows the DoD to request, and FDA to provide, assistance to expedite development and the FDA’s review of products to diagnose, treat, or prevent serious or life-threatening diseases or conditions facing American military personnel. Novavax recognizes that only the DoD can utilize PL 115-92. As such, Novavax will work proactively with the DoD to leverage this this law to its maximal potential under this Project Agreement. Novavax shall submit a mutually agreed upon Public Law 115-92 Sponsor Authorization Letter to the U.S. Government within 30 days of award.

10.0    ENSURING SUFFICIENT SUPPLY OF THE PRODUCT

a. In recognition of the Government’s significant funding for the development and manufacturing of the product in this Project Agreement and the Government’s need to provide sufficient quantities of a safe and effective COVID-19 vaccine to protect the United States population, the Government shall have the remedy described in this section to ensure sufficient supply of the product to meet the needs of the public health or national security. This remedy is not available to the Government unless and until both of the following conditions are met:

i.Novavax gives written notice, required to be submitted to the Government no later than 15 business days, of:
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a.any formal management decision to terminate manufacturing of the NVX-CoV-2373 vaccine prior to delivery of 100 million doses to USG;
b.any formal management decision to discontinue sale of the NVX-CoV-2373 vaccine to the Government prior to delivery of 100 million doses to USG; or
c.any filing that anticipates Federal bankruptcy protection; and
ii.Novavax has submitted an Emergency Use Authorization under §564 of the FD&C Act or a biologics license application provisions of §351(a) of the Public Health Service Act (PHSA).

b. If both conditions listed in section (a) occur, Novavax, upon the request of the Government, shall provide the following items necessary for the Government to pursue manufacturing of the NVX-CoV-2373 vaccine with a third party for exclusive sale to the U.S. Government:

i.a writing evidencing a non-exclusive, nontransferable, irrevocable (except for cause), royalty-free paid-up license to practice or have practiced for or on behalf of the U.S. Government any Background IP as defined in clause 7.1 necessary to manufacture or have manufactured the NVX-CoV-2373 vaccine;
ii.necessary FDA regulatory filings or authorizations owned or controlled by Novavax related to NVX-CoV-2373 and any confirmatory instrument pertaining thereto; and
iii.any outstanding Deliverables contemplated or materials purchased under this Project Agreement.

c. This Article shall be incorporated into any contract for follow-on activities for the Government to acquire and use additional doses of the product. Per section 1.3, the estimated quantity for follow-on production/procurement is approximately 560 million doses.

d. This Article will survive the acquisition or merger of the Contractor by or with a third party. This Article will survive the expiration of this agreement.

11.    SECURITY

The security classification level for this effort is UNCLASSIFIED. Attachment D of the Project Agreement shall be referenced for supplemental security requirements associated with the execution of this project.

12.0     MISCELLANEOUS REQUIREMENTS (SAFETY, ENVIRONMENTAL, ETC.)
    
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N/A

13.0     GOVERNMENT FURNISHED PROPERTY/MATERIAL/INFORMATION

14.0    AGREEMENTS OFFICER’S REPRESENTATIVE (AOR) AND ALTERNATE AOR CONTACT INFORMATION

AOR

NAME: [***]            
EMAIL: [***]            
PHONE: [***]    
AGENCY NAME/DIVISION/SECTION: Joint Program Executive Office, Joint Program Lead-Enabling Biotechnologies

Alternate AOR

NAME: [***]                 
EMAIL: [***]            
PHONE: [***]            
AGENCY NAME/DIVISION/SECTION: HHS

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ENCLOSURE 3: (SUPERSEDED)

N/A – this enclosure has been superseded from the original and is no longer applicable.


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ENCLOSURE 4: PATENT LISTING
[Pursuant to Regulation S-K, Item 601(a)(5), this enclosure setting forth the patent listing has not been filed. The Registrant agrees to furnish supplementally a copy of any omitted exhibits to the Securities and Exchange Commission upon request; provided, however, that the Registrant may request confidential treatment of omitted items.]

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Exhibit 10.8

CERTAIN INFORMATION IDENTIFIED WITH [***] HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) IS THE TYPE THAT THE REGISTRANT TREATS AS PRIVATE OR CONFIDENTIAL.

SENSITIVE
EN
ANNEX
to the
COMMISSION DECISION
approving an Advance Purchase Agreement on COVID-19 vaccines

105636159_8

Contract No: SANTE/2020/C3/087 - S12.854725
IMAGE_0A.JPG
Sensitive*
RELEASABLE TO: Need to know basis

ADVANCE PURCHASE AGREEMENT (“APA”)1 for the development, production,
priority-purchasing options and supply of a successful COVID-19 vaccine for EU Member States
NUMBER — SANTE/2020/C3/087 - SI2.854725
1.    The European Commission (the ‘Commission’), acting on behalf and in the name of the Member States listed in Annex I (hereinafter referred to as Participating Member States”) being represented for the purposes of signature of this APA by Ms. Stella Kyriakides, Commissioner for Health and Food Safety:
on the one part
and
2.    Novavax, Inc.,
a Delaware corporation,
Delaware file number: 2129598
21 Firstfield Road, Gaithersburg, Maryland 20878 USA
VAT Registration Number: [***],
hereinafter referred to as the ‘Contractor’), represented for the purposes of the signature of this APA by John A. Herrmann III, Chief Legal Officer and Corporate Secretary
and
Novavax CZ
a Czech corporation,
Bohumil 138
281 63 Jevany
Czech Republic
VAT Registration Number: [***]
represented for the purposes of the signature of this APA by John A. Herrmann III, Director
on the other part,
Contractor and Novavax CZ - hereinafter collectively referred to as ‘the signatories’ - shall be [***] towards the Commission and the Participating Member States for the performance of this APA and any and all Vaccine Order Forms signed under this APA.
1 This APA is based on the agreement between the Commission and the Member States as approved by Commission Decision C(2020) 4192 final on approving the agreement with Member States on procuring Covid-19 vaccines on behalf of the Member States and related procedures.
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The Commission, acting on behalf and in the name of the Participating Member States, and the Contractor are together referred to as the “Parties” and each individually as a Party
HAVE AGREED
to the special conditions and the general conditions of this APA and the following annexes:
Annex I    List of Participating Member States
Annex II    Model for Vaccine Order Form
Annex III    Agreement between the Commission and Member States on procuring Covid-19 vaccines on behalf of the Member States and related procedures, annexed to the Commission Decision C (2020) 4192 final of 18 June 2020
Annex III    Description of the Contractor’s utilization of the Down Payment
Annex IV    List of confirmed and planned manufacturing network partners including the location(s) of manufacturing and subcontractors
Annex VI    Preliminary Specifications of the Product
which form an integral part of this APA.
Recitals
A.    The world is experiencing an emergency healthcare crisis due to the COVID-19 pandemic (the “COVID-19 pandemic”) and the global demand for vaccines to prevent COVID-19 infection is expected to be in order of magnitude of billions of doses. COVID-19 is an infectious disease caused by Sars-COV-2 virus strain.
B.    The Contractor is currently working to develop and manufacture NVAX-CoV2373 a protein subunit vaccine comprised of a stable, prefusion protein antigen derived from the genetic sequence of the SARS-CoV-2 coronavirus spike (S) protein and adjuvanted with Novavax’ proprietary Matrix-M™ adjuvant, to help protect against COVID-19 infection in humans.
C.    The Commission intends to create the environment required to support a secure manufacturing network and optimisation for the production of vaccines against COVID-19 in the European Union.
D.    The Commission has concluded an agreement with all Member States of the European Union to conclude, on behalf and in the name of the Member States, Advance Purchase Agreements with vaccine manufacturers with the objective to procure vaccines for the purposes of combatting the COVID-19 pandemic in the European Union.
E.    The Commission wishes to secure supply of the Product for human use for the Participating Member States during the COVID-19 pandemic as promptly as possible.
F.    The intention of the Commission, on behalf of the Member States, is to ensure that the population in the European Union will be able to access an efficacious vaccine, including against mutations or variants of SARS-CoV-2, in sufficient quantities and at a fair price, but also in safe conditions. The vaccine should only be available to the population once its safety and efficacy will have been demonstrated to the competent regulatory bodies, and the relevant authorisations will have been obtained. Security of supply with the vaccine must be ensured and any adapted versions of the vaccine against mutations or variants of SARS-CoV-2 or other versions, including in particular for a paediatric population, should be made available for supply under this APA.
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G.    According to the Agreement between the Commission and the Member States2 and in particular Article 4 thereof, the Commission can conclude an Advance Purchase Agreement that contains a right and an obligation for Participating Member States to acquire vaccine doses. Where the Commission intends to enter into such an agreement, it shall inform the Member States of such intention and the detailed terms. In case a Member State does not agree with the conclusion of an APA containing an obligation to acquire vaccine doses or its terms, it has the right to opt out by explicit notification to the Commission. All Participating Member States not having opted out in accordance with the Agreement between the Commission and the Member States are deemed to have authorised the Commission to negotiate and conclude an Advance Purchase Agreement with the vaccine manufacturer in their name and on their behalf.
H    This APA is such an agreement which the Commission enters into on behalf and in the name of the Participating Member States which have not opted out of the agreement. These Participating Member States will then have an obligation to acquire the Product and a right to be supplied with the respective Product doses. While the APA is legally binding upon those Participating Member States, it will be further implemented by means of the conclusion of contracts between the Participating Member States and the Contractor. The present APA will be implemented by a Vaccine Order Form (“Vaccine Order Form”) between each of the Participating Member States and the Contractor. A model Vaccine Order Form for the contract between each of the Participating Member States and the Contractor is attached in Annex II.
I.    The development, production, advance sale and supply of the Product as per this APA requires significant investments by the Contractor to increase the speed of the preparation of the at-scale production capacity along the entire production value chain in the EU required for a rapid deployment of the millions of doses of the Product. The Commission as well as the Participating Member States are willing to contribute to financing of those investments in the form of upfront payments in return for the warranties and rights set out in this APA.
J    Pursuant to these APA terms and conditions, access to Product doses will be allocated to Participating Member States according to a population distribution key, unless a different allocation is communicated by the Commission to the Contractor prior to execution of any Vaccine Order Forms for Participating Member States. The upfront payment, paid by the Commission, should be taken into account in equal terms per dose ordered by the Member States.
K.    The Parties recognise that the timelines to develop, produce, sell and supply the Product [***], which includes an obligation of the Participating Member States to indemnify the Contractor and its Indemnified Persons subject to the conditions laid down in Article II.5.1, in case of [***].
L    Against this background, the Commission wishes to enter into, on behalf and in the name of the Participating Member States, an Advance Purchase Agreement with the Contractor to secure the availability of a total of a minimum of 20 million and a maximum of 100 million doses of the Product, to be allocated among the Participating Member States in accordance with the allocation principles set out in this APA. The Commission, on behalf and in the name of the Participating Member States, shall furthermore have the option to order up to a total of 100 million additional doses of the Product, subject to the terms and conditions of this APA.
This APA sets out:
2 Such agreement is based on Article 4(5)(b) of Regulation (EU) 2016/369 of 15 March 2016 on the provision of emergency support within the Union, OJ L 70, 16.3.2016, p.1, as amended by Council Regulation (EU) 2020/521 of 14 April 2020 activating the emergency support under Regulation (EU) 2016/369, and amending its provisions taking into account the COVID-19 outbreak, OJ L 117, 15.4.2020. p. 3. The agreement was approved Decision C(2020) 4192 final of 18 June 2020 (see Annex III to this APA).
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1.    the procedure and conditions by which the Commission and the Participating Member States may pay for the Product from the Contractor;
2.    the provisions that apply to any Vaccine Order Form which the Participating Member States and the Contractor may conclude under this APA; and
3.    the obligations of the Parties during and after the duration of this APA.

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TABLE OF CONTENTS
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I.SPECIAL CONDITIONS
I.1.Order of priority of provisions
If there is any conflict between different provisions in this APA, the following rules must be applied:
(a)The provisions set out in the special conditions take precedence over those in the other parts of the APA.
(b)The provisions set out in the general conditions take precedence over those in the Vaccine Order Form (Annex II) and other Annexes.
All documents issued by the Contractor (such as end-user agreements, general terms and conditions, etc.) are held inapplicable, unless they are issued under or in accordance with this APA (such as the final specifications, (formal) notifications, etc.). In all circumstances, in the event of contradiction between this APA and documents issued by the Contractor, this APA prevails, regardless of any provision to the contrary in the Contractor’s documents.
I.2.Subject matter
The subject of this APA is the development, production, advance purchase, and supply of a minimum of 20 million doses and a maximum of 100 million doses of the Product, as described below in Article I.4.2, to be allocated among the Participating Member States by the Commission in accordance with the allocation principles set out below in Article I.4.3. Additionally, this APA gives the Commission the opportunity to order during the term of the APA, on behalf and in the name of the Participating Member States, up to 100 million additional doses of the Product in one or more tranches in accordance with Article I.4.4. Such Option Increase is to be allocated between the Participating Member States by the Commission as set out below in Article I.4.4.
On the basis of this APA, the Contractor commits to use Reasonable Best Efforts to obtain Marketing Authorisation for the Product as regards its use in the entire adult population in the EU. To this effect the Contractor undertakes to submit an application to EMA for Marketing Authorisation (including conditional marketing authorisation) as soon as possible. In particular, the Contractor will ensure that such application for Marketing Authorisation is submitted to EMA on a concurrent timeline with any other stringent regulatory authorities (SRA) (as defined by the World Health Organization) applications for Marketing Authorisation or equivalent made in other jurisdictions, and, in any event, not later than [***] after the first application for any such authorisation is made anywhere in the world. The Contractor also commits to establish sufficient manufacturing capacities to enable the manufacturing and supply of the contractually foreseen volumes of the Product to the Participating Member States in accordance with the delivery schedule and planning schedule set out below in Article I.4.7.
Each Participating Member State shall issue a Vaccine Order Form as regards to its allocation of the Fixed Initial Doses, through which the Contractor shall supply to the Participating Member States the Product doses in accordance with the terms of this APA. Each Participating Member State shall also issue a Vaccine Order Form with regard to any Flexible Initial Doses allocated to such Participating Member State pursuant to the process set forth in Article I.4.2. If the Commission acting on behalf and in the name of the Participating Member States decides to exercise the Option Increase under Article I.4.4, each Participating Member States shall issue a Vaccine Order Form with regard to any Additional Option Doses allocated to it in connection with such Option Increase.
The delivery of the Product to the individual Participating Member States shall be carried out in accordance with the terms and conditions or this APA, and in particular, in accordance with the allocation notified to the Contractor by the Commission, as well as the additional delivery details set out in the Vaccine Order Forms to be concluded between the Contractor and the Participating Member States using the model Vaccine Order Form provided as Annex II to this APA.
I.3.Entry into force and duration of the APA
I.3.1.The APA enters into force on the date on which the Contractor and the Commission have signed it.
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I.3.2.Unless earlier terminated in accordance with Article II.16 or expired in accordance with Article I.3.5, the APA is concluded for a period of 24 months with effect from the date of its entry into force.
I.3.3.The APA duration may be extended [***] upon written agreement by the Parties. The Participating Member States and the Contractor may not sign any Vaccine Order Form after the APA expires.
I.3.4.The APA continues to apply to signed Vaccine Order Forms after its expiry. [***]. Articles which survive the termination of both the APA and signed Vaccine Order Forms are defined in Article I.3.6.
I.3.5.The APA shall automatically expire on (i) the date on which all the Initial Doses have been delivered and paid in full, in the event the Commission has not elected an Option Increase in accordance with Article I.4.4, or (ii) the date on which all of the Initial Doses and the Option Doses have been delivered and paid in full, in the event the Commission has elected an Option Increase in accordance with Article I.4.4.
I.3.6.Articles I.3.6, I.4.6, I.4.7.1.1, I.4.7.2, I.5, I.6, I.9, I.10, I.11.1-1.11.6, I.12, II.1, II.3, II.4, II. 5, II.7, II.16.5, II.18.4, II.19.2, and II.20 shall survive the termination or expiry of this APA and Vaccine Order Forms. Further, neither Party shall be relieved of any obligation that accrued prior to such effective date of termination or expiry of the APA or Vaccine Order Form. Except as otherwise expressly provided herein, all rights and obligations of each Party hereunder will cease upon termination or expiry of this APA and Vaccine Order Forms.
I.4.Implementation of the APA
I.4.1.Implementation of the APA
The APA shall be implemented following signature between the Commission on behalf and in the name of the Participating Member States and the Contractor as follows:
Following entry into force of this APA, this APA is binding upon the Contractor, the Commission and all Participating Member States on behalf and in the name of which the Commission has concluded this APA, as identified in Annex I.
Following entry into force of this APA, the Commission will determine the allocation of the contractually agreed doses of the Product between the Participating Member States in accordance with the procedure set out below in Article I.4.3 and will formally notify this allocation to the Contractor. The allocation notified to the Contractor by the Commission on behalf and in the name of the Participating Member States is binding upon all Participating Member States.
Each Participating Member State and the Contractor will conclude a Vaccine Order Form, using the model Vaccine Order Form attached as Annex II to this APA, setting out the details of the delivery of the doses of the Product allocated to the respective Participating Member State in accordance with Article I.4.3.
I.4.2.Initial Doses
Without prejudice to the Option Increase (see Article I.4.4), the Contractor agrees to supply an initial aggregate number of 100 million doses of the Product (the “Initial Doses “) to the Participating Member States in accordance with the terms of this APA and the applicable Vaccine Order Forms.
The delivery schedule for the first 20 million Initial Doses in the Initial Delivery Schedule set forth in Article I.4.7.1 is fixed (the “Fixed Initial Doses”).
For the remaining 80 million Initial Doses (the “Flexible Initial Doses”), the following rules shall apply: the Initial Planning Schedule for Flexible Initial Doses in Article I.4.7.1 sets out the volume of Flexible Initial Doses that the Contractor has earmarked for delivery to the Participating Member States as Flexible Initial Doses under this APA. At least [***] before the [***], the Commission on behalf of the Participating Member States shall communicate to the Contractor its demand of Flexible Initial Doses for [***], as well as the desired delivery schedule [***]
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(“Expression of Demand”). For clarity, the initial [***] Expression of Demand shall be due [***] and communicate the demand for [***], with the subsequent [***] Expression of Demands due on [***]. In a situation where Variant Product is available pursuant to Article I.11.9, the Expression of Demand may cover (i) only quantities of Variant Product; (ii) only quantities of Product; or (iii) any combination of both. In such situation, the Expression of Demand shall set out the quantities of Variant Product and/or Product requested per month.
Within [***] of receipt of the Expression of Demand, the Contractor shall propose to the Commission the delivery schedule for the Flexible Initial Doses, containing all quantities specified in the Expression of Demand ([***] for which they have been requested) and the [***] during which these quantities can be delivered by the Contractor (“Flexible Initial Doses Delivery Schedule”). If the Expression of Demand is [***] the Initial Planning Schedule for the Flexible Initial Doses set out in Article I.4.7.1, the Flexible Initial Doses Delivery Schedule shall contain at least the quantities included in that Initial Planning Schedule.
The Commission, on behalf of the Participating Member States, shall confirm the final quantities to be delivered to the Participating Member States. Within [***] of receipt of the Flexible Initial Doses Delivery Schedule, the Commission shall communicate to the Contractor the allocation of Flexible Initial Doses between the Participating Member States, and the Participating Member States shall issue Vaccine Order Forms.
For the avoidance of doubt, if the amounts included in the Flexible Initial Doses Delivery Schedule for [***] are [***] included in the Expression of Demand, the Commission, on behalf of the Participating Member States, shall be allowed to express demand for the difference in a subsequent Expression of Demand. [***].
The Flexible Initial Doses Delivery Schedule shall qualify as an Updated Delivery Schedule within the meaning of Article I.4.7.1.1, so that in particular the rules of Article I.4.7.2 apply to deliveries made under the Flexible Initial Doses Delivery Schedule. In addition, the cancellation right of Article I.4.7.1.1, third and fourth subparagraphs (other than the right to [***]), shall apply mutatis mutandis if the delivery dates foreseen in the Flexible Initial Doses Delivery Schedule is [***] in the Expression of Demand. For the avoidance of doubt, Article I.4.7.1.1, first and second subparagraphs, shall not apply to the Flexible Initial Doses Delivery Schedule.
Any amounts of Flexible Initial Doses for which no demand has been expressed in Expressions of Demand issued by [***] shall be automatically and fully cancelled. Such automatic cancellation shall take effect as from [***]. For the avoidance of doubt, the choice of whether or not to express demand for Flexible Initial Doses is not subject to any conditions and is at the sole discretion of the Commission acting on behalf of the Participating Member States.
The Commission, on behalf of the Participating Member States, and the Contractor may agree [***] on the delivery of Flexible Initial Doses in 2023. In that case, the cancellation right and automatic cancellation foreseen in the previous paragraphs shall apply mutatis mutandis in 2023.
I.4.3.Allocation between Participating Member States; Vaccine Order Forms
The Commission shall coordinate with the Participating Member States to agree to the allocation of the Initial Doses to be purchased from the Contractor. The Commission shall provide to the Contractor in writing the allocation for distribution of the Fixed Initial Doses among the Participating Member States within [***]. Such allocation shall indicate for each Participating Member State the precise volume of Initial Doses to be delivered to each Participating Member State. The Commission shall communicate the allocation for distribution of the (i) Flexible Initial Doses among the Participating Member States pursuant to the procedure specified in Article I.4.2 and (ii) Option Doses pursuant to the procedure specified in Article I.4.4.
Within [***] after the notification by the Commission of the allocation for distribution of the Product among the Participating Member States, each Participating Member State shall place an order for its full allocated portion of the Product by sending the Contractor the duly completed and signed Vaccine Order Form (the format for which is set out in Annex II) in PDF format by email to the Contractor’s email address as specified in the Vaccine Order Form.
Within [***] of receipt of the Vaccine Order Form from a Participating Member State, the Contractor must send back to the Participating Member State the Vaccine Order Form duly signed and dated in PDF format by email to
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the Participating Member State’s e-mail address specified in the Vaccine Order Form. If the Contractor refuses without valid reason to sign the Vaccine Order Form at the conditions laid down in the APA and in Annex II, the Contractor may be considered in breach of its obligations under this APA as set out in Article II. 16.2. If the Participating Member State refuses without valid reason to sign the Vaccine Order Form at the conditions laid down in the APA and in Annex II, the Participating Member State may be considered in breach of its obligations under this APA.
I.4.4.Option Increase
During the term of the APA and subject to the terms of Article I.4.7.1, the Commission, acting on behalf of one or more of the Participating Member States, may elect to increase the number of doses of Product by up to an additional 100 million doses of the Product in one or more tranches (the “Option Increase”) at the times set forth below.
At the request of the Commission, the Contractor shall provide to the Commission an estimated delivery schedule for the Product, comprising the Option Increase, in one or more tranches, for delivery during the calendar year 2022 and/or 2023 to enable the Commission and the Participating Member States to determine whether or not to exercise an Option Increase. The estimated delivery schedule shall detail timelines of supply of the Option Increase for two scenarios. The first scenario will detail an estimated delivery schedule supplied exclusively from EU Manufacturing Facilities and the second scenario will detail an estimated delivery schedule supplied from EU Manufacturing Facilities and other manufacturing facilities which have the necessary regulatory approvals in the EU and are listed in the Marketing Authorisation. The Commission and/or Participating Member States may choose which schedule the Contractor uses to supply Additional Option Doses.
On or prior to [***] after delivery of the estimate, the Commission will be entitled to exercise the Option Increase by written notice from the Commission to the Contractor, which written notice shall specify which supply schedule it elects, the Participating Member States participating in such Option Increase (the Exercising Member States”), the aggregate number of doses of Product to be purchased for the Option Increase, and the allocation of doses of Product to be purchased by and delivered to each such Exercising Member State (the Additional Option Doses”). For clarity, if the Commission exercises the Option Increase, in one or more tranches, for less than one hundred million (100,000,000) doses in the aggregate, then all references to Option Increase in this APA will be limited to the amount of doses of Product so exercised.
The Parties shall memorialize the number of doses of Product in the Option Increase (the Option Doses”), and schedule of delivery in writing and Contractor and the Exercising Member States shall execute Vaccine Order Forms for the Option Doses. The Option Doses will be paid by the Exercising Member States within a period of [***] after the receipt of the Contractor’s invoice following each delivery of such Option Doses to the Exercising Member States. The provisions of this APA apply to such Option Increase mutatis mutandis unless otherwise agreed.
I.4.5.Development timeline; Special Commitments
Contractor’s COVID-19 Vaccine is eligible for review under the centralized procedure with European Medicines Agency (EMA). Contractor commits to submit data packages as soon as they become available to accelerate review. The rolling review process has begun with the non-clinical package on [***]. The clinical and Chemistry, Manufacturing and Controls (CMC) packages should be available for submission throughout [***].
The Contractor shall have sufficient manufacturing capacity to be capable of manufacturing and supplying the Product to the Commission on behalf of the Participating Member States in accordance with the provisions of this APA. The Contractor may not manufacture or have manufactured the Product at manufacturing sites located outside the territory of the European Union (EU) or the European Economic Area without the prior written consent of the Commission, which consent may not be unreasonably withheld, conditioned or delayed if the manufacturing at such sites is required to accelerate production and supply under this APA. For the avoidance of doubt, consent may be withheld in particular in case the relevant manufacturing site does not comply with applicable Union law or regulatory requirements, including Good Manufacturing Practices, or when the manufacturing site is not listed in the Marketing Authorisation. The manufacturing sites as identified in Annex V are deemed approved for the duration of
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the APA, subject to each one of these sites fulfilling at any point in time all applicable Union law regulatory requirements, including being listed in the Marketing Authorisation.
The Contractor has invested in building out a robust supply chain with the majority of facilities located within the EU. The Contractor shall use Reasonable Best Efforts to supply, [***], the Products to the Participating Member States using only manufacturing facilities of itself or of contract manufacturers located in the European Union.
[***]
I.4.6.Right of the Participating Member State to re-sell and/or donate
The Participating Member States shall be entitled to re-sell or donate any of the Products supplied to them pursuant to this APA to any other EU or EEA Member State and Switzerland provided they have paid Contractor for such Product and are not otherwise in breach of this APA and their Vaccine Order Form. Any such recipient EU Member State, EEA Member State or Switzerland shall execute with Contractor a Vaccine Order Form, or in the case of EEA Member States or Switzerland, an agreement equivalent to a Vaccine Order Form.
The Participating Member States shall take the appropriate measures to ensure that the Products supplied to them pursuant to this APA will not be (i) re-sold or (ii) donated to another country outside the EU and EEA and Switzerland, including for donation directly or indirectly [***] without prior written consent of the Contractor. Provided a Participating Member State has paid Contractor for Product and are not otherwise in breach of this APA and their Vaccine Order Form, the Contractor shall not unreasonably withhold, condition or delay such consent to the resale or donation. The Contractor acknowledges that such re-sale or donation of the Products to countries outside the EU and EEA and Switzerland may be required in order to provide a global solution to COVID-19 Pandemic and limit the risk of emergence of new variants of the COVID-19.
The Parties understand and agree, however, that in connection with any re-sale or donation the following shall apply: (a) [***], and (b) [***].
For the avoidance of doubt, the Contractor may not require the reselling or donating Participating Member State to guarantee in relation to the Contractor the performance of any obligations of the recipient country including the indemnification by the recipient country nor can the Contractor require the reselling or donating Participating Member State to commit to any indemnification of losses arising out of use and deployment of resold or donated doses outside the reselling or donating Participating Member State’s jurisdiction.
The Parties acknowledge that, should re-sale to any third country, including EEA Member States and Switzerland, take place, the Participating Member State re-selling the Product has an obligation to reimburse the Commission the Down Payment per dose paid by the Commission to the Contractor.
In addition, the Participating Member State envisaging a re-sale or donation shall ensure, at its expense or at the expense of the receiving country, that the required regulatory/quality/GMP/GDP processes to enable such re-sale or donation (i.e. for the transport of the Product from the Participating Member State envisaging such re-sale or donation to the central warehouse of the receiving country) are in place.
In case of a donation or a re-sale to another EU or EEA Member State or Switzerland, the Contractor may, at its sole discretion and without incurring additional costs, attempt to support or execute implementation of regulatory/quality/GMP/GDP requirements, particularly if the Products have not yet been delivered to the Participating Member State.
I.4.7.Delivery and Manufacturing Sites
The Contractor shall deliver the Product doses to the Participating Member States in accordance with the allocation and the other terms and conditions of this APA. The Contractor shall use Reasonable Best Efforts, to manufacture, [***], the Products only at the Contractor’s or its contract manufacturers’ manufacturing facilities located in the European Union. The Contractor shall deliver Product doses to the Participating Member States in a rolling non-discriminatory manner on the schedule and in the quantities as set out in the following initial [***] delivery schedule (“Initial Delivery Schedule”).
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To support supply of doses the Additional Option Doses delivered in connection with the Option Increase, Contractor commits by [***], to establish the necessary additional manufacturing facilities located in the European Union and/or will have presented a plan to the Commission that [***]. In each instance these European facilities would be used for the purpose of providing prioritized supply to the Commission and/or Member States (“EU Manufacturing Facilities”). [***]. [***].
I.4.7.1.Initial Delivery Schedule and Initial Planning Schedule
The Fixed Initial Doses shall be delivered according to the following [***] Initial Delivery Schedule based on an estimated [***] Marketing Authorisation by the Commission. The Flexible Initial Doses are earmarked for the Participating Member States on the basis of the following Initial Planning Schedule for Flexible Initial Doses:
Initial Delivery Schedule (for Fixed Initial Doses)
[***] [***] [***]
[***] [***] [***] [***] [***] [***] [***] [***]
Number of Fixed Initial Doses [***] [***] [***]
Cumulative fixed Initial Doses [***] [***] [***]

Initial Planning Schedule (for Flexible Initial Doses)
[***] [***] [***]
[***] [***] [***] [***] [***] [***] [***] [***]
Number of flexible Initial Doses [***] [***] [***] [***] [***] [***]
Cumulative Flexible Initial Doses [***] [***] [***] [***] [***] [***]

The Commission and the Participating Member States further acknowledge that the Initial Delivery Schedule above and the initial delivery of Product (“Delivery Start Date”) in such Initial Delivery Schedule is based on the assumption that Contractor will have submitted final documentation for consideration of Marketing Authorization to EMA on or before [***] (“Expected Submission Date”) The precise Delivery Start Date will be dependent on receipt of Marketing Authorization.
The Delivery Start Date shall be as soon as possible, but in any case within [***] after the granting of the Marketing Authorisation irrespective of when Marketing Authorisation is granted. The Contractor commits to meet this anticipated Delivery Start Date in the EU, and will consequently have to advance fill, finish, label and pack Product in anticipation of receipt of Marketing Authorisation. Accordingly, the Commission and the Participating Member States accept and agree that shipments of Product prior to [***] may have a shorter shelf life (but not below [***]) upon delivery to the Participating Member States. Product delivered from [***] onwards will have the regular shelf life as per the Marketing Authorisation. Contractor commits to work expediently and continuously on the extension of shelf life, and to deliver the Product with the longest possible shelf life.
Under no circumstances will any delivery of Product doses be required under this APA prior to receipt of Marketing Authorisation for the Product unless mutually agreed by the Commission, the relevant Participating Member State(s) and the Contractor. The Contractor shall use Reasonable Best Efforts as referred to in Article I.12 to obtain Marketing Authorisation for the Product as soon as reasonably possible in order to meet the anticipated Delivery Start Date under the Initial Delivery Schedule.
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I.4.7.1.1.Updated Delivery Schedules Prior to Obtaining Marketing Authorization
The Contractor shall, [***], communicate any anticipated changes to the Expected Submission Date and/or the Initial Delivery Schedule to the Commission prior to obtaining Marketing Authorisation. At least [***] in advance of expected date of receipt of Marketing Authorization, the Contractor shall inform the Commission in writing of the date of the actual Delivery Start Date and provide the Commission an updated delivery schedule which details the anticipated amounts and dates of each of [***] delivery of Product (“Updated Delivery Schedule”). The Delivery Start Date shall be at most [***] after the receipt of Marketing Authorisation irrespective of the date of granting of the Marketing Authorisation.
Provided that the Marketing Authorisation is granted on or before [***], the Updated Delivery Schedule shall be identical to the Initial Delivery Schedule. In case the Marketing Authorisation is not granted by [***], the Contractor acknowledges the strong interest of the Participating Member States, given the current pandemic situation, in receiving the Product [***] in accordance with the Initial Delivery Schedule and acknowledges in this context also the importance of security of supply. Therefore, the Contractor shall use its Reasonable Best Efforts to ensure that deliveries of Product doses set out in the Updated Delivery Schedule are made within a schedule that is as close as reasonably possible to the Initial Delivery Schedule, and the Contractor shall make all possible efforts to catch up in its deliveries with the Initial Delivery Schedule. To this effect, if Marketing Authorisation is received after [***] then the Updated Delivery Schedule will reflect the delay between [***] and the date of the Marketing Authorisation.
If the anticipated delivery date of Product doses per an Updated Delivery Schedule is more than [***] after the corresponding delivery date for such Product doses in the Initial Delivery Schedule, a Participating Member State (or the Commission, acting on its behalf) may cancel its order for the number of Product doses that will be more than [***] late by providing written notice to the Contractor within [***] of the Commission’s receipt of such Updated Delivery Schedule. For the avoidance of doubt, if more than one Updated Delivery Schedule is communicated by the Contractor, the cancellation right pursuant to this paragraph shall also exist if the cumulative anticipated delay foreseen in those Updated Delivery Schedules exceeds [***] after the corresponding delivery date on which the Product would have been delivered as per the Initial Delivery Schedule.
If a Participating Member State elects to cancel delivery of Product pursuant to this Article I.4.7.1.1, the Participating Member State shall [***] and the Contractor shall be relieved of its obligation to deliver such Product units. The Down Payment attributable to such undelivered Product units ([***]% of the price per dose of Product) will be reimbursed to the Commission within [***] of Contractor’s receipt of written notice and/or credited against outstanding invoices and invoices of future deliveries of Product as the case may be.
I.4.7.2.Actual Late Deliveries, [***] and Cancellation
The Commission acknowledges that Contractor is in the process of scaling up and optimizing Product manufacturing and that manufacture and delivery of Product may be subject to disruptions outside of Contractor’s control such as the Acknowledged Root Causes for Delivery Delays mentioned below; accordingly, that notwithstanding anything herein to the contrary, the quantity of Product actually delivered [***] may vary by [***] of the total amount of doses under the Vaccine Order Form for such Participating Member State.
The Contractor, throughout the term of this APA, will have in place an effective supply management system that includes, inter alia, an early alert system. [***]. [***].
In the event that the Contractor has a delay in delivery of more than [***] of the doses foreseen for a given [***] in the Updated Delivery Schedule and that the delay exceeds a period of [***] after [***] in which delivery was foreseen as per the Updated Delivery Schedule, (“Late Delivery/ies”), the following provisions shall apply. The Contractor shall regularly inform the Commission and the Participating Member States of the expected delivery date of any product subject to Late Delivery.
If the Late Delivery is made more than [***] after [***] in which delivery was foreseen in the Updated Delivery Schedule, the Contractor shall [***]. [***].
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If the Late Delivery is made more than [***] after [***] in which delivery was foreseen in the Updated Delivery Schedule, the Contractor shall [***]. [***].
If the Late Delivery is made more than [***] after [***] in which delivery was foreseen in the Updated Delivery Schedule, the Contractor shall [***]. [***].
[***]
[***].
If a Late Delivery delay exceeds a period of [***] after the [***] in which delivery was foreseen as per the Updated Delivery Schedule, Contractor shall provide the Participating Member State (or the Commission acting on its behalf) without delay a supply schedule reflecting delivery timeframes for any doses from the Late Delivery not yet delivered. In such event, the Participating Member State (or the Commission acting on its behalf) shall either accept the revised supply schedule for such doses or cancel up to [***] of the amount of doses from the Late Delivery that have not yet been delivered The Participating Member State (or the Commission acting on its behalf) will provide written notice to the Contractor of its decision within [***] following its receipt of the revised supply schedule.
If a Participating Member State elects to cancel delivery of Product pursuant to this Article I.4.7.2, the Participating Member State shall be relieved of its obligation to pay for such undelivered Product units and the Contractor shall be relieved of its obligation to deliver such Product units. The Contractor will issue a credit for the Down Payment for any doses for which the Down Payment was paid but that were cancelled in accordance with the previous sentence. Such credit will be applied against outstanding payments for deliveries with any remaining credit being refunded to the Commission.
In case not all the Fixed Initial Doses are delivered by [***], the Commission shall have the unconditional right to cancel the delivery of the doses and in addition the unconditional right to terminate the APA.
[***] The Commission acknowledges that Contractor is in the process of scaling up and optimizing Product manufacturing, which involves biomanufacturing that may be inherently difficult to predict, especially during a pandemic. The Parties understand that, next to situations of Force Majeure, there may be a number of situations or events that can lead to a shortfall of doses and a delay in delivery of the Product; these situations [***] relate to timing of regulatory approvals of the manufacturing sites in Annex V, exceptional consumables and raw material shortages, strikes and / or third country export controls preventing successful shipments of crucial materials to their intended destinations, provided that such situation or event is not attributable to error or negligence on the part of the Contractor or on the part of its subcontractors and proven to be inevitable despite the Contractor exercising due diligence (“Acknowledged Root Causes for Delivery Delays”). Total supply of Product may be impacted by such events, and should not be seen by the Commission or Participating Member States as evidence of Contractor’s intentions to treat the Commission or the Participating Members States in an unfair manner.
I.4.7.3.Overall Delivery Considerations
In addition to the updates regarding the Initial Delivery Schedule per [***] and per [***], the Contractor shall provide the Commission and the Participating Member States with an estimated [***] delivery schedule detailing the relevant [***] of delivery. The Contractor will provide the Commission and the Participating Member States without delay with any possible change of that schedule. The Contractor may agree with the Participating Member States to make multiple deliveries over a [***] or over a [***], in varying quantities, and will do so on a rolling non-discriminatory basis as between all Participating Member States. Such deliveries will be pro rata to each Participating Member State based on the allocation provided by the Commission pursuant to Article I.4.3, subject to the Contractor’s minimum delivery volume and [***] cooperation with the Participating Member States.
The Contractor has put in place an effective supply management system so that the Contractor and its subcontractors will have sufficient raw materials, materials and other input items to manufacture and supply the Product in accordance with the applicable Delivery Schedule to the extent possible under current pandemic conditions. To limit exposure to risks of disruption in the supply chain, the Contractor also shall use its Reasonable Best Efforts to use contract manufacturing organisations located in the European Union.
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I.4.7.3.1.Form of Delivery
The supply of Product doses will be delivered by the Contractor to the Participating Member States [***]. [***].
I.4.7.4.Distribution
Following delivery of the Product doses, each Participating Member State will solely control and assume all responsibility, at such Participating Member State’s own cost and expense, for conducting all distribution and related activities relating to the Product doses in the Participating Member State’s territory.
I.5.Acceptance/Rejection of Product
I.5.1.Subject to the terms of this Article, and without prejudice of Article II.5.1, a Participating Member State may claim a remedy described in this Article I.5.5 (a “Product Claim”) for any unit of Product delivered to such Participating Member State by the Contractor which at the time of delivery (a) does not comply with the final specifications for the Product as approved in the Marketing Authorisation for the Product or (b) has been affected by a failure to comply with GMP or any applicable laws (“Deficient Product”). Such Participating Member State will visually inspect the Product, or review documentation provided by or on behalf of the Contractor, upon delivery or receipt (as applicable) and will no later than within [***] (the “Inspection Period”) following Contractor’s delivery of Product give the written notice of the Product Claim. Notwithstanding the foregoing, a Participating Member State has the right to extend the Inspection Period for an additional [***] period with at least [***] advance notice and a detailing of the circumstances for such extension. A Participating Member State will be deemed to have accepted a delivery of Product if not rejected prior to expiry of such Inspection Period. In the case of any deficiency at the time of delivery to such Participating Member State that was not reasonably susceptible to discovery upon such delivery or receipt (a “Latent Defect”), a Participating Member State will not later than [***] after discovery by such Participating Member State give the written notice of the Product Claim; provided Product will not be eligible for a Latent Defect Product Claim if its shelf life date has been exceeded, provided that the minimum shelf life requirements of the APA on delivery were respected by the Contractor.
I.5.2.The Contractor will have no obligation for any Product Claims to the extent the Deficient Product was caused exclusively by actions or omissions of such Participating Member State or Third Parties not acting on behalf of the Contractor occurring after the time of delivery of the Product by the Contractor or its designee.
I.5.3.Upon receipt of a Product Claim, the Contractor will have [***] to advise the Participating Member State by notice in writing whether it disagrees with the content of the Product Claim. If, after joint testing or investigation has been performed, the Parties still cannot agree on whether such Product is Deficient Product (a “Technical Dispute”), the Contractor or the Participating Member State may refer such Technical Dispute to a technical expert for resolution in accordance with Article I.5.4 .
I.5.4.If any Technical Dispute arises, the Contractor and the Participating Member State will first try to resolve it amicably. The Contractor or the Participating Member State will send a notice of a Technical Dispute to the other, and each Party will appoint, within [***] from receipt of the notice, an appropriate single representative having full power and authority to resolve the dispute. The representatives will meet as necessary in order to resolve the Technical Dispute. If the representatives fail to resolve the matter within [***] from their appointment, or if a Party fails to appoint a representative as required above, the expert determination procedure below may be started by either Party. Within [***] after the written request, the Contractor and the Participating Member State will appoint a single, independent, mutually agreed expert with experience and expertise in the subject matter of the dispute. If the Contractor and the Participating Member State do not appoint a mutually agreed expert within such period of [***], each Party is entitled to have the expert appointed in court, in accordance with Article I.10.2(b). As a condition of the expert’s appointment, the Contractor and the Participating Member State will ensure that the expert agrees to disclose any actual or potential conflicts of interest promptly as they arise. The Contractor and the Participating Member State do not intend that the expert acts as an arbitrator and therefore any matters requiring legal interpretation or adjudication including disputes relating to the conduct of the Technical Dispute are solely reserved for the dispute resolution procedure under Article I.11.2. For the avoidance of doubt, any technical determination by the expert under a Technical Dispute may be used as evidence under Article I.II.2. The Contractor and the Participating Member State will require the expert to provide an opinion on each referred issue (with
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reasonably detailed reasoning) within [***] (or as agreed by the Contractor and the Participating Member State with the expert). The Contractor and the Participating Member State will give to the expert all the evidence and information within their respective possession or control as the expert may reasonably request, which they will disclose promptly and in any event within [***] of a written request from the expert to do so. At all times the Contractor and the Participating Member State will co-operate and seek to narrow and limit the issues to be determined. The technical determination of the expert will, except for fraud or manifest error or where an unapproved conflict of interest is discovered, be final and binding upon the Contractor and the Participating Member State with respect to the referred Technical Dispute. Each of the Contractor and the Participating Member State will bear its own costs for any matter referred to an expert under this Article I.5.5 and, in the absence of express agreement to the contrary, the costs and expenses of the expert will be shared equally by the Contractor and the Participating Member State.
I.5.5.If a Participating Member State makes a Product Claim pursuant to this Article I.5 and (a) the Contractor and the Participating Member State agree the Product that is the subject of such Product Claim is Deficient Product (such agreement not to be unreasonably withheld, conditioned or delayed) or (b) any previously delivered Product is determined to be Deficient Product due to a Latent Defect, the Contractor will replace such Deficient Product as soon as reasonably practicable after the time of such agreement or determination (and in no event later than [***] after the time of such agreement or determination). If such replacement products are not delivered within this time limit and without prejudice to Article I.4.7.1.1 and I.4.7.2, the Participating Member States shall have the choice, at their own discretion, whether to opt for a later delivery of replacement products, or to obtain reimbursement of the purchase price for the Deficient Product to the Participating Member States in question in so far as that purchase price was already paid.
I.5.6.Upon resolution of a Product Claim as specified in in Article I.5.5, the Participating Member State shall dispose of the Deficient Product in compliance with applicable laws and regulations. ‘The Contractor will bear the cost of destruction of any such Deficient Product.
I.5.7.Without prejudice to the no limitations of liability provision set out in Article II.4.6, the remedies described in Article I.5.5 shall be a Participating Member State’s sole and exclusive remedy and Contractor’s entire liability for a Product Claim for the supply of specific units of Deficient Product.
I.6.Warranties
I.6.1.The Contractor warrants to the Commission and the Participating Member States that
(a)all Product doses supplied to the Participating Member States shall at the time of delivery conform with the final specifications for the Product as approved in the Marketing Authorisation for the Product;
(b)all Product doses supplied to the Participating Member States shall at the time of delivery have been manufactured in conformance with GMP and all applicable laws (together with the warranty in (a), the Production Warranties”); and
(c)at the time of delivery, it has good title to the Product doses delivered to the Participating Member States pursuant to this APA and it shall pass such title to the Participating Member States free and clear of any security interests, liens, or other encumbrances, including, to the knowledge of the Contractor, having obtained any necessary intellectual property rights.
(d)any claimed breach of the Production Warranties of specific units of the Product shall be resolved pursuant to Article I.5, without prejudice to Article II.5.1.
(e)as of the date hereof, this APA has been duly executed and is a legal, valid and binding obligation on it, enforceable against it in accordance with its terms; and as of the date hereof, it is not under any obligation, contractual or otherwise, to any Third Party that conflicts with or is inconsistent in any respect with the terms of this APA or that would impede the complete fulfillment of its obligations under this APA.
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(f)the Contractor has not entered and shall not enter into any contractual agreement with any Affiliate or third party with the effect of diverting to any third party, or of impeding or limiting the delivery of, the Product to be delivered to the Participating Member States under any of the delivery schedules under this APA. This clause does not pertain to Contractor’s obligations to GAVI under its existing advanced purchase agreement.
(g)Except for the foregoing express warranties, to the fullest extent not prohibited by applicable law, the Contractor expressly disclaims all other representations, warranties and covenants of any kind, whether express or implied.
I.7.Prices
I.7.1.Price per Dose of Product
The price per single dose of Product is specified in the following table and is based on the aggregate volume of doses of Product the Commission and Participating Member States procure for delivery in 2021 and/or 2022 and/or 2023 and reflects amongst other factors, the price for building capacity in the European Union and holding that capacity available:
[***] [***]
[***] [***]
[***] [***]
[***] [***]

Upon execution of the APA, the price per single dose of Product is [***] USD based on the Commission’s and Participating Member States ‘ commitment to procure the Fixed Initial Doses and the total price of the Fixed Initial Doses equals [***] USD (i.e., USD [***] multiplied by 20 million doses).
Additional doses procured for delivery in 2022 and/or in 2023 by the Commission through the Expression of Demand process set forth in Article I.4.2 or Option Increase process set forth in Article I.4.4 shall count toward the aggregate number of doses of Product for purposes of [***]. [***]. [***].
If by [***] (or by [***] in case of an exercise of the Option Increase for 2023), the amount of credit owed a Participating Member State exceeds the amount due to the Contractor, Contractor will issue a refund to such Participating Member State in an amount equal to such excess. [***].
[***].
All payments shall be made in Euros converted pursuant to the methodology specified in Article I.8.4.
The price is exclusive of any and all governmental taxes, including, without limitation, value added tax, customs, charges or levies of every kind (“Taxes”) that Contractor may be required to collect or pay upon sale, transfer or shipment of Product to the Participating Member State under any applicable laws or regulations. Taxes will be added to the price where applicable. Each Participating Member State will be solely responsible for all such Taxes, including any interest and penalties.
I.7.2.Down payment under the APA
To ensure proper and rapid research and development of a vaccine against COVID-19, and to enable the Contractor to conduct the activities contemplated in Article I.8.2, the Commission will make an upfront payment of [***] of the total price of the Fixed Initial Doses set forth in Article I.7.1 (the Down Payment”), payable within [***] after the receipt of an invoice following signature of this APA.
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The Down Payment is [***] Euros which is based on USD [***] calculated using the Exchange Rate Methodology and equals [***] of the total price of the Fixed Initial Doses as laid down in Article I.7.1. The Down Payment shall be fully deductible from the price of each dose of the Fixed Initial Doses at a rate of [***] per single dose. The price for each dose for the Fixed Initial Doses remaining for the Participating Member States after deduction of the Down Payment is consequently USD [***].
I.8.Payment Arrangements
I.8.1.Pre-financing (Payment of the Down Payment)
Within [***] following signature of the APA, the Contractor shall send to the Commission an invoice for the payment of the Down Payment in paper format or in PDF format by email. The invoice shall indicate the reference number of the APA and comply with the invoicing terms of the APA.
The Down Payment shall be paid in a single instalment.
The invoice for the Down Payment must contain the following information:
-    Name of the addressee
-    APA number
-    Contractor’s name and bank account.
The Commission must approve the submitted documents and pay the Down Payment within [***] after receipt of the invoice and the supporting documents.
I.8.2.Utilisation of the Down Payment
[***].[***]. [***].
[***].
I.8.3.Payment for Supply of Product
After the Commission pays the Down Payment, the balance of payments for the supply of Initial Doses will be paid by each Participating Member State in accordance with the allocation and the relevant signed Vaccine Order Form(s).
The Contractor must send an invoice in paper format or in PDF format by email to the Participating Member States for payment by the Participating Member States under Articles I.4.2, I.4.4 and I.7.2.
The Contractor will send the invoices to each Participating Member States along with each delivery of Product. All amounts set forth in each invoice for a delivery of Product not rejected pursuant to Article I.5.1 shall be payable by a Participating Member State within [***] of the date of a Participating Member State’s receipt of such invoice.
The Contractor must send an invoice in paper format or in PDF format by email for payment due under the Vaccine Order Form accompanied by the following documentation (as applicable):
-    Proof of delivery of the Products to the place(s) of delivery indicated by the Participating Member State concerned in the Vaccine Order Form
Each invoice must contain the following information:
-    Name of concerned Member State
-    APA and Vaccine Order Form number/reference
-    Order reference
-    Date of receipt of Marketing Authorisation for the Product
-    Product
-    Quantity delivered
-    Delivery reference and date
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-    Contractor name and bank account.
The Participating Member States must approve the submitted documents or deliverables and pay within [***] from receipt of the invoice.
I.8.4.Currency
Any payments to be made by the Commission or the Participating Member States under this APA, including under any Vaccine Order Form, shall be made, and any invoices issued pursuant to this APA shall be issued, in Euros (EUR).
All payments required under this APA (including any Vaccine Order Form) are based on a unit price set in United States Dollars (USD). As a currency conversion in EUR will be required in connection with such invoices, the amounts payable hereunder shall be expressed in EUR equivalent using the Exchange Rate Methodology (as defined below).
The “Exchange Rate Methodology” is calculated as the average of the Euro Foreign Exchange Reference Rates as published by the European Central Bank from the beginning of each calendar year up to the pen-ultimate day of the month preceding the invoice, whereby all days are taken into account on which the Euro Foreign Exchange Rate is published. For the purposes of the Down Payment the conversion between the euro and USD is calculated by applying the average exchange rate of the Euro Foreign Exchange Reference Rates as published by the European Central Bank from the first semester of 2021, i.e. from 1 January 2021 to 30 June 2021, whereby all days are taken into account on which the Euro Foreign Exchange Rate is published (the “Benchmark Rate”). This rate is [***]
For future invoicing under the APA, the Parties agree that the rates resulting from the exchange rate methodology in the paragraph above shall reside in a band from [***] the Benchmark Rate.
I.8.5.Bank account
Payments must be made to the Contractor’s bank account denominated in euro identified as follows:
Bank:
[***]
[***]
[***]
[***]
I.8.6.Communication Details
For the purpose of this APA, communications must be sent to the following addresses:
The Commission:
European Commission
Directorate-General for Health and Food Safety
E-mail: [***]
[***]
Participating Member States will provide the communication details in the Vaccine Order Forms.
Contractor (or leader in the case of a joint tender):
John A. Herrmann III
EVP, Chief Legal Officer and Corporate Secretary
Novavax, Inc.
21 Firstfield Road, Gaithersburg, Maryland 20878 USA
E-mail: [***]
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By derogation from this Article, different contact details for the Commission, the Participating Member States or the Contractor may be provided in Vaccine Order Forms.
I.9.Vaccine IP rights
The Commission and the Participating Member States acknowledge and agree that the Contractor shall be the sole owner of all intellectual property rights generated during the development, manufacture, and supply of the Product, including all know-how (collectively, the “Vaccine IP Rights”). The Contractor shall be entitled to exclusively exploit any such Vaccine IP Rights. Except as expressly set forth in this APA, the Contractor does not grant to the Commission or any of the Participating Member States by implication, estoppel or otherwise, any right, title, license or interest in the Vaccine IP Rights. All rights not expressly granted by the Contractor hereunder are reserved by the Contractor. To the extent a Participating Member State, directly or indirectly, creates, discovers, reduces to practice or otherwise generates intellectual property relating to the composition or method of use of the Product and in connection with the activities contemplated by this APA, such intellectual property will be solely owned by the Contractor. The Participating Member State shall assign, and hereby does assign, to the Contractor all such intellectual property, and will take reasonable actions requested by the Contractor, at the Contractor‘s expense, to record and confirm the Contractor’s ownership thereof, including signing formal documentation evidencing the Contractor’s ownership thereof.
I.10.Applicable law and settlement of disputes
I.10.1.This APA shall be governed by the laws of [***].
I.10.2.Dispute Resolution
(a)In the event of a dispute relating to or in connection with this APA or a Vaccine Order Form between the Contractor and the Commission or a Participating Member State, the Parties shall first refer such dispute to informal dispute resolution discussions between their respective representatives. The Contractor or the Commission on behalf of itself or of the Participating Member States may initiate such informal dispute resolution by sending written notice of the dispute to the other Party, and, within [***] of such notice, the representatives shall meet and attempt to resolve the dispute by good faith negotiations.
(b)The Commission, the Participating Member States, the Contractor and Novavax CZ irrevocably submit to the [***] jurisdiction of the courts located in [***] to settle any dispute which may arise under or in connection with this APA or the legal relationships established by this APA including under a Vaccine Order Form.
The Contractor and Novavax CZ acknowledge that the Commission is duly authorised by each Participating Member State (i) to send a notice of default to the Contractor and Novavax CZ on behalf of the Participating Member States, (ii) to introduce and pursue legal proceedings and enforce any resulting judgment on behalf of the Participating Member States, and (iii) to take any other action or legal or procedural act related to (i) and (ii) on behalf of the Participating Member States, which the Commission considers useful or necessary to protect the Member States’ interests under this APA or any Vaccine Order Form.
I.11.Other special conditions
I.11.1.Each Participating Member State and the Contractor will each maintain records necessary to permit a Recall of any Product delivered to such Participating Member State.
I.11.2.Each Participating Member State and the Contractor will notify the other Party promptly after notifying the European Medicines Agency of any information which might affect the safety or effectiveness of the Product or which might result in the Recall or seizure of the Product in the Participating Member State’s territory.
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I.11.3.Upon receiving this notice or upon this discovery, such Participating Member State and the Contractor will stop making any further shipments of any Product specific to the Product lot under recall in their possession or control in such Participating Member State’s territory until a decision has been made whether a Recall or some other corrective action is necessary.
I.11.4.The decision to initiate a Recall or to take some other corrective action, if any, with respect to the Product in such Participating Member State’s territory will be made by the competent authority concerned, or by the Contractor, in agreement with the competent authority(ies) concerned.
I.11.5.If: (i) any regulatory authority issues a decision, order or, following the issuance of a safety warning or alert about a Product, a written request that any Product be Recalled in such Participating Member State’s territory; (ii) a court of competent jurisdiction orders a recall in such Participating Member State’s territory; or (iii) the Contractor in agreement with the concerned competent authority(ies) determines that any Product should be recalled in such Participating Member State’s territory (each a ‘Recall’), then the Contractor, the Participating Member State(s) and the competent authority(ies) shall assist each other in the Recall process, as appropriate, having regard to all applicable laws, and especially (a) the EU Guidelines for Good Manufacturing Practice for Medicinal Products for Human Use and Veterinary Use — Part I — Chapter 8 “Complaints, Quality Defects and Product Recalls” and (b) the compilation of Community procedures on inspections and exchange information in the meaning of article 3 (1) of the Commission Directive 2003/94/EC of 8 October 2003 laying down the principles and guidelines of good manufacturing practice in respect of medicinal products for human use and investigational medicinal products for human use.
In the event of any Recall, [***].
Further, in the event of any Recall not attributable to a Participating Member State’s act or omission, the Contractor shall, at Contractor’s own election, either (i) [***] or (ii) [***].
I.11.6.The Contractor shall [***].
I.11.7.The Contractor shall use Reasonable Best Efforts to obtain Marketing Authorisation for the Product as regards its use in the entire adult population in the EU. To that end, Contractor participated in a pre-submission review meeting with EMA, the Rapporteur, Co-Rapporteur, and Peer Reviewer on [***] to discuss the status of the program and submission procedures and timelines. In Q1 2021, Contractor initiated Rolling Submission / Review procedures in accordance with the COVID-ETF immediately following endorsement by the CHMP. If the Contractor first obtains a conditional Marketing Authorisation for the Product, the Contractor shall use Reasonable Best Efforts to obtain full Marketing Authorisation as soon as possible upon completion of the dataset necessary to obtain such full Marketing Authorisation.
I.11.8.The Contractor shall provide [***] to the Commission and the Participating Member States, via the Commission, the following information as part of and until its submission for Marketing Authorisation and GMP-compliant production:
(a)[***];
(b)[***];
(c)[***].
For the duration of this APA, the Contractor shall also provide [***] to the Commission and the Participating Member States, via the Commission, information on [***].
I.11.9.The Parties acknowledge (a) the interest of the Participating Member States to purchase a vaccine that is effective also against variants and mutations of the SARS-CoV-2 coronavirus 2019 strain identified as the cause of the pandemic outbreak in early 2020, and (b) the Contractor may develop one or more alternative versions of the Product to target any variants or mutations identified to COVID-19 Virus (each a “Variant Product”). The
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Contractor shall use Reasonable Best Efforts to ensure the continued efficacy of the vaccine to enable the Participating Member States to immunize its citizens as most appropriate.
For clarity, the Contractor may develop a given Variant Product under a new Marketing Authorisation or as a variation under the Marketing Authorisation for the Product. In the event that the Contractor elects to submit a new Marketing Authorisation application or to seek a variation under the Marketing Authorisation for the Product, the Contractor will ensure that such application for Marketing Authorisation is submitted to EMA on a concurrent timeline with similar applications made in other jurisdictions, and, in any event, not later than [***] after the first application for Authorisation is made anywhere in the world.
In case the Contractor intends to submit an application for Marketing Authorisation for a Variant Product (including through a variation of the Marketing Authorisation for the Product) to the EMA, the Contractor shall [***] (“Variant Product Information”). The Contractor acknowledges and agrees that if Marketing Authorisation for a Variant Product is obtained, the Participating Member States shall have the right to purchase such Variant Product, and [***].
Once Contractor has determined the total number of doses of Variant Product available, including for the Commission/Participating Member States, Contractor will notify the Commission in writing of both the amount of available doses allocated to this APA and estimated delivery schedule. The amount of available Variant Product doses allocated to this APA [***], including the Flexible Initial Doses as referred to in Article I.4.2 and I.4.7.1.
The Commission shall, within [***] of receipt of such estimated delivery schedule, notify Contractor in writing of the Participating Member States’ intention of whether or not to obtain Variant Product. If the Commission elects to obtain the Variant Product, Contractor and each Participating Member State obtaining Variant Product shall execute a modification to their Vaccine Order Form memorializing the terms of the Variant Product request, including how many units of Product will be substituted for Variant Product. [***]. If the Commission elects not to request Variant Product, the Commission shall also include in their notice whether or not Participating Member States elect to continue to receive Product or cancel the remaining deliveries of Product. If the Commission elects to continue to receive the remaining deliveries of Product, Contractor shall continue to deliver Product pursuant to the APA. If the Commission elects to cancel receipt of the Product, Contractor shall deliver the following [***] deliveries of Product, and the Down Payment attributable to the remainder of undelivered Fixed Initial Doses ([***] of the price per dose of Product) will be reimbursed to the Commission within [***] of Contractor’s receipt of written notice and/or credited against outstanding invoices and invoices of future deliveries of Product as the case may be.
The above process will result in an agreed delivery schedule, containing the [***] number of doses of Variant Product and/or Product to be delivered to the Participating Member States (“Variant Product Delivery Schedule”). The Variant Product Delivery Schedule shall qualify as an Updated Delivery Schedule within the meaning of Article I.4.7.1.1, so that the rules of Article I.4.7.2 apply to deliveries made under the Variant Product Delivery Schedule. For the avoidance of doubt, Article I.4.7.1.1 shall not apply to the Variant Product Delivery Schedule.
If the Participating Member State(s) elect not to request Variant Product. Contractor shall be free to reallocate such Variant Product to its other bilateral customers and Commission/Participating Member States.
For clarity, if Marketing Authorisation is granted for a Variant Product prior to the date that an Option Increase is exercised in accordance with Article I.4.4, the Option increase can be exercised, in whole or in part in accordance with the preceding paragraphs, for the Variant Product.
In the event an Option Increase is exercised for Variant Product or Paedatric Product, the right of the Commission and/or Participating Member States to terminate the APA on [***] pursuant to Article I.4.7.2 for failure to deliver the Fixed Initial Doses of Product shall expire and be of no further force and effect.
I.11.10.If the Contractor accrues the necessary data required by EMA for paediatric use, the Contractor commits to use its Reasonable Best Efforts to obtain Marketing Authorisation for paediatric use (i.e. use in the population under 18 years old) for the Product (“Paediatric Product”) and [***]. For the avoidance of doubt, the extension of the authorised indication to include any or all sections of the paediatric population without any adaptation to the
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formulation or dosage compared to the adult vaccine should not be considered a Paediatric Product. If the Contractor has submitted an application for authorisation of its product for paediatric use to the EMA, Article I.11.9 shall apply mutatis mutandis to the Paediatric Product.
I.12.Definitions
For the purpose of this APA, the following definitions (indicated in italics in the text) apply:
‘Acknowledged Root Causes for Delivery Delays’: has the meaning set forth in Article I.4.7.1.1.
‘Affiliate’: with respect to a Party, any other individual, partnership, corporation, limited liability company, association, a joint stock company, trust, joint venture, unincorporated organization, or a governmental entity (or any department, agency, or political subdivision thereof) (“Person”) that controls, is controlled by, or is under common control with such Person. For the purpose of this definition only, “control” (including, with correlative meaning, the terms “controlled by” and “under the common control”) means the actual power, either directly or indirectly through one or more intermediaries, to direct or cause the direction of the management and policies of any Person, whether by the ownership of more than 50% of the voting security of such Person, by contract or otherwise.
‘APA’: has the meaning set forth in the preamble;
‘Benchmark Rate’: has the meaning set forth in Article I.8.4;
‘Breach of obligations’: failure by a Party to fulfil one or more of its contractual obligations under this APA;
‘Claim’: has the meaning set forth in Article II.5.1;
‘CMOs’: has the meaning set forth in Article II. 16.5;
‘Commission’: has the meaning set forth in the preamble;
‘Contractor’: has the meaning set forth in the preamble;
‘Confidential information or document’: any information or document received by either Party from the other or accessed by either Party in the context of the implementation of the APA, that any of the Parties has identified in writing as confidential. It may not include information that is publicly available;
‘Conflict of interest’: a situation where the impartial and objective implementation of the APA by the Contractor is compromised for reasons involving family, emotional life, political or national affinity, economic interest, any other direct or indirect personal interest, or any other shared interest with the Commission, the Participating Member State or any Third Party related to the subject matter of the APA;
‘COVID-19’: has the meaning set forth in the Recitals;
‘COVID-19 Pandemic’: has the meaning set forth in the Recitals;
‘Deficient Product’: has the meaning set forth in Article I.5.1;
‘Delivery Start Date’: has the meaning set forth in Article I.4.7.1;
‘Down Payment’: has the meaning set forth in Article I.7.2;
‘European Institutions’: has the meaning set forth in Article II.7.6;
‘EU Manufacturing Facilities’: has the meaning set forth in Article I.4.7;
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‘Exchange Rate Methodology’: has the meaning set forth in Article I.8.4;
‘Exercising Member State’: has the meaning set forth in Article I.4.4;
‘Expected Submission Date’: has the meaning set forth in Article I.4.7;
‘Expression of Demand’: has the meaning set forth in Article I.4.2;
‘Extended Term’: has the meaning set forth in Article II.5.3;
‘Financial Statement’: has the meaning set forth in Article II.16.5;
‘Fixed Initial Doses’: has the meaning set forth in Article I.4.2;
‘Flexible Initial Doses’: has the meaning set forth in Article I.4.2;
‘Flexible Initial Doses Delivery Schedule’: has the meaning set forth in Article I.4.2;
‘Force majeure’: any unforeseeable, exceptional situation or event beyond the control of the Parties that prevents either of them from fulfilling any of their obligations under the APA, including explosion, fire, earthquakes, flood and other natural disasters, embargoes, terrorist acts, war or civil war, insurrections, blockade, sabotage, plant breakdown, epidemic and pandemics, shortages, legislative measures or regulations promulgated by supranational, state or governmental authorities or acts, omissions or delays in acting by any supranational, state or governmental authority. The situation or event must not be attributable to error or negligence on the part of the Parties or on the part of the subcontractors and must prove to be inevitable despite their exercising reasonable due diligence. Defaults in performance of service, defects in equipment or material, labour disputes, strikes and financial difficulties may not be invoked as force majeure, unless they stem from a relevant case of force majeure as set out above. For the avoidance of doubt, the Covid-19 Pandemic may not be invoked as Force Majeure;
‘Formal notification’ (or ‘formally notify’): form of communication between the Parties made in writing by mail or email, which provides the sender with compelling evidence that the message was delivered to the specified recipient;
‘Fraud’: an intentional act or omission committed in order to make an unlawful gain for the perpetrator or another by causing a loss to the Union’s financial interests, and relating to: i) the use or presentation of false or incorrect statements or documents, which has as its effect the misappropriation or wrongful retention of funds or assets from the Union budget, ii) the intentional non-disclosure of information in violation of a specific obligation, with the same effect or iii) the misapplication of such funds or assets for purposes other than those for which they were originally granted, which damages the Union’s financial interests;
‘Good Manufacturing Practices’ or ‘GMP’: means the current practices for manufacture required by the standards, rules, principles and guidelines set out in Directive 2001/83/EC as last amended, Directive 2003/94/EC, Directive 2017/1572 and EudraLex - Volume 4 of the Rules Governing Medicinal Products in the EU entitled “EU Guidelines to Good Manufacturing Practice Medicinal Products for Human and Veterinary Use”;
‘Gross Negligence’ means [***];
‘Implementation of the APA’; the performance of the APA, the purchase of the Product envisaged in the APA, the signing and performance of Vaccine Order Forms;
‘Indemnified Persons’: has the meaning set forth in Article II.5.1;
‘Initial Doses’: has the meaning set forth in Article I.4.2;
‘Initial Delivery Schedule’: has the meaning set forth in Article I.4.7.1;
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‘Initial Planning Schedule’: has the meaning set forth in Article I.4.7.1;
‘Inspection Period’: has the meaning set forth in Article I.5.1;
‘Irregularity’: any infringement of a provision of Union law resulting from an intentional act or omission by an economic operator, which has, or would have, the effect of prejudicing the Union’s budget;
‘Late Delivery/ies’: has the meaning set forth in Article I.4.7.2;
‘Latent Defect’: has the meaning set forth in Article I.5.1;
‘[***]’: has the meaning set forth in Article I.4.7.2;
‘Losses’: has the meaning set forth in Article II.5.1;
‘Marketing Authorisation’: the approval under the relevant provisions of Regulation (EC) 726/2004 of the European Parliament and of the Council of 31 March 2004 laying down Union procedures for the authorisation and supervisions of medicinal products for human and veterinary use and establishing a European Medicines Agency, by the European Commission necessary for the placing on the market of the Vaccine in the territory of the European Union, including conditional marketing authorisation in accordance with Article 14-a of Regulation 726/2004 and as amended or varied from time to time;
‘Non-Indemnifiable Loss’ shall mean a Loss which a Participating Member State is legally prohibited from indemnifying pursuant to national or Union legislation;
‘Notification’ (or ‘notify’): form of communication between the Parties made in writing including by electronic means;
‘Option Doses’: has the meaning set forth in Article I.4.4;
‘Option Increase’: has the meaning set forth in Article I.4.4;
‘Party’ and ‘Parties’: have the meaning set forth in the preamble;
‘Performance of a Vaccine Order Form’: the execution of tasks and delivery of the Product by the Contractor to the Participating Member State;
‘Product’: the finished and packaged form of the Contractor’s vaccine against COVID-19 as well as any changes to the product following the initial marketing authorisation, including any improved version of that vaccine or any adapted version for the purpose of addressing mutations or variants of the SARS-CoV-2 virus (i.e., Variant Product) and/or any new formulation, including for the use in adolescents or in children (i.e., Paediatric Product);
‘Product Claim’: has the meaning set forth in Article I.5.1;
‘Production Warranties’: has the meaning set forth in Article I.6.1(b);
‘Professional conflicting interest’: a situation in which the Contractor’s previous or ongoing professional activities affect its capacity to implement the APA or to perform a Vaccine Order Form to an appropriate quality standard;
‘Reasonable Best Efforts’: means, [***];
‘Recall’: has the meaning set forth in Article I.11.5;
‘Refundable Items’: has the meaning set forth in Article I.16.5;
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‘Related person’: any natural or legal person who is a member of the administrative, management or supervisory body of the Contractor, or who has powers of representation, decision or control with regard to the Contractor,
‘Vaccine IP Rights’: has the meaning set forth in Article I.9;
‘Vaccine Order Form’: has the meaning set forth in the Recitals;
‘Taxes’: has the meaning set forth in Article I.7.1;
‘Technical Dispute’: has the meaning set forth in Article I.5.3;
‘Third Party’: any Person other than (a) the Commission or any of the Participating Member States or (b) the Contractor or its Affiliates’,
‘Third Party Claim’: has the meaning set forth in Article II.5.8;
‘Trademark’: trademarks, service marks, certification marks, trade dress, internet domain names, trade names, identifying symbols, designs, product names, company names, slogans, logos or insignia, whether registered or unregistered, and all common law rights, applications and registrations therefor, and all goodwill associated therewith;
‘Union’: means the European Union;
‘Unspent Amounts’: has the meaning set forth in Article II.16.5;
‘Updated Delivery Schedule’: has the meaning set forth in Article I.4.7.1.1;
‘[***]’: has the meaning set forth in Article I.4.2;
‘Variant Product’: has the meaning set forth in Article I.11.9;
‘Variant Product Delivery Schedule’: has the meaning set forth in Article I.11.9;
‘Variant Product Information’: has the meaning set forth in Article I.11.9;
‘Willful Misconduct’ means [***].
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SIGNATURES
For the Contractor, For the Commission, on behalf and in the name of the Participating Member States,
John A. Herrmann III, EVP, CLO
Ms Stella Kyriakides, Commissioner for Health and Food Safety
In the event of a joint tender submitted by a group of economic operators and where the group does not have legal personality or legal capacity, one member of the group is appointed as leader of the group.
Signature: /s/ John Herrmann III Signature: /s/ S. Kyriakides
Done at [place], [date] Gaitersburg MD 13 August 2021
Done at Brussels, [date] 16. August 2021.
For Novavax CZ
John A. Hermann III, Director
Signature: /s/ John Herrmann III
Done at [place], [date] Gaitersburg MD 13 August 2021

In duplicate in English.

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II.GENERAL CONDITIONS FOR THE APA
II.1.Severability
Each provision of this APA is severable and distinct from the others. If a provision is or becomes illegal, invalid or unenforceable to any extent, it must be severed from the remainder of the APA. This does not affect the legality, validity or enforceability of any other provisions of the APA, which continue in full force and effect. The illegal, invalid or unenforceable provision must be replaced by a legal, valid and enforceable substitute provision which corresponds as closely as possible with the actual intent of the Parties under the illegal, invalid or unenforceable provision. The replacement of such a provision must be made in accordance with Article II.11. The APA must be interpreted as if it had contained the substitute provision as from its entry into force.
II.2.Provision of Product
II.2.1.The Contractor must produce and supply the Product in accordance with GMP, the applicable laws in the Participating Member States and the provisions of this APA.
II.2.2.The Contractor must comply with the requirements provided for in this APA in all material respects.
II.2.3.All periods specified in the APA are calculated in calendar days, unless otherwise specified.
II.2.4.The Contractor must immediately inform the Commission of any changes in the exclusion situations as declared, according to Article 137 (1) of Regulation (EU) 2018/1046.
II.3.Communication between the parties
II.3.1.Form and means of communication
Any communication of information, notices or documents under the APA must:
(a)be made in writing in paper or electronic format in the language of the contract;
(b)be in the English language;
(c)bear the APA number and, if applicable, the Vaccine Order Form number;
(d)be made using the relevant communication details set out in Article I.8.6; and
(e)be sent by mail or email.
If a Party requests written confirmation of an e-mail within a reasonable time, the other Party must provide an original signed paper version of the communication as soon as possible.
The Parties agree that any communication made by email has full legal effect and is admissible as evidence in judicial proceedings.
II.3.2.Date of communications by mail and email
Any communication is deemed to have been made when the receiving Party receives it, unless this APA refers to the date when the communication was sent.
E-mail is deemed to have been received by the receiving Party on the day of dispatch of that email, provided that it is sent to the e-mail address indicated in Article I.8.6 and that the sending Party has received a delivery report or the receiving Party has acknowledged receipt. The sending Party must be able to prove the date of dispatch. Receiving Party shall acknowledge receipt as soon as e-mail is received. In the event that the sending Party receives a non-
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delivery report, it must make every effort to ensure that the other Party actually receives the communication by email or mail. In such a case, the sending Party is not held in breach of its obligation to send such communication within a specified deadline.
Mail sent to the Commission or the Participating Member State is deemed to have been received on the date on which the department responsible referred to in Article I.8.6 acknowledges its receipt.
Formal notifications are considered to have been received by the receiving Party on the date of receipt indicated in the proof received by the sending Party that the message was delivered to the specified recipient.
II.4.Liability
II.4.1.Without prejudice to Article II.5, the Commission and the Participating Member States are not liable for any damage or loss caused by the Contractor, including any damage or loss to Third Parties during or as a consequence of Implementation of the APA.
II.4.2.If required by the relevant applicable legislation, the Contractor must take out an insurance policy against risks and damage or loss relating to the Implementation of the APA. It must also maintain customary insurance as is standard practice in the pharmaceutical industry for companies of Contractor’s stage and size. Upon request, the Contractor must provide evidence of insurance coverage to the Commission.
II.4.3.If a third party brings any action against the Commission or the Participating Member State in connection with the performance of the APA or any Vaccine Order Forms, including any action for alleged breach of intellectual property rights, the Contractor will provide reasonable assistance to the Commission or the Participating Member State as appropriate, including by intervening in support of the Commission or the Participating Member State upon request.
II.4.4.[***].
II.4.5.Without prejudice to Article II.4.6, in no event will the Contractor’s aggregate liability in respect of claims made by the Commission or Participating Member States, of whatever nature, arising out of, under or in connection with this APA and/or any Vaccine Order Form or otherwise as a consequence of Implementation of the APA, exceed [***].
II.4.6.[***].
II.5.Indemnification
II.5.1.The Commission, on behalf of the Participating Member States, declares that the use of the Product produced under the APA will happen under epidemic conditions requiring such use, and that the administration of the Product will therefore be conducted under the sole responsibility of the Participating Member States. Hence, each Participating Member State shall indemnify and hold harmless the Contractor, its Affiliates and its and their respective sub-contractors, sub-licensees, officers, directors, employees and other agents and representatives (together, the “Indemnified Persons”) from and against any and all [***].
II.5.2.Intentionally omitted.
II.5.3.Such indemnification will only be available to the Indemnified Persons if such Losses arise with respect to [***]. In the event that [***]. If such grounds are present, the Commission and the Contractor will agree [***]. If the Contractor and the Commission agree that such grounds are not present, the Contractor and the Commission will [***]. If those grounds are still (partially) present, the Contractor and the Commission will [***].
II.5.4.Indemnification will not be available to the extent that [***].
II.5.5.Intentionally omitted.
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II.5.6.Assistance. In case liability has been incurred by the Indemnified Persons for Losses defined in Article II.5.1, the Contractor shall give the Participating Member State in question, or an independent expert as referred to in Article II.5.7, access to all information [***] for the Participating Member State to indemnify the Indemnified Persons and to verify whether the conditions pursuant to Articles II.5.1 and II.5.4 are fulfilled.
II.5.7.Access to Information. The Participating Member State shall be allowed to access the information as referred to in Article II.5.6 through an independent expert in the field of damages claims, in particular in the field of public health; provided that such independent expert is bound by a confidentiality agreement reasonably acceptable to the Contractor. In that case, the Participating Member State shall notify the Contractor in advance of its intention to use an expert and the identity of such expert. The Contractor shall be allowed to object to the use of an expert within [***] counted from such notification, if it puts forward reasonable grounds on the basis of which the specific expert in question should not be permitted access to such information, such as conflict of interest. In such case, the Participating Member State shall be allowed to appoint a new independent expert and notify that expert to the Contractor. If the Contractor also refuses that expert, the Participating Member State is entitled to seek a court appointed expert, in accordance with Article I.10.2(b).
II.5.8.Procedure. The Contractor shall promptly inform the relevant Participating Member State of any damages claim brought against any of the Indemnified Persons before the courts of that Participating Member State or other forum (“Third Party Claim”), stating the nature and basis of the damages claim in question and the maximum estimated amount of damages; provided that any failure or delay in providing such written notice will not relieve the Participating Member State of its indemnification obligations except to the extent the Participating Member State can demonstrate actual prejudice due to such delay or lack of notice. The Contractor shall keep the Participating Member State informed of any material developments relating to such Third Party Claim, including updates in the estimated maximum amount of damages.
II.5.9.Obligations. The Contractor shall ensure that the Indemnified Persons (i) use [***] to defend themselves against Third Party Claims and [***]; and (ii) [***] cooperate with the Participating Member State and their legal representatives in the investigation and defense of any matter which is the subject of indemnification. [***]. [***]. [***].
II.6.Conflict of interest and professional conflicting interests
II.6.1.The Contractor must take all the [***] measures to prevent any situation of conflict of interest or professional conflicting interest.
II.6.2.The Contractor must notify the Commission and the Participating Member States in writing [***] of any situation that could constitute a conflict of interest or a professional conflicting interest during the Implementation of the APA. The Contractor must immediately take action to rectify the situation.
The Commission or the Participating Member States as applicable may do any of the following:
(a)verify that the Contractor’s action is appropriate;
(b)require the Contractor to take further action within a specified deadline;
(c)decide not to enter a Vaccine Order Form with the Contractor.
II.6.3.The Contractor must pass on all the relevant obligations in writing to:
(a)its personnel;
(b)any natural person with the power to represent the Contractor or take decisions on the Contractor’s behalf;
(c)    Third Parties involved in the Implementation of the APA, including subcontractors.
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The Contractor must also take reasonable precautions to ensure that the persons referred to above are not placed in a situation which could give rise to conflicts of interest.
II.7.Confidentiality
II.7.1.The Commission, the Participating Member State and the Contractor must treat with confidentiality any information or documents, in any format, disclosed in writing, relating to the Implementation of the APA and identified in writing as confidential.
II.7.2.The Commission, the Participating Member State and the Contractor shall:
(a)not use confidential information or documents for any purpose other than to perform its obligations or exercise and/or enforce its rights under the APA or a Vaccine Order Form without the prior written agreement of the other Party;
(b)ensure the protection of such confidential information or documents with the same level of protection as its own confidential information or documents and in any case with due diligence and no less than a reasonable level of protection;
(c)not disclose, directly or indirectly, confidential information or documents to Third Parties unless such Third Parties have a need to know such confidential information for the purposes set forth in Article II.7.2 and agree to comply with this Article or are subject to substantially similar confidentiality obligations as provided in this Article.
II.7.3.The confidentiality obligations set out in this Article are binding on the Commission, the Participating Member State and the Contractor during the Implementation of the APA and for as long as the information or documents remain confidential unless:
(a)the disclosing Party agrees to release the receiving Party from the confidentiality obligation earlier;
(b)the confidential information or documents become public through other means than a breach of the confidentiality obligation;
(c)the applicable law requires the disclosure of the confidential information or documents. Prior to making any such disclosure, the receiving Party shall promptly inform the disclosing Party of the requirement to disclose as soon as the receiving Party becomes aware that such a requirement might become effective. The receiving Party shall disclose only that portion of the disclosing Party’s confidential information or documents that it is required to disclose.
II.7.4.The Contractor must obtain from any natural person with the power to represent it or take decisions on its behalf, as well as from Third Parties involved in the Implementation of the APA, a commitment that they will comply with this Article or ensure that such person or Third Party is subject to substantially similar confidentiality obligations. At the request of the Commission, the Contractor must provide a document providing evidence of this commitment.
II.7.5.Notwithstanding the other provisions of this Article, the Commission, the Participating Member States and the Contractor may issue a press release and/or other public statement relating to this APA. The Parties shall consult together on and aim to agree the timing, contents and manner of any press release and/or other public statement relating to this APA, prior to any issuance of such press release and/or other public statement. A Party may subsequently publicly disclose any information previously contained in any public announcement made in accordance with this Article.
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II.7.6.The Contractor acknowledges that the Commission, along with other agencies and offices of the European Union (collectively, the “European Institutions”), are subject to requirements under Regulation (EC) 1049/20013, which may require the European Institutions to disclose information to Third Parties on request. The Commission commits itself to assess any request for access to a document that relates to this contract according to the exclusions or exceptions set forth in Regulation (EC) 1049/2001 and consult with the Contractor regarding the same to the extent required under such regulation.
II.8.Processing of personal data
II.8.1.Processing of personal data by the Commission
Any personal data included in or relating to the APA, including its implementation, shall be processed in accordance with Regulation (EU) 2018/1725. Such data shall be processed solely for the purposes of the implementation, management and monitoring of the APA by the data controller. For the purpose of this provision, the data controller for the Commission shall be the Director-General of the European Commission’s Directorate-General for Health and Food Safety. The data protection notice is available at https://ec.europa.eu/info/data-protection-public-procurement-procedures_en.
The Contractor or any other person whose personal data is processed by the data controller in relation to this APA has specific rights as a data subject under Chapter III (Articles 14-25) of Regulation (EU) 2018/1725, in particular the right to access, rectify or erase their personal data and the right to restrict or, where applicable, the right to object to processing or the right to data portability.
Should the Contractor or any other person whose personal data is processed in relation to this APA have any queries concerning the processing of its personal data, it shall address itself to the data controller. They may also address themselves to the Data Protection Officer of the data controller. They have the right to lodge a complaint at any time to the European Data Protection Supervisor.
II.8.2.Processing of personal data by the Contractor
The processing of personal data by the Contractor shall meet the requirements of Regulation (EU) 2018/1725 and be processed solely for the purposes set out by the controller.
II.9.Subcontracting
II.9.1.The Contractor shall be responsible for, and liable to the Commission and the Participating Member States for the acts or omissions of any subcontractor it engages to have the APA implemented. [***].
II.9.2.In the case of subcontracting, the Contractor remains bound by its contractual obligations and is solely responsible for the Implementation of the APA.
II.9.3.The Contractor must ensure that the subcontract does not affect the rights of the Commission and the Participating Member States under this APA.
II.9.4.The Commission may request the Contractor to replace a subcontractor found to be in a situation provided for in one of the situations provided for in Article 136(1) and (2) of the Financial Regulation,
II.10.Amendments
II.10.1.Any amendment to the APA or a Vaccine Order Form must be made in writing. A Vaccine Order Form does not constitute an amendment to the APA.
3 Regulation (EC) No 1049/2001 of the European Parliament and of the Council of 30 May 2001 regarding public access to European Parliament, Council and Commission documents, OJ L 145, 31.5.2001, p. 43.
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II.10.2.No amendment can make changes to the APA or a Vaccine Order Form that might materially alter the initial conditions of the procurement procedure or result in unequal treatment of tenderers or Contractors.
II.11.Assignment
II.11.1.The Contractor cannot assign any of the rights and obligations arising from the APA, including claims for payments or factoring, without prior written consent of the Commission, such consent not to be unreasonably withheld, delayed or conditioned. In such cases, the Contractor must provide the Commission with the identity of the intended assignee. This APA will bind and inure to the benefit of the successors and permitted assigns of the respective Parties.
II.11.2.Any right or obligation assigned by the Contractor without consent of the Commission is not enforceable against the Commission or the Participating Member States.
II.12.Intellectual property rights
II.12.1.Intentionally Omitted.
II.12.2.[***]
[***]
II.13.Force majeure
II.13.1.If a Party is affected by force majeure, it must [***] notify the other Party, stating the nature of the circumstances in sufficient detail, their likely duration and foreseeable effects.
II.13.2.Excepting payment obligations, a Party is not liable for any delay or failure to perform its obligations under the APA if that delay or failure is a result of force majeure. [***].
II.13.3.The Parties must take all [***] measures to limit any damage due to force majeure.
II.13.4.For the avoidance of doubt, except in the case of force majeure or Acknowledged Root Causes for Delivery Delays, no unforeseen circumstances whatsoever allow Contractor to amend, revise, suspend or terminate the APA or to request the APA to be amended, revised, suspended or terminated. Contractor expressly waives the right to invoke the doctrine of hardship insofar as it is applicable.
II.14.Intentionally Omitted
II.15.Suspension of the implementation of the APA
II.15.1.Suspension by the Contractor
If the Contractor is affected by force majeure, it may suspend the provision of the services and Product under a Vaccine Order Form.
The Contractor must [***] notify the Commission and the Participating Member States of the suspension. The notification must include a description of the force majeure in sufficient detail and state when the Contractor expects to resume the provision of services and the Product.
The Contractor must notify the Commission and the Participating Member States as soon as it is able to resume performance of the Vaccine Order Form, unless the Commission has already terminated the APA or the Vaccine Order Form.
II.15.2.Suspension by the Commission or the Participating Member State
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The Commission or the Participating Member State in question may suspend the Implementation of the APA or performance of a Vaccine Order Form (of such Participating Member State) or any part of it:
(a)if the procedure for awarding the APA or a Vaccine Order Form or the Implementation of the APA proves to have been subject to irregularities, or fraud by the Contractor;
(b)in order to verify whether the Contractor’s presumed irregularities, or fraud have actually occurred.
The Commission or the Participating Member State in question must formally notify the Contractor of the suspension and the reasons for it. Suspension takes effect on the date of formal notification, or at a later date if the formal notification so provides.
The Commission or the Participating Member State in question must promptly and in good faith investigate the issue giving rise to the formal notification and formally notify the Contractor as soon as the verification is completed whether:
(a)it is lifting the suspension; or
(b)it intends to terminate the APA or its Vaccine Order Form under Article 16.2(e).
The Contractor is not entitled to compensation for so long as Implementation of the APA or a Vaccine Order Form is under suspension pursuant to this Article. The Commission will ensure the investigation is conducted expeditiously to minimize the duration of suspension period.
II.16.Termination
II.16.1.Failure to obtain Market Authorisation or inability to provide the Product due to Clinical Failure
If the Contractor fails to receive Marketing Authorisation of the Product [***], then as a remedy, the Commission and the Participating Member States may terminate this APA and the Vaccine Order Forms with immediate effect upon written notice to the Contractor and [***] of the Down Payment will become due and refundable to the Commission [***].
II.16.2.Additional Grounds for termination by the Commission or a Participating Member State
In addition to the right under Article II. 16.1, the Commission may terminate the APA or a Participating Member State may terminate its on-going Vaccine Order Form in the following circumstances:
(a)on the grounds referred to in Article I.4.7.1.1 and I.4.7.2;
(b)if (i) the Contractor repeatedly refuses to sign one or several Vaccine Order Form(s) without valid reason, or (ii) Contractor is in material breach of obligations under the APA or Vaccine Order Form (and there is no other express termination right provided in regard to such obligation);
(c)if the Contractor or any person that assumes unlimited liability for the debts of the Contractor is in one of the situations provided for in points (a) and (b) of Article 136(1) of the Financial Regulation4;
(d)if the Contractor or any related person is in one of the situations provided for in points (c) to (h) of Article 136(1) or to Article 136(2) of the Financial Regulation;
4 Regulation (EU, Euratom) 2018/1046 of the European Parliament and of the Council of 18 July 2018 on the financial rules applicable to the general budget of the Union, amending Regulations (EU) No 1296/2013, (EU) No 1301/2013, (EU) No 1303/2013, (EU) No 1304/2013, (EU) No 1309/2013, (EU) No 1316/2013, (EU) No 223/2014, (EU) No 283/2014, and Decision No 541/2014/EU and repealing Regulation (EU, Euratom) No 966/2012, OJ L 193 of 30.7.2018, p. 1 https://eur-lex.europa.eu/legal- content/EN/TXT/?qid=1544791836334&uri=CELEX:32018R1046
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(e)if the procedure for awarding the APA proves to have been subject to irregularities or fraud or Contractor is in material breach of obligations in the Implementation of the APA ;
(f)if the Contractor is in a situation that could constitute a conflict of interest or a professional conflicting interest;
(g)if a change to the Contractor’s legal, financial, technical, organizational or ownership situation substantially modifies the conditions under which the APA was initially awarded, or a change occurs regarding the exclusion situations listed in Article 136 of Regulation (EU) 2018/1046 that calls into question the decision to award the contract;.(i) in the event of force majeure, where either resuming implementation is impossible or the necessary ensuing amendments to the APA or a Vaccine Order Form would mean that the tender specifications are no longer fulfilled in material respects.
II.16.3.Grounds for termination by the Contractor
The Contractor may terminate the APA or the respective Vaccine Order Form in the following circumstances:
(a)If the Commission or any of the Participating Member States are in material breach of obligations under the APA or Vaccine Order Forms.
(b)In the event of force majeure, where either resuming implementation is impossible or the necessary ensuing amendments to the APA or a Vaccine Order Form would mean that the tender specifications are no longer fulfilled in material respects.
II.16.4.Procedure for termination
A Party must formally notify the other Party of its intention to terminate the APA or a Vaccine Order Form and the grounds for termination.
For terminations other than due to a breach of payment obligations to the Contractor or other than a termination by the Commission or a Participating Member State pursuant to Articles II.16.1 or II.16.2(a), the other Party has [***] following the date of receipt to submit observations, including the measures it has taken or will take to continue fulfilling its contractual obligations. Failing that, the decision to terminate becomes enforceable the day after the time limit for submitting observations has elapsed. For payment obligations, the period to submit observations shall be [***]. There shall be no such period for a termination associated with Article II.16.1 or II.16.2(a).
If the other Party submits observations, but in the reasonable judgement of the Party intending to terminate such observations do not address its concerns, the Party intending to terminate must formally notify the Party submitting observations of its intention to terminate this APA or a Vaccine Order Form and the grounds for termination. [***].
II.16.5.Effects of termination on Down Payment
[***]
II.17.Invoices, Taxes, value added tax and e-invoicing
II.17.1.Payment Requests, Invoices and value added tax
Payment requests and invoices shall contain the following information: (i) the Contractor’s full name and address, (ii) the reference to this APA and to the Vaccine Order Form, (iii) the full name and address of the recipient, (iv) the name of the Participating Member State concerned, (v) the invoiced amount, (vi) the quantity of Product doses delivered, or, with respect to the Down Payment, the quantity of Product doses allocated to the Participating Member States pursuant to Articles I.4.2 and I.4.4, (viii) the date of delivery (if relevant), and (ix) the date of issuance of the payment request or invoice.
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Invoices must indicate the place of taxation of the Contractor for value added tax (VAT) purposes and must specify separately amounts not including VAT and amounts including VAT (where VAT is applicable) where required according to local applicable VAT law.
VAT may be charged on doses of the Product under the conditions of national legislation. In such cases, the taxable amount may include the amount paid by the Participating Member State as well as the respective portion of the Down Payment paid by the Commission.
For the further avoidance of doubt, the Parties agree that all prices set forth in the APA shall be exclusive of VAT and that VAT, if any, shall be paid in addition to the prices set forth in the APA. Each Participating Member State acknowledges that it is registered for VAT in its respective Member State and will promptly provide such VAT registration number upon request from the Contractor.
If a Participating Member State is required under the law of any jurisdiction to deduct or withhold any sum of Taxes imposed on or in respect of any amount due or payable to Contractor, the Taxes shall be paid and borne by the Participating Member State for Participating Member State’s own account. Each Participating Member State agrees to pay an additional amount required to be withheld or deducted to the relevant agency in accordance with the applicable Law and to provide evidence of payment thereof to Contractor.
II.18.Payments and guarantees
II.18.1.Date of payment
The date of payment is deemed to be the date on which the Commission’s account or the account of the Participating Member State in question is debited.
II.18.2.Costs of transfer
The costs of the transfer are borne as follows:
(a)[***];
(b)[***];
(c)[***].
II.18.3.Suspension of the time allowed for payment
The Commission or the Participating Member State in question may suspend the payment periods specified in Article I.8.3 at any time by notifying the Contractor (or leader in the case of a joint tender) that its invoice cannot be processed. The reasons the Commission or the Participating Member State in question may cite for not being able to process an invoice are:
(a)because the invoice does not comply with the requirements specified in the APA; or
(b)because it disputes Contractor’s performance of services specified in such invoice.
The Commission or the Participating Member State in question must notify the Contractor as soon as possible of any such suspension (but not later than [***] after receipt of such invoice), giving the reasons for it. In the case of the situation described in (b) above, the Commission or the Participating Member State in question shall notify the Contractor (or leader in case of a joint tender) of required corrections or (b) above, the Commission or the Participating Member State in question shall formally notify the Contractor (or leader in case of a joint tender) of the perceived performance failure.
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Suspension takes effect on the date the Commission or the Participating Member State in question sends the notification. The remaining payment period resumes from the date on which the corrected invoice is provided or the dispute is resolved. If the dispute cannot be resolved within [***], the Contractor shall have the right to suspend its performance of further deliveries under the APA until the dispute is resolved.
II.18.4.Interest on late payment
On expiry of the payment periods specified in Article I.8.3, the Contractor is entitled to interest on late payment at the annual rate of [***]. Suspension of the payment period as provided for in Article II.18.3 is not considered as giving rise to late payment.
Interest on late payment covers the period running from the day following the due date for payment up to and including the date of payment as defined in Article II. 18.1.
II.19.Recovery
II.19.1.Recovery Procedure
Before any recovery permitted under this APA, the Commission or the Participating Member State in question must formally notify the contractor of its intention to recover the amount it claims, specifying the amount due and the reasons for recovery and inviting the Contractor to make any observations within [***] of receipt. Notwithstanding anything to the contrary herein, the Down Payment will only be subject to recovery as set forth in Articles II.16.1 and II.16.5.
If no observations have been submitted or if, despite the observations submitted, the Commission or the Participating Member State in question decides to pursue the recovery procedure, it must confirm recovery by formally notifying a debit note to the Contractor, specifying the date of payment. The Contractor must pay in accordance with the provisions specified in the debit note. If the Contractor does not pay by the due date, the Commission or the Participating Member State in question may, after informing the contractor in writing, recover the amounts due:
(a)[***];
(b)by taking legal action.
II.19.2.Interest on late payment
If the Contractor does not honour the obligation to pay the Unspent Amounts due by the date set by the Commission or the Participating Member State in question, the amount due bears interest at the rate indicated in Article II.18.4. Interest on late payments will cover the period starting on the day after the due date for payment and ending on the date when the Commission or the Participating Member State in question receives the full amount owed (including accrued interest). Any partial payment is first entered against charges and interest on late payment and then against the principal amount.
II.20.Checks and audits
II.20.1.The Commission and the European Anti-Fraud Office may check or require an audit on the Implementation of the APA. This may be carried out either by OEAF’s own staff or by any outside body authorised to do so on its behalf, provided that the auditor may not be a competitor of the Contractor.
Such checks and audits may be initiated at any moment during business hours during the provision of the services and up to [***] starting from the payment of the balance of the last specific contract issued under this APA.
The audit procedure is initiated on the date of receipt of the relevant letter sent by the Commission. Audits are carried out on a confidential basis.
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II.20.2.The Contractor must keep all original documents stored on any appropriate medium, including digitised originals if authorised under national law, for a period of [***] starting from the payment of the balance of the last specific Vaccine Order Form issued under this APA.
II.20.3.The Contractor must grant the appropriate right of access to sites and premises where the APA is implemented, and to all information, including information in electronic format, needed to conduct such checks and audits. The Contractor must ensure that the information is readily available at the moment of the check or audit and, if so requested, that information is handed over in an appropriate format. The auditor must, insofar possible, comply with all applicable and reasonable security measures notified to Commission by the Contractor subject to this not creating any material obstacles for the performance of the auditor’s tasks.
II.20.4.On the basis of the findings made during the audit, a provisional report is drawn up. The Commission or its authorised representative must send it to the Contractor, who has [***] following the date of receipt to submit observations. The Contractor must receive the final report within [***] following the expiry of the deadline to submit observations.
On the basis of the final audit findings, the Commission or the Participating Member State in question may recover all or part of the payments made in accordance with Article II.19.
II.20.5.In accordance with Council Regulation (Euratom, EC) No 2185/96 of 11 November 1996 concerning on-the-spot checks and inspection carried out by the Commission in order to protect the European Communities’ financial interests against fraud and other irregularities and Regulation (EU, Euratom) No 883/2013 of the European Parliament and of the Council of 11 September 2013 concerning investigations conducted by the European Anti-Fraud Office, the European Anti- Fraud Office may carry out investigations, including on the spot checks and inspections, to establish whether there has been fraud, corruption or any other illegal activity under the contract affecting the financial interests of the Union. Findings arising from an investigation may lead to criminal prosecution under national law.
The investigations may be carried out at any moment during the provision of the Product and up to five years starting from the payment of the balance of the last Vaccine Order Form issued under this APA.
II.20.6.The Court of Auditors and the European Public Prosecutor’s Office established by Council Regulation (EU) 20I7/19395 (‘the EPPO’) have the same rights as the Commission, particularly right of access, for the purpose of checks, audits and investigations.

5Council Regulation (EU) 2017/1939 of 12 October 2017 implementing enhanced cooperation on the establishment of the European Public Prosecutor’s Office
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ANNEX I: PARTICIPATING MEMBER STATES
[Pursuant to Regulation S-K, Item 601(a)(5), this Annex I setting forth the Participating Member States has not been filed. The Registrant agrees to furnish supplementally a copy of any omitted schedules to the Securities and Exchange Commission upon request; provided, however, that the Registrant may request confidential treatment of omitted items.]
[***]

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ANNEX II; MODEL FOR VACCINE ORDER FORM
[Pursuant to Regulation S-K, Item 601(a)(5), this Annex II setting forth the Model for Vaccine Order Form has not been filed. The Registrant agrees to furnish supplementally a copy of any omitted schedules to the Securities and Exchange Commission upon request; provided, however, that the Registrant may request confidential treatment of omitted items.]
[***]
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ANNEX III: AGREEMENT BETWEEN THE COMMISSION AND MEMBER STATES ON PROCURING COVID-19 VACCINES ON BEHALF OF THE MEMBER STATES AND RELATED PROCEDURES, ANNEXED TO THE COMMISSION DECISION C(2020) 4192 FINAL OF 18 JUNE 2020
[Pursuant to Regulation S-K, Item 601(a)(5), this Annex III setting forth the Agreement between the Commission and Member States on procuring COVID-19 vaccines on behalf of the Member States and related procedures has not been filed. The Registrant agrees to furnish supplementally a copy of any omitted schedules to the Securities and Exchange Commission upon request; provided, however, that the Registrant may request confidential treatment of omitted items.]
[***]

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ANNEX IV: DESCRIPTION OF THE CONTRACTOR’S UTILISATION OF THE DOWN PAYMENT
[Pursuant to Regulation S-K, Item 601(a)(5), this Annex IV setting forth the Description of the Contractor’s Utilisation of the Down Payment has not been filed. The Registrant agrees to furnish supplementally a copy of any omitted schedules to the Securities and Exchange Commission upon request; provided, however, that the Registrant may request confidential treatment of omitted items.]
[***]
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ANNEX V: LIST OF CONFIRMED AND PLANNED MANUFACTURING NETWORK PARTNERS
INCLUDING THE LOCATION(S) OF MANUFACTURING
[Pursuant to Regulation S-K, Item 601(a)(5), this Annex V setting forth the List of Confirmed and Planned Manufacturing Network Partners Including the Location(s) of Manufacturing has not been filed. The Registrant agrees to furnish supplementally a copy of any omitted schedules to the Securities and Exchange Commission upon request; provided, however, that the Registrant may request confidential treatment of omitted items.]
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ANNEX VI : PRELIMINARY SPECIFICATIONS OF THE PROJECT
[Pursuant to Regulation S-K, Item 601(a)(5), this Annex VI setting forth the Preliminary Specifications of the Project has not been filed. The Registrant agrees to furnish supplementally a copy of any omitted schedules to the Securities and Exchange Commission upon request; provided, however, that the Registrant may request confidential treatment of omitted items.]
[***]
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Exhibit 31.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
I, Stanley C. Erck, certify that:
1.I have reviewed this Quarterly Report on Form 10-Q of Novavax, Inc.;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
    
4.    The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)    Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)    Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)    Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)    Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.    The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)    All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)    Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 4, 2021 By: /s/ Stanley C. Erck
Stanley C. Erck
President and Chief Executive Officer



Exhibit 31.2
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
I, James P. Kelly, certify that:

1.    I have reviewed this Quarterly Report on Form 10-Q of Novavax, Inc.;

2.    Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.    Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.    The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)    Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)    Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)    Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)    Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.    The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)    All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)    Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 4, 2021 By: /s/ James P. Kelly
James P. Kelly
Executive Vice President,
Chief Financial Officer and Treasurer



Exhibit 32.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO 18
UNITED STATES CODE §1350
(SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002)
In connection with the Quarterly Report of Novavax, Inc. (the “Company”) on Form 10-Q for the fiscal period ended September 30, 2021 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Stanley C. Erck, President and Chief Executive Officer of the Company, hereby certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best of my knowledge, that:
1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company for the dates and periods covered by this Report.
Date: November 4, 2021 By: /s/ Stanley C. Erck
Stanley C. Erck
President and Chief Executive Officer
This certification accompanies the Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by such act, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended. Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that the Company specifically incorporates it by reference.


Exhibit 32.2
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER PURSUANT TO 18 UNITED STATES CODE §1350
(SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002)
In connection with the Quarterly Report of Novavax, Inc. (the “Company”) on Form 10-Q for the fiscal period ended September 30, 2021 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, James P. Kelly, Executive Vice President, Chief Financial Officer and Treasurer of the Company, hereby certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best of my knowledge, that:
1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company for the dates and periods covered by this Report.
Date: November 4, 2021 By: /s/ James P. Kelly
James P. Kelly
Executive Vice President,
Chief Financial Officer and Treasurer
This certification accompanies the Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by such act, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended. Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that the Company specifically incorporates it by reference.