Joining day two of the 2025 Bank of America Healthcare Conference. My name is Alec Stranahan, a senior biotech analyst covering Novavax at Bank of America. I'm very pleased to be joined by many members of the senior leadership team at Novavax, including John Jacobs, President and Chief Executive Officer, Jim Kelly, Chief Financial Officer, and Ruxandra Draghia-Akli, Head of R&D, who's a recent joiner to the team. We've got 30 minutes on the clock. Maybe, John, if you want to sort of tee up the discussion, and then we can jump into the. Absolutely. We were joking a little bit out front, but Ruxandra also has a PhD and several other accolades of credibility that could not even fit on the slide as well as Jim. I am who I am, but these two are underplayed on the slide. Glad to be on the team with both of them. Thank you, Alec, for hosting us yet again this year. Hard to believe it has been a year since our landmark Sanofi deal for the company. Boy, have we been busy in that time, and even in the last quarter. We have taken the company from an organization that was originally a small biotech, and then through the pandemic launched its first product. I joined the company, and we've really changed the whole fabric of the organization from our expense profile to the people and the structure that we have, the leadership team. Our focus and strategy, most importantly post-Sanofi, has been to leverage the technology platform that we have, which has proven at a global scale through our COVID vaccine, through the R21 vaccine, and now through a 4 million-5 million patient database on our adjuvant Matrix-M, showing safety and effectiveness there with that particular tech. To a company that's now looking to grow through partnering and R&D, early stage R&D, with four new programs launched in the last quarter under the leadership of Ruxandra and her team. We have late stage assets in COVID and flu where we're seeking a partner. We continue to explore more deeply the Sanofi partnership. We announced just in the first quarter two new MTA arrangements, one with an original partner, Top 10 Pharma, where we expanded their MTA with Matrix-M to include viral antigens that they are exploring with now. We added a second Top 10 Pharma experimenting with our Matrix-M in their lab, extended our Takeda contract with better economics for Novavax and a win-win for both companies post-pandemic, as well as an agreement with an oncology company to explore the utility of our Matrix-M in their oncology platform assets. Very exciting news. We keep adding to that ability to potentially partner much more broadly than Sanofi, which we saw as a starting point, not the finish of what we intend to be. More to come. OK, great. Maybe we could start with the updates that we saw on the Q1 call, got some clarity around APAs, which benefited the top line in the quarter, and also led to the guidance raise as well. Maybe just walk us through sort of the key updates from the print that you single out. Certainly, as you said, and some of those numbers, a lot of those numbers were not direct cash. There were cash that we had received in prior periods, but now accounted for from a GAAP perspective. We took the guidance up. Importantly, the core of our guidance for this year on expenses remains. As Jim Kelly made very clear, we have a pathway toward potential break even in profitability as early as 2027. That is just through what we have with our Sanofi relationship alone on either a single milestone and/or potential royalties from one of the several assets that they have in development with them now. We talked about our revenue guidance, primarily based upon our BLA milestone from Sanofi this year. The two license transfers for both the U.S. and Europe that would go to Sanofi are associated with that BLA approval and European approvals of our product. We are on track for those. I know it has been hard to follow. The news is so vibrant and changes on a daily basis. Lots of exciting things happening politically and in biotech, et cetera. We remain very confident. We have been in touch with FDA. We have heard from them formally. We responded to their information request, or IR for short. We are waiting for their final response. Once we get alignment on a post-marketing commitment, not requirement, but a commitment, which is less stringent than a requirement, to generate some additional data, we believe then our file is approvable. It was approvable before. It remains approvable. We have a pathway to that approval upon alignment with the parameters of how we'll generate that data. We're in those discussions right now. We fully anticipate and look forward to potentially getting that approval in the near term and being on the market this fall with the other competitors. Right. I think the key, the other key word within that is post-marketing, which has been a point of confusion in the media and with investors as well. I guess just simply the expectation is this would be post-BLA. Correct. No, that's well said, Alec. I think there were some other comments made by new leaders who were on social media making comments that might have been misinterpreted unintentionally as we had to do something prior to potentially getting the approval. Inherently, as you say, a post-marketing commitment is achieved post-marketing and post-approval. You need the approval to then formally market the product. You would generate the data. It's not uncommon at all for any company to have post-marketing commitments, requirements, data generation requests from the FDA. It's actually a good thing to keep learning about these products and to deliver more data over time. That's not unusual at all. What was unusual about this was just really the timing of it and the way it came about. We just happened to be there the first day the new administration took control of FDA with our approval date. That is what it is. We are working with the FDA. We plan on partnering with them, generating the data, and look forward to our BLA approval. That is our intention. OK. Maybe it'd be helpful just to revisit the data that you have that supported the EUA for Nuvaxovid and maybe what the other BLA-approved COVID vaccines have had to show to attain their own BLAs. Why don't I refer to Ruxandra here? Rux, maybe you want to address the robust nature of our existing data set for Nuvaxovid. Yeah, thank you for the question. As you know, we have undertaken a placebo-controlled trial for Nuvaxovid. We've enrolled something like 30,000 individuals in that particular trial. We have seen our data, which indicated that the vaccine is safe and effective in that particular study population. As a consequence, we do believe that based on that data, our vaccine is approvable. Of course, as John was mentioning, we always have to learn. The vast majority, practically all of the vaccines that have been approved as of lately have this type of post-marketing commitments that are attached to them. That is something very normal. We really need to generate more data as a field. I'm not talking only about the COVID vaccines, but really in all the other vaccines that would inform us. It would inform the population where that particular vaccine is more useful, maybe an extended label if that is something that is under discussion. There are many things where we can actually learn from these post-marketing commitments. OK, that makes sense. Maybe one question we've received, and maybe this feeds back to sort of the changing perspectives within leadership at the FDA and elsewhere, is what do you guys think about the seasonal updates? This has been standard for decades in flu. It's what's been happening in COVID too. Do you anticipate any change of tone around that? I mean, that's kind of what it requires to stay up to date for the evolving. Look, I think the best arbiter for that will be what we see next week at VRBPAC. Next Thursday, I'd encourage anyone who's interested in the space to listen in on the VRBPAC meeting and see what recommendations are made. Ultimately, where CDC and the authorities line up on their final recommendation. I mean, we know in other markets, age-based and disease-based recommendations have already been made in COVID and are currently made with many vaccines. If you have underlying conditions, if you're 65 or older, et cetera, you should consider getting vaccinated. If you're relatively healthy and have no underlying conditions, depending on the state of a disease, the severity of that season, you may not need to. That's up to the authorities each year to change their mind. Now, if you're asking about the methodologies available to any pharma company and the state of science as it stands today in the modern era and how we can measure these things, then you're looking at immune response as the foundational principle there. Each time you get mutated viruses on a seasonal viral infection, guys, you measure the human immune response to that. There's a tree, and then there are branches. If you have a JN.1 family, for instance, of COVID viruses, and they're mutating off of that JN.1 with a couple of different proteins, you measure your JN.1 vaccine and maybe other branch vaccines against that to see what's most effective or still meets the bar for minimum effectiveness at least. If a tree jumps or you get a very different variant with completely different sets of protein or a vast amount of protein that's different, you may need to tweak the formulation of your vaccine. It is really the same vaccine. You're just changing the target protein in alignment with that, Ruxandra. That is the way it's done with flu, and that is the way it's been done with COVID. If we are looking at the data that has been generated both in the United States and globally, we can note that the COVID variants have been replaced by newer variants or evolving somewhere between 14-28 weeks of circulating in the population. The same thing, maybe a little bit longer, is happening with the flu strains. We have seen they are evolving really every year. As a consequence, the vaccines will need to be adapted in function of the circulating variants. Sometimes there are variants that are much more conserved, as John was mentioning. Let's say that tree, the JN.1, is an example of these seasons, while some of the flu strains, some can be very, very different. Then one needs to look at including these new variants in their vaccines. Perhaps a question behind the question, Alec. We've heard from some investors we've met with. There seems to be confusion around what's actually being asked for. This isn't specific to Novavax, just in general. Are the authorities saying, hey, well, there needs to be a full-blown efficacy study every single season? That's not feasible, in our opinion. You should ask other pharma executives as well. Knowing as we do vaccine development, it's not feasible. By the time you got a strain and would do a full-blown efficacy study with thousands of patients, the season would be over, and it would be mutating again to something else. You'd be in a perpetual loop of constantly assessing effectiveness. By the time you knew it was effective, you know it's effective by the immunity already, by the way. Showing it through that different measure, you'd already be on to the next mutation. You'd be in this endless loop, almost like a twilight zone of never having any vaccine. That is why flu measures immunity. It is not practical. It is not economically feasible. You would essentially be saying you have a vaccine or not, is our interpretation of that potential scenario. We are not hearing that being asked for. We received our information request from FDA to generate some additional data after licensure. That is not an unreasonable request. We think we can manage that. Yeah, makes sense. I think along those same lines, we've heard comments from Fasad and others around the requirement or the age requirement for boosters with COVID. I think I've seen that floated around. I'd be curious to know if you've already seen kind of a natural gravitation for maybe more exposed patient groups or elderly individuals, immune-compromised individuals that are already kind of naturally comprising the market for COVID vaccine boosters today. Anything you're seeing there? That's correct. It's over 50% of the market is 65+. And you have Jim and Rux have the stats. It's 50/ 50 and up make the vast majority of the market, right? That's right. Right. So So you've got some great information about below 50 who actually is getting vaccinated. The percentage of the absolute percentage of the population that is getting vaccinated, for instance, in less than 18 years of age, last year was about 14%-16%. In the 18 - 49, actually, it is about 36%. Of course, there is a percentage of the population that is immunocompromised, that has at least one risk factor of developing severe disease. There is a very long list of that one factor on the side of the CDC, including one which everyone is very familiar with, which is a BMI of higher than 30, which actually is characteristic of much of the U.S. population. We do believe that that would be the population underneath 65 that are going to get predominantly vaccinated. A couple of ways to look at it, right? What Rux was describing was the percentage of a particular age cohort that is choosing to get vaccinated. If we take that hat off, that speaks to opportunity and rationale, which is very important to know. If I'm an investor, I'm looking at the other hat, which is, OK, so what does that mean market size was? The vast majority of the market, if we put on that other hat and think about it through a different lens, which is of those who have received the vaccine in the last two years, what proportion would be in that 65+ and in that at least one underlying factor up to 64? That is the vast majority of the market. The majority of the market is not your 17-year-old lacrosse star, and she's super healthy and eats organic food and runs into CVS to get six vaccines. The majority of your market are 65+ and/or people with underlying conditions and really are advised by their doctor and together want to go get a vaccine. Those are some of the recommendations we've already seen in Europe and other markets. If the U.S. happens to go that way, that's still the majority, in our opinion, of the market opportunity here for COVID. OK. No, that's very interesting. It's great to get your perspective. Obviously, you guys are uniquely positioned to comment on some of these things. I want to kind of shift the focus back to Novavax as a company, what's going on internally. Maybe walk us through sort of the process of transferring ownership over Nuvaxovid to Sanofi as the year goes on, as we head into the next season, just logistically. Yeah, sure. I mean, of course, they took the lead formally in the beginning of this year. But technically, then you still have to, we want to get the BLA, have it under full licensure. And we intend to do so, as we've said publicly, and then hand the license for the U.S. market over to them, the MAH transfer, which is associated with a $25 million one-time milestone payment, as well as that MAH or that license transfer for Europe, which is another $25 million milestone association. So the BLA earns us $175 million. And then those two license handovers to Sanofi are worth another $50 million. So that's $225 million cash coming into our company that we would earn through those events. Then technically, Sanofi, for a given year, the season really starts the year before, as you know, Alec. Having a product that's under full licensure, having a product that has the right shelf life, having a product that's all in the right presentation, like a prefilled syringe, not just in the U.S., but in all markets, sets the full stage. What Sanofi has said in 2025 is it's a learning year. They're getting the product, but we're still waiting for the BLA. We're still filing for shelf life extensions and other things as Novavax still has those components on our side of the fence that we're wrapping up. As they get into the 2026, 2027 season, that will be the first time that the Sanofi team has their hands on the wheel, proverbially, of the ship with all of the pieces together, the presentation, all of the filings done, full licensure, which allows for marketing campaign, and the ability to start the retail negotiations as the lead, which start the fall prior to the next season all the way in advance. Their first time that they'll have the full machinery at their disposal with all of the right pieces, and they can operate 100% independently in these markets would be for next year's season, not this year's season. This year will be a partial where we hope to get that BLA to those license transfers. And there's some engagement there. They carry it through the fall as they're already preparing for the full 2026, 2027 effort. OK, that all makes sense. You recently announced your updated agreement with Takeda as well. How does this maybe walk us through the updated terms here? How does this maybe exemplify one embodiment of how you're trying to derive value from the platform? Yeah, Jim, did you want to answer that one? Certainly. I think one of the most important things about this updated agreement is, one, Japanese market, third largest health care market in the world. This is an exceptionally important both partner and market where we want our COVID vaccine and vaccine available. With respect to where we were, we had a pandemic-era type of contract that needed to logically move and be more of an endemic. We had agreement with our partner that something had to change. That is what this amendment is. It was just making this agreement fit for purpose, all the right incentives, so that Takeda was incentivized, and we were as well, to make them as successful as possible. Therefore, what happens? $20 million upfront. We'll book that in the second quarter. Under the agreement, we're going to be eligible each year that they get approval to market the product, up to $10 million more in milestone payments. Then instead of a profit share model, a model where you take revenue minus certain costs and split them up, regular royalty model. All three of these are far more traditional. More in line with the Sanofi deal. More in line with Sanofi deal. What we think is important here is you continue to see major pharma players want to access our technology. I mean, there's a limited number of approved and validated COVID vaccines, right? I think you've got great validation for Matrix-M from that. Maybe you could talk sort of on the Matrix-M side. What kind of fertile ground is there for partnerships there? I know Sanofi is leveraging that for some of their programs as well. Yeah, a few things we announced. I'd like Rux, maybe you can comment on the platform's utility of Matrix and other elements that you're researching in oncology, et cetera. From a perspective of partnering, Alec, first, the Sanofi deal itself, what you mentioned. They licensed an asset we made from our tech platform and our COVID vaccine. They're intending to make new assets combining that vaccine with their own flu vaccines in the form of combination vaccines. They have two fast-tracked in phase I, II studies now. What you're alluding to on Matrix-M, our adjuvant platform, Sanofi has unfettered access to that. For every new vaccine they may develop, above and beyond their combo they've made with our COVID vaccine and their flu vaccine, which is separate and related to its own milestones. Any new vaccine, they take Matrix, they add it to XYZ antigen, they make a new vaccine. We're eligible for up to $200 million in milestones and then mid-single-digit royalties for two decades post-launch for each individual asset they may make using Matrix-M. None of those are exclusive. It's a non-exclusive license. We could therefore then take Matrix-M and out-license it to any competitor, any other company we want to, or take it ourselves, copy exactly what they're doing, and move forward with it. We have freedom to operate. They have unfettered access to it to work on expanding their own portfolio, which is pretty exciting. We also announced two MTAs. I think we talked about that just a bit earlier, but one with a big top 10 pharma by global revenue measurement last year who came and expanded that MTA to now experiment with viral antigens as well as bacterial antigens. It was just bacterial before. That is an expanded experimentation in their own lab with their own portfolio and Matrix to see what's possible. We had a second top 10 pharma by revenue definition globally come to us and sign an MTA. They are also separately experimenting with Matrix-M and their portfolio. We signed a deal with an oncology company to combine Matrix with their asset. Rux can talk a little bit more about the utility of Matrix itself, which we have been building evidence and data around to show how it has utility across multiple platforms, Rakshin? Yes. To the point of an approved vaccine, actually, we do have Matrix-M in R21, which is a malaria vaccine that has been introduced in endemic countries as of last year. In 2025, the plans are to introduce it in approximately 15 countries. That is very encouraging. That is based on another collaboration, more on the academic side, so it is the University of Oxford and Serum. There it is very important because the study population and the population in which it is introduced is as young as five months of age. The clinical trials were 5 - 36 months of age. We are getting that tolerability reactogenicity profile not only in adult population but in this very young pediatric population. To the point that John was making, we have actually experimented, and I had the opportunity to present at the World Vaccine Conference with Matrix-M and in conjunction with different vaccine platforms. Very different. We are using a protein-based vaccine, nanoparticles. We have experimented with things as various inactivated vaccine, polysaccharide vaccines, VLPs, variants, adenoviruses. Part of my presentation at the World Vaccine Conference was that particular long list with the references with either the preclinical or the clinical trials in those areas. By and large, do we believe that Matrix-M will work with everything? Probably not. The data that we have generated shows that all the platforms that we have tried and the antigens that we have picked in our studies showed positive results. That is really encouraging with a very reasonable tolerability profile. That is another characteristic. We have compared it, for instance, in the COVID realm with the available mRNA vaccines and asked exactly that question, how does the reactogenicity and tolerability compare? It is also part of my presentation at the World Vaccine Conference showing a much lesser reactogenicity, about 39% less adverse effects. When it comes to the tolerability, we have undertaken a study looking at the quality of life of recipients. That is also very encouraging. That's really important when you think about the U.S. market, Alec, moving more toward consumer choice. It used to be roughly 50/50 physician to pharmacy distribution of vaccines. After COVID, it went to almost 90% pharmacy now. That means a consumer has to decide he or she wants to be vaccinated, go onto the website, sign up, pick the vaccine they want. Consumer choice is driven toward less side effects. I don't want to be knocked out from work. I don't want to get a fever. I don't want to have three days of just feeling under the weather. You know, I'd like to get maybe the Novavax shot because I understand it may have better tolerability. I got the Novavax shot. You'd hope I would. I get the flu shot every year. I've had the mRNAs prior to joining Novavax before Novavax was available in the U.S. I personally experienced the difference myself on side effects there. I personally added one. I know it's better for me anyway. Rux showed that through the Shield data that statistically it does have a remarkable difference and where it really matters. If consumer choice is moving toward combinations, hey, give me I'd rather have one shot than two or three. Who wants to wait on line three times at CVS filling out clipboards and staring at the carpet tiles until you get called? You want to do that once and get out of dodge. You'd rather have something that's more tolerable than not if you can. This fits right into that with what we think we can do with our combinations. You take a look at the five most invested in, at least in the U.S. from a portfolio perspective, markets. The recent McKinsey report that was just published in April of this year on the vaccine marketplace, the five key markets are in order, flu, COVID. You come down the list to RSV and RSV combinations. You come down to the Prevnar's of the world, the pneumococcal vaccines of the world. You have shingles. If you have those different buckets, we're in all five, either directly or indirectly. Four of them, we've got our own late-stage combination COVID flu, our own standalone flu. We've got our own shingles vaccine early on. In development. In the clinical program right now and preclinical that we're looking at where we believe we could have potential of less tolerability, but in the efficacy of the effect. Or therapy. I mean, yes, less side effects, better tolerability. Yay, that's good. We know what you meant. We want to be worse, Alec. We're going for it. That is good. Then we released data on a pneumococcal vaccine that is already marketed with our Matrix-M showing better immune response and the potential to lower COGS in an asset like that. We have data on that. Several companies, six or seven, have those products in their pipeline according to that research report. We are where it counts with our pipeline, with our technology across multiple platforms. More and more steps toward potential partnerships are happening with MTAs where people are experimenting with Matrix-M in their labs across multiple companies. It is getting exciting. Let's see if we can pull this all home and through. That is our intent. We are excited about our strategy and our potential right now. Yeah, no, that's great. Definitely plenty going on in the pipeline. Thanks. Those will advance through the clinic, hopefully data over the next four months from those programs. We have the KICK readout, which is kind of middle of this year. I think you guys talked about that a bunch on your earnings call. Not a pivotal trial, just a cohort. It is to learn because we only had about 75 patients in each arm on the phase I, II, Rux. We wanted to generate more data that when and if we do find a partner for that and we design a registrational trial going forward, you have a much more robust data set to understand the safety and to understand the right mix and ratios and things for a pivotal trial. Yes. It will help enormously in the design of a phase III clinical trial. Right. The intent is to potentially partner that one. That's the intent. OK. Maybe in the last minute, I do want to talk about the P&L. This has been a real focus, one of the pillars when you first joined. What inning are we in on that front? Is there more work to do there? Do you feel like you're in a pretty good place to sort of drive the next leg of growth for? Jim, you want to address that on liabilities and cost reduction, et cetera? I think it's fair to say it's both P&L and balance sheet. The way I would describe it is, my goodness, what a last few years it has been to literally reconstruct this company from a pandemic-era company swinging for the fences, develop the vaccine to help save the world to now let's become classic biotech. To do so by shedding our liabilities. We're down 80%. We're on track to reduce our R&D and SG&A compared to 2022 by another 80%-85% towards being about $250 million by 2027. We're in the final stretches. This is important because as we can put the balance sheet and cost structure behind us, people can focus uniquely on value creation. That's where we are. As I listen to John and Rux talk about the future opportunities for our Matrix and our vaccines and the market in general, when we take the long view and we look at a vaccine market that is currently $50 billion a year, it is going to grow to $75 billion or more, knowing the utility of our platform across many of these categories, we ask ourselves, what percentage of that market might we have? Not might we get a product out? We are asking, why not the majority of products leveraging our Matrix to make and drive new vaccines, better vaccines? That is how we are seeing the world. The early installment of that thinking, the Sanofi deal. You need only see that. Now you are watching other major vaccine players beginning to work with our technology. That is how you know we are on the path. Thrilled to have, I'll say, hitting those late innings on getting our cost structure and financial story in order. It's really all about value creation now. All about it. I think with that, we are at time. So we'll have to leave it there. But please join me in thanking the whole Novavax Tech Summit. Thanks so much.