10-Q

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, 2020
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 ☒ No ☐

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 ☒ No ☐

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	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☒
Emerging growth company	☐

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. ◻

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐  No ☒

The number of shares outstanding of the Registrant's Common Stock, $0.01 par value, was 63,659,952 as of October 31, 2020.

NOVAVAX, INC.

TABLE OF CONTENTS

		Page No.
PART I. FINANCIAL INFORMATION		1
Item 1.	Consolidated Financial Statements	1
	Consolidated Balance Sheets as of September 30, 2020 (unaudited) and December 31, 2019	1
	Unaudited Consolidated Statements of Operations and Unaudited Consolidated Statements of Comprehensive Loss for the three and nine months ended September 30, 2020 and 2019	2
	Unaudited Consolidated Statements of Changes in Stockholders’ Equity (Deficit) for the three and nine months ended September 30, 2020 and 2019	3
	Unaudited Consolidated Statements of Cash Flows for the nine months ended September 30, 2020 and 2019	5
	Notes to the Consolidated Financial Statements (unaudited)	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	39
Item 4.	Controls and Procedures	39
PART II. OTHER INFORMATION		40
Item 1A.	Risk Factors	40
Item 6.	Exhibits	46
SIGNATURES		48

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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,		December 31,
	2020		2019
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	334,171	$	78,823
Marketable securities		169,860		—
Restricted cash		67,154		2,947
Accounts receivable		12,355		7,500
Unbilled services		3,826		—
Prepaid expenses and other current assets		83,851		7,977
Total current assets		671,217		97,247
Restricted cash		411		410
Property and equipment, net		131,834		11,445
Intangible assets, net		5,332		5,581
Goodwill		126,932		51,154
Other non-current assets		8,294		7,120
Total assets	$	944,020	$	172,957
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accounts payable	$	15,097	$	2,910
Accrued expenses		78,812		14,867
Accrued interest		2,031		5,078
Deferred revenue		81,814		1,678
Current portion of finance lease liabilities		55,860		—
Other current liabilities		5,604		1,262
Total current liabilities		239,218		25,795
Deferred revenue		2,500		2,500
Convertible notes payable		321,679		320,611
Non-current finance lease liabilities		63,099		—
Other non-current liabilities		11,262		10,068
Total liabilities		637,758		358,974
Commitments and contingencies
Preferred stock, $0.01 par value, 2,000,000 shares authorized; 438,885 shares of redeemable Series A Convertible Preferred Stock issued and outstanding at September 30, 2020 and no shares issued and outstanding at December 31, 2019		199,822		—
Stockholders' equity (deficit):
Common stock, $0.01 par value, 600,000,000 shares authorized at September 30, 2020 and December 31, 2019; and 63,318,888 shares issued and 62,927,485 shares outstanding at September 30, 2020 and 32,399,352 shares issued and 32,352,416 shares outstanding at December 31, 2019		633		324
Additional paid-in capital		1,848,644		1,260,551
Accumulated deficit		(1,696,635)		(1,431,801)
Treasury stock, 391,403 shares, cost basis at September 30, 2020 and 46,936 shares, cost basis at December 31, 2019		(41,207)		(2,583)
Accumulated other comprehensive loss		(4,995)		(12,508)
Total stockholders’ equity (deficit)		106,440		(186,017)
Total liabilities and stockholders’ equity (deficit)	$	944,020	$	172,957

The accompanying notes are an integral part of these financial statements.

1

NOVAVAX, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share information)

(unaudited)

		For the Three Months Ended			For the Nine Months Ended
		September 30,			September 30,
	2020		2019		2020		2019
Revenue:
Grant and other	$	114,086	$	2,507	$	152,690	$	9,846
Government contract		42,938		—		43,249		—
Total revenue		157,024		2,507		195,939		9,846
Expenses:
Research and development		294,087		18,611		345,828		84,502
Gain on Catalent transaction		—		(9,016)		—		(9,016)
General and administrative		56,879		7,899		83,977		26,236
Total expenses		350,966		17,494		429,805		101,722
Loss from operations		(193,942)		(14,987)		(233,866)		(91,876)
Other income (expense):
Investment income		140		342		872		1,236
Interest expense		(4,460)		(3,403)		(11,266)		(10,209)
Other income (expense)		952		5		3,565		(15)
Net loss	$	(197,310)	$	(18,043)	$	(240,695)	$	(100,864)
Basic and diluted net loss per share	$	(3.21)	$	(0.74)	$	(4.39)	$	(4.43)
Basic and diluted weighted average number of common shares outstanding		61,554		24,327		54,810		22,761

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(in thousands)

(unaudited)

	For the Three Months Ended				For the Nine Months Ended
	September 30,				September 30,
	2020		2019		2020		2019
Net loss	$	(197,310)	$	(18,043)	$	(240,695)	$	(100,864)
Other comprehensive income (loss):
Net unrealized gains (losses) on marketable securities available-for-sale		(26)		—		18		5
Foreign currency translation adjustment		8,226		(1,564)		7,495		(2,668)
Other comprehensive income (loss)		8,200		(1,564)		7,513		(2,663)
Comprehensive loss	$	(189,110)	$	(19,607)	$	(233,182)	$	(103,527)

The accompanying notes are an integral part of these financial statements.

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NOVAVAX, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)

Three Months Ended September 30, 2020 and 2019

(unaudited)

				Additional						Other		Stockholders'
	Common Stock			Paid-in		Accumulated		Treasury		Comprehensive		Equity
	Shares	Amount		Capital		Deficit		Stock		Income (Loss)		(Deficit)
	(in thousands, except share information)
Balances at June 30, 2020	61,262,632	$	612	$	1,699,072	$	(1,499,325)	$	(2,638)	$	(13,195)	$	184,526
Preferred stock beneficial conversion feature	—		—		—		—		—		—		—
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		5		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
Balances at June 30, 2019	23,495,466	$	235	$	1,210,941	$	(1,381,928)	$	(2,451)	$	(12,290)	$	(185,493)
Non-cash stock-based compensation	—		—		2,624		—		—		—		2,624
Stock issued under incentive programs	122,485		1		181		—		(132)		—		50
Issuance of common stock, net of issuance costs of $161	1,957,627		20		12,568		—		—		—		12,588
Foreign currency translation adjustment	—		—		—		—		—		(1,564)		(1,564)
Net loss	—		—		—		(18,043)		—		—		(18,043)
Balance at September 30, 2019	25,575,578	$	256	$	1,226,314	$	(1,399,971)	$	(2,583)	$	(13,854)	$	(189,838)

The accompanying notes are an integral part of these financial statements.

3

NOVAVAX, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)

Nine Months Ended September 30, 2020 and 2019

(unaudited)

				Additional						Other		Stockholders'
	Common Stock			Paid-in		Accumulated		Treasury		Comprehensive		Equity
	Shares	Amount		Capital		Deficit		Stock		Income (Loss)		(Deficit)
	(in thousands, except share information)
Balance at December 31, 2019	32,399,352	$	324	$	1,260,551	$	(1,431,801)	$	(2,583)	$	(12,508)	$	(186,017)
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 gain 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
Balance at December 31, 2018	19,245,302	$	192	$	1,144,621	$	(1,299,107)	$	(2,450)	$	(11,191)	$	(167,935)
Non-cash stock-based compensation	—		—		12,803		—		—		—		12,803
Stock issued under incentive programs	173,873		2		1,122		—		(132)		—		992
Fractional shares purchased in stock split	—		—		—		—		(1)		—		(1)
Issuance of common stock, net of issuance costs of $1,273	6,156,403		62		67,768		—		—		—		67,830
Unrealized gain on marketable securities	—		—		—		—		—		5		5
Foreign currency translation adjustment	—		—		—		—		—		(2,668)		(2,668)
Net loss	—		—		—		(100,864)		—		—		(100,864)
Balance at September 30, 2019	25,575,578	$	256	$	1,226,314	$	(1,399,971)	$	(2,583)	$	(13,854)	$	(189,838)

The accompanying notes are an integral part of these financial statements.

4

NOVAVAX, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

	Nine Months Ended
	September 30,
	2020		2019
Operating Activities:
Net loss	$	(240,695)	$	(100,864)
Reconciliation of net loss to net cash used in operating activities:
Depreciation and amortization		3,091		4,744
Loss on disposal of property and equipment		—		88
Gain on Catalent transaction		—		(9,016)
Amortization of debt issuance costs		1,068		1,068
Non-cash stock-based compensation		77,602		12,803
Write off of right-of-use assets		187,193		—
Other		(4,119)		1,269
Changes in operating assets and liabilities:
Receivables, prepaid expenses and other assets		(78,788)		1,326
Accounts payable and accrued expenses		60,540		(16,882)
Deferred revenue		80,135		(7,416)
Net cash provided by (used in) operating activities		86,027		(112,880)
Investing Activities:
Capital expenditures		(12,610)		(1,641)
Acquisition of Novavax CZ, net of cash acquired		(164,204)		―
Proceeds from Catalent transaction		—		18,333
Purchases of marketable securities		(266,330)		(17,484)
Proceeds from maturities of marketable securities		96,488		39,500
Net cash (used in) provided by investing activities		(346,656)		38,708
Financing Activities:
Net proceeds from sale of preferred stock		199,822		—
Net proceeds from sales of common stock		447,070		67,220
Proceeds from the exercise of stock-based awards		35,708		992
Treasury stock related to tax withholding on stock-based awards		(37,024)		—
Finance lease payments		(65,424)		—
Net cash provided by financing activities		580,152		68,212
Effect of exchange rate on cash, cash equivalents and restricted cash		33		(69)
Net increase (decrease) in cash, cash equivalents and restricted cash		319,556		(6,029)
Cash, cash equivalents and restricted cash at beginning of period		82,180		81,959
Cash, cash equivalents and restricted cash at end of period	$	401,736	$	75,930
Supplemental disclosure of non-cash activities:
Sale of common stock under the Sales Agreement not settled at quarter-end	$	3,883	$	610
Capital expenditures included in accounts payable and accrued expenses	$	6,189	$	183
Right-of-use assets from new lease agreements	$	188,362	$	—
Supplemental disclosure of cash flow information:
Cash interest payments	$	12,188	$	12,188

The accompanying notes are an integral part of these financial statements.

5

NOVAVAX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2020

(unaudited)

Note 1 – Organization

Novavax, Inc. (“Novavax,” and together with its wholly owned subsidiaries, Novavax AB and Novavax CZ (formerly, Praha Vaccines a.s.), the “Company”) is a late-stage biotechnology company that promotes improved global health through the discovery, development and commercialization of innovative vaccines to prevent serious infectious diseases and address urgent, global health needs. The Company’s vaccine candidates, including both its coronavirus vaccine candidate, NVX-CoV2373, and its lead influenza vaccine candidate, NanoFlu^TM, are genetically engineered, three-dimensional nanostructures of recombinant proteins critical to disease pathogenesis and may elicit differentiated immune responses, which may be more efficacious than naturally occurring immunity or traditional vaccines. The Company’s technology targets a variety of infectious diseases. The Company is also developing proprietary immune stimulating saponin-based adjuvants at Novavax AB, its wholly owned Swedish subsidiary. The Company’s lead adjuvant, Matrix-M™, has been shown to enhance immune responses and has been well-tolerated in multiple clinical trials.

Note 2 – Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. The consolidated balance sheet as of September 30, 2020, the consolidated statements of operations and the consolidated statements of comprehensive loss for the three and nine months ended September 30, 2020 and 2019, the consolidated statements of changes in stockholders’ equity (deficit) for the three and nine months ended September 30, 2020 and 2019 and the consolidated statements of cash flows for the nine months ended September 30, 2020 and 2019 are unaudited, but include all adjustments (consisting of normal recurring adjustments) that the Company considers necessary for a fair presentation of the financial position, operating results, comprehensive loss, changes in stockholders’ equity (deficit) and cash flows, respectively, for the periods presented. Although the Company believes that the disclosures in these unaudited consolidated financial statements are adequate to make the information presented not misleading, certain information and footnote information normally included in consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted as permitted under the rules and regulations of the United States Securities and Exchange Commission (“SEC”).

The unaudited consolidated financial statements include the accounts of Novavax, Inc. and its wholly owned subsidiaries, 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 loss in the accompanying unaudited consolidated balance sheets. The foreign currency translation adjustment balance included in accumulated other comprehensive loss was $5.0 million and $12.5 million as of September  30, 2020 and December 31, 2019, respectively.

The accompanying unaudited consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2019. Results for this or any interim period are not necessarily indicative of results for any future interim period or for the entire year. The Company operates in one business segment.

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,		December 31,
	2020		2019
Cash	$	126,505	$	15,863
Money market funds		79,950		42,960
Government-backed securities		43,250		20,000
Treasury securities		24,998		—
Corporate debt securities		59,468		—
Cash and cash equivalents	$	334,171	$	78,823

Cash equivalents are recorded at cost, which approximate fair value due to their short-term nature.

Marketable Securities

Marketable securities consist of debt securities with maturities greater than three months from the date of purchase that include commercial paper, 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' deficit until realized. Marketable securities are evaluated periodically to determine whether a decline in value is “other-than-temporary.” The term “other-than-temporary” is not intended to indicate a permanent decline in value. Rather, it means that the prospects for a near term recovery of value are not necessarily favorable, or that there is a lack of evidence to support fair values equal to, or greater than, the carrying value of the security. Management reviews criteria, such as the magnitude and duration of the decline, as well as the Company's ability to hold the securities, including whether the Company will be required to sell a security prior to recovery of its amortized cost basis, the investment issuer's financial condition and business outlook to predict whether the loss in value is other-than-temporary. 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. The cost of securities sold is based on the specific identification method.

Restricted Cash

The Company’s current and non-current restricted cash includes payments received under the Coalition for Epidemic Preparedness Innovations (“CEPI”) funding agreements (see Note 12), payments received under the Bill & Melinda Gates Foundation (“BMGF”) grant agreements (see Note 12), escrow funds paid in connection with the acquisition of Novavax CZ (see Note 5), escrow funds received in connection with a transaction in 2019 with Catalent Maryland, Inc. (formerly Paragon Bioservices, Inc.), a unit of Catalent Biologics (“Catalent”), 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.

7

As of September 30, 2020, the restricted cash balances (both current and non-current) consisted of $9.1 million for payments received from BMGF, $46.3 million of payments under the CEPI funding agreements, $11.7 million held in escrow that was paid by the Company in connection with the Novavax CZ acquisition and $0.4 million of security deposits. As of December 31, 2019, the restricted cash balances (both current and non-current) consisted of $1.4 million for payments received from BMGF, $1.5 million held in escrow received in connection with the Catalent transaction and $0.4 million of security deposits.

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amounts shown in the statement of cash flows (in thousands):

	September 30,		December 31,
	2020		2019
Cash and cash equivalents	$	334,171	$	78,823
Restricted cash current		67,154		2,947
Restricted cash non-current		411		410
Cash, cash equivalents and restricted cash	$	401,736	$	82,180

Acquisitions

The Company applies the acquisition method of accounting to business combinations in accordance with Accounting Standards Codification (“ASC”) Topic 805, Business Combinations. The Company’s consolidated financial statements include the operating results of an acquired entity from the date on which it obtains control of the business acquired. The Company recognizes and measures the identifiable assets acquired and liabilities assumed, as of the acquisition date, based on their estimated fair value with the excess purchase consideration, if any, recognized as goodwill. In determining fair value, the Company uses various recognized valuation methods, including the cost and market approaches. The Company initially performs these valuations based on preliminary estimates and assumptions by management or independent valuation specialists under Company supervision, where appropriate, and makes revisions as estimates and assumptions are finalized. The final determination of fair values must be completed no later than the first anniversary of the date of acquisition. The Company expenses acquisition related costs as incurred. See Note 5 for further discussion around the Company’s recent acquisition of Novavax CZ.

Lease Accounting

The Company determines at the inception of a contract if an arrangement is, or contains, a lease, which exists when the contract conveys the right to control the use of identified property or equipment for a period of time in exchange for consideration. Depending on the contract, the lease commencement date, defined as the date on which the lessor makes the underlying asset available for use by the lessee, may be different than the inception date of the contract. Leases are classified as either operating or finance leases based on the economic substance of the agreement.

The Company enters into non-cancelable lease agreements for office space and certain equipment. Further, the Company enters into supply agreements with contract manufacturing organizations and contract development and manufacturing organizations to manufacture its vaccine candidates. Certain of these supply agreements include the use of identified manufacturing facilities and equipment that are controlled by the Company and may qualify as an embedded lease. Supply agreements that contain a lease are treated as lease arrangements in their entirety.

For leases that have a lease term of more than 12 months at the lease commencement date, the Company recognizes lease liabilities, which represent the Company’s obligation to make lease payments arising from the lease, and corresponding right-of-use (“ROU”) assets, which represent the right to use an underlying asset for the lease term, based on the present value of the fixed future payments over the lease term. The Company calculates the present value of future payments using the discount rate implicit in the lease, if available, or the Company’s incremental borrowing rate.  For all leases that have a lease term of 12 months or less at the commencement date (referred to as “short-term” leases), the Company has elected to apply the practical expedient in ASC Topic 842, Leases (“ASC 842”), to not recognize a lease liability or ROU asset but instead, recognize lease payments as an expense on a straight-line basis over the lease term and variable lease payments that do not depend on an index or rate, as an expense in the period in which the variable lease costs are incurred based on performance or usage in accordance with contractual agreements.  In determining the lease period, the Company evaluates facts and circumstances that could affect the period over which it is reasonably certain to

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use the underlying asset while taking into consideration the non-cancelable period over which it has the right to use the underlying asset and any option period to extend or terminate the lease if it is reasonably certain to exercise the option. The Company reevaluates short-term leases that are modified and if they no longer meets the requirements to be treated as short-term leases, recognizes and measures the lease liability and ROU asset as if the date of the modification is the lease commencement date.

For operating leases, the Company recognizes lease expense related to fixed payments on a straight-line basis over the lease term and lease expense related to variable payments as incurred based on performance or usage in accordance with the contractual agreements. For finance leases, the Company recognizes the amortization of the ROU asset over the shorter of the lease term or useful life of the underlying asset. The Company expenses ROU assets acquired for research and development activities under ASC Topic 730, Research and Development, if they do not have an alternative future use, in research and development projects or otherwise.

The Company uses significant assumptions and judgment in evaluating its lease contracts and other agreements under ASC 842, including the determination of whether an agreement is or contains a lease, whether a lease represents an operating or finance lease, the discount rate used to determine the present value of lease obligations and the term of a lease embedded in its supply agreements.

Revenue Recognition

The Company performs research and development under government funding, grant, license and clinical development agreements. The revenue primarily consists of funding under U.S. government contracts and other arrangements to advance the clinical development and manufacturing of NVX-CoV2373. The Company’s U.S. government contracts are with the U.S. Department of Defense (the “DoD”) and its participation in Operation Warp Speed (“OWS”) (see Note 12). Other funding arrangements primarily include a grant and forgivable loan funding from CEPI (see Note 12).

At contract inception, the Company analyzes the revenue arrangement to determine the appropriate accounting under U.S. GAAP. Currently, the Company’s revenue arrangements represent customer contracts within the scope of ASC Topic 606, Revenue from Contracts with Customers (Topic 606) (“ASC 606”) or are contributions under the scope of ASC Topic 958-605, Not-for-Profit Entities – Revenue Recognition (“ASC 958-605”.) The Company recognizes revenue from arrangements within the scope of ASC 606 following the five-step model: (i) identify the contract(s) with a customer; (ii) identify the performance obligation(s) in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligation(s) in the contract; and (v) recognize revenue when (or as) it satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that it will collect the consideration it is entitled to in exchange for the goods or services it transfers to its customer. The Company recognizes contribution revenue within the scope of ASC 958-605 when the funder-imposed conditions have been substantially met. Contributions are recorded as deferred revenue until the period in which research and development activities are performed that satisfy the funder-imposed conditions.

Under the U.S. government contracts, the Company is entitled to receive funding of up to $1.66 billion, on a reimbursable-cost or reimbursable-cost-plus-fixed-fee basis, to support certain activities related to the development, manufacture and delivery of NVX-CoV2373 to the U.S. government. The Company analyzed these contracts and determined that they are within the scope of ASC 606. The obligations under each of the contracts are not distinct in the context of the contract as they are highly interdependent or interrelated and, as such, they are accounted for as a single performance obligation. The transaction price under these arrangements is the consideration the Company is expecting to receive and consists of the funded contract amount and the unfunded variable amount to the extent that it is probable that a significant reversal of revenue will not occur. The Company recognizes revenue for these contracts over time as the Company transfers control over the goods and services and satisfies the performance obligation. The Company measures progress toward satisfaction of the performance obligation using an Estimate-at-Completion (“EAC”) process, which is a cost-based input method that reviews and monitors the progress towards the completion of the Company’s performance obligation. Under this process, management considers the costs that have been incurred to-date, as well as projections to completion using various inputs and assumptions, including, but not limited to, progress towards completion, labor costs and productivity, material and subcontractor costs and identified risks. Estimating the total allowable cost at completion of the performance obligation under a contract is subjective and requires the Company to make assumptions about future activity and cost drivers. Changes in these estimates can occur for a variety of reasons and, if significant, may impact the timing of revenue and fee recognition on the Company’s contracts. Allowable contract costs include direct costs incurred

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on the contract and indirect costs that are applied in the form of rates to the direct costs. Billings under the contracts are initially based on provisional indirect billing rates, agreed upon between the Company and the U.S. government. These indirect rates are subject to audit on an annual basis. The Company records the impact of changes in the indirect billing rates in the period when such changes are identified. These changes reflect the difference between actual indirect costs incurred compared to the estimated amounts used to determine the provisional indirect billing rates agreed upon with the U.S. government. The Company recognizes revenue on the U.S government contracts based on reimbursable allowable contract costs incurred in the period up to the transaction price. For reimbursable-cost-plus-fixed-fee contracts, the Company recognizes the fixed-fee based on the proportion of reimbursable contract costs incurred to total estimated allowable contract costs expected to be incurred on completion of the underlying performance obligation as determined under the EAC process. The Company recognizes changes in estimates related to the EAC process in the period when such changes are made on a cumulative catch-up basis. The Company includes the transaction price comprising both funded and unfunded portions of customer contracts, in this estimate. As of September 30, 2020, $1.62 billion of the total transaction price of $1.66 billion was not yet satisfied and the Company had a contract asset of $3.8 million and a contract liability of $26.5 million.

The Company’s other funding agreements currently include funding from CEPI of $399.5 million in the form of a grant of $257.0 million (“CEPI Grant Funding”) and one or more forgivable no interest term loans of $142.5 million (“CEPI Forgivable Loan Funding”). Under the Company’s grant funding arrangements, including the CEPI Grant Funding, the Company is primarily entitled to reimbursement for costs that support development related activities of NVX-CoV2373. The CEPI Forgivable Loan Funding is designated for the prepayment of certain manufacturing activities. The Company analyzed these other funding arrangements and determined that they are not within the scope of ASC 606 as they do not provide a direct economic benefit to the grantor. Payments received under the grant funding arrangements are considered conditional contributions under the scope of ASC 958-605 and are recorded as deferred revenue until the period in which such research and development activities are actually performed that satisfy the funder-imposed conditions. Payments received under the CEPI Forgivable Loan Funding agreements are only repayable if the proceeds of sales to one or more third parties of NVX-CoV2373 cover the Company’s costs of manufacturing such vaccine candidate, not including manufacturing costs funded by CEPI. As the financial risk remains with CEPI, the Company determined that the use of the CEPI Forgivable Loan Funding is outside the scope of ASC Topic 470, Debt. The research and development risk is considered substantive, such that it is not yet probable that the development will be successful. Therefore, the Company has concluded that ASC 730 is considered applicable and most appropriate. Given the financial risk associated with the research and development activities lies with CEPI because repayment of any funds provided by CEPI depends solely on the results of the research and development activities having future economic benefit, the Company has accounted for the obligation under the CEPI Forgivable Loan Funding as a contract to perform research and development for others. The Company has determined that payments received under these agreements should be recorded as revenue under ASC 958-605 rather than a reduction to research and development expenses. This is consistent with the Company’s policy of presenting such amounts as revenue. In reaching this determination, the Company considered a number of factors, including whether it is principal under the arrangement, and whether the arrangement is significant to, and part of, the Company’s core operations. The Company will record revenue as it performs the contractual research and development services.

Net Loss per Share

Net loss per share is computed using the weighted average number of shares of common stock outstanding. As of September 30, 2020 and 2019, the Company had outstanding stock options, stock appreciation rights (“SARs”) and unvested restricted stock units (“RSUs”) totaling 6,623,466 and 5,041,526, respectively. In addition, as of September 30, 2020, the Company had 438,885 shares outstanding of its newly designated Series A Convertible Preferred Stock , which are convertible into 4,388,850 shares of the Company’s common stock.

As of September 30, 2020, the Company’s Notes (see Note 8) would have been convertible into approximately 2,385,800 shares of the Company’s common stock assuming a common stock price of $136.20 or higher. These and any shares due to the Company upon settlement of its capped call transactions are excluded from the computation, as their effect is antidilutive.

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Recent Accounting Pronouncements

Recently Adopted

In January 2017, the FASB issued Accounting Standards Update (“ASU”) No. 2017-04, Intangibles-Goodwill and Other (Topic 350) (“ASU 2017-04”), which will simplify the goodwill impairment calculation by eliminating Step 2 from the current goodwill impairment test. The new standard does not change how a goodwill impairment is identified. The Company will continue to perform its quantitative goodwill impairment test by comparing the fair value of its reporting unit to its carrying amount, but if the Company is required to recognize a goodwill impairment charge, under the new standard, the amount of the charge will be calculated by subtracting the reporting unit's fair value from its carrying amount. Under the current standard, if the Company is required to recognize a goodwill impairment charge, Step 2 requires it to calculate the implied value of goodwill by assigning the fair value of a reporting unit to all of its assets and liabilities as if that reporting unit had been acquired in a business combination and the amount of the charge is calculated by subtracting the reporting unit's implied fair value of goodwill from the goodwill carrying amount. The standard was effective January 1, 2020 for the Company and will be applied prospectively from the date of adoption. The adoption of ASU 2017-04 did not have a material impact on the Company’s historical financial statements.

Not Yet Adopted

In August 2020, the FASB issued 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 on 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. Early adoption is permitted, but no earlier than January 1, 2021 for the Company. Management is evaluating the impact of adopting ASU 2020-06 and whether it will 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 measured at fair value (in thousands):

	Fair Value at September 30, 2020						Fair Value at December 31, 2019
Assets	Level 1		Level 2		Level 3		Level 1		Level 2		Level 3
Money market funds(1)	$	79,950	$	―	$	—	$	42,960	$	—	$	—
Government-backed securities(2)		―		43,250		―		―		20,000		―
Treasury securities(3)		—		65,093		—		—		—		—
Corporate debt securities(4)		―		148,583		―		―		—		―
Agency securities	$	―		40,651		—		—		—		—
Total cash equivalents and marketable securities	$	79,950	$	297,577	$	—	$	42,960	$	20,000	$	—
Liabilities
Convertible notes payable	$	―	$	389,217	$	—	$	—	$	125,811	$	—

(1) Classified as cash and cash equivalents as of September 30, 2020 and December 31, 2019, respectively, on the consolidated balance sheets.

(2) Includes $43,250 and $20,000 classified as cash and cash equivalents as of September 30, 2020 and December 31, 2019, respectively, on the consolidated balance sheets.

(3) Includes $24,998 classified as cash and cash equivalents as of September 30, 2020 on the consolidated balance sheets.

(4) Includes $59,468 classified as cash and cash equivalents as of September 30, 2020 on the consolidated balance sheets.

Fixed-income investments categorized as Level 2 are valued at the custodian bank by a third-party pricing vendor's valuation models that use verifiable observable market data, e.g., interest rates and yield curves observable at

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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 8) 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, 2020 and 2019, the Company did not have any transfers between levels.

The amount recorded in the Company's unaudited consolidated balance sheets for accounts payable and accrued expenses approximates its fair value due to its short-term nature.

Note 4 – Marketable Securities

Marketable securities classified as available-for-sale as of September 30, 2020 and December 31, 2019 were comprised of (in thousands):

	September 30, 2020								December 31, 2019
			Gross		Gross						Gross		Gross
	Amortized		Unrealized		Unrealized				Amortized		Unrealized		Unrealized
	Cost		Gains		Losses		Fair Value		Cost		Gains		Losses		Fair Value
Treasury securities	$	40,093	$	2	$	—	$	40,095	$	—	$	—	$	—	$	—
Corporate debt securities		89,104		12		(2)		89,114		—		—		—		—
Agency securities		40,645		6		—		40,651		—		—		—		—
Total	$	169,842	$	20	$	(2)	$	169,860	$	—	$	—	$	—	$	—

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 – Acquisition of Novavax CZ

On May 27, 2020 (the “Acquisition Date”), the Company entered into a Share Purchase Agreement (the “Deed”) by and among Novavax AB, the Company’s wholly-owned Swedish subsidiary (the “Buyer”), and De Bilt Holdings B.V., Poonawalla Science Park B.V., and Bilthoven Biologicals B.V. (collectively, the “Sellers”) and, solely as guarantors, each of Serum International B.V. and the Company. Pursuant to the terms and conditions of the Deed, the Buyer acquired all the issued and outstanding shares of Novavax CZ (formerly, Praha Vaccines a.s.), a vaccine manufacturing company (the “Acquisition”). The assets of Novavax CZ acquired as part of the Acquisition include a biologics manufacturing facility and associated assets in Bohumil, Czech Republic and will be used by the Company to expand its manufacturing capacity.

The Purchase Price includes €10.0 million (approximately $11.1 million at the time of the Acquisition), which was placed in an escrow account and subsequently paid to the Sellers after September 30, 2020. The Deed and ancillary agreements contain customary warranties and post-completion covenants, as well as indemnities by each of the parties thereto.

Preliminary Allocation of Purchase Price to Assets Acquired and Liabilities Assumed

The Company has accounted for the Acquisition as a business combination using the acquisition method of accounting, with the Company as the acquirer. The acquisition method requires the Company to record the assets acquired and liabilities assumed at fair value. The amount by which the purchase price exceeds the fair value of net assets acquired is recorded as goodwill. The Company has commenced the appraisal process necessary to assess the fair values of the assets acquired and liabilities assumed to determine the amount of goodwill to be recognized as of the Acquisition Date. These appraisals are not yet complete and therefore, the amounts recorded for certain assets and liabilities are preliminary and are subject to adjustment as additional information is obtained about the facts and circumstances that existed as of the Acquisition Date. The final determination of the fair value of certain assets and liabilities will be completed within the measurement period of up to one year from the Acquisition Date. The final values may also result in changes to depreciation and amortization expense related to certain assets such as buildings and equipment. Any potential adjustments made could be material in relation to the preliminary values presented in the table below.

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The table below summarizes the preliminary allocation of the Purchase Price based upon the fair values of assets acquired and liabilities assumed at the Acquisition Date, adjusted for an increase in the Purchase Price of $0.2 million in the three months ended ended September 30, 2020 for a customary working capital adjustment. The preliminary allocation is based upon information that was available to management at the time the consolidated financial statements were prepared and is subject to change prior to completion of the measurement period (in thousands):

Prepaid expense and other current assets	$	326
Property and equipment		96,739
Goodwill		70,662
Accounts payable		(1,193)
Accrued expenses		(205)
Other non-current liabilities		(813)
Purchase Price, net of cash acquired	$	165,516

The fair value of the assets acquired and liabilities assumed were preliminarily determined using market and cost valuation methodologies. The fair value measurements are based on significant unobservable inputs that were developed by the Company using publicly available information, market participant assumptions, and cost and development assumptions. Because of the use of significant unobservable inputs, the fair value measurements represent a Level 3 measurement as defined in ASC 820, Fair Value Measurement and Disclosures. The market approach is a valuation technique that uses prices and other relevant information generated by market transactions involving identical or comparable assets, liabilities, or a group of assets or liabilities. The cost approach estimates value by determining the current cost of replacing an asset with another of equivalent utility. The cost to replace a given asset reflects the estimated reproduction or replacement cost for the property, less an allowance for loss in value due to depreciation.

The cost approach was the primary approach used to value fixed assets, including the real property. Fixed assets are depreciated on a straight-line basis over their expected remaining useful lives, ranging from 4 to 25 years. The carrying value and expected lives of the fixed assets may change upon finalizing the purchase price allocation as valuation and engineering reports are finalized.

The Company recorded $70.7 million in goodwill related to the Acquisition representing the Purchase Price that was in excess of the fair value of the assets acquired and liabilities assumed. The goodwill generated from the Acquisition is not expected to be deductible for U.S. federal income tax purposes. The goodwill recognized is attributable to intangible assets that do not qualify for separate recognition, such as the assembled workforce of Novavax CZ.

Current assets and current liabilities were recorded at their contractual or historical acquisition amounts, which approximate their fair value.

Determining the fair value of assets acquired and liabilities assumed requires the exercise of significant professional judgment. Use of different estimates and judgments could yield different results.

Impact to Financial Results for the Three and Nine Months Ended September 30, 2020

The results of operations from Novavax CZ have been included in the consolidated financial statements since the Acquisition Date. As a result, the consolidated financial results for the nine months ended September 30, 2020 does not reflect a full nine months of Novavax CZ results. From the Acquisition Date through September 30, 2020, Novavax CZ has not recognized any revenue and recorded a net loss of $4.3 million from Novavax CZ’ operations.

The Company incurred approximately $0.7 million and $2.7 million of costs related to the Acquisition in the three months and nine months ended September 30, 2020, respectively, which are included within general and administrative expenses in the consolidated statements of operations.

Supplemental Pro Forma Financial Information (Unaudited)

The unaudited pro forma financial information for the periods set forth below gives effect to the Acquisition as if it had occurred as of January 1, 2019.  The pro forma financial information is presented for informational purposes only and is not necessarily indicative of the results of operations that would have been achieved had the Acquisition been consummated as of that time. The unaudited pro forma financial information combines the historical results of operations

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of the Company and Novavax CZ for the periods presented below and reflects the application of certain pro forma adjustments (in thousands, except per share amounts):

	Three Months Ended				Nine Months Ended
	September 30, 2020				September 30,
	2020		2019		2020		2019
Revenue	$	157,024	$	2,507	$	195,939	$	9,846
Net loss		(196,590)		(19,982)		(242,411)		(107,349)
Basic and diluted net loss per share		(3.19)		(0.45)		(4.21)		(2.51)

Pro forma adjustments include the recognition of depreciation expense based on the Acquisition Date fair value and remaining useful lives of Novavax CZ’ fixed assets (net of historical depreciation expense) and the elimination of costs related to the Acquisition, which are non-recurring in nature.

Note 6 – Goodwill and Other Intangible Assets

Goodwill

The change in the carrying amounts of goodwill for the nine months ended September 30, 2020 was as follows (in thousands):

	Amount
Balance at December 31, 2019	$	51,154
Goodwill resulting from the acquisition of Novavax CZ		70,662
Currency translation adjustments		5,116
Balance at September 30, 2020	$	126,932

Identifiable Intangible Assets

Purchased intangible assets consisted of the following as of September 30, 2020 and December 31, 2019 (in thousands):

	September 30, 2020						December 31, 2019
	Gross						Gross
	Carrying		Accumulated		Intangible		Carrying		Accumulated		Intangible
	Amount		Amortization		Assets, Net		Amount		Amortization		Assets, Net
Finite-lived intangible assets:
Proprietary adjuvant technology	$	8,309	$	(2,977)	$	5,332	$	7,985	$	(2,562)	$	5,423
Collaboration agreements		3,752		(3,752)		—		3,606		(3,448)		158
Total identifiable intangible assets	$	12,061	$	(6,729)	$	5,332	$	11,591	$	(6,010)	$	5,581

Amortization expense for the nine months ended September 30, 2020 and 2019 was $0.5 million.

Estimated amortization expense for existing intangible assets for the remainder of 2020 and for each of the five succeeding years ending December 31 will be as follows (in thousands):

Year	Amount
2020	$	104
2021		415
2022		415
2023		415
2024		415
2025		415

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Note 7 - Leases

During the three months ended September 30, 2020, there were no material new or modified real estate lease arrangements.

During the three months ended September 30, 2020, the Company entered into multiple supply agreements with contract manufacturing organizations and contract development and manufacturing organizations to manufacture the Company’s COVID-19 vaccine candidate, NVX-CoV2373. The agreements include the use of identified manufacturing facilities, contain fixed or minimum commitments and include variable costs related to production and material costs in excess of the fixed or minimum commitment specified in the agreements. The Company evaluated the agreements at inception and determined that certain of these arrangements contain an embedded lease under ASC 842 as it has the exclusive use of, and control over, a portion of the manufacturing facility and equipment of the supplier during the contractual term of the arrangement. The Company recognized a financing lease liability and ROU asset of $187.2 million related to its supply agreements using the Company’s Incremental Borrowing Rate of 6.6%. The Company used significant judgment and estimates, including the estimated value of the underlying leased asset and financial profile of comparable companies to analyze the credit spread as on the date of the lease inception. The Company expensed the ROU asset as it represents an asset acquired for research and development activities related to the development of NVX-CoV2373 that currently does not have an alternative future use.

Supplemental balance sheet information for embedded leases in supply agreements entered into by the Company during the three months ended September 30, 2020 is as follows (in thousands, except weighted-average remaining lease term and discount rate):

Lease Liabilities	Classification		Amount
Current operating lease liabilities	Other current liabilities	$	3,868
Current portion of finance lease liabilities	Current portion of finance lease liabilities		55,860
Non-current finance lease liabilities	Non-current finance lease liabilities		63,099
Weighted-average remaining lease term (years):
Operating lease			1.1
Finance lease			4.9
Weighted-average discount rate:
Operating lease			6.5%
Finance lease			6.6%

Lease expense for the operating, finance and short-term embedded leases related to the supply agreements entered into by the Company during the three months ended September 30, 2020 was as follows (in thousands):

		Three Months Ended September 30, 2020
Operating lease expense:
Fixed lease expense	$	16
Finance lease expense:
Fixed lease expense		65,424
Interest expense		1,041
Short-term expense		19,390
Total lease expense	$	85,871

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Supplemental cash flow information related to the embedded leases for three months ended September 30, 2020 was as follows (in thousands):

Cash paid for amounts included in the measurement of lease liabilities:		Amount
Financing cash flows from finance lease	$	65,424

As of September 30, 2020, maturities of embedded lease liabilities were as follows (in thousands):

Year		Operating		Finance
2021	$	3,900	$	62,623
2022		-		65,235
Total minimum lease payments		3,900		127,858
Less: Imputed interest		(32)		(8,899)
Total lease liabilities	$	3,868	$	118,959

As of September 30, 2020, the Company had one agreement that contains an embedded finance lease for a manufacturing arrangement that is expected to commence in the fourth quarter of 2020 with a lease term of approximately 5 years.

Note 8 – 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):

	September 30,		December 31,
	2020		2019
Principal amount of Notes	$	325,000	$	325,000
Unamortized debt issuance costs		(3,321)		(4,389)
Total convertible notes payable	$	321,679	$	320,611

Interest expense incurred in connection with the Notes consisted of the following (in thousands):

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2020		2019		2020		2019
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

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Note 9 – Preferred Stock

In June 2020, the Company entered into a redeemable Series A Convertible Preferred Stock Subscription Agreement (“Subscription Agreement”), pursuant to which the Company agreed to issue and sell in a private placement 438,885 shares of its newly designated redeemable Series A Convertible Preferred Stock, par value $0.01 per share (“Preferred Stock”), at a purchase price of $455.70 per share, for total gross proceeds of $200.0 million (the “Preferred Private Placement”). Under the terms of the Preferred Stock, any holder thereof has the right to redeem shares of the Preferred Stock at the original purchase price if the Company fails to meet certain SEC filing requirements and file and maintain for at least one year a registration statement for the resale of the shares of common stock underlying the Preferred Stock. Because certain of these features are outside of the Company's control, the Company has classified the Preferred Stock outside of permanent equity.

Each share of Preferred Stock is convertible into ten shares of common stock. The conversion price is equal to $45.57 and is subject to adjustment based on standard anti-dilution provisions. Holders of Preferred Stock are not entitled to cumulative dividends, are not entitled to vote on matters submitted to common stockholders and have a liquidation preference over common stockholders equal to the greater of the original purchase price, plus declared and unpaid Preferred Stock dividends, and the amount that would be payable in respect of common stock assuming the Preferred Stock converted immediately prior to the liquidation. The Company recognized a beneficial conversion feature of approximately $24.1 million that was recorded within additional paid-in capital and accumulated deficit as the Preferred Stock issuance is only contingently redeemable and convertible at any time at the option of the holder.

Note 10 – Stockholders' Equity (Deficit)

In June 2020, in advance of David M. Mott joining the Company’s Board of Directors, the Company agreed to sell 32,916 shares of common stock to him at a purchase price of $45.57 per share, reflecting the closing price of the Company’s common stock on the trading date prior to the date the parties’ agreement regarding the sale, for total gross proceeds of $1.5 million. Mr. Mott joined the Company’s Board of Directors later in the same month.

In May 2020, the Company entered into an At Market Issuance Sales Agreement ("May 2020 Sales Agreement"), which allows it to issue and sell up to $250 million in gross proceeds of its common stock. During the nine months ended September 30, 2020, the Company sold 2.8 million shares of common stock under the May 2020 Sales Agreement resulting in $160.3 million in net proceeds (this amount excludes $3.9 million received in the fourth quarter of 2020 for shares traded in late September 2020). From October 1, 2020 through November 3, 2020, the Company sold 0.7 million shares of common stock resulting in $74.1 million in net proceeds, leaving $8.7 million remaining under the May 2020 Sales Agreement.

In March 2020, the Company entered into an At Market Issuance Sales Agreement (“March 2020 Sales Agreement”), which allowed it to issue and sell up to $150 million in gross proceeds of its common stock. During the six months ended June 30, 2020, the Company sold 8.6 million shares of common stock under the March 2020 Sales Agreement resulting in $148.1 million in net proceeds. The March 2020 Sales Agreement was fully utilized at that time.

In January 2020, the Company entered into an At Market Issuance Sales Agreement ("January 2020 Sales Agreement"), which allowed it to issue and sell up to $100 million in gross proceeds of its common stock. During the first quarter of 2020, the Company sold 10.5 million shares of common stock under the January 2020 Sales Agreement resulting in $98.7 million in net proceeds. The January 2020 Sales Agreement was fully utilized at that time.

In December 2018, the Company entered into an At Market Issuance Sales Agreement (“December 2018 Sales Agreement”), which allowed it to issue and sell up to $100 million in gross proceeds of its common stock. During the nine months ended September 30, 2019, the Company sold 3.6 million shares of common stock under the December 2018 Sales Agreement, of which 1.7 million shares of common stock were sold in the first quarter of 2019, resulting in $29.3 million in net proceeds. In January 2020, the Company sold 7.2 million shares of common stock under the December 2018 Sales Agreement  resulting in $38.5 million in net proceeds. The December 2018 Sales Agreement was fully utilized at that time.

In December 2017, the Company entered into an At Market Issuance Sales Agreement (“December 2017 Sales Agreement”), which allowed it to issue and sell up to $75 million in gross proceeds of its common stock. During the three months ended March 31, 2019, the Company sold 2.5 million shares of common stock under the December 2017 Sales

17

Agreement resulting in $37.9 million in net proceeds. The December 2017 Sales Agreement was fully utilized at that time.

Note 11 – Stock-Based Compensation

Stock Options

The 2015 Stock Incentive Plan, as amended (“2015 Plan”), was approved at the Company's annual meeting of stockholders in June 2015. Under the 2015 Plan, equity awards may be granted to officers, directors, employees and consultants of and advisors to the Company and any present or future subsidiary.

The 2015 Plan authorizes the issuance of up to 10,900,000 shares of common stock under equity awards granted under the 2015 Plan, which includes an increase of 7,100,000 shares approved for issuance under the 2015 Plan at the Company's 2020 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, stock appreciation rights and restricted stock units. In addition, under the 2015 Plan, unrestricted stock, stock units and performance awards may be granted. Stock options and stock appreciation rights generally have a maximum term of 10 years and may be or were granted with an exercise price that is no less than 100% of the fair market value of the Company's common stock at the time of grant. Grants of stock options are generally subject to vesting over periods ranging from one to four years.

Stock Options and Stock Appreciation Rights

The following is a summary of stock options and stock appreciation rights activity under the 2015 Plan and 2005 Plan for the nine months ended September 30, 2020:

	2015 Plan			2005 Plan
		Weighted-			Weighted-
		Average			Average
	Stock	Exercise		Stock	Exercise
	Options	Price		Options	Price
Outstanding at January 1, 2020	3,388,750	$	35.64	501,780	$	64.19
Granted	3,110,566	$	31.16	—	$	—
Exercised	(874,586)	$	31.08	(189,378)	$	44.14
Canceled	(80,366)	$	50.29	(23,329)	$	51.92
Outstanding at September 30, 2020	5,544,364	$	33.66	289,073	$	78.32
Shares exercisable at September 30, 2020	771,002	$	86.28	289,073	$	78.32
Shares available for grant at September 30, 2020	2,814,405

In 2019, the Company granted 192,400 stock appreciation rights, with a weighted-average exercise price of $5.95, under the 2015 Plan.

Additionally, in 2019, due to limitations on the equity awards available under the 2015 Plan, the Company granted to certain employees 1,014,200 stock options, with a weighted-average exercise price of $5.95, under the 2015 Plan that were subject to approval of an increase in the number of shares under the 2015 Plan at the Company's 2020 annual meeting of stockholders. Furthermore, in April 2020, due to limitations on the equity awards available under the 2015 Plan, the Company granted to all of its employees collectively 2,501,600 stock options, with a weighted-average exercise price of $19.08, and 326,050 restricted stock units under the 2015 Plan that include a performance requirement related to its NVX-CoV2373 program that were also subject to approval of an increase in the number of shares under the 2015 Plan at the Company's 2020 annual meeting of stockholders. Since the proposal to increase the number of shares under the 2015 Plan was approved at the Company’s 2020 annual meeting of stockholders, as discussed in the “Stock Options” section above, the Company began to record stock-based compensation expense for these awards at that time.

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The fair value of stock options granted under the 2015 Plan was estimated at the date of grant or the date upon which the 2015 Plan was approved by the Company’s stockholders for stock options discussed above using the Black-Scholes option-pricing model with the following assumptions:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2020		2019		2020		2019
Weighted average Black-Scholes fair value of stock options and SARs granted		$102.41		$4.91		$78.78		$5.42
Risk-free interest rate		0.2%-0.4%		1.5%-1.6%		0.2%-1.5%		1.5%-2.6%
Dividend yield		0%		0%		0%		0%
Volatility		135.4%-152.2%		128.0%-133.8%		116.0%-152.2%		111.6%-133.8%
Expected term (in years)		4.0-5.3		4.0-4.4		4.0-7.6		4.0-4.5
Expected forfeiture rate		0%		0%		0%		0%

The total aggregate intrinsic value and weighted-average remaining contractual term of stock options and stock appreciation rights outstanding under the 2015 Plan and 2005 Plan as of September 30, 2020 was $446.5 million and 8.5 years, respectively. The total aggregate intrinsic value and weighted-average remaining contractual term of stock options and stock appreciation rights exercisable under the 2015 Plan and 2005 Plan as of September 30, 2020 was $43.3 million and 5.3 years, respectively. The aggregate intrinsic value represents the total intrinsic value (the difference between the Company's closing stock price on the last trading day of the period and the exercise price, multiplied by the number of in-the-money stock options and stock appreciation rights) that would have been received by the holders had all stock option  and stock appreciation rights holders exercised their stock options and stock appreciation rights on September 30, 2020. This amount is subject to change based on changes to the closing price of the Company's common stock. The aggregate intrinsic value of stock options and vesting of restricted stock awards for the nine months ended September 30, 2020 and 2019 was $164.3 million and $0.1 million, respectively.

Employee Stock Purchase Plan

The Employee Stock Purchase Plan, as amended (the “ESPP”), was approved at the Company's annual meeting of stockholders in June 2013. The ESPP currently authorizes an aggregate of 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, 2020, there were 255,596 shares available for issuance under the ESPP.

The ESPP is considered compensatory for financial reporting purposes. As such, the fair value of ESPP shares was estimated at the date of grant using the Black-Scholes option-pricing model with the following assumptions:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2020		2019		2020		2019
Range of Black-Scholes fair values of ESPP shares granted		$3.08-$92.67		$2.57-$35.00		$2.57-$92.67		$2.57-$35.00
Risk-free interest rate		0.2%-2.5%		1.3%-2.6%		0.2%-2.6%		1.2%-2.6%
Dividend yield		0%		0%		0%		0%
Volatility		77.5%-189.7%		59.7%-171.6%		66.6%-189.7%		52.2%-171.6%
Expected term (in years)		0.5-2.0		0.5-2.0		0.5-2.0		0.5-2.0
Expected forfeiture rate		0%		0%		0%		0%

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Restricted Stock Units

The following is a summary of restricted stock units activity for the nine months ended September 30, 2020:

		Per Share
		Weighted-
	Number of	Average
	Shares	Fair Value
Outstanding and Unvested at January 1, 2020	1,102,311	$	5.95
Restricted stock units granted	508,854	$	82.02
Restricted stock units vested	(781,812)	$	6.74
Restricted stock units forfeited	(39,324)	$	45.73
Outstanding and Unvested at September 30, 2020	790,029	$	52.17

The Company recorded all stock-based compensation expense in the consolidated statements of operations as follows (in thousands):

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2020		2019		2020		2019
Research and development	$	28,730	$	723	$	34,735	$	6,347
General and administrative		36,975		1,901		42,867		6,456
Total stock-based compensation expense	$	65,705	$	2,624	$	77,602	$	12,803

As of September 30, 2020, there was approximately $311 million of total unrecognized compensation expense related to unvested stock options, SARs, restricted stock units and the ESPP. The increase in unrecognized compensation expense is primarily due to the awards that were subject to approval of an increase in the number of shares under the 2015 Plan at the Company's 2020 annual meeting of stockholders, as discussed in the "Stock Options" section above, and the significant increase in the Company's common stock price in 2020. This unrecognized non-cash compensation expense is expected to be recognized over a weighted-average period of 1.4 years, and will be allocated between research and development and general and administrative expenses accordingly. This estimate does not include the impact of other possible stock-based awards that may be made during future periods  and awards that require approval by the stockholders.

Note 12 – U.S. Government Agreements, Grants and Licenses

Operation Warp Speed

In July 2020, the Company entered into a Project Agreement (the “Project Agreement”) with Advanced Technology International, Inc. (“ATI”), the Consortium Management Firm acting on behalf of the Medical CBRN Defense Consortium in connection with OWS. OWS is a partnership among components of the U.S. Department of Health and Human Services and the U.S. Department of Defense working to accelerate the development, manufacturing and distribution of COVID-19 vaccines, therapeutics and diagnostics. The Project Agreement relates to the Base Agreement the Company entered into with ATI in June 2020 (the “Base Agreement”, together with the Project Agreement, the “OWS Agreement”). Under the OWS Agreement, the Company is entitled to receive funding of up to $1.6 billion to support certain activities related to the development of NVX-CoV2373 and the manufacture and delivery of the vaccine candidate to the U.S. Government. Pursuant to the OWS Agreement, the Company is currently authorized to make expenditures or incur obligations of up to $800 million, and the parties have committed to negotiate a definitive agreement by December 2020 that provides for aggregate costs payable to the Company up to but not in excess of the approved budget of $1.6 billion. If the parties have not agreed on definitive pricing or other terms by December 2020, or any extension of such target date granted by the U.S. Government, the U.S. Government has the discretion to unilaterally determine a fair and reasonable price for completion of the definitive agreement.

The OWS Agreement requires the Company to conduct certain clinical, regulatory and other activities, including a pivotal Phase 3 clinical trial to determine the safety and efficacy of NVX-CoV2373, and to manufacture and deliver to the U.S. Government 100 million doses of the vaccine candidate. Funding under the OWS Agreement is payable to the Company for various development, clinical trial, manufacturing, regulatory and other activities. The OWS Agreement contains terms and conditions that are customary for U.S. Government agreements of this nature, including provisions giving the U.S. Government the right to terminate the Base Agreement and/or the Project Agreement based on a

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reasonable determination that the funded project will not produce beneficial results commensurate with the expenditure of resources and that termination would be in the U.S. Government’s interest. If the Project Agreement is terminated prior to completion, the Company is entitled to be paid for work performed and costs or obligations incurred prior to termination and consistent with the terms of the OWS Agreement. The performance period under the Project Agreement extends from July 2020 through December 2021, subject to early termination by the U.S. Government or extension by mutual agreement of the parties. During the three months ended September 30, 2020, the Company recognized revenue from the OWS Agreement of $39.4 million.

U.S. Department of Defense

In June 2020, the Company entered into a letter contract (the “DoD Contract”) with the DoD Joint Program Executive Office for Chemical, Biological, Radiological and Nuclear Defense (“JPEO-CRBND-EB”), under which JPEO-CRBND-EB agreed to provide funding of up to $60.0 million to the Company to support the manufacture of NVX-CoV2373. Under the DoD Contract, the Company is currently authorized to make expenditures or incur obligations up to $30.0 million, and the Company and the DoD have committed to negotiate a definitive cost-reimbursement contract by December 2020 that provides for costs payable by the DoD not to exceed $60.0 million. If the Company and the DoD have not agreed on pricing or terms by December 2020, or any extension of such target date granted by the DoD, the DoD has the discretion to determine a reasonable price or fee for completion of the contract.

Under the DoD Contract, the Company is expected to deliver 10 million doses of NVX-CoV2373 to the DoD. The 10 million doses of NVX-CoV2373 may be used in Phase 2/3 clinical trials or under an Emergency Use Authorization, if approved by the U.S. Food and Drug Administration (“FDA”). Pursuant to the DoD Contract, if NVX-CoV2373 is approved by the FDA, the DoD is entitled to most-favored customer status for a period of five years from the award of the DoD Contract, meaning that the Company cannot give any comparable commercial client in the United States more favorable pricing than the DoD under similar transactional circumstances. During the three months and nine months ended September 30, 2020, the Company recognized revenue from the DoD Contract of $3.6 million and $3.9 million, respectively.

Coalition for Epidemic Preparedness Innovations

In May 2020, the Company entered into a restated funding agreement which was modified in November 2020 (the “CEPI Funding Agreement”) with CEPI, under which CEPI agreed to provide funding of up to $399.5 million to the Company to support the development of NVX-CoV2373, in addition to the $3.9 million of funding CEPI provided to the Company pursuant to an initial funding agreement entered into between the Company and CEPI in March 2020. The  CEPI Funding Agreement provides up to $257.0 million in Grant Funding and up to $142.5 million in Forgivable Loan Funding, which loans are in the form of one or more forgivable no interest term loans in order to prepay certain manufacturing activities and are not subject to restrictive or financial covenants. The Company is only required to repay any CEPI Forgivable Loan Funding under certain circumstances to the extent it sells doses of NVX-CoV2373, produced with the funds provided and included in such loan(s), to a third party.

Under the terms of the CEPI Funding Agreement, among other things, the Company and CEPI agreed on the importance of global equitable access to any vaccines produced pursuant to the CEPI Funding Agreement. Any such vaccines, if approved, are expected to be procured and allocated through global mechanisms under discussion as part of the Access to COVID-19 Tools (ACT) Accelerator, an international initiative launched by the World Health Organization (“WHO”), Gavi the Vaccine Alliance, CEPI and other global non-governmental organizations and governmental leaders in 2020.

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The scope and continuation of the CEPI Funding Agreement may be modified depending on ongoing developments of the COVID-19 outbreak and the success of NVX-CoV2373 relative to other third-party COVID-19 vaccine candidates or treatments. If the WHO, CEPI or a regulatory authority having jurisdiction over a clinical trial of NVX-CoV2373 determines that a third-party product candidate has substantially greater potential than a Company vaccine product, the Company must cease its clinical trial in the relevant region, and will be reimbursed for any costs incurred as a result thereof. In addition, CEPI has the right to unilaterally terminate the CEPI Funding Agreement if CEPI reasonably determines that (i) there are material safety, regulatory or ethical issues with the development of NVX-CoV2373, (ii) NVX-CoV2373 development should be limited in scope or terminated, (iii) the Company becomes unable to discharge its obligations under the agreement, (iv) the Company fails to meet certain milestones, or (v) the Company commits fraud or a financial irregularity.

Payments received in advance that are related to future performance are deferred and recognized as revenue when the research and development activities are performed. Cash payments received under the funding agreements are restricted as to their use until expenditures contemplated in the funding agreements are incurred. During the three and nine months ended September 30, 2020, the Company recognized revenue from the funding agreements of $111.3 million and $147.8 million, respectively.

Bill & Melinda Gates Foundation

In support of the Company's development of ResVax^TM, in September 2015, the Company entered into the grant agreement with BMGF (the “BMGF Grant Agreement”), under which it was awarded a grant totaling up to $89.1 million (the “Grant”). The Grant supports ResVax development activities, including the Company's global Phase 3 clinical trial in pregnant women in their third trimester and other regulatory efforts. Unless terminated earlier by BMGF, the BMGF Grant Agreement will continue in effect until the end of 2021. The Company concurrently entered into a Global Access Commitments Agreement (“GACA”) with BMGF as a part of the BMGF Grant Agreement. Under the terms of the GACA, among other things, the Company agreed to make a certain amount of ResVax available and accessible at affordable pricing to people in certain low- and middle-income countries. Unless terminated earlier by BMGF, the GACA will continue in effect until the later of 15 years from its effective date, or 10 years after the first sale of a product under defined circumstances. The term of the GACA may be extended in certain circumstances, by a period of up to five additional years.

In July 2020, the Company entered into a grant agreement with BMGF (the “BMGF SA Grant Agreement”) under which it was awarded a grant of $15.0 million to support a Phase 2b clinical trial in the Republic of South Africa to evaluate the safety, immunogenicity, and potential efficacy of NVX-CoV2373.

Payments received in advance that are related to future performance are deferred and recognized as revenue when the research and development activities are performed. Cash payments received under the BMGF Grant Agreement and the BMGF SA Grant Agreement are restricted as to their use until expenditures contemplated in the agreements are incurred. During the nine months ended September 30, 2020, the Company recognized revenue from the BMGF Grant Agreement of less than $0.1 million and $0.4 million, respectively, and has recognized approximately $82 million in revenue since the inception of the agreement. During the three months ended September 30, 2020, the Company recognized revenue from the BMGF SA Grant Agreement of $2.4 million.

Serum Institute of India Private Limited

In July 2020, the Company entered into a supply and license agreement with Serum Institute of India Private Limited (“SIIPL”), as amended by the parties in September 2020, under which the Company granted exclusive and non-exclusive licenses to SIIPL for the development, co-formulation, filling and finishing, registration and commercialization by SIIPL of NVX-CoV2373. SIIPL has agreed to purchase Matrix-M adjuvant from the Company and the Company has 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 sale of NVX-CoV2373 by SIIPL in its licensed territory, net of agreed costs. The Company granted to SIIPL (i) an exclusive license in India during the agreement, and (ii) a non-exclusive license (a) during the “Pandemic Period” (as declared by the World Health Organization), in all countries other than specified countries designated by the World Bank as upper-middle or high-income countries, with respect to which the Company retains rights, and (b) after the Pandemic Period, in only those countries designated as low or middle-income by the World Bank. Following the Pandemic Period, the Company may notify SIIPL of any bona fide opportunities for the Company

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to license NVX-CoV2373 to a third party in such low and middle-income countries and SIIPL would have an opportunity to match or improve such third party terms, failing which, the Company would have the discretion to remove one or more non-exclusive countries from SIIPL’s license.

Takeda Pharmaceutical Company Limited

In August 2020, the Company announced a partnership with Takeda Pharmaceutical Company Limited (“Takeda”) for the exclusive development, manufacturing and commercialization of NVX-CoV2373 in Japan. Takeda will receive funding from the Government of Japan’s Ministry of Health, Labour and Welfare to support the technology transfer, establishment of infrastructure and scale-up of manufacturing. The Company will be entitled to receive payments based on the achievement of certain development and commercial milestones, as well as a portion of proceeds from the sale of the vaccine.

UK SARS-CoV-2 Vaccine Supply Agreement

In October 2020, the Company entered into a SARS-CoV-2 vaccine supply agreement with The Secretary of State for Business, Energy and Industrial Strategy, acting on behalf of the United Kingdom (“UK”) government (the “Authority”) under which the Authority agreed to purchase up to 60 million doses of NVX-CoV2372, plus such additional orders as the Authority may make from time to time. The Company agreed to continue to conduct its UK-based Phase 3 clinical trial of NVX-CoV2373, establish a committed supply chain for NVX-CoV2373 in the UK and seek regulatory approval for NVX-CoV2373 in the UK.

Pursuant to the terms of the agreement, the Company agreed to supply the initial 60 million doses of NVX-CoV2373 to the Authority on a priority supply basis and to supply any additional orders of NVX-CoV2373 to the Authority on an equal priority basis with other third parties. The Authority has certain termination rights, or rights to reduce or cancel orders, if the Authority's supply of NVX-CoV2373 is materially interrupted, delayed or deferred.

Note 13 – CARES Act

On March 27, 2020, Congress enacted the Coronavirus Aid, Relief and Economic Security Act ("CARES Act") to provide certain relief as a result of the COVID-19 pandemic. Amongst other items, the CARES Act lifts certain interest expense deduction limitations originally imposed by the Tax Cuts and Jobs Act of 2017. The enactment of the CARES Act did not result in any material adjustments to the Company's income tax provision or net deferred tax assets for the nine months ended September 30, 2020.

Note 14 – Subsequent Events

In October 2020, the Company entered into a lease for approximately 170,000 square feet of space for premises located at 700 Quince Orchard Road Gaithersburg, MD. The Company intends to use the premises for manufacturing, research and development and offices. The term of the lease is approximately 15 years with options to extend the lease. The lease provides for an annual base rent of $5.8 million that is subject to future rent increases, and obligates the Company to pay building operating costs. The Landlord will contribute an aggregate of $30.6 million toward tenant improvements.

In addition, in October 2020, the Company purchased a parcel of land at 14 Firstfield Road, Gaithersburg, MD that the Company plans to develop in the future to accommodate growth of the Company. The purchase price of the parcel of land was $14.5 million.

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; 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

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preclinical product candidates; the conduct, timing and potential results from clinical trials and other preclinical studies; plans for and potential timing of regulatory filings; our expectation of manufacturing capacity, timing, production and delivery for NVX-CoV2373; our expectations with respect to the anticipated ongoing development and potential commercialization or licensure of NVX-CoV2373 and NanoFlu™; the expected timing and content of regulatory actions; funding from 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”); our available cash resources and usage and the availability of financing generally; plans regarding partnering activities, 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,” or “assume,” the negative of these terms or other comparable terminology, although not all forward-looking statements contain these words.

Forward-looking statements involve estimates, assumptions and uncertainties that could cause actual results to differ materially from those expressed or implied in the statements. Any or all of our forward-looking statements in this Quarterly Report may turn out to be inaccurate or materially different from actual results.

Risk factors discussed in this Quarterly Report, identified in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019, and those of which we are not currently aware, could cause actual results or outcomes to differ materially from those expressed or implied in any forward-looking statements made by or on behalf of us, therefore, you should not place undue reliance on any such forward-looking statements. We have included important factors that could cause results to differ in the cautionary statements included in this Quarterly Report, particularly those identified in Part II, Item 1A “Risk Factors” of this Quarterly Report and in Part I, Item 1A “Risk Factors” of our Annual Report on Form 10-K. These and other risks may also be detailed and modified or updated in our reports and other documents filed with the Securities and Exchange Commission (“SEC”) from time to time. You are encouraged to read these filings as they are made.

We cannot guarantee future results, events, level of activity, performance or achievement. Further, any forward-looking statement speaks only as of the date 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

We are a late-stage 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 influenza vaccine candidate, NanoFlu, are genetically engineered, three-dimensional nanostructures of recombinant proteins critical to disease pathogenesis. We believe that our protein-based candidates elicit differentiated immune responses that may be more efficacious than naturally occurring immunity or other, more traditional vaccine approaches. Our technology may be used to target a variety of infectious diseases. We are also developing proprietary immune stimulating saponin-based adjuvants at Novavax AB, our wholly owned Swedish subsidiary. Our lead adjuvant, Matrix-M™, has been shown to enhance immune responses and has been well-tolerated in multiple clinical trials.

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Product Pipeline

Program	Current Development Stage
Coronavirus
● NVX-CoV2373(1)(2)	Phase 3(3)
● Middle East Respiratory Syndrome (“MERS”)	Preclinical
● Severe Acute Respiratory Syndrome (“SARS”)	Preclinical
Seasonal Influenza
● NanoFlu (Older Adults)(1)	Pre-BLA
Respiratory Syncytial Virus (“RSV”)
● ResVax(4) (Infants via Maternal Immunization)	Phase 3
● Older Adults(1)	Phase 2
● Pediatrics	Phase 1
Combination Vaccines
● NanoFlu/NVX-CoV2373(1)	Preclinical
● NanoFlu/RSV(1)	Preclinical
Ebola Virus (“EBOV”)(1)	Phase 1

(1) Includes Matrix-M adjuvant

(2) Supported by funding from OWS, DoD, CEPI and BMGF

(3) Ongoing U.S. Phase 2 and South Africa Phase 2b; initiated UK Phase 3 in September 2020; initiation of U.S. Phase 3 expected by the end of November 2020

(4) Supported by a grant from BMGF

A summary and status of these vaccine programs follows:

Coronavirus

Coronaviruses (“CoV”), so named for their “crown-like” appearance, are a large family of viruses, some of which are believed to have spread from animals to humans. These viruses cause human diseases such as MERS and SARS, and COVID-19, the disease resulting from the SARS CoV-2 coronavirus. COVID-19 first emerged in late 2019 in China, and, as of March 2020, the World Health Organization declared it a global pandemic. No vaccines proven to prevent COVID-19 have been approved for sale in the U.S., United Kingdom (“UK”), Japan, or European Union, although a range of vaccine candidates are under development.

NVX-CoV2373

We have successfully produced NVX-CoV2373, designed to provide protection against SARS-CoV-2. We engineered NVX-CoV2373 from the genetic sequence of SARS-CoV-2 using our recombinant nanoparticle technology to generate the antigen derived from the coronavirus spike (S) protein. NVX-CoV2373 includes our proprietary Matrix-M adjuvant.

Clinical Development

In October 2020, we announced we expect to begin a Phase 3 clinical trial in the U.S. and Mexico by the end of November 2020. This pivotal Phase 3 clinical trial is being conducted with support from the U.S. Government through OWS. The trial is expected to enroll up to 30,000 participants in the U.S. and Mexico, with proportional representation among diverse populations most vulnerable to COVID-19 distributed across race/ethnicity, age and those living with co-morbidities. In November 2020, we announced that the U.S. Food and Drug Administration’s (“FDA”) granted NVX-CoV2373 Fast Track designation, which is intended for products that treat serious or life-threatening diseases or conditions and that demonstrate the potential to address unmet medical needs for such diseases or conditions. The program is designed to facilitate development and expedite review of drugs to treat serious and life-threatening conditions so that approved products can reach the market expeditiously. Specifically, Fast Track designation facilitates meetings to discuss

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all aspects of development to support licensure and provides the opportunity to submit sections of a U.S. biologics license application (“BLA”) on a rolling basis as data become available. This permits the FDA to review modules of the BLA as they are received instead of waiting for the entire BLA submission.

In September 2020, we initiated our first Phase 3 study in the UK, in partnership with the UK Government’s Vaccines Taskforce. The trial is a randomized, placebo-controlled, observer-blinded study to evaluate the efficacy, safety and immunogenicity of NVX-CoV2373 in subjects aged 18 to 84 years. In October 2020, we expanded enrollment from 10,000 to 15,000 volunteers, some of whom have been recruited through the National Health Service Vaccine Registry. The increased enrollment is likely to facilitate assessment of safety and efficacy in a shorter time period than originally anticipated. Half of the trial participants will receive two intramuscular injections of NVX-CoV2373 comprising 5 micrograms of antigen with 50 micrograms of Matrix-M, administered 21 days apart, while the other half of the trial participants will receive placebo. The trial is designed to enroll at least 25 percent of participants over the age of 65 as well as to prioritize groups that are most affected by COVID-19. Additionally, up to 400 participants will also receive a licensed seasonal influenza vaccine as part of a co-administration sub-study. The primary endpoint is first occurrence of PCR-confirmed symptomatic COVID-19 with onset at least seven days after the second study vaccination in volunteers who have not been previously infected with SARS-CoV-2. The primary efficacy analysis will be an event-driven analysis based on the number of participants with symptomatic or moderate/severe COVID-19 disease. The trial protocol calls for unblinding of data once 152 participants have achieved mild, moderate or severe endpoints. Two interim analysis are planned once 66 and 110 endpoints have occurred. As of November 9, 2020, we have enrolled over 9,000 participants in this trial. We expect this trial to be fully enrolled by the end of November 2020, and dependent on the overall COVID-19 attack rate, interim data in this event-driven trial are expected as soon as early first quarter 2021. These data are expected to serve as the basis for global licensure.

In August 2020, we initiated a Phase 2b clinical trial in South Africa to evaluate the efficacy of NVX-CoV2373. The trial includes two cohorts. In October 2020, we expanded enrollment from 2,665 to 4,404. One cohort evaluates efficacy, safety and immunogenicity in approximately 4,164 healthy adults. The second cohort evaluates safety and immunogenicity in approximately 240 medically stable, HIV-positive adults. This allows for evaluation of the vaccine across a diverse, representative study population. The Phase 2b clinical trial is supported in part by a $15.0 million grant from the BMGF.

In August 2020, we announced positive preliminary immunogenicity and safety results from our Phase 1 portion of the Phase 1/2 clinical trial of NVX-CoV2373 initiated in May 2020. The Phase 1 portion was a randomized, observer-blinded, placebo-controlled trial in 131 participants at two sites in Australia. The trial was designed to evaluate the immunogenicity and safety of NVX-CoV2373, both adjuvanted with Matrix-M and unadjuvanted. The protocol’s two-dose trial regimen assessed two dose sizes (5 and 25 micrograms) with Matrix-M and without. Results from this trial showed that NVX-CoV2373 was generally well-tolerated, elicited robust antibody responses numerically superior to that seen in human convalescent sera and induced robust polyfunctional CD4⁺ T cell responses. In September 2020, the Phase 1 portion clinical results were published in The New England Journal of Medicine. In August 2020, we initiated the Phase 2 portion of the Phase 1/2 clinical trial. The Phase 2 portion is designed to evaluate the safety and immunogenicity of NVX-CoV2373 with Matrix-M in participants aged 18 to 84 years. The secondary objectives of the Phase 2 portion include preliminary evaluation of efficacy. The Phase 2 portion will assess two dose levels (5 and 25 micrograms), each with 50 micrograms of Matrix-M. We completed enrollment of 1,288 healthy volunteers in October 2020, with approximately 50 percent of participants 60 years of age and older, at up to 40 sites in the U.S. and Australia. In late October 2020, we reported favorable preliminary reactogenicity data from the Phase 2 portion of the trial during the Centers for Disease Control and Prevention Advisory Committee on Immunization Practices meeting.

Funding

In July 2020, we were selected to participate in OWS, a U.S. government sponsored program working to accelerate the development, manufacturing and distribution of COVID-19 vaccines, therapeutics and diagnostics. Through a Base Agreement and a Project Agreement (together, 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, we are entitled to receive funding up to $1.6 billion to support certain activities related to the development of NVX-CoV2373, and the manufacture and delivery of 100 million doses of NVX-CoV2373 to the U.S. government as early as late 2020. 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 licensed. We anticipate

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that the OWS Agreement will fund the late-stage clinical studies necessary to determine the safety and efficacy of NVX-CoV2373, including a pivotal Phase 3 clinical trial with up to 30,000 subjects expected to begin by the end of November 2020. Funding under the OWS Agreement is also expected to support our plans to file submissions for licensure with the FDA.

In June 2020, we were awarded a contract by the U.S. DoD (the “DoD Contract”) under which we are entitled to receive funding of up to $60.0 million for the manufacturing of NVX-CoV2373.

In May 2020, we signed a restated funding agreement which was modified in November 2020, with CEPI (the “CEPI Funding Agreement”), under which we are entitled to receive funding of up to $399.5 million, in addition to the $3.9 million of funding CEPI provided in March 2020, to be used by us for the development of NVX-CoV2373. Pursuant to the CEPI Funding Agreement, if approved, a portion of the NVX-CoV2373 supply produced by us, other than vaccine manufactured under the OWS Agreement, is expected to be procured and allocated through the COVAX Facility component of the Access to COVID-19 Tools (ACT) Accelerator, an international equitable vaccine purchasing initiative launched by the World Health Organization, Gavi the Vaccine Alliance, CEPI and other global non-governmental organizations and governmental leaders in 2020.

Manufacturing and Supply

To date, we have increased our projected global manufacturing capacity for NVX-CoV2373 to over two billion annualized doses when we are at full capacity, which we expect to occur in mid-2021. The antigen component of NVX-CoV2373 is being manufactured at Novavax CZ and at the following partnered manufacturing sites:

● Biofabri S.L. in Spain

● FUJIFILM Diosynth Biotechnologies (“FDB”) in North Carolina and Texas in the United States

● FDB in the UK

● Serum Institute of India Private Limited (“SIIPL”) in India

● SK Bioscience Co., Ltd. (“SK bioscience”) in the Republic of Korea

● Takeda Pharmaceutical Company Limited (“Takeda”) in Japan

Matrix-M adjuvant is being manufactured at Novavax AB and the following partnered manufacturing sites:

● AGC Biologics in the United States and Denmark

● PolyPeptide Group (will manufacture two key intermediaries used in Matrix-M) in the U.S. and Sweden

In November 2020, we signed a Heads of Terms with the Australian Federal Government to supply up to 40 million doses of NVX-CoV2373 beginning as early as the first half of 2021, subject to the successful completion of the Phase 3 clinical trial program and approval of NVX-CoV2373 by the Therapeutic Goods Administration.

In October 2020, we entered into a SARS-CoV-2 vaccine supply agreement with The Secretary of State for Business, Energy and Industrial Strategy, acting on behalf of the government of the UK (the “Authority”), for the purchase of up to 60 million doses of NVX-CoV2373, plus such additional orders as the Authority may make from time to time. We agreed to continue to conduct a UK-based Phase 3 clinical trial of NVX-CoV2373 to assess the efficacy of NVX-CoV2373 in the UK population, establish a dedicated supply chain for NVX-CoV2373 in the UK and seek regulatory approval for the NVX-CoV2373 in the UK. FDB’s UK site is expected to produce up to 180 million doses annually. We expect to supply up to 60 million doses of NVX-CoV2373 to the UK beginning as early as the first quarter of 2021. Excess supply of antigen manufactured at the FDB’s site in Billingham, Stockton-on-Tees may be available for us to sell to additional markets outside the UK.      

In August 2020, we reached an agreement in principle with the Government of Canada to supply up to 76 million doses of NVX-CoV2373. We and Canada expect to finalize an advance purchase agreement under which we will supply

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doses of NVX-CoV2373 to Canada beginning as early as the second quarter of 2021. This purchase arrangement will be subject to licensure of NVX-CoV2373 by Health Canada.

In August 2020, we entered into a development and supply agreement with SK bioscience for the antigen component of NVX-CoV2373 for supply to global markets including the COVAX Facility. In addition, we and SK bioscience signed a letter of intent with the Republic of Korea’s Ministry of Health and Welfare to work toward broad and equitable access to NVX-CoV2373 for the global market as well as to make the vaccine available in South Korea. Under the terms of the agreement, SK bioscience will manufacture NVX-CoV2373 for use in the final drug product globally during the COVID-19 pandemic.

In August 2020, we announced a partnership with Takeda for the exclusive development, manufacturing and commercialization of NVX-CoV2373 in Japan. Takeda will receive funding from the Government of Japan’s Ministry of Health, Labour and Welfare to support the technology transfer, establishment of infrastructure and scale-up of manufacturing. We anticipate that Takeda has a manufacturing capacity of over 250 million doses per year. We will be entitled to receive payments based on the achievement of certain development and commercial milestones, as well as a portion of proceeds from vaccine sales.

In July 2020, we announced a manufacturing partnership with FDB allowing for the large-scale contract production of NVX-CoV2373 in connection with our OWS Agreement, beginning at FDB’s North Carolina facility.

Also in July 2020, we entered into a supply and license agreement with SIIPL, as amended by the parties in September 2020, under which we granted exclusive and non-exclusive licenses to SIIPL for the development, co-formulation, filling and finishing, registration and commercialization by SIIPL of NVX-CoV2373. SIIPL has agreed to purchase Matrix-M adjuvant from us and we have 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. We will equally split with SIIPL the revenue from SIIPL’s sale of NVX-CoV2373 in its licensed territory, net of agreed costs. We granted to SIIPL (i) an exclusive license in India during the agreement, and (ii) a non-exclusive license (a) during the “Pandemic Period” (as declared by the World Health Organization), in all countries other than specified countries designated by the World Bank as upper-middle or high-income countries, with respect to which we retain rights, and (b) after the Pandemic Period, in only those countries designated as low or middle-income by the World Bank. Following the Pandemic Period, we may notify SIIPL of any bona fide opportunities for us to license NVX-CoV2373 to a third party in such low and middle-income countries and SIIPL would have an opportunity to match or improve such third party terms, failing which, we would have the discretion to remove one or more non-exclusive countries from SIIPL’s license. We anticipate SIIPL to manufacture approximately one billion doses of NVX-CoV2373 in 2021.

MERS/SARS

Historically, we developed a vaccine candidate against MERS, a novel coronavirus first identified in 2012, and a vaccine candidate against SARS in 2005. In 2012, within weeks of obtaining the sequence of the circulating MERS strain, we successfully produced a vaccine candidate designed to provide protection. Our MERS candidate was based on the major surface spike protein, which we had previously identified as the antigen of choice in our work with our SARS vaccine candidate. In 2014, in collaboration with the University of Maryland, School of Medicine, we published results that showed our MERS and SARS vaccine candidates both blocked infection in laboratory studies. Although not in active development, our MERS and SARS vaccine candidates remain viable opportunities to potentially develop independently or in conjunction with other coronavirus development activities.

Seasonal Influenza

NanoFlu Program (Older Adults)

Influenza is a world-wide infectious disease with serious illness generally occurring in more susceptible populations such as children under 18 years old and older adults, but also occurring in the general population. According to a 2019 Global Data forecast of influenza vaccines, the market for seasonal influenza vaccines is expected to grow from approximately $4.6 billion in 2018 to approximately $6.5 billion in 2028 (in the countries comprising the eight major markets). Recent flu seasons have shown an increase in the influenza disease burden. For the 2017-18 flu season, the

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Centers for Disease Control and Prevention estimates that influenza in the U.S. resulted in 48.8 million illnesses, 959,000 hospitalizations and 79,400 deaths, a dramatic increase across all categories compared to previous years.

In March 2020, we announced positive top-line results from our Phase 3 clinical trial of our nanoparticle seasonal quadrivalent influenza vaccine candidate, which includes our proprietary Matrix-M adjuvant (“NanoFlu”). This positive data will support a BLA, which BLA will include process performance qualification and a lot consistency clinical trial, and licensure of NanoFlu using the FDA accelerated approval pathway.

In October 2020, we announced the formation of a leadership team within the Company focused on advancing NanoFlu to regulatory licensure. The leadership team will establish a separate NanoFlu development unit within our Company, which we expect to benefit from joint shared services with key cross-functional departments within the Company and to build on the Company’s established knowledge base in the discovery and development of innovative vaccines to prevent serious infectious diseases.

Respiratory Syncytial Virus (RSV)

Currently, there is no approved RSV vaccine available to combat the estimated 64 million RSV infections that occur globally each year. We have identified three susceptible target populations that we believe could benefit from the development of our respiratory syncytial virus fusion (F) protein nanoparticle vaccine candidate (“RSV F Vaccine”) in different formulations: (1) infants via maternal immunization, (2) older adults (60 years and older) and (3) children six months to five years old (“pediatrics”). With our current estimates of the annual global cost burden of RSV in excess of $88 billion, we believe our RSV F Vaccine represents a multi-billion dollar worldwide opportunity.

ResVax Program (Infants via Maternal Immunization)

ResVax is our adjuvanted RSV F Vaccine for infants via maternal immunization. RSV is the most common cause of lower respiratory tract infections (“LRTI”) and the leading viral cause of severe lower respiratory tract disease in infants and young children worldwide. In the U.S., RSV is the leading cause of hospitalization of infants and, globally, is second only to malaria as a cause of death in children under one year of age.

In February 2019, we announced data from our Prepare trial, initiated in December 2015. The Prepare trial was conducted to determine whether ResVax reduced incidence of medically significant RSV-positive LRTI in infants through a minimum of the first 90 days of life and up through the first six months of life. While the data did not meet the trial’s primary efficacy endpoint, it did demonstrate efficacy against a secondary objective by reducing RSV LRTI hospitalizations in treated infants. In July 2020, these data were published in the New England Journal of Medicine. BMGF supported the Prepare trial for ResVax through a grant of up to $89.1 million pursuant to a grant agreement we entered into with BMGF in September 2015 (the “BMGF Grant Agreement”), including our efforts to conduct certain follow-on analyses of the Phase 3 data. We are assessing opportunities to bring ResVax to market, in conjunction with our pursuit of a regulatory licensure approach for the U.S., the European Union and other geographies.

RSV Older Adults Program

Older adults (60 years and older) are at increased risk for RSV disease due in part to immunosenescence, the age-related decline in the human immune system. RSV infection can also lead to exacerbation of underlying co-morbidities such as chronic obstructive pulmonary disease, asthma and congestive heart failure. In the U.S. alone, a reported RSV incidence rate of 5.5% in older adults would account for approximately 2.5 million infections per year. We estimate that approximately 900,000 medical interventions are caused by RSV disease in this U.S. population each year. We followed up the 2016 Phase 3 clinical trial of our RSV F Vaccine, which failed to meet its pre-specified primary or secondary efficacy objectives, with a 2017 Phase 2 clinical trial in older adults, to assess safety and immunogenicity of one and two dose regimens of our RSV F Vaccine, with and without aluminum phosphate or our proprietary Matrix-M adjuvant. Immunogenicity results from the 2017 trial indicate that both adjuvants increase the magnitude, duration and quality of the immune response versus the non-adjuvanted RSV F Vaccine. We continue to assess the development opportunities for our RSV F Vaccine in older adults.

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RSV Pediatrics Program

By the age of five, essentially all children will have been exposed to RSV and will likely develop natural immunity against the virus; however, children under five remain vulnerable to RSV disease, offering a strong rationale for a pediatric vaccine that could offer enhanced protection. In 2015, we announced positive results in our Phase 1 clinical trial evaluating the safety and immunogenicity of our RSV F Vaccine in healthy children between two and six years of age. We continue to assess the development opportunities for our RSV F Vaccine for pediatrics.

Combination Vaccines

With the ongoing development of NanoFlu, NVX-CoV2373, and RSV F Vaccine, a strong rationale exists for developing two combination respiratory vaccines designed to protect susceptible populations against these diseases. Although testing is at an early stage, we believe that a combination vaccine against both influenza in combination with COVID-19, and influenza in combination with RSV, may be achievable since both vaccines are created using our recombinant nanoparticle technology and include our proprietary Matrix-M adjuvant.

Ebola Virus

EBOV is a filovirus that produces severe, often fatal illness in humans. Within the last decade, it has produced two large outbreaks in Sub-Saharan Africa with high mortality. There are currently two vaccines licensed to prevent EBOV.

We developed an EBOV glycoprotein vaccine candidate (“Ebola GP Vaccine”) expressed in insect cells, using our core recombinant baculovirus technology. Although not in active development, our Ebola GP Vaccine is a viable development opportunity in the event of dedicated funding or a partnership arrangement.

Sale of Preferred Stock

In June 2020, we entered into an agreement to sell 438,885 shares of newly designated Series A Convertible Preferred Stock, par value $0.01 per share (“Preferred Stock”), at a purchase price of $455.70 per share, convertible into 4,388,850 shares of common stock, to an investment fund affiliated with RA Capital Management (“RA Capital”) in a private placement, at an effective purchase price per share of common stock equal to the June 12, 2020 closing price of our common stock. Upon closing, we received gross proceeds of approximately $200 million. Holders of Preferred Stock are not entitled to cumulative dividends, are not entitled to vote on matters submitted to common stockholders and have a liquidation preference over common stockholders (see “Note 9 – Preferred Stock” included in our Notes to Consolidated Financial Statements).

Sales of Common Stock

In May 2020, we entered into an At Market Issuance Sales Agreement (“May 2020 Sales Agreement”), which allows us to issue and sell up to $250 million in gross proceeds of our common stock. During the nine months ended September 30, 2020, we sold 2.8 million shares of common stock under the May 2020 Sales Agreement resulting in $160.3 million in net proceeds (this amount excludes $3.9 million received in the fourth quarter of 2020 for shares traded in late September 2020). From October 1, 2020 through November 3, 2020, we sold 0.7 million shares of common stock resulting in $74.1 million in net proceeds, leaving $8.7 million remaining under the May 2020 Sales Agreement.

In March 2020, we entered into an At Market Issuance Sales Agreement (“March 2020 Sales Agreement”), which allowed us to issue and sell up to $150 million in gross proceeds of our common stock. During the six months ended June 30, 2020, we sold 8.6 million shares of common stock under the March 2020 Sales Agreement resulting in $148.1 million in net proceeds. The March 2020 Sales Agreement was fully utilized at that time.

In January 2020, we entered into an At Market Issuance Sales Agreement (“January 2020 Sales Agreement”), which allowed us to issue and sell up to $100 million in gross proceeds of our common stock. During the first quarter of 2020, we sold 10.5 million shares of common stock under the January 2020 Sales Agreement resulting in $98.7 million in net proceeds. The January 2020 Sales Agreement was fully utilized at that time.

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In December 2018, we entered into an At Market Issuance Sales Agreement (“December 2018 Sales Agreement”), which allowed us to issue and sell up to $100 million in gross proceeds of our common stock. In January 2020, we sold 7.2 million shares of common stock under the December 2018 Sales Agreement resulting in $38.5 million in net proceeds. The December 2018 Sales Agreement was fully utilized at that time.

Critical Accounting Policies and Use of Estimates

The discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements (unaudited) and the accompanying notes, which have been prepared in accordance with generally accepted accounting principles in the United States.

The preparation of our consolidated financial statements requires us to make estimates, assumptions and judgments that affect the reported amounts of assets, liabilities and equity and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. These estimates, assumptions and judgments particularly in relation to revenue recognition (discussed in greater detail below), lease accounting (discussed in greater detail below) and impairment of long-lived assets have a material impact on our consolidated financial statements and are discussed in detail throughout our analysis of the results of operations discussed below. For additional discussion of our critical accounting policies and estimates, see Item 7 in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019, as filed with the SEC.

Revenue Recognition

We perform research and development under government funding, grant, license and clinical development agreements. Our revenue primarily consists of funding under U.S. government contracts and other arrangements to advance the clinical development and manufacturing of NVX-CoV2373. Our U.S. government contracts include the DoD Contract and the OWS Agreement. Other funding arrangements primarily include a grant and forgivable loan funding from CEPI.

At contract inception, we analyze our revenue arrangements to determine the appropriate accounting under U.S. GAAP. Currently, our revenue arrangements represent customer contracts within the scope of ASC Topic 606, Revenue from Contracts with Customers (Topic 606) (“ASC 606”) or are contributions under the scope of Accounting Standards Codification (ASC) Topic 958-605, Not-for-Profit Entities – Revenue Recognition (“ASC 958-605”). We recognize revenue from arrangements within the scope of ASC 606 following the five-step model: (i) identify the contract(s) with a customer; (ii) identify the performance obligation(s) in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) we satisfy a performance obligation. We only apply the five-step model to contracts when it is probable that we will collect the consideration we are entitled to in exchange for the goods or services we transfer to our customer. We recognize contribution revenue within the scope of ASC 958-605 when the funder-imposed conditions have been substantially met. Contributions are recorded as deferred revenue until the period in which research and development activities are performed that satisfy the funder-imposed conditions.

Under our U.S government contracts, we are entitled to receive funding, on a reimbursable-cost or reimbursable-cost-plus fixed fee basis to support certain activities related to the development, manufacture and delivery of NVX-CoV2373 to the U.S. Government. We analyzed these contracts and determined that they are within the scope of ASC 606. Our obligations under each of the contracts are not distinct in the context of the contract as they are highly interdependent or interrelated and, as such, they are accounted for as a single performance obligation. The transaction price under these arrangements is the consideration we expect to receive and consists of the funded contract amount and the unfunded variable amount to the extent that it is probable that a significant reversal of revenue will not occur. We recognize revenue for these contracts over time as we transfer control over the goods and services and satisfy our performance obligation. We measure progress toward satisfaction of our performance obligation using an Estimate-at-Completion (“EAC”) process, which is a cost-based input method that reviews and monitors the progress towards the completion of our performance obligation. Under this process, we consider the costs that have been incurred to-date, as well as projections to completion using various inputs and assumptions, including, but not limited to, progress towards completion, labor costs and productivity, material and subcontractor costs, and identified risks. Estimating the total allowable cost at completion of our performance obligation under a contract is subjective and requires us to make assumptions about future activity and cost drivers. Changes in these estimates can occur for a variety of reasons and, if significant, may impact the timing of revenue and fee recognition on our contracts. Allowable contract costs include direct

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costs incurred on the contract and indirect costs that are applied in the form of rates to the direct costs. Billings under the contracts are initially based on provisional indirect billing rates, agreed upon between us and the U.S. government. These indirect rates are subject to audit on an annual basis. The impact of changes in the indirect billing rates are recorded in the period when such changes are identified and reflect the difference between actual indirect costs incurred compared to the estimated amounts used to determine the provisional indirect billing rates agreed upon with the U.S. government. We recognize revenue on our U.S government contracts based on reimbursable allowable contract costs incurred in the period up to the transaction price. For our reimbursable-cost-plus fixed fee contracts, we recognize the fixed fee based on the proportion of reimbursable contract costs incurred to total estimated allowable contract costs expected to be incurred on completion of the underlying performance obligation as determined under the EAC process. Changes in estimates related to the EAC process are recognized in the period when such changes are made on a cumulative catch-up basis. We include the transaction price comprising both funded and unfunded portions of customer contracts, in this estimate.

Our other funding agreements primarily include the CEPI Grant Funding and CEPI Forgivable Loan Funding. Under our grant funding arrangements including the CEPI Grant Funding, we are entitled to reimbursement for costs that support development related activities of NVX-CoV2373. The CEPI Forgivable Loan Funding is designated for the prepayment of certain manufacturing activities. We analyzed these other funding arrangements and determined that they are not within the scope of ASC 606 as they do not provide a direct economic benefit to the grantor. Payments received under the grant funding arrangements are considered conditional contributions under the scope of ASC 958-605 and are recorded as deferred revenue until the period in which such research and development activities are actually performed that satisfy the funder-imposed conditions. Payments received under the CEPI Forgivable Loan Funding agreements are only repayable if the proceeds of sales to one or more third parties of NVX-CoV2373 cover our costs of manufacturing such vaccine candidate, not including manufacturing costs funded by CEPI. As the financial risk remains with CEPI, we have determined that the use of the CEPI Forgivable Loan Funding is outside the scope of ASC Topic 470, Debt. The research and development risk is considered substantive, such that it is not yet probable that the development will be successful. Therefore, we have concluded that ASC Topic 730, Research and Development is considered applicable and most appropriate. Given the financial risk associated with the research and development activities lies with CEPI because repayment of any funds provided by CEPI depends solely on the results of the research and development activities having future economic benefit, we will account for our obligation under the CEPI Forgivable Loan Funding as a contract to perform research and development for others. We have determined that payments received under these agreements should be recorded as revenue under ASC 958-605 rather than a reduction to research and development expenses. This is consistent with our policy of presenting such amounts as revenue. In reaching this determination, we considered a number of factors, including whether we are principal under the arrangement, and whether the arrangement is significant to, and part of, our core operations. We will record revenue as we perform the contractual research and development services.

Lease Accounting

We determine at the inception of a contract if an arrangement is, or contains, a lease, which exists when the contract conveys the right to control the use of identified property or equipment for a period of time in exchange for consideration. Depending on the contract, the lease commencement date, defined as the date on which the lessor makes the underlying asset available for use by the lessee, may be different than the inception date of the contract. We classify leases as either operating or finance leases based on the economic substance of the agreement.

We enter into non-cancelable lease agreements for office space and certain equipment. We also enter into supply agreements with contract manufacturing organizations and contract development and manufacturing organizations to manufacture our vaccine candidates. Certain of these supply agreements include the use of identified manufacturing facilities and equipment that are controlled by us and may qualify as an embedded lease. We treat supply agreements that contain a lease as lease arrangements in their entirety.

For leases that have a lease term of more than 12 months at the lease commencement date, we recognize lease liabilities, which represent our obligation to make lease payments arising from the lease, and corresponding right-of-use (“ROU”) assets, which represent the right to use an underlying asset for the lease term, based on the present value of the fixed future payments over the lease term. We calculate the present value of future payments using the discount rate implicit in the lease, if available, or our incremental borrowing rate.  For all leases that have a lease term of 12 months or less at the commencement date (referred to as “short-term” leases), we have elected to apply the practical expedient in ASC Topic 842, Leases (“ASC 842”) to not recognize a lease liability or ROU asset but instead, recognize lease payments as an expense on a straight-line basis over the lease term and variable lease payments that do not depend on an index or rate, as an expense in the period in which the variable lease costs are incurred based on performance or usage in

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accordance with contractual agreements.  In determining the lease period, we evaluate facts and circumstances that could affect the period over which we are reasonably certain to use the underlying asset while taking into consideration the non-cancelable period over which we have the right to use the underlying asset and any option period to extend or terminate the lease if we are reasonably certain to exercise the option. We reevaluate short-term leases that are modified and if they no longer meets the requirements to be treated as short-term leases, we recognize and measure the lease liability and ROU asset as if the date of the modification is the lease commencement date.

For operating leases, we recognize lease expense related to fixed payments on a straight-line basis over the lease term and lease expense related to variable payments as incurred based on performance or usage in accordance with the contractual agreements. For finance leases, we recognize the amortization of the ROU asset over the shorter of the lease term or useful life of the underlying asset. We expense ROU assets acquired for research and development activities under ASC Topic 730, Research and Development, if they do not have an alternative future use, in research and development projects or otherwise.

We use significant assumptions and judgment in evaluating our lease contracts and other agreements under ASC 842, including the determination of whether an agreement is or contains a lease, whether a lease represents an operating or finance lease, the discount rate used to determine the present value of lease obligations and the term of embedded leases in our supply agreements.

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, 2020 and 2019 (amounts in tables are presented in thousands, except per share information or as otherwise indicated)

Revenue:

	Three Months Ended
	September 30,
					Change 2019
	2020		2019		to 2020
Revenue (in thousands):
Total revenue	$	157,024	$	2,507	$	154,517

Revenue for the three months ended September 30, 2020 was $157.0 million as compared to $2.5 million for the same period in 2019, an increase of $154.5 million. Revenue for the three months ended September 30, 2020 was primarily comprised of revenue for services performed under the CEPI Funding Agreement, participation in OWS and the DOD contract. Revenue for the three months ended September 30, 2019 was primarily comprised of revenue for services performed under the BMGF Grant Agreement and revenue from Novavax AB. The significant increase in revenue was due to increased development activities relating to NVX-CoV2373 under the CEPI Funding Agreement, participation in OWS and the DOD contract.

We expect revenue in 2020 to significantly increase due to our NVX-CoV2373 program, which we anticipate will be primarily funded by OWS, CEPI, DoD and/or other potential non-dilutive funding sources.  

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Expenses:

	Three Months Ended
	September 30,
					Change 2019
	2020		2019		to 2020
Expenses (in thousands):
Research and development	$	294,087	$	18,611	$	275,476
Gain on Catalent transaction		—		(9,016)		9,016
General and administrative		56,879		7,899		48,980
Total expenses	$	350,966	$	17,494	$	333,472

Research and Development Expenses

Research and development expenses include salaries, stock-based compensation, laboratory supplies, consultants and subcontractors, including external contract research and manufacturing organizations, and other expenses associated with our process development, program-related manufacturing, clinical, regulatory and quality assurance activities for our programs. Indirect costs such as fringe benefits and overhead expenses related to research and development activities, are also included in research and development expenses. Research and development expenses increased to $294.1 million for the three months ended September 30, 2020 from $18.6 million for the same period in 2019, an increase of $275.5 million. The increase was primarily due to increased development activities relating to NVX-CoV2373, including the write-off of $187.2 million of ROU assets associated with our manufacturing supply agreements for NVX-CoV2373 that we determined do not currently have an alternative future use, and increased employee-related costs, primarily stock-based compensation expense. As of September 30, 2020, we had 433 employees dedicated to our research and development programs versus 127 employees as of September 30, 2019. For 2020, we expect research and development expenses to increase significantly due to our anticipated development activities for our NVX-CoV2373 program (see discussion on our NVX-CoV2373 program above) and increases in employee-related costs.

Expenses by Functional Area

We track our research and development expenses according to the type of costs incurred during identification, development, manufacture and testing of vaccine candidates. We evaluate and prioritize our activities according to functional area and therefore believe that project-by-project information would not form a reasonable basis for disclosure to our investors. Historically, we did not account for internal research and development expenses by project, since our employees’ work time is spread across multiple programs and our internal manufacturing clean-room facility produces multiple vaccine candidates.

The following summarizes our research and development expenses by functional area for the three months ended September 30 (in millions):

	2020		2019
Manufacturing	$	266.4	$	9.7
Vaccine Discovery		2.8		1.4
Clinical and Regulatory		24.9		7.5
Total research and development expenses	$	294.1	$	18.6

We do not provide forward-looking estimates of costs and time to complete our research projects due to the many uncertainties associated with vaccine development. As we obtain data from preclinical studies and clinical trials, we may elect to discontinue or delay clinical trials in order to focus our resources on more promising vaccine candidates. Completion of clinical trials may take several years or more, but the length of time can vary substantially depending on 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;

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● the time to enroll participants;

● the duration of treatment and follow-up;

● the safety and efficacy profile of the vaccine candidate; and

● the cost, timing, and ability to secure, regulatory approvals.

As a result of these uncertainties, we are unable to determine with any significant degree of certainty the duration and completion costs of our research and development projects or when, and to what extent, we will generate future cash flows from our research projects.

General and Administrative Expenses

General and administrative expenses increased to $56.9 million for the three months ended September 30, 2020 from $7.9 million for the same period in 2019, an increase of $49.0 million. The increase in general and administrative expenses is primarily due to increased employee-related costs, primarily stock-based compensation expense, and increased professional fees relating to the integration of Novavax CZ and supporting our NVX-CoV2373 program. As of September 30, 2020, we had 89 employees dedicated to general and administrative functions versus 41 employees as of September 30, 2019. For 2020, we expect general and administrative expenses to significantly increase due to increased activities related to supporting our NVX-CoV2373 program and increases in employee-related costs.

Other Income (Expense):

	Three Months Ended
	September 30,
					Change 2019
	2020		2019		to 2020
Other Income (Expense) (in thousands):
Investment income	$	140	$	342	$	(202)
Interest expense		(4,460)		(3,403)		(1,057)
Other income (expense)		952		5		947
Total other income (expense), net	$	(3,368)	$	(3,056)	$	(312)

We had total other expense, net of $3.4 million for the three months ended September 30, 2020 as compared to $3.1 million for the same period in 2019. In the three months ended September 30, 2020, we recorded a $1.0 million gain on the intercompany loan with Novavax CZ due to changes in the exchange rates and additional interest expense of $1.1 million for finance leases.

Net Loss:

	Three Months Ended
	September 30,
					Change 2019
	2020		2019		to 2020
Net Loss (in thousands, except per share information):
Net loss	$	(197,310)	$	(18,043)	$	(179,267)
Net loss per share	$	(3.21)	$	(0.74)	$	(2.47)
Weighted average shares outstanding		61,554		24,327		37,227

Net loss for the three months ended September 30, 2020 was $197.3 million, or $3.21 per share, as compared to $18.0 million, or $0.74 per share, for the same period in 2019. The increase in net loss was primarily due to increased development activities relating to NVX-CoV2373, including the write off of $187.2 million of ROU assets associated with our manufacturing supply agreements for NVX-CoV2373 and increased employee-related costs, primarily stock-based compensation expense, partially offset by increased  revenue under the CEPI Funding Agreement, the OWS Agreement and the DoD Contract.

The increase in weighted average shares outstanding for the three months ended September 30, 2020 is primarily a result of sales of our common stock in 2020 and 2019.

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Nine Months Ended September 30, 2020 and 2019 (amounts in tables are presented in thousands, except per share information or as otherwise indicated)

Revenue:

	Nine Months Ended
	September 30,
					Change 2019
	2020		2019		2020
Revenue (in thousands):
Total revenue	$	195,939	$	9,846	$	186,093

Revenue for the nine months ended September 30, 2020 was $195.9 million as compared to $9.8 million for the same period in 2019, an increase of $186.1 million. Revenue for the nine months ended September 30, 2020 was primarily comprised of revenue for services performed under the CEPI Funding Agreement, the OWS Agreement and the DoD Contract. Revenue for the nine months ended September 30, 2019 was primarily comprised of revenue for services performed under the BMGF Grant Agreement and revenue from Novavax AB. The significant increase in revenue was due to increased development activities relating to NVX-CoV2373 under the CEPI Funding Agreement, the OWS Agreement and the DoD Contract.

Expenses:

	Nine Months Ended
	September 30,
					Change 2019
	2020		2019		to 2020
Expenses (in thousands):
Research and development	$	345,828	$	84,502	$	261,326
Gain on Catalent transaction		—		(9,016)		9,016
General and administrative		83,977		26,236		57,741
Total expenses	$	429,805	$	101,722	$	328,083

Research and Development Expenses

Research and development expenses include salaries, stock-based compensation, laboratory supplies, consultants and subcontractors, including external contract research and manufacturing organizations, and other expenses associated with our process development, program-related manufacturing, clinical, regulatory and quality assurance activities for our programs. In addition, indirect costs such as fringe benefits and overhead expenses related to research and development activities, are also included in research and development expenses. Research and development expenses increased to $345.8 million for the nine months ended September 30, 2020 from $84.5 million for the same period in 2019, an increase of $261.3 million. This increase was primarily due to increased development activities relating to NVX-CoV2373, including the write off of $187.2 million of ROU assets associated with our manufacturing supply agreements for NVX-CoV2373 that we determined do not currently have an alternative future use, and increased employee-related costs, primarily stock-based compensation expense. As of September 30, 2020, we had 433 employees dedicated to our research and development programs versus 127 employees as of September 30, 2019.

Expenses by Functional Area

The following summarizes our research and development expenses by functional area for the nine months ended September 30 (in millions):

	2020		2019
Manufacturing	$	295.3	$	50.6
Vaccine Discovery		7.8		4.9
Clinical and Regulatory		42.7		29.0
Total research and development expenses	$	345.8	$	84.5

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General and Administrative Expenses

General and administrative expenses increased to $84.0 million for the nine months ended September 30, 2020 from $26.2 million for the same period in 2019, an increase of $57.7 million. The increase in general and administrative expenses is primarily due to increased employee-related costs, primarily stock-based compensation expense and increased professional fees relating to the acquisition and integration of Novavax CZ and supporting our NVX-CoV2373 program. As of September 30, 2020, we had 89 employees dedicated to general and administrative functions versus 41 employees as of September 30, 2019.

Other Income (Expense):

	Nine Months Ended
	September 30,
					Change 2019
	2020		2019		to 2020
Other Income (Expense) (in thousands):
Investment income	$	872	$	1,236	$	(364)
Interest expense		(11,266)		(10,209)		(1,057)
Other income (expense)		3,565		(15)		3,580
Total other income (expense), net	$	(6,829)	$	(8,988)	$	2,159

We had total other expense, net of $6.8 million for the nine months ended September 30, 2020 as compared to $9.0 million for the same period in 2019. In the nine months ended September 30, 2020, we recorded a $3.5 million gain on the intercompany loan with Novavax CZ due to changes in the exchange rates and additional interest expense of $1.1 million for finance leases.

Net Loss:

	Nine Months Ended
	September 30,
					Change 2019
	2020		2019		to 2020
Net Loss (in thousands, except per share information):
Net loss	$	(240,695)	$	(100,864)	$	(139,831)
Net loss per share	$	(4.39)	$	(4.43)	$	0.04
Weighted average shares outstanding		54,810		22,761		32,049

Net loss for the nine months ended September 30, 2020 was $240.7 million, or $4.39 per share, as compared to $100.9 million, or $4.43 per share, for the same period in 2019. The increase in net loss was primarily due to increased development activities relating to NVX-CoV2373, including the write off of $187.2 million of ROU assets associated with our manufacturing supply agreements for NVX-CoV2373 and increased employee-related costs, primarily stock-based compensation expense, partially offset by increased  revenue under the CEPI Funding Agreement, the OWS Agreement and the DoD Contract.

The increase in weighted average shares outstanding for the nine months ended September 30, 2020 is primarily a result of sales of our common stock in 2020 and 2019.

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Liquidity Matters and Capital Resources

Our future capital requirements depend on numerous factors including, but not limited to, the commitments and progress of our research and development programs, the progress of preclinical and clinical testing, the time and costs involved in obtaining regulatory approvals, the costs of filing, prosecuting, defending and enforcing patent claims and other intellectual property rights and manufacturing and distribution costs. We plan to continue to have multiple vaccines and product candidates in various stages of development, and we believe our operating expenses and capital requirements will fluctuate depending upon the timing of events, such as the scope, initiation, rate and progress of our preclinical studies and clinical trials and other research and development activities. We have primarily funded our recent operations with proceeds from the sale of common stock and preferred stock in equity offerings, revenue under the CEPI Funding Agreement, OWS Agreement and the DoD Contract. We anticipate our future operations to be additionally funded by OWS, CEPI, DoD and/or other potential non-dilutive funding sources.

As of September 30, 2020, we had $571.6 million in cash and cash equivalents, marketable securities and restricted cash as compared to $82.2 million as of December 31, 2019. These amounts consisted of $334.2 million in cash and cash equivalents, $169.8 million in marketable securities and $67.6 million in restricted cash as of September 30, 2020 as compared to $78.8 million in cash and cash equivalents and $3.4 million in restricted cash as of December 31, 2019.

The following table summarizes cash flows for the nine months ended September 30, 2020 and 2019 (in thousands):

	Nine Months Ended
	September 30,
					2019 to
	2020		2019		2020
Summary of Cash Flows (in thousands):
Net cash (used in) provided by:
Operating activities	$	86,027	$	(112,880)	$	198,907
Investing activities		(346,656)		38,708		(385,364)
Financing activities		580,152		68,212		511,940
Effect on exchange rate on cash, cash equivalents and restricted cash		33		(69)		102
Net increase (decrease) in cash, cash equivalents and restricted cash		319,556		(6,029)		325,585
Cash, cash equivalents and restricted cash at beginning of period		82,180		81,959		221
Cash, cash equivalents and restricted cash at end of period	$	401,736	$	75,930	$	325,806

Net cash provided by operating activities increased to $86.0 million for the nine months ended September 30, 2020, as compared cash used in operating activities to $112.9 million for the same period in 2019. The increase in cash provided is primarily due to payments received under the CEPI Funding Agreement and OWS Agreement, and the timing of payments to third-parties.

During the nine months ended September 30, 2020 and 2019, our investing activities consisted of purchases and maturities of marketable securities, our acquisition of Novavax CZ in 2020, proceeds from the Catalent transaction in 2019 and, to a much lesser extent, capital expenditures. Capital expenditures for the nine months ended September 30, 2020 and 2019 were $12.6 million and $1.6 million, respectively. For 2020, we expect a significant increase in our capital expenditures due to our development activities for our NVX-CoV2373 program.

Our financing activities consisted primarily of sales of our common stock under our At Market Issuance Sales Agreements and issuance of preferred stock in a private placement, payments of finance lease liabilities and to a lesser extent, stock option exercises and purchases under our Employee Stock Purchase Plan. In the nine months ended September 30, 2020, we received net proceeds of $445.6 million from selling shares of common stock through our At Market Issuance Sales Agreements and $200.0 million through the issuance of preferred stock in a private placement. In the nine months ended September 30, 2019, we received net proceeds of $67.2 million from selling shares of common stock through our At Market Issuance Sales Agreements.

Based on our most recent cash flow forecast, we believe our current capital is sufficient to fund our operating plans for a minimum of twelve months from the date that this Quarterly Report was filed. Additional capital may be

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required in the future to develop our vaccine candidates through clinical development, manufacturing and commercialization.

Our ability to fund the Company’s operations is dependent upon management’s plans, which include receiving non-dilutive funding from domestic and international sources, raising additional capital in the near term primarily through a combination of equity and debt financings, collaborations, strategic alliances and marketing, distribution or licensing arrangements and in the longer term, from revenue related to product sales, to the extent our product candidates receive marketing approval and can be commercialized. New financings may not be available to the Company on commercially acceptable terms, or at all. Also, any collaborations, strategic alliances and marketing, distribution or licensing arrangements may require us to give up some or all of our rights to a product or technology, which in some cases may be at less than the full potential value of such rights.

Off-Balance Sheet Arrangements

We did not have any material off-balance sheet arrangements as of September 30, 2020.

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, 2020, we had cash and cash equivalents of $334.2 million, $169.9 million in marketable securities, all of which are current, $67.6 million in restricted cash and working capital of $432.0 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 (formerly Praha Vaccines a.s.), which is located in the Czech Republic. A 10% decline in the exchange rate between the U.S. dollar and Swedish Krona would result in a decline of stockholders’ equity (deficit) of approximately $3.3 million as of September 30, 2020. A 10% decline in the exchange rate between the U.S. dollar and Czech Koruna would result in a decline of stockholders’ equity (deficit) of approximately $10.1 million as of September 30, 2020.

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, 2020. 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, 2020, 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, has evaluated any changes in our internal control over financial reporting that occurred during the quarterly period ended September 30, 2020, and has concluded that there was no change that occurred during the quarterly period ended September 30, 2020 that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Management’s assessment of and conclusion on the effectiveness of disclosure controls and procedures and internal controls over financial reporting did not include the internal controls related to the operations acquired in the acquisition of Novavax CZ that are included in our September 30, 2020 consolidated financial statements. Our audit of internal control over financial reporting also did not include an evaluation of the internal control over financial reporting of Novavax CZ.

PART II. OTHER INFORMATION

Item 1A. Risk Factors

Other than the additional risk factors disclosed below, there are no material changes to the Company’s risk factors as described in Item 1A of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019.

Although there has been rapid progress, the regulatory and commercial success of our COVID-19 vaccine candidate, NVX-CoV2373, remains uncertain. We may be unable to 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, which is currently in Phase 3 of clinical testing. Even though we observed positive results in pre-clinical and early clinical trials, such results may not be predictive of future clinical trial results and whether they will be sufficient to support regulatory approval, accelerated or otherwise. We may be unable to produce a vaccine that successfully prevents COVID-19 in a timely manner, if at all.

Additionally, our ability to develop an effective vaccine to respond to COVID-19 depends on our ability to effectively scale up manufacturing capabilities at our own locations and those of our manufacturing partners and contractors. We recently acquired Novavax CZ (formerly Praha Vaccines, a.s.) including its vaccine manufacturing facility in Bohumil, Czech Republic and approximately 150 of its employees. Strategic transactions, such as our acquisition of Novavax CZ, 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. We are also actively entering into agreements with third parties to manufacture the antigen component of NVAX-CoV2373 and our proprietary Matrix-M adjuvant, as well as to distribute NVX-CoV2373. Reliance on third parties involves many risks, including risks that such third parties may not complete manufacturing or distribution activities on schedule, in compliance with regulatory requirements, within budget or in accordance with our quality standards. Our reliance on third-party manufacturers and distributors may adversely affect our operations or result in unforeseen delays or other problems beyond our control. Because of contractual restraints and the limited number of third-party manufacturers with the expertise, required regulatory approvals and facilities to manufacture NVX-CoV2373 on a potentially commercial scale, replacement of a manufacturer may be expensive and time-consuming and may cause interruptions in production. Manufacturing of NVX-CoV2373 involves a complicated process that will require significant investments of time and financial resources to implement. In addition, we may 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 further delays. We cannot guarantee that we will be able to timely and effectively produce NVX-CoV2373 in adequate quantities to meet global demand.

The Company has 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 will need to develop global distribution channels and form partnerships with third parties worldwide. Rapid and significant growth may strain our administrative and operational infrastructure and our efforts to establish these

40

capabilities may not meet initial expectations as to timing, scale-up, yield, cost or quality. If we are unable 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.

There is significant competition in the development of a vaccine against COVID-19 and we may never see returns on the significant resources we are devoting to NVX-CoV2373.

We may be unable to produce a successful COVID-19 vaccine, and establish a competitive market share for our vaccine before a competitor, or before the COVID-19 outbreak is contained or significantly diminished. A large number of vaccine manufacturers, academic institutions and other organizations currently have programs to develop COVID-19 vaccine candidates. While we are not aware of all of our competitors’ efforts, there are reports that Johnson & Johnson/Janssen, Pfizer, GlaxoSmithKline, Moderna, Sanofi, Inovio, AstraZeneca and many other companies are all in various stages of developing vaccine candidates against COVID-19. 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. Our business could be materially and adversely affected if competitors develop and commercialize one or more COVID-19 vaccines before we can complete development and seek approval for our vaccine candidate, or if they develop and commercialize one or more COVID-19 vaccines that are safer, more effective, have fewer or less severe side effects, have broader market acceptance, are more convenient or are less expensive than any vaccine candidate that we may develop. Furthermore, if any competitors are successful in producing a more efficacious vaccine or other treatment for COVID-19, 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 working toward the large-scale development, manufacturing and distribution of NVX-CoV2373 through a variety of government and private funding sources. For instance, we entered into funding agreements with CEPI to fund up to $399.5 million for clinical development and manufacturing activities for NVX-CoV2373 and we entered into the OWS Agreement to fund up to $1.6 billion, of which we are currently authorized to make expenditures or incur obligations of up to $800 million, to support the development, manufacture and delivery of NVX-CoV2373 to the U.S. Government. To the extent pricing negotiations are ongoing, however, such funding sources have discretion over the distribution of funding commitments, and to the extent funding commitments in such agreements are conditioned on our meeting certain milestones, we may not ultimately receive the full amount of committed funds and could be exposed to urgent needs for additional funding to support our NVX-CoV2373 development, manufacturing and distribution activities and there can be no assurance that we will be able to timely obtain additional government or private funding, if at all. For example, our agreement with CEPI requires that we adhere to certain equitable access principles regarding allocation and pricing, which may impact our ability to make profits. Future third-party investors and strategic partners, if any, may also impose restrictions on or mandate input as to our conduct of clinical trials, manufacturing activities or distribution activities, which may cause delays in the event of disagreement. We can make no assurance that the OWS Agreement or the funding agreements with CEPI will have a positive impact on our financial results.

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 combatting a global health threat that is unpredictable or against which our vaccine, if developed, may not be partially or fully effective, and may ultimately prove unsuccessful or unprofitable.

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 the U.S. Government under the Defense Production Act of 1950, as amended, which could 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 pandemic, where the spread of a disease needs to be controlled, closed or heavily regulated national borders will create challenges and potential delays in our development and production activities and may

41

necessitate that we pursue strategies to develop and produce our vaccine candidates within self-contained national or international borders, at potentially much greater expense and with longer timeframes for public distribution.

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.

The speed at which all parties are moving to create, test and approve a vaccine 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, including the FDA, 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, 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 and the FDA or other regulators may require that we conduct additional clinical trials or non-clinical studies. There can be no guarantee that the evolving regulatory pathway will not impede the development, commercialization and/or licensure of NVX-CoV2373.

In addition, since the path to licensure of any vaccine against COVID-19 is unclear, we may have a widely used vaccine in circulation in the U.S. or another country 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 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.  

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.

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

42

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.

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 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.

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 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.

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 as of December 31, 2019 was $1.4 billion. Our revenue for the last three fiscal years was $18.7 million in 2019, $34.3 million in 2018, and $31.2 million in 2017. Though we have received or anticipate receiving a significant amount of funding from OWS, the DoD and CEPI in connection with the development and potential commercialization of NVX-CoV2373, we may be unable to produce a successful vaccine in a timely manner, if at all. Our net losses for the last three fiscal years were $132.7 million in 2019, $184.7 million in 2018, and $183.8 million in 2017.

Historically, our losses have resulted predominantly from research and development expenses for our vaccine candidates, manufacturing-related expenses, 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 research and development efforts to support our vaccine development efforts, and, if our product candidates are approved, future commercialization efforts.

By the end of fiscal year 2020, we expect our total investment in the development and manufacture of NVX-CoV2373 to be significant and to continue through 2021 and beyond, although the precise magnitude of our investment will be subject to clinical trial data results, the duration of the COVID-19 pandemic and other factors, including our competitive landscape and regulatory outcomes. If we are unable to timely commercialize a vaccine against COVID-19, we may never recoup this investment. Although certain specified costs associated with the development of NVX-CoV2373 are expected to be reimbursed under the OWS Agreement, the DoD Contract and the CEPI Funding Agreement, we expect to continue to incur significant operating expenses and anticipate significant losses over time as we seek to:

● conduct clinical trials and seek regulatory approval for NVX-CoV2373 and other potential vaccine candidates;

● conduct preclinical studies for other potential vaccine candidates;

43

● 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 fund our operations. We may never achieve profitability and may not sustain profitability, if achieved.

Our existing funding agreements with the U.S. government and CEPI do not assure success of NVX-CoV2373 or that we will be able to fully fund NVX-CoV2373

The OWS Agreement, the DoD Agreement and the CEPI Funding Agreement each reimburse a portion of the expenses associated with the development and potential commercialization of NVX-CoV2373. However, we remain fully responsible for conducting these development and commercialization activities, not all of which may be reimbursed. Furthermore, none of the OWS Agreement, the DoD Agreement, or the CEPI Funding Agreement guarantees that any of these activities will be successful. 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.

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

Swedish-based Novavax AB and its wholly-owned subsidiary Novavax CZ are wholly-owned subsidiaries of Novavax, Inc. We also have formed a joint venture with Cadila Pharmaceuticals Limited in India, established clinical development agreements with CEPI and BMGF and entered into other agreements and arrangements with international companies, including SIIPL in India, among others. We plan to continue to enter into collaborations or partnerships with companies, non-profit organizations and national and local governments in various parts of the world, particularly to expand our global manufacturing and distribution capacity with respect to NVX-CoV2373. Risks of conducting business outside the U.S. include negative consequences of:

● The complexity and costs associated with seeking to comply with separate regulatory requirements that govern our ability to develop, manufacture, license and commercialize our vaccine candidates in local markets;

● the impacts of the COVID-19 pandemic on specific countries or regions;

● failure to comply with anti-bribery laws such as the U.S. Foreign Corrupt Practices Act, the U.K. Bribery 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;

● increased legal and compliance burden associated with establishing, maintaining and operating legal entities in foreign countries;

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

● changes in environmental, health and safety laws;

● 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.

44

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; however, we may not be able to maintain insurance coverage at a reasonable cost or in sufficient amounts to protect us against losses due to liability. Furthermore, coverage is relatively expensive, and the market pricing fluctuates significantly. We may not be able to maintain our existing insurance coverage or obtain coverage for the use of our other products in the future. This 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 in the U.S. and other countries 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:

● decreased demand for our products;

● impairment of our business reputation;

● 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.

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. government 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, and manufacturing and potential 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 clinical outcomes regarding the 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.

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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 disclosures 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 product candidates. There is also a risk of inappropriate disclosure of sensitive information or negative or 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	Second Amended and Restated Certificate of Incorporation of the Registrant (Incorporated by reference to Exhibit 3.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2015, filed on August 10, 2015 (File No. 000-26770))
3.2	Certificate of Amendment to the Second Amended and Restated Certificate of Incorporation of the Registrant (Incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on May 9, 2019 (File No. 000-26770))
3.3	Certificate of Designation of Series A Convertible Preferred Stock (Incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on June 19, 2020 (File No. 000-26770))
3.4	Amended and Restated By-Laws of the Company (Incorporated by reference to Exhibit 3.2 to the Company's Annual Report on Form 10-K for the year ended December 31, 2012, filed on March 12, 2013 (File No. 000-26770))
10.1*±	Base Agreement, entered into June 25, 2020, between the Company and Advanced Technology International
10.2*±	Undefinitized Project Agreement No. 1, entered into July 6, 2020, between the Company and Advanced Technology International
10.3*±	Modification No. 01 to Undefinitized Project Agreement No. 01, entered into July 9, 2020, between the Company and Advanced Technology International
10.4*±	Supply and License Agreement, entered into July 30, 2020, between the Company and Serum Institute of India Private Limited
10.5*±	Amendment to Supply and License Agreement, entered into September 11, 2020, between the Company and Serum Institute of India Private Limited
10.6*±	Amendment of Solicitation/Modification of Contract, entered into September 16, 2020, between the Company and the U.S. Department of Defense Joint Program Executive Office for Chemical, Biological, Radiological and Nuclear Defense
31.1*	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or 15d-14(e) of the Securities Exchange Act
31.2*	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or 15d-14(e) of the Securities Exchange Act

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32.1*	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2*	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101	The following financial information from our Quarterly Report on Form 10-Q for the quarter ended September 30, 2020, formatted in Inline Extensible Business Reporting Language (Inline XBRL): (i) the Consolidated Balance Sheets as of September 30, 2020 and December 31, 2019, (ii) the Consolidated Statements of Operations for the three and nine-month periods ended September 30, 2020 and 2019, (iii) the Consolidated Statements of Comprehensive Loss for the three and nine-month periods ended September 30, 2020 and 2019, (iv) the Consolidated Statements of Changes in Stockholders’ Equity (Deficit) for the three and nine-month periods ended September 30, 2020 and 2019, (v) the Consolidated Statements of Cash Flows for the nine-month periods ended September 30, 2020 and 2019, and (vi) the Notes to Consolidated Financial Statements.
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

* Filed herewith or furnished.

± Certain portions of this exhibit have been omitted because they are both (i) not material and (ii) would be competitively harmful if publicly disclosed.

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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 10, 2020	By:	/s/ Stanley C. Erck
		Stanley C. Erck
		President and Chief Executive Officer
		(Principal Executive Officer)
Date: November 10, 2020	By:	/s/ John J. Trizzino
		John J. Trizzino
		Executive Vice President, Chief Business Officer, Chief Financial Officer and Treasurer
		(Principal Financial and Accounting Officer)

48

EX-10.1

EXHIBIT 10.1

CERTAIN INFORMATION IDENTIFIED WITH [***] HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS BOTH (i) NOT MATERIAL AND (ii) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED.

BASE AGREEMENT

BETWEEN

ADVANCED TECHNOLOGY INTERNATIONAL (ATI)

315 SIGMA DRIVE

SUMMERVILLE, SC 29486

AND

Novavax, Inc.

21 Firstfield Road

Gaithersburg, MD 20878

MEDICAL CBRN DEFENSE CONSORTIUM (MCDC) BASE AGREEMENT NO.: 2020-530

Authority: MCDC Other Transaction Agreement (OTA) No. W15QKN-16-9-1002 and 10 U.S.C. § 2371b, Section 815 of the 2016 National Defense Authorization Act (NDAA), Public Law (P.L.) 114-92.

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This Agreement is entered into between the Advanced Technology International hereinafter referred to as the ''Consortium Management Firm (CMF)," and Novavax, Inc ., hereinafter  referred  to as  "Project  Agreement  Holder." This Agreement constitutes the entire understanding and agreement between the parties with respect to the subject matter hereof and supersedes all prior representations and agreements.  It shall not be varied except by an instrument in writing of subsequent dale duly executed by an authorized representative of each of the parties. The validity, construction, scope and performance or this Agreement shall be governed by the laws or the stale of South Carolina, excluding its choice of laws rules .

ADVANCED TECHNOLOGY	FOR THE PROJECT AGREEMENT
INTERNATIONAL	HOLDER NOVAVAX, INC.
/s/ [***]	/s/ John A. Herrmann III
(Signature)	(Signature)
[***], Senior Contracts Manager	John A. Herrmann III, SVP, General Counsel
(Name & Title)	(Name & Title)
June 25, 2020
(Date)	(Date)

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Article I.    SCOPE OF THE AGREEMENT		7
Section 1.01	Background	7
Section 1.02	Definitions	7
Section 1.03	Scope	10
Section 1.04	Goals/Objectives	11
Section 1.05	Reports	12
Article II.   TERM		14
Section 2.01	The Term of this Agreement	14
Section 2.02	Termination of this Agreement by Mutual Agreement	14
Section 2.03	Termination Provisions	14
Section 2.04	Termination Cost	16
Section 2.05	Close-out Procedure.	16
Section 2.06	Stop Work	16
Article III.  MANAGEMENT OF THE PROJECT		17
Section 3.01	The Medical CBRN Defense Consortium (MCDC)	17
Section 3.02	The following MCDC decisions are subject to the ACC-NJ approval	17
Section 3.03	Management and Project Structure	17
Section 3.04	Modifications	18
Article IV.   AGREEMENT ADMINISTRATION		19
Article V.    OBLIGATION AND PAYMENT		19
Section 5.01	Obligation	19
Section 5.02	Project Payments	19
Section 5.03	Accounting System Requirements	19
Section 5.04	Invoicing Instructions	20
Section 5.05	Advance Payments:	22
Section 5.06	Limitation of Funds:	22
Section 5.07	Financial Records and Reports	23
Article VI.   NONTRADITIONAL DEFENSE/COST SHARING		23
Article VII.  DISPUTES		24
Section 7.01	General	24
Section 7.02	Dispute Resolution Procedures	24
Section 7.03	Limitation of Liability and Damages	24

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Article VIII. CONFIDENTIAL INFORMATION		25
Section 8.01	Definitions	25
Section 8.02	Exchange of Information	25
Section 8.03	Authorized Disclosure	25
Section 8.04	Return of Proprietary Information	26
Section 8.05	Term	26
Section 8.06	Flow Down	26
Article IX.   PUBLICATION AND ACADEMIC RIGHTS		26
Section 9.01	Use of Information	26
Section 9.02	Publication or Public Disclosure of Information	26
Article X.    PATENT RIGHTS		28
Section 10.01	Definitions	28
Section 10.02	Allocation of Principal Rights	28
Section 10.03	Invention Disclosure, Election of Title, and Filing of Patent Application	28
Section 10.04	Conditions When the Government May Obtain Title	29
Section 10.05	Minimum Rights to the MCDC PAH and Protection of the MCDC PAH’s Right to File	29
Section 10.06	Action to Protect the Government’s Interest	30
Section 10.07	Lower Tier Agreements	30
Section 10.08	Reporting on Utilization of Subject Inventions	30
Section 10.09	Preference for American Industry	31
Section 10.10	March-in Rights	31
Section 10.11	Opportunity to Cure	31
Section 10.12	Background Information	31
Section 10.13	Survival Rights	32
Article XI.   DATA RIGHTS		32
Section 11.01	Definitions	32
Section 11.02	Data Categories	33
Section 11.03	Allocation of Principal Rights	34
Section 11.04	Marking of Data	35
Section 11.05	Copyright	36
Section 11.06	Data First Produced by the Government	36
Section 11.07	Prior Technology	36

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Section 11.08	Lower Tier Agreements	37
Section 11.09	Survival Rights	37
Article XII.  EXPORT CONTROL		37
Article XIII. TITLE AND DISPOSITION OF PROPERTY		38
Section 13.01	Definitions	38
Section 13.02	Title to Property	38
Section 13.03	Government Furnished Property	38
Article XIV.  CIVIL RIGHTS ACT		38
Article XV.   NO SMALL BUSINESS AFFILIATION		39
Article XVI.  ANTITRUST		39
Article XVII. SECURITY & OPSEC		39
Article XVIII. SAFETY		43
Article XIX.  REPRESENTATIONS AND WARRANTIES		43
Section 19.01	Representations and Warranties of All Parties	43
Section 19.02	Limitations	43
Article XX.   LIABILITY OF THE PARTIES		44
Section 20.01	Waiver of Liability	44
Section 20.02	Damages	44
Section 20.03	Extension of Waiver of Liability	44
Section 20.04	Applicability	44
Section 20.05	Limitation of Liability	44
Article XXI.  GENERAL PROVISIONS		44
Section 21.01	Fees	44
Section 21.02	Waiver	44
Section 21.03	Section Headings	44
Section 21.04	Severability	45
Section 21.05	Force Majeure	45
Section 21.06	Regulatory Affairs	45
Section 21.07	Radioactive Materials	45
Section 21.08	Recombinant DNA	45
Section 21.09	Required Compliance for Use of Laboratory Animals	46
Section 21.10	Required Compliance for Use of Human Subjects	46
Section 21.11	Required Compliance for use of Human Anatomical Substances	46

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Section 21.12	Compliance with current Good Manufacturing Processes (cGMP)	46
Section 21.13	Registration with Select Agent Program	47
Section 21.14	Duty-Free Entry	47
Section 21.15	Follow-On Production	49
Article XXII. ASSIGNMENT OF AGENCY		49
Section 22.01	Assignment	49
Article XXIII. ORDER OF PRECEDENCE		50
Article XXIV. EXECUTION		50
Attachment I – Assurance of Compliance with Title VI of the Civil Rights Act of 1964		51

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Article I.        SCOPE OF THE AGREEMENT

Section 1.01   Background

The U.S. Army Contracting Command-New Jersey (ACC-NJ) is entering into a Section 815 Prototype Other Transaction Agreement (OTA) with the Medical CBRN Defense Consortium, c/o Advanced Technology International 315 Sigma Drive, Summerville, SC 29486. The Joint Project Manager for Medical Countermeasure Systems (JPM-MCS) through the Joint Program Executive Office for Chemical and Biological Defense (JPEO- CBD) seeks to collaborate with the MCDC to carry out a coordinated research and development program. An OTA is being proposed with the purpose of conducting Research and Development into medical, pharmaceutical, and diagnostic technologies to enhance mission effectiveness of military personnel. The MCDC was formed in response to the Government’s expressed interest to engage with an industry consortium comprised of traditional and nontraditional government contractors, small and large businesses, for-profit and not-for-profit entities, academic organizations and their affiliates for the purpose of entering into an OTA for prototype projects.

Under the OTA and associated awards, the Government, along with the non-government members from the MCDC, shall perform coordinated planning and research and development prototype efforts designed to encompass the areas contained within the scope of this OTA as listed in Article I, Section 1.03.

Section 1.02    Definitions

“Academic Research Institution” means accredited institutions (colleges, universities or other educational institutions) of higher learning in the U.S.

“Agreement” refers to the Base Agreement between the Medical CBRN Defense Consortium (MCDC) Consortium Management Firm (CMF) Advanced Technology International (ATI) and the Project Agreement Holder.

“Agreements Officer (AO)” is the U.S. Army Contracting Command – New Jersey’s warranted Contracting Officer authorized to sign the final OTA for the Government.

“Agreements Officer Representative (AOR)” is the individual designated by the Government on a per project basis to monitor all technical aspects and assist in agreement administration of the specific project; the AOR shall only assist in agreement administration of the specific project to the extent delegated such administration authority in writing in the AOR delegation letter by the responsible Agreements Officer.

“Basket” is an electronic file containing proposals that have been submitted by MCDC Members in response to Requests for Prototype Proposals (RPP), reviewed by the Government, and favorably evaluated in accordance with the procedures outlined in Section 1.03 of this Article.

“Cash Contribution” means a MCDC member organization’s financial resources expended to conduct a project awarded under this Agreement. The cash contribution can be derived from MCDC member organization funds or outside sources or may also come from non-federal contract or grant revenues or from profit or fee on a federal procurement contract. A MCDC member organization’s own source of funds may include corporate retained earnings, current or prospective Independent Research and Development (IR&D) funds or any other indirect cost pool allocation. New or concurrent IR&D funds can be utilized as a cash contribution provided those funds identified by the MCDC member organization are to be spent on the conduct of a project’s Statement of Work. Prior IR&D will not be considered as part of the MCDC member organization’s cash or in kind contributions nor will fee be considered on the Project Awards that include cost sharing. Cash contributions include the funds a MCDC member organization will spend for labor (including benefits and direct overhead), materials, new equipment (prorated if appropriate), subcontractor efforts expended on a project, and restocking the parts and material consumed under a project.

“Consortium Management Firm (CMF)” refers to the organization acting on behalf of the MCDC to execute and administer the efforts under the Other Transaction Agreement for this program as defined in the specific agreement

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entered into between the MCDC and the CMF. The current CMF is Advanced Technology International (ATI). The MCDC reserves the right to replace the CMF at any time.

“Cost Share” means resources expended by the PAH on the proposed project SOW and subject to the direction of the AOR. There are two kinds of cost share: cash contribution and in-kind contribution. Cost Share may only be proposed and collected on cost-reimbursement type agreements.

“Contracting Activity” means an element of an agency designated by the agency head and delegated broad authority regarding acquisition functions. It also means elements or another agency designated by the director of a defense agency which has been delegated contracting authority through its agency charter.

“Date of Completion” is the date on which all work is completed or the date on which the period of performance ends.

“Development” means the systematic use, under whatever name, of scientific and technical knowledge in the design, development, test, or evaluation of an existing or potential new technology, product or service (or of an improvement in an existing technology, product or service) for the purpose of meeting specific performance requirements or objectives. Development includes the research functions of design engineering, prototyping, and engineering testing.

“Effective Date” means the date when this Agreement is signed and executed by the Agreements Officer for the Government.

“Government” means the US Government and its departments and agencies.

“Government Fiscal Year” means the period commencing on October 1 and ending September 30 of the following calendar year.

“In Kind Contribution” means the MCDC member organization’s nonfinancial resources expended by the MCDC member organization to conduct a project, such as wear and tear on in-place capital assets like machinery or the prorated value of space used for the conduct of a project, and the reasonable fair market value (appropriately prorated) of equipment, materials, and other property used in the conduct of the project.

“JPM-MCS” means the Joint Project Manager-Medical Countermeasure Systems Office created for the advanced development of medical countermeasures for chemical and biological defense. The JPM-MCS is also the program management office for this overall effort. The JPM-MCS includes an array of stakeholders involved in the development of prototype hardware, software, and system technologies.

“Milestone” means a scheduled event signifying the completion of a major deliverable or a set of related deliverables.

“Medical CBRN Defense Consortium” is the consortium formed by industry in response to the Government’s expressed interest to quickly provide the warfighter with safe and effective chemical, biological, radiological, and nuclear countermeasures. The MCDC is comprised of Traditional and Nontraditional Defense Contractors, including small and large (other than small) businesses, for profit, and not for profit entities, and academic research institutions. The MCDC was originally named the National Chemical and Biologic Defense Consortium.

“MCDC Executive Committee” is the Executive Committee, comprised of Traditional and Nontraditional Defense Contractors, including small and large businesses, for profit and not for profit entities, and academic research institutions.

“MCDC Members” means the Nontraditional and Traditional Defense Contractors, including small and large businesses, for profit and not for profit entities, and Academic Research Institutions that are members in good standing of the MCDC.

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“Nontraditional Defense Contractor” with respect to applicable authority, means an entity that is not currently performing and has not performed, for at least the one-year period preceding the solicitation of sources by the Department of Defense for the procurement or transaction, any contract or subcontract for the Department of Defense that is subject to full coverage under the cost accounting standards prescribed pursuant to section 1502 of title 41 and the regulations implementing such section.

“Other Transaction Agreement (OTA)” refers to the Section 815 Other Transaction Agreement between the Government and the MCDC by its Consortium Management Firm, Advanced Technology International, Agreement No. W15QKN-16-9-1002.

“Other Transactions for Prototype Projects” refers to this type of Other Transaction Agreement (OTA). Section 815 of Public Law 114-92 authorizes the use of OTAs, under the authority of 10 U.S.C. 2371(b), under certain circumstances for prototype projects directly relevant to enhancing the mission effectiveness of military personnel and supporting the platforms, systems, components, or materials proposed to be acquired or developed by the Department of Defense, or to improvement of platforms, systems, components, or materials in use by the armed forces. This type of OTA is treated by DoD as an acquisition instrument, commonly referred to as an “other transaction” for a prototype project or Section 815 “other transaction”.

“Parties” means the Consortium Management Firm, Advanced Technology International, and the Project Agreement Holder where collectively identified and “Party” where each entity is individually identified.

“Payable Milestone” means that once a milestone has been met (see definition of “milestone”), the Government can approve payment to the MCDC of a predetermined dollar amount in relation to performance of a particular project under the Other Transaction Agreement.

“Program Manager” means the Technical Administrator for the Program (located at the JPM-MCS) responsible for Government oversight of the MCDC OTA program.

“Project” refers to the scope of work being completed under a Project Agreement.

“Project Agreement (PA)” means that agreement between the MCDC, by its CMF, and the MCDC member entity whose proposal is evaluated and competitively selected by the Government for funding, establishing the scope of work, terms and conditions for the MCDC member entity performance and payment under the Government funded project. Project Agreements shall comply with all provisions contained within the OTA and any other supporting documents referenced therein. The Project Agreement is initiated by the CMF based on the Technical Direction Letter sent by the Government to the CMF.

“Project Agreement Holder (PAH)” means the MCDC member entity issued a Project Agreement by the CMF.

“Technical Direction Letter (TDL)” is a Government document to be issued to the CMF reflecting the Government's decision to select and fund all or part of a particular proposal submitted by a MCDC member or team of MCDC members through the RPP process conducted under this OTA. The TDL shall establish the scope of work, terms and conditions for performance and payment and include the MCDC member proposal selected for Government funding. Where a specific Government agency laboratory, test facility, center or other location will be used by the MCDC member entity in performance of the Project Agreement, it will be identified and the cost of such use, whether Government-contributed or MCDC member reimbursed, will be identified in the TDL.

“United States Army Contracting Command – New Jersey Contracting Activity” (ACC-NJ) means the contracting activity who is designated as the lead Government organization in charge of executing the Program.

“White Paper” means a document limited to a few pages prepared and submitted by a MCDC member(s) in response to a Government solicitation issued under the terms and conditions of the OTA that briefly describes and summarizes a technology idea or concept for an indicated research area in a Government-specified format. The White Papers are evaluated by the Government to determine whether submission of a full proposal on the summarized concept or idea might be warranted. To the extent that a MCDC member(s) desires to include

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proprietary information in the white paper it shall be identified and marked in accordance with the terms for protection of information under Article VIII. Confidential Information.

Section 1.03   Scope

The Government in conjunction with the MCDC member entities shall perform a coordinated research and development program designed to support the DoD’s medical, pharmaceutical, and diagnostic requirements as related to enhancing the mission effectiveness of military personnel. The mission of JPM-MCS is to provide the U.S. military forces and the nation safe, effective, and innovative medical solutions to counter Chemical Biological Radiological and Nuclear (CBRN) threats. Under the OTA and associated Project Agreements, the Government along with the Consortium member entities, shall perform coordinated planning and research and development prototype efforts in support of the JPM-MCS mission through the development of products in three (3) major Medical Countermeasure Systems (MCS) objective areas:

· Detection: Systems and devices to identify CBRN agents and assist in making medical decisions

· Prevention: Prophylaxis, pretreatment, and post-exposure prophylaxis

· Treatment: Therapeutics (post-exposure, post-symptomatic)

The Government will determine which endeavors to pursue and projects to fund. At any time throughout the term of the OTA, the Government may address the needs for the desired MCS objective areas or other related Government needs as they arise. The MCDC and the Government agree that other organizations and agencies within the U.S. Government may participate in the collaborative activities through a Memorandum of Agreement or other such arrangement. It is anticipated that these other organizations may include JPEO-CBD and DTRA.

Request for Prototype Proposal (RPP) Process:

Once the Government identifies a need under one of the MCS objective areas above, the Government will issue a Request for Prototype Proposal (RPP). The RPP will include a Request for White Papers (RWP) and/or a Request for Prototype Proposal (RPP) to the Consortium Management Firm (CMF). Due dates will be indicated for each. The CMF shall in turn issue a similar request to MCDC’s member entities, for which the Government will review and evaluate all responses. The Government will be solely responsible for evaluation of the white papers and/or proposal submissions, as applicable. If the RPP includes a RWP, only members submitting white papers will be permitted to submit full proposal submissions. Based on the evaluation of the white papers, the Government will make a recommendation on whether the member should or should not submit a full proposal submission. Any member submitting a white paper, regardless of the Government’s recommendation, may submit a proposal.

MCDC member white papers and proposals shall be submitted to the CMF in accordance with the RPP instructions which will include evaluation criteria and a Statement of Work (SOW) template on the due date indicated in the RPP. The CMF will review white paper and proposal submissions for completeness and format compliance. The CMF shall in turn prepare and transmit MCDC’s member’s white papers and proposals to the Government for evaluation. The Government will be responsible for technical evaluation and selection of the projects from the proposals submitted. The CMF will assess the reasonableness and completeness of the cost estimates and then provide a formal assessment to the Government. The Government Agreement Officer will review this assessment and make the final determination regarding whether the negotiated project cost is fair and reasonable. All Project Agreements will be subject to discussions/negotiations and proposal updates, as appropriate, prior to execution.

Once all steps are complete, the Government will issue a Technical Direction Letter (TDL) to the CMF for the authorization and execution of the selected project to be performed by the selected MCDC’s member entity(ies). Once the CMF receives notification of selection of a project for funding via TDL, the CMF will enter into a Project Agreement with the MCDC member.

A modification will be included with the TDL, which will include the funding for the negotiated and agreed-upon project. After receipt of the TDL and review and execution of the funding modification, the CMF shall enter into a Project Agreement (PA) with MCDC member whose project was selected. MCDC CMF shall administer the Government-funded Project Agreements. The Government's designated Agreements Officer Representative (AOR) for the specific project will supervise the technical work performed by MCDC’s member entity in execution of the

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PA. The Government reserves the right to revise the terms and conditions of these projects in accordance with Article III, Section 3.04.

Placement in the Electronic “Basket File”:

Qualifying proposals, not eligible for current funding, may be entered into an electronic basket and subject to award for up to thirty-six (36) months. The RPP will contain the available ratings and their definitions to be assigned to proposals as a result of the technical evaluation as well as which specific ratings will qualify a proposal for inclusion in the Basket. The Government reserves the right to determine which, if any, proposals are to be selected according to the published criteria.

Once in the Basket, a proposal may be identified for award by the Government based on Government need and availability of funding. The Government reserves the right to 1.) request that the MCDC member who submitted the identified proposal, scale or otherwise adjust the original proposal, and to 2.) fund all or part of the identified proposal. The MCDC member will have an opportunity to update their proposal, as applicable, if selected from the basket. The Government will review any updated information provided by the MCDC member and/or CMF. Upon the Government’s decision to fund such a proposal from the Basket, the CMF will receive notification of the award decision through a TDL whereupon the CMF will enter into a Project Agreement with the indicated MCDC member as required.

A selected proposal will reside in the Basket for thirty-six (36) months from the date the corresponding RPP is closed unless funded or the submitting MCDC member requests in writing beforehand to have it removed.

SBIR Phase III Project Requests

It will be incumbent upon the MCDC member, on their own with some general support and guidance from the CMF, to find a Government Technical POC with both (1) available funding and (2) an interest in furthering technology developed under a current or prior SBIR project. Upon doing so, the Government Technical POC will coordinate the feasibility of placing the award under the OTA with the Government AO and OTA Program Manager and the following areas will be considered when making a determination for appropriateness of award under the OTA:

·How the proposed effort derives from, extends, or logically concludes efforts performed under prior SBIR funding agreements;

·How the proposed effort fits within the definition of a prototype effort related to medical, pharmaceutical, and diagnostic technologies to enhance mission effectiveness of military personnel in accordance with the statutory requirement;

·How the proposed effort fits within the overall scope of work and the goals and objectives of the OTA.

Should the Government AO and the OTA Program Manager determine it is appropriate to award the SBIR Phase III under the OTA, the Government AO will send a proposal request to the MCDC member through the CMF, as is standard for any Government request under the OTA. The CMF will provide a cost analysis summary to the Government Agreements Officer (AO) for consideration in the Government’s award determination. The Government will evaluate the proposal, conduct any necessary negotiations through the CMF, and make an award determination. If the Government makes the determination to award to the MCDC member, the Government AO will issue a TDL letter to the CMF, resulting in the issuance of a Project Agreement between the CMF and MCDC member.

SBIR Phase III awards under this Agreement shall include the Data Rights provisions and Data Rights granted to the MCDC member contained within Article XI of this Agreement. All administrative, reporting, and other aspects of awards made for SBIR Phase III efforts under this Agreement will be in accordance with the terms and conditions of the OTA. MCDC Members must have been awarded and performed under a previous SBIR Phase I and/or Phase II contract in order to qualify for SBIR Phase III award under this Agreement.

Section 1.04   Goals/Objectives

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The following goals/objectives will be pursued through the execution of the OTA:

· Accelerate the development of mission critical technologies in the areas of concern from applied research into advanced development.

· Deliver therapeutic MCM prototypes targeting viral, bacterial, and biological toxin targets of interest to the DOD. MCM prototypes are drug products that have completed all or part of the activities required to support FDA licensure. This may include meeting warfighter requirements of protection against an aerosolized route of exposure.

· Deliver enabling technologies that will support the development and regulatory review of MCM prototypes. The enabling technologies can include animal models of viral, bacterial or biological toxin disease and pathogenesis (multiple routes of exposure), assays, diagnostic technologies or other platform technologies applicable to development and regulatory review of MCM.

· Develop prototype candidates for the prophylaxis, treatment and diagnosis of Chemical threats. This will include diagnosis of, and prophylaxis and treatment for, exposure to traditional and emerging chemical nerve agent threats, as well as other emerging chemical threat agents other than nerve agents.

· Develop prototype candidates for the prophylaxis, treatment and diagnosis of Radiological and Nuclear threats. This will include prototype candidates for diagnosis of, and prophylaxis and treatment for Acute Radiation Syndrome.

· Develop soldier-carried autoinjector delivery devices for single drug administration. Develop soldier- carried autoinjector delivery devices for administration of two or more drugs.

· [Develop vaccine-manufacturing platforms that offer early stage manufacturing flexibility and diversity using a deep knowledge of protein(s) expression in a biological system that is reproducible and scalable, and preferably with direct FDA experience. The goal is to manufacture and test identified protective molecule(s) and target molecule(s) (along with associated reagents and standards) in multiple scalable, flexible manufacturing platforms encompassing a diverse array of manufacturing systems (e.g., insect, mammalian, live viral, plant, E.coli, yeast, etc.) for use in appropriate animal model(s) and in Phase 1 trials.]

· Pharmaceutical development will address the FDA Animal Rule, as appropriate.

· Utilize adjuvants and excipients supporting the ability to develop up to 300,000 equivalent doses within 60 days at clinical quality.

· Support a family of systems diagnostic approach that increases the speed, accuracy, and confidence of agent identification and disease diagnosis. Diagnostic areas include those for organisms that circulate freely and at relatively high numbers at or near the onset of symptoms, organisms that circulate in low numbers early in infection but then integrate with host cells, organisms that have significant genomic diversity from strain to strain, and non-BW agents such as toxins/chemical agents/radiological agents that do not replicate and require low quantities to cause illness.

· Support the Defense Biological Products Assurance Office (formally the Critical Reagents Program), the principal DoD resource of high quality, validated, and standardized biological reference materials, reagents, and assays, as necessary.

· DoD Advanced Development and Manufacturing Capabilities: To facilitate lessons learned and to ensure DoD MCM product development schedules are not impacted, the consortium will consider Advanced Development and Manufacturing (ADM) capability contractors for biologics manufacturing activities for monoclonal antibodies, vaccines, and recombinant proteins may utilize the DoD funded facility.

· Pursue collaborative research with non-traditional technology providers in a manner that enables effective transition of technologies to Government prototyping programs during any phase of life cycle support (affordability, manufacturability, sustainment, etc.).

Section 1.05   Reports

The MCDC member organizations conducting projects in accordance with this Agreement shall maintain records of the activities performed and funding expended under the projects and the results of any studies analyses, tests, and other investigations conducted. Based on the progress of the funded projects and other information known to the AO or authorized designee, the MCS Program Office shall review the relevant

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projects throughout the period to determine if any changes to planning or budget are required. If such a change is expected which will cause a need to modify the OTA, the Technical Direction Letter or an individual Project Agreement may be modified to incorporate such changes. The AO is the only authorized representative of the Government who may make modifications to the OTA. PAHs shall submit the following reports to the CMF who will review and provide one cumulative report detailing status of all funded projects to the MCS Program Office.

a.)   Project Agreement Quarterly Report. The report will have two major sections:

(i) Technical Status Report. The technical status report will detail technical progress to date and report on all problems, technical issues or major developments during the reporting period. Each of the topics described below shall be addressed for the effort performed:

(1) A comparison of actual accomplishments with the goals and objectives of the project established for the period.

(2) Reasons why established goals and objectives were not met, if appropriate.

(3) Other pertinent information including, when appropriate, analysis and explanation of cost variances.

(4) A cumulative chronological list of written publications in technical journals. Include those in press as well as manuscripts in preparation and planned for later submission. Indicate likely journals, authors, and titles.

(5) Papers presented at meetings, conferences, seminars, etc.

(ii) Business Status Report. The business status report shall provide summarized details of the resource status of the Project Agreement, including the status of the contributions by all participants. This report will include a quarterly accounting of current expenditures. Any major deviations from the agreed to project plans shall be explained with discussion of proposed actions to address the deviations. The report will also include an accounting of interest earned on Government Funds, if any. It is not expected that any interest will accrue under the Project Agreement(s), as milestone payments will be tracked and adjusted accordingly. In any event, the Government reserves the right to require interest amounts in excess of $250 per year to be remitted to the US Treasury.

b.)   Annual Technical Report. Annual technical reports are required for projects whose periods of performance are greater than one year. The PAH’s report will provide a concise and factual discussion of the significant accomplishments and progress during the year covered by the report.

c.)   Final Technical Report.

(i)Final Technical Report (FTR). A Final Technical Report shall be submitted to the CMF within thirty (30) calendar days of the completion of the Project Agreement. This report will provide a comprehensive, cumulative, and substantive summary of the progress and significant accomplishments achieved during the total period of the effort. Each of the topics described above shall be addressed as appropriate for the effort performed. Upon receipt, the AOR will review and provide any comments within 30 days. If necessary, the PAH will update the FTR within 30 days of receipt of AOR’s comments. Once the CMF has informed PAH that the FTR has been approved by the AOR, the PAH shall forward a copy of the FTR to the Defense Technical Information Center, Attn. DTIC-O, 8725 John J. Kingman Road, Suite 0944, Fort Belvoir, VA 22060-6218.

(ii) Format. The cover and title page shall be Standard Form (SF) 298, Report Documentation Page. Item 13 of the form should contain a 100 to 200 word abstract summarizing technical progress during the reporting period. Style should be third person singular using past tense. Jargon, special symbols or notations, subscripts, mathematical symbols or foreign alphabet letters are not permitted. All pages should be

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prepared for acquisition and distribution by the Defense Technical Information Center (DTIC). All pages should be good quality for copying purposes. The report shall be prepared in accordance with American National Standards Institute (ANSI) document Z39.18-1987, "Scientific and Technical Reports: Organization, Preparation, and Production," which may be obtained from American National Standards Institute Incorporated, 1430 Broadway, New York, NY, 10018. The FTR front page shall be marked in a conspicuous place with a distribution statement to denote the extent of its availability for distribution, release, and disclosure without additional approvals or authorizations.

d.)  Final Business Status Report. The final business status report shall provide summarized details of the resource status of the Project Agreement, including the status of the contributions by all participants. This report will include a final accounting of cumulative expenditures. If a project is terminated prior to the end of a quarter or a year and sufficient funding is available, the PAH, through the CMF, must submit a final technical and business status report in the same format as detailed herein.

Note: Deficiencies in regulatory reports must be adequately assessed by the Government, MCDC and the individual performer, or consortium as a whole, to come to resolution.

Article II.       TERM

Section 2.01   The Term of this Agreement

The period of performance for this Agreement is from the effective date, which is the date of last signature, to April 7, 2036. If at any time funds expended exceed the amount obligated on a Project Agreement prior to the expiration of the term, the Parties have no obligation to continue performance and may elect to cease their efforts at that point. Provisions of this Agreement, which, by their express terms or by necessary implication, apply for periods of time other than specified in Article II herein, shall be given effect, notwithstanding this Article.

Section 2.02   Termination of this Agreement by Mutual Agreement

Except for the rights and obligations with respect to proprietary information and/or specific intellectual property agreements between or amongst the Government, the CMF and the MCDC member organizations, unless extended by mutual written agreement of the Parties, this Agreement shall automatically terminate by written agreement of  the Parties. Unless otherwise directed by the AO through the CMF, individual Project Agreements pursuant to this Agreement shall also terminate upon the termination of this Agreement.

Section 2.03   Termination Provisions

Subject to a reasonable determination that the program, or a project funded under the program, will not produce beneficial results commensurate with the expenditure of resources, the Government may terminate performance of work under this OTA or a specific project, in whole or in part, if the AO determines that a termination is in the Government’s interest. The AO shall terminate by delivering to the MCDC through its CMF a Notice of Termination specifying the extent of termination and the effective date.

After receipt of a Notice of Termination, and except as directed by the CMF, the PAH shall immediately proceed with the following obligations, regardless of any delay in determining or adjusting any amounts due:

(1) Stop work and direct its subawardees to stop work as specified in the notice.

(2)Place no further subagreements or orders (referred to as orders in this clause) for materials, services, or facilities, except as necessary to complete the continued portion of the project.

(3) Terminate all orders to the extent they relate to the work terminated.

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(4)Assign to the Government, as directed by the AO, all right, title, and interest of the PAH under the orders terminated, in which case the Government shall have the right to settle or to pay any termination settlement proposal arising out of those terminations.

(5)With approval or ratification to the extent required by the AO, the CMF may settle all outstanding liabilities and termination settlement proposals arising from the termination of orders; the approval or ratification will be final for purposes of this clause.

(6)Provide CMF, and/or obtain from the subawardees under the terminated portion of the Agreement a transfer of title to the following where applicable and deliver to the Government --

(i)The fabricated or unfabricated parts, work in process, completed work, supplies, and other material produced or acquired for the work terminated; and

(ii)The completed or partially completed plans, drawings, information, and other property that, if the order had been completed, would have been required to be furnished to the Government.

(7) Complete performance of any work not terminated, if applicable.

(8)Take any action that may be necessary, or that the AO may direct through the CMF, for the protection and preservation of the property related to this project that is in the possession of the PAH(s) or any subawardee and in which the Government has or may acquire an interest.

(9)Use commercially reasonable efforts to sell, as directed or authorized by the CMF, any property of the types referred to under Article II. Section 2.03 Termination Provisions, (6)(i) and (ii); provided, however, that the PAH:

(i) is not required to extend credit to any purchaser and

(ii)may arrange for the subawardee who was performing the terminated work to acquire the property under the conditions prescribed by, and at prices approved by, the CMF.

(iii)will in no event be required to continue with such efforts for more than three (3) months after notice by the CMF to sell or disposition such property.

(10)The PAH has no obligation to continue to cost share on the terminated project or terminated portion of the project.

The requirement for at least 1/3 cost share of the total project cost by the PAH is assessed prior to award. In the event that during the course of the performance of the Project Agreement any of the parties to the Project Agreement believe the cost sharing funds available will be insufficient, the PAH shall notify the CMF within twenty-five (25) days of the event that gave rise to the insufficient cost sharing funds. CMF will notify the Government within five (5) days of receiving such notice from the PAH. The Government will determine whether it is in its best interest to either renegotiate the scope and/or terms of the Project Agreement to meet the cost share requirement or terminate the Project Agreement in whole or in part.

The proceeds of any transfer or disposition of project property will be applied to reduce any payments to be made by the Government under that particular project, including credited to the price or cost of the work, or paid in any other manner directed by the CMF.

In the event of a termination of the Project Agreement, the Government shall have patent rights as described in Article X, Patent Rights, and rights in Data as described in Article XI, Data Rights. Failure of the PAH and Government to agree to an equitable adjustment shall be resolved pursuant to Article VII, Disputes.

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Section 2.04    Termination Cost

The CMF will negotiate with the Government and PAH in good faith equitable reimbursement for work performed toward accomplishment of the task or tasks of individual projects. The Government will allow full credit for the Government share of the obligations properly incurred by a PAH prior to termination. Costs incurred by a PAH during a suspension or after termination of a project are not allowable unless the CMF expressly authorizes them in either the notices of suspension, termination, or subsequently. Other PAH’s costs incurred during a suspension or after termination which are necessary and not reasonably avoidable are allowable if:

(a) The costs result from obligations which were properly incurred by the PAH before the effective date of the suspension or termination, are not in anticipation of it, and in the case of a termination, are non-cancellable; and

(b) The costs would be allowable if the project was not suspended or the award expired normally at the end of the funding period in which the termination takes effect.

Section 2.05    Close-out Procedure.

If the Government funds an individual Project Agreement and then subsequently terminates the agreement or the requirements of the agreement are met, the following closeout procedures apply:

(a) Definitions.

(i)     “Closeout” – the process by which the Government and CMF determine that all applicable administrative actions and all required work have been completed by the PAH.

(ii)    “Date of Completion” – the date on which all work is completed or the date on an amendment thereto on which the period of performance ends.

(iii)   “Disallowed costs” – those charges that the Government or its representative determines to be unallowable, in accordance with the terms and conditions stated in this Agreement.

(b) Upon request, the Government shall make prompt payments to the PAH through the CMF for allowable reimbursable costs under the MCS Project Agreement being closed out.

(c) The PAH shall immediately refund any balance of unobligated (unencumbered) cash that the CMF has paid and that is not authorized to be retained by the PAH for use in the performance of the Project Agreement.

(d) The CMF shall obtain from the PAH within 90 calendar days after the date of completion of an MCS Project Agreement all financial, performance, and other reports required as a condition of the MCS Project Agreement. The CMF may grant extensions when requested by the PAH.

(e) When authorized, the CMF shall make a settlement for any upward or downward adjustments to the Government’s share of costs after these reports are received based on final, actual expenditures in accordance with the Termination Costs provision of the Agreement.

(f) Quick close-out procedures similar to FAR 42.708 shall be followed.

(g) The PAH shall account for any property received from the Government.

Section 2.06    Stop Work

As directed by the AO, the CMF may, at any time, by written order to the PAH, require the PAH to stop all, or any part, of the work called for under this Agreement or any Project Agreement for a period of 90 days after the written order is delivered to the PAH, and for any further period to which the parties may agree. The order shall be specifically identified as a stop-work order issued under this section. Upon receipt of the order, the PAH shall

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immediately comply with its terms and take all reasonable steps to minimize the incurrence of costs allocable to the work covered by the order during the period of work stoppage. Within a period of 90 days after a stop-work is delivered to the PAH, or within any extension of that period to which the parties shall have agreed, the CMF shall either:

(a) Cancel the stop-work order; or

(b) Terminate the work covered by the Project Agreement as provided in Article II, Term and Termination.

If a stop work order issued under this clause is canceled, the PAH shall resume work. The CMF shall make an equitable adjustment in the delivery schedule or Project Agreement estimated cost/price, or both, and the Government’s share of the Project Agreement shall be modified, in writing, accordingly, if—

(1)The stop-work order results in an increase in the time required for, or in the PAH’s cost properly allocable to, the performance of any part of the Project Agreement; and

(2)The PAH asserts its right to the adjustment within 30 days after the end of the period of work stoppage; provided, that, if the Government decides the facts justify the action, the Government through the MCDC CMF may receive and act upon a proposal submitted at any time before final payment under the Project Agreement.

If a stop work order is not canceled and the work covered by the Project Agreement is terminated in accordance with Article II, the MCDC CMF shall work with the PAH to negotiate an equitable reimbursement in accordance with Article II. Section 2.03, Termination Provisions.

Article III.       MANAGEMENT OF THE PROJECT

Section 3.01    The Medical CBRN Defense Consortium (MCDC)

The MCDC, as defined in the OTA, was formed to work with the Government and provide input in developing technologies to support the Department of Defense’s (DoD) medical, pharmaceutical, and diagnostic requirements as related to enhancing the mission effectiveness of military personnel ultimately resulting in fully executed research and development prototype projects selected by the Government. Every Member in this MCDC is independent of the other, and there is no affiliation between the MCDC members within the definition of 13 C.F.R. 121.103 of the Federal Small Business Regulations and no such affiliation is intended either by the formation or implementation of the MCDC.

As appointed by the MCDC Executive Committee, the CMF has the authority to execute the Other Transaction Agreement (OTA) on behalf of the MCDC and has the responsibility for day to day overall administration of this Agreement, subject to the supervision of the MCDC Executive Committee.

Section 3.02    The following MCDC decisions are subject to the ACC-NJ approval:

1. Changes to the MCDC Articles of Collaboration if such changes substantially alter the relationship of the MCDC and the Government as originally agreed upon when the OTA was executed;

2. Changes to, or elimination of, any ACC-NJ funding allocation to any MCDC Member as technically and/or financially justified.

Section 3.03    Management and Project Structure

Technical and project management of the coordinated research program established under this Agreement shall be accomplished through the management structures and processes detailed in this Article.

The Government competitively selected the MCDC, organized by its Consortium Management Firm Advanced Technology International, a Section 501(c)(3) nonprofit organization. MCDC has entered into an agreement with Advanced Technology International authorizing Advanced Technology International to enter into this OTA as the consortium manager, engage in overall day to day management of the MCDC under the guidance of and as

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designated by the MCDC Executive Committee, including technical, programmatic, reporting, financial, administrative and contractual matters and administer Project Agreements required for performance under this OTA.

As established by funded projects under the OTA, the Government Program Manager shall fully participate in the appropriate program technical meetings held by the MCDC. The AORs and Other Government personnel, as deemed appropriate, also may participate in the technical portion of these meetings.

Section 3.04    Modifications

As a result of scheduled meetings, end of program reviews, or at any time during the term of the OTA, research progress or results may indicate that a change in the OTA’s scope, objectives or Term would be beneficial to program objectives. Recommendations for modifications, including justifications to support any changes to the OTA Scope, will be documented in a letter and submitted by the PAH to the CMF, who will then forward it to the Program Manager with a copy to the AO. This documentation letter will detail the technical, chronological, and financial impact of the proposed modification to the OTA. The Program Manager shall be responsible for the review and verification of any recommendations to revise or otherwise modify the OTA Scope or other proposed changes to the terms and conditions of the OTA and subsequently this Agreement.

With regard to projects the Government determines to fund as a result of the RPP process specified in the Agreement Scope, any PAH recommendations for modifications, including justifications to support any changes to the funded projects, will be documented in a letter and submitted by the CMF to the AO with a copy to the Government Agreements Officer Representative designated for the particular project. The AO shall be responsible for review of proposed changes and for all modifications to the terms and conditions of the project awards. The CMF shall modify the Project Agreement(s) in the event of any such modifications or changes to the project.

Management of Projects

(1) Performance of the work on each project is subject to the technical direction of the AOR designated in the Project Agreement. For the purposes of this clause, technical direction includes the following:

a. Direction to the PAH, which shifts work emphasis between work areas or tasks, requires pursuit of certain lines of inquiry, fills in details or otherwise serves to accomplish the objectives described in the statement of work;

b. Guidelines to the PAH that assist in the interpretation of drawings, specifications or technical portions of work description.

c. Review and, where required by the Project Agreement, approval of technical reports, drawings, specifications, or technical information to be delivered by the PAH under the Project Agreement.

The AOR shall monitor the PAH’s performance with respect to compliance with the technical requirements of the Project Agreement.

(2) Technical direction must be within the general scope of work stated in the Project Agreement. Technical direction may not be used to

a. Assign additional work under the Project Agreement;

b. Increase or decrease the estimated Project Agreement cost, fee (if any), or the time required for the project performance;

c. Change any of the terms, conditions or specifications of the Project Agreement; or

d. Accept non-conforming work.

As such, no verbal or written request, notice, authorization, direction or order received by the PAH shall be binding upon the MCDC, CMF or Government, or serve as the basis for a change in the Project Agreement cost or any other provision of the Project Agreement, unless issued (or confirmed) in writing by the MCDC CMF Contractual Representative designated in the Project Agreement.

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(3) The PAH shall immediately notify the MCDC CMF Contractual Representative whenever a written change notification has been received from anyone other than the MCDC CMF Contractual Representative, which would affect any of the terms, conditions, cost, schedules, etc. of the Project Agreement, and the PAH is to perform no work or make any changes in response to any such notification or make any claim on the MCDC through its CMF or Government, unless the MCDC CMF Contractual Representative directs the PAH, in writing, to implement such change notification.

Article IV.       AGREEMENT ADMINISTRATION

Administrative and contractual matters under this Agreement shall be referred to the following representatives of the parties:

MCDC:	Advanced Technology International
	MCDC Contracts
	315 Sigma Drive
	Summerville, SC 29486
	[***]
Project Agreement Holder:	Novavax, Inc.
	21 Firstfield Road
	Gaithersburg, MD 20878
	Attn: John A. Herrmann III, SVP, General Counsel
	[***]

Each party may change its representatives named in this Article by written notification to the other parties. Agreements Officer Representative (AOR); AOR will he designated by the Government on a per project basis.

Article V.       OBLIGATION AND PAYMENT

Section 5.01   Obligation:

Except as specified in Article VII: Disputes, the CMF's liability to make payments to the PAH is limited only to those funds obligated under the Project Agreement(s). The CMF may incrementally fund the Project Agreement(s). If modification becomes necessary in performance of projects, pursuant to Article V of this Agreement, the CMF and the PAH shall establish and execute a revised Schedule of Payable Milestones consistent with the current Project Agreement.

Section 5.02   Project Payments:

The detailed instructions for project payments will be included in the Technical Direction Letter to be issued by the CMF on a project by project basis.

Section 5.03   Accounting System Requirements:

Prior to the submission of invoices, the PAH shall have and maintain an established accounting system which complies with Generally Accepted Accounting Principles (GAAP) and the requirements of this Agreement. The PAH shall ensure that appropriate arrangements have been made for receiving, distributing and accounting: for Federal funds under this Agreement. Consistent with this stipulation, an acceptable accounting system will be one in which all cash receipts and disbursements arc controlled and documented properly.

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Section 5.04   Invoicing Instructions:

Project Payable Milestones: The PAH shall segregate and track all individual project costs separately and shall document the accomplishments of each Payable Milestone under each Project Agreement. A Payable Milestones report shall be detailed on a project basis and submitted with each request to the AOR or designee for approval.

Section 5.04 a. Payment Method Types

Project Agreements will be issued as either a fixed price milestone payment method or a cost reimbursement milestone payment method as described below.

(a) Fixed Price Milestone Payment Method: Payments shall be made in accordance with the Payable Milestone Schedule of each Project Agreement, provided the designated AOR has verified compliance with the Statement of Work and accomplishment of the stated effort. The Payable Milestone Schedule may be revised as appropriate and deemed necessary by issuance of a bilateral modification to the Project Agreement. Quarterly reviews by the AOR and the CMF will assess the need for revisions to the Payable Milestone Schedule. An acceptable invoice for adjustable fixed price milestone payments is one that (on the invoice or on the Payable Milestone Report):

(i) contains the date of invoice and the Base Agreement number and Project Agreement number;

(ii) identifies any associated technical milestones and the progress toward completion of each milestone; and

(iii) lists the milestone cost negotiated and contained in each Project Agreement

(b) Cost Reimbursable Milestone Payment Method (with not to exceed ceiling): Payment is contingent upon satisfactory progress toward completion of milestones as delineated in Project Agreement. Payment shall be made based on actual costs incurred in completing milestones up to the maximum amount allowable under the applicable Project Agreement, provided the designated AOR has verified compliance with the Statement of Work and accomplishment of the stated effort. Per (ii) below, either a Status Report identifying any associated technical tasks and the progress toward completion of each milestone, a Deliverable Report, or a Milestone Report is required concurrent with the invoice. An acceptable invoice for reimbursable payment is one that (on the invoice or on the attached Status, Deliverable, or Milestone Report in accordance with each Project Task Assignment):

(i) contains the date of invoice and the Base Agreement number and Project Agreement number;

(ii) identifies any associated technical milestones and the progress toward completion of each milestone;

(iii) includes a description of supplies and services, labor costs, subcontractor costs, material costs, travel costs, other direct costs, and extended totals;

(iv) indicates the current period and cumulative man-hours and costs incurred through the period indicated on the invoice; and

(v) contains the following certification statement:

“I certify that the amounts invoiced are for costs incurred in accordance with the agreement, the work reflected has been performed, and prior payment has not been received.”

Authorized Signature__________________________________

(c) Cost Plus Fixed Fee Milestone Payment Method (with not to exceed ceiling): Payment is contingent

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upon satisfactory progress toward completion of milestones as delineated in Project Agreement. Payment shall be made based on actual costs incurred in completing milestones up to the maximum amount allowable under the applicable Project Agreement, provided the designated AOR has verified compliance with the Statement of Work and accomplishment of the stated effort. The PAH will normally fund any costs incurred above this maximum amount. Either a Status Report identifying any associated technical tasks and the progress toward completion of each milestone, a Deliverable Report, or a Milestone Report is required concurrent with the invoice. An acceptable invoice for reimbursable payment is one that (on the invoice or on the attached Status, Deliverable, or Milestone Report in accordance with each Project Agreement):

(i) contains the date of invoice and the Base t Agreement number and Project Agreement number;

(ii) identifies any associated technical milestones and the progress toward completion of each milestone;

(iii) includes a description of supplies and services, labor costs, subcontractor costs, material costs, travel costs, other direct costs, fixed fee and extended totals;

(iv) indicates the current period and cumulative man-hours and costs incurred through the period indicated on the invoice; and

(v) contains the following certification statement:

“I certify that the amounts invoiced are for costs incurred in accordance with the agreement, the work reflected has been performed, and prior payment has not been received.”

Authorized Signature____________________________________

(d) Cost Reimbursable, Cost Sharing Milestone Payment Method (with not to exceed ceiling): Payment is contingent upon satisfactory progress toward completion of milestones as delineated in Project Agreement and acceptable cost share. Payment shall be made based on actual costs incurred in completing milestones up to the maximum amount allowable under the applicable Project Agreement, provided the designated AOR has verified compliance with the Statement of Work and accomplishment of the stated effort. Per (ii) below, either a Status Report identifying any associated technical tasks and the progress toward completion of each milestone, a Deliverable Report, or a Milestone Report is required concurrent with the invoice. An acceptable invoice for reimbursable payment is one that (on the invoice or on the attached Status, Deliverable, or Milestone Report in accordance with each Project Agreement):

(i) contains the date of invoice and the Base Agreement number and Project Agreement number;

(ii) identifies any associated technical milestones and the progress toward completion of each milestone;

(iii) includes a report of the cost share expended towards the accomplishment of the SOW tasks and/or milestones. This cost share report may be attached to the invoice if contractor practices make inclusion of such information on the invoice itself impractical. If the cost share report is separate from the invoice, it must be signed by an authorized representative. This cost share report must contain a breakout of the cost share by cost element similar to the level of detail required on the invoice and any in-kind contributions. The preferred method of reporting cost share is to provide an invoice for actual cost incurred with a value for the cost shared amount and the value to be reimbursed by the Government through the CMF;

(iv) includes a description of supplies and services, labor costs, subcontractor costs, material costs, travel costs, other direct costs, and extended totals;

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(v) indicates the current period and cumulative man-hours and costs incurred through the period indicated on the invoice; and

(vi) contains the following certification statement:

“I certify that the amounts invoiced are for costs incurred in accordance with the agreement, the work reflected has been performed, and prior payment has not been received.”

Authorized Signature_____________________________________

Section 5.04 b. Submission of Invoices

Invoices may be submitted no more frequently than monthly. The PAH shall submit invoices and any necessary supporting documentation via email to [***].

For Cost type Project Agreements, the PAH’s final invoice (completion invoice) will be clearly indicated as such and shall indicate the cumulative amounts incurred and billed to completion, and a written certification of the total hours expended. Actual project costs incurred and cost share performance, if applicable, of each project shall be reported and reviewed each quarter.

Section 5.04 c. Payment Terms

Payment terms are NET 30 days after CMF’s receipt of an acceptable invoice. An acceptable invoice is one that meets the conditions described in Article V Section 5.04a. Payment Method Types.

Section 5.05    Advance Payments:

On a per project basis, advance payments may be approved by the AO. If the AO has approved advance payments, there will be a requirement to establish a separate interest bearing account. The PAH sets up and maintains funds in a separate interest bearing account unless one of the following applies:

(1) The PAH receives less than $120,000 in Federal awards per year;

(2) The best reasonably available interest bearing account would not expect to earn interest in excess of

$250 per year on such cash advances;

(3) The depository would require an average or minimum balance so high that it would not be feasible within the expected cash resources for the project; or

(4) The advance payments are made one time to reduce financing costs for large up-front expenditures and the fund will not remain in the PAH’s account for any significant period of time.

Where a separate interest bearing account is set up, any interest earned should be remitted annually to the CMF. CMF shall forward the funds to the Government as directed by the AO. Interest payments shall be made payable to the U.S. Treasury.

Section 5.06    Limitation of Funds:

Except as set forth in Article VII, the Government's financial liability will not exceed the amount obligated for projects and available for payment.

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Section 5.07    Financial Records and Reports:

The PAH shall maintain adequate records to account for Federal funds received under this Agreement and shall maintain adequate records to account for Project Agreement funding provided under this Agreement, should cost sharing procedures be implemented for funding a particular project. PAH's relevant financial records are available and subject to examination or audit on behalf of the ACC-NJ for a period not to exceed five (5) years after final payment of the PAH's project. The AO or designee shall have direct access to sufficient records and information of the PAH to ensure full accountability for all funding under this Agreement. Such audit, examination or access shall be performed during business hours on business days upon prior written notice and shall be subject to the security requirements of the audited party. Any audit required during the course of the program may be conducted by the Government using Government auditors or, at the request of the PAH, by the requesting PAH's external CPA accounting firm at the expense of the requesting PAH.

AGREEMENT

Article VI.       NONTRADITIONAL DEFENSE/COST SHARING

In accordance with provisions of 10 USC 2371b, Section 815 of the 2016 National Defense Authorization Act, P.L. 114-92, which provides the Department of Defense (DoD) authority to enter into transactions other than contracts, grants, or cooperative agreements, the Department of Defense (DoD) has the authority to make awards that are directly relevant to enhancing the mission effectiveness of military personnel and the supporting platforms, systems, components, or materials proposed to be acquired or developed by the Department of Defense, or the improvement of platforms, systems, components, or materials in use by the armed forces. Section 815 revised the definition for  the term ‘nontraditional defense contractor’ as defined in Article I. Section 1.01, Definitions.

Each MCDC Member Organization must meet the definition of a Nontraditional Defense Contractor or have at least one Nontraditional Defense Contractor participating to a significant extent in the performance of an awarded Project Agreement. Examples of what might be considered a significant extent or significant contribution include, but may not be limited to supplying new key technologies or products, accomplishing a significant amount of the effort, or in some other way causing a material reduction in the cost or schedule or increase in the performance.

If significant Nontraditional Defense Contractor participation cannot be fulfilled, the Member Organization must provide at least one third cost share of the value of the Project Agreement awarded to the Member Organization. Proposals that fail to comply with this requirement will not be awarded under the OTA.

Cost Sharing is not required under this Other Transaction Agreement for projects that contain significant nontraditional defense contractor participation. Where both Parties agree, cost sharing may be considered on a per project basis under terms and conditions to be agreed to by the Parties and in accordance with the “Other Transactions” (OT) Guide For Prototype Projects dated January 2001. For traditional Government contractors without a significant nontraditional defense contractor teaming partner, a one third cost share of the project costs is required as described in the “Other Transaction” (OT) Guide For Prototype Projects dated January 2001. For traditional Government contractors with significant nontraditional defense contractor participation, cost sharing is not required for Projects under this OTA.

Throughout the period of performance of any Project Agreement, the Government AO and AOR will actively monitor Nontraditional Defense Contractor participation and/or cost sharing to ensure compliance with this provision in accordance with implementation guidance from HQDA and/or OSD. The PAH will be given the opportunity to become compliant with the guidance should they be found non-compliant. Failure to comply may result in termination.

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Article VII.       DISPUTES

Section 7.01      General

For the purposes of this Article, “Parties” means the CMF, the PAH and the Government where collectively identified and “Party” where each entity is individually identified. The Parties shall communicate with one another in good faith and in a timely and cooperative manner when raising issues under this Article.

Section 7.02      Dispute Resolution Procedures

Any disagreement, claim or dispute among the Parties concerning questions of fact or law arising from or in connection with this Agreement and whether or not involving an alleged breach of this Agreement, may be raised only under this Article.

Whenever disputes, disagreements, or misunderstandings arise, the Parties shall attempt to resolve the issue(s) involved by discussion and mutual agreement as soon as practicable. In no event shall a dispute, disagreement or misunderstanding which arose more than three (3) months prior to the notification made under this article constitute the basis for relief under this article unless the ACC-NJ, Center Director for Emerging Technologies, in the interest of justice, waives this requirement.

Failing resolution by mutual agreement, the aggrieved Party shall document the dispute, disagreement, or misunderstanding by notifying the other Party in writing documenting the relevant facts, identifying unresolved issues, specifying the clarification or remedy sought, and documenting the rationale as to why the clarification/remedy is appropriate. Within ten (10) working days after providing notice to the other Party, the aggrieved Party may, in writing, request a decision by the ACC-NJ, Center Director for Emerging Technologies. The other Party shall submit a written position on the matter(s) in dispute within thirty (30) calendar days after being notified that a decision has been requested. The ACC-NJ, Center Director for Emerging Technologies, will conduct a review of the matter(s) in dispute and render a decision in writing within thirty (30) calendar days of receipt of such position. Any such decision is final and binding, unless a Party shall, within thirty (30) calendar days request further review as provided by this article.

If requested within thirty (30) calendar days of the ACC-NJ, Center Director for Emerging Technologies’ decision, further review will be conducted by the Chair of the MCDC Executive Committee and the ACC-NJ Associate Director. In the event of a decision, or in absence of a decision within sixty (60) calendar days of referral to the Chair of the MCDC Executive Committee and the ACC-NJ, Associate Director (or such other period as agreed to by the parties), either party may pursue any right or remedy provided by law, including but not limited to the right to seek extraordinary relief under Public Law 85-804. Alternatively, the parties may agree to explore and establish an Alternate Disputes Resolution procedure to resolve this dispute.

Section 7.03      Limitation of Liability and Damages

In no event shall the liability of the MCDC PAH or any other entity performing research activities under a Project Agreement exceed the funding such entity has received for their performance of the specific Project Agreement under which the dispute arises.

No Party shall be liable to any other Party for [***], whether arising in contract (including warranty), tort (whether or not arising from the negligence of a Party) or otherwise, except to the extent such damages are caused by a Party's [***]; Notwithstanding the foregoing, claims for contribution toward third-party injury, damage, or loss are not limited, waived, released, or disclaimed.

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Article VIII.       CONFIDENTIAL INFORMATION

Section 8.01        Definitions

(1) “Disclosing Party” means CMF, MCDC PAHs, or the Government who discloses Confidential Information as contemplated by the subsequent Paragraphs.

(2) “Receiving Party” means CMF, MCDC PAHs, or the Government who receives Confidential Information disclosed by a Disclosing Party.

(3) “Confidential Information” means information and materials of a Disclosing Party which are designated as confidential or as a Trade Secret in writing by such Disclosing Party, whether by letter or by use of an appropriate stamp or legend, prior to or at the same time any such information or materials are disclosed by such Disclosing Party to the Receiving Party. Notwithstanding the foregoing, materials and other information which are orally, visually, or electronically disclosed by a Disclosing Party, or are disclosed in writing without an appropriate letter, stamp, or legend, shall constitute Confidential Information or a Trade Secret if such Disclosing Party, within thirty (30) calendar days after such disclosure, delivers to the Receiving Party a written document or documents describing the material or information and indicating  that it is confidential or a Trade Secret, provided that any disclosure of information by the Receiving Party prior to receipt of such notice shall not constitute a breach by the Receiving Party of its obligations under this Paragraph. “Confidential Information” includes any information and materials considered a Trade Secret by the PAH. “Trade Secret” means all forms and types of financial, business, scientific, technical, economic, or engineering or otherwise proprietary information, including, but not limited to, patterns, plans, compilations, program devices, formulas, designs, prototypes, methods, techniques, processes, procedures, programs, or codes, whether tangible or intangible, and whether or how stored, compiled, or memorialized physically, electronically, graphically, photographically, or in writing if -

(a) The owner thereof has taken reasonable measures to keep such information secret; and

(b)The information derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable through proper means by, the public.

Section 8.02         Exchange of Information:

Neither the Government nor MCDC on behalf of the MCDC member entities or PAHs nor the CMF shall be obligated to transfer Confidential Information independently developed by the Government or the MCDC member entities or PAHs or the CMF absent an express written agreement between the Parties involved in the exchange providing the terms and conditions for such disclosure.

Section 8.03        Authorized Disclosure:

The Receiving Party agrees, to the extent permitted by law, that Confidential Information shall remain the property of the Disclosing Party (no one shall disclose unless they have the right to do so), and that, unless otherwise agreed to by the Disclosing Party, Confidential Information shall not be disclosed, divulged, or otherwise communicated by it to third parties or used by it for any purposes other than in connection with specified project efforts and the licenses granted in Article X, Patent Rights, and Article XI, Data Rights, provided that the duty to protect such “Confidential Information” and “Trade Secrets” shall not extend to materials or information that:

(a)Are received or become available without restriction to the Receiving Party under a proper, separate agreement,

(b)Are not identified with a suitable notice or legend per Article VIII entitled "Confidential Information" herein,

(c)Are lawfully in possession of the Receiving Party without such restriction to the Receiving Party at the time of disclosure thereof as demonstrated by prior written records,

(d) Are or later become part of the public domain through no fault of the Receiving Party,

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(e)Are received by the Receiving Party from a third party having no obligation of confidentiality to the Disclosing Party that made the disclosure,

(f)Are developed independently by the Receiving Party without use of Confidential Information as evidenced by written records,

(g)Are required by law or regulation to be disclosed; provided, however, that the Receiving Party has provided written notice to the Disclosing Party promptly so as to enable such Disclosing Party to seek a protective order or otherwise prevent disclosure of such information.

Section 8.04        Return of Proprietary Information:

Upon the request of the Disclosing Party, the Receiving Party shall promptly return all copies and other tangible manifestations of the Confidential Information disclosed. As used in this section, tangible manifestations include human readable media as well as magnetic and digital storage media.

Section 8.05        Term:

The obligations of the Receiving Party under this Article shall continue for a period of seven (7) years from conveyance of the Confidential Information.

Section 8.06        Flow Down

The PAH shall flow down the requirements of this Article VIII to their respective personnel, member entities, agents, subawardees (including employees) at all levels, receiving such Confidential Information under this OTA.

Article IX.         PUBLICATION AND ACADEMIC RIGHTS

Section 9.01        Use of Information.

For the purposes of this Article, “Parties” means the PAH and the Government where collectively identified and “Party” where each entity is individually identified.

Subject to the provisions of Article VIII, Confidential Information, Article IX, Publication and Academic Rights, and Article XI Data Rights, the PAH and the Government shall have the right to publish or otherwise disclose information and/or data developed by the Government and/or the respective MCDC PAH under the Research Project. The PAH and the Government (and its employees) shall include an appropriate acknowledgement of the sponsorship of the Research Projects by the Government and the MCDC PAH in such publication or disclosure.  The Parties shall have only the right to use, disclose, and exploit any such data and Confidential Information in accordance with the rights held by them pursuant to this Agreement.  Notwithstanding the above, the Parties shall not be deemed authorized by this paragraph, alone, to disclose any Confidential Information of the Government or the PAH.

Section 9.02        Publication or Public Disclosure of Information

(a) Classified Project Agreements

If a release of Confidential Information or Trade Secrets is for a classified Project Agreement, the provisions of the DoD Security Agreement (DD Form 441) and the DoD Contract Security Classification Specification (DD Form 254) apply.

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(b) Review or Approval of Technical Information for Public Release.

(1)At least 30 days prior to the scheduled release date PAH shall submit to the CMF a copy of the information to be released. In turn, CMF shall submit to the Government AOR a copy of the information to be released.

The Government AOR is hereby designated as the approval authority for the AO for such releases.

(2)Where the PAH is an Academic Research Institution performing fundamental research on campus. PAH shall provide papers and publications for provision to the CMF for provision to the Government AOR for review and comment 30 days prior to formal paper/publication submission. However, if that Academic Research Institution incorporates into its research results or publications artifacts produced by and provided to these institutions on behalf of other (non-educational institution) MCDC PAHs (or has authors listed on the paper who are not employees or students of the Academic Research Institution) then the procedures in Section 9.02(a) ABOVE must be followed.

(3)Parties to this Agreement are responsible for assuring that an acknowledgment of government support will appear in any publication of any material based on or developed under this OTA, using the following acknowledgement terms:

“Effort sponsored by the U.S. Government under Other Transaction number W15QKN-16-9-1002 between the MCDC, and the Government. The US Government is authorized to reproduce and distribute reprints for Governmental purposes notwithstanding any copyright notation thereon.”

(4)Parties to this Agreement are also responsible for assuring that every publication of material based on or developed under this project contains the following disclaimer:

“The views and conclusions contained herein are those of the authors and should not be  interpreted as necessarily representing the official policies or endorsements, either expressed or implied, of the U.S. Government.

The PAH shall flowdown these requirements to its subawardees, at all tiers.

(c) Notices. To avoid disclosure of Confidential Information or Trade Secrets belonging to an MCDC member entity or PAH and/or the Government and the loss of patent rights as a result of premature public disclosure of patentable information, the PAH that is proposing to publish or disclose such information shall provide advance notice to the MCDC, through its CMF, and identify such other parties as may have an interest in such Confidential Information. The CMF shall notify such parties at least thirty (30) calendar days prior to any PAH’s submission for publication or disclosure, together with any and all materials intended for publication or disclosure relating to technical reports, data, or information developed by the parties during the term of and pursuant to this Agreement. The Government must notify the MCDC, through its CMF, of any objection to disclosure within this thirty (30) day period, or else the PAH, shall be deemed authorized to make such disclosure.

(d) Filing of Patent Applications. During the course of any such thirty (30) calendar day period, the PAH shall provide notice to the CMF as to whether it desires that a patent application be filed on any invention disclosed in such materials. In the event that a PAH and/or the Government desires that such a patent be filed, the PAH or the Government proposing to publish or disclose such materials agrees to withhold publication and disclosure of such materials until the occurrence of the first of the following:

(1) Filing of a patent application covering such invention, or

(2) Written agreement, from the AO and the CMF (on behalf of the PAH to whom such Confidential Information belong) that no patentable invention is disclosed in such materials.

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(3) Further, during the course of any such 90 calendar day period, the PAH shall notify the AO and the Government, through the CMF, if PAH believes any of its Confidential Information have been included in the proposed publication or disclosure and shall identify the specific Confidential Information or Trade Secrets that need to be removed from such proposed publication. The Government and the CMF on behalf of the PAH proposing the publication or disclosure of such materials agrees to remove from the proposed publication or disclosure all such Confidential Information so identified by the CMF.

Article X.         PATENT RIGHTS

Section 10.01   Definitions

“Invention” means any invention or discovery which is or may be patentable or otherwise protectable under Title 35 of the United States Code.

“Made” when used in relation to any invention means the conception or first actual reduction to practice of such invention.

“Practical application” means to manufacture, in the case of a composition of product; to practice, in the case of a process or method, or to operate, in the case of a machine or system; and in each case, under such conditions as to establish that the invention is capable of being utilized and that its benefits are, to the extent permitted by law or Government regulations, available to the public on reasonable terms.

“Subject Invention” means any invention of the MCDC’s PAH or its subcontractors of any tier conceived or first actually reduced to practice in the performance of work on a Project Agreement under this Agreement.

"Background Invention" means any invention, or improvement to any invention, other than a Subject Invention, made by a PAH (or their subcontractors of any tier) that was conceived, designed, developed, produced, and/or actually reduced to practice prior to performance of the Agreement or outside the scope of work performed under this Agreement.

Section 10.02   Allocation of Principal Rights

The PAH, or its subcontractor to the extent such is proper assignee of the invention, shall retain the entire right, title, and interest throughout the world to each Subject Invention consistent with the provisions of this Article, Executive Order 12591 and 35 U.S.C § 202. In the event that a PAH consists of more than one entity or person, those entities or persons may allocate such right, title interest between themselves or others as they may agree in writing. With respect to any Subject Invention in which the PAH retains title, the Government shall have a non-exclusive, nontransferable, irrevocable, paid-up license to practice or have practiced on behalf of the United States the Subject Invention throughout the world. The PAH may elect to provide full or partial rights that it has retained to other parties. The Government shall have the right to use any products or processes used for test and evaluation (including materials for testing or assays) in any other project pursued on behalf of the U.S. Government.

Section 10.03   Invention Disclosure, Election of Title, and Filing of Patent Application

(1)The PAH shall disclose each Subject Invention to the CMF within four (4) months after the inventor discloses it in writing to his company personnel responsible for patent matters. The disclosure to the CMF shall be in the form of a written report and shall identify the Agreement under which the invention was made and the identity of the inventor(s). It shall be sufficiently complete in technical detail to convey a clear understanding to the extent known at the time of the disclosure, of the nature, purpose, operation, and the physical, chemical, biological or electrical characteristics of the invention. The disclosure shall also identify any publication, sale, or public use of the invention and whether a manuscript describing the invention has been submitted for publication and, if so, whether it has been accepted for publication at the time of disclosure.

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(2)If the PAH determines that it does not intend to retain title to any such invention, the PAH shall notify the CMF, in writing, within nine (9) months of disclosure. However, in any case where publication, sale or public use has initiated the one (1) year statutory period wherein valid patent protection can still be obtained in the United States, the period for such notice may be shortened by the ACC-NJ through CMF to a date that is no more than six (6) months prior to the end of the project.

(3)The PAH shall file its initial patent application on a Subject Invention to which it elects to retain title within one (1) year after election of title or, if earlier, prior to the end of the statutory period wherein valid patent protection can be obtained in the United States after a publication, or sale, or public use.  The  MCDC PAH may elect to file patent applications in additional countries (including the European Patent Office and the Patent Cooperation Treaty) within either ten (10) months of the corresponding initial patent application or six (6) months from the date permission is granted by the Commissioner of Patents and Trademarks to file foreign patent applications, where such filing has been prohibited by a Secrecy Order.

(4)After considering the position of the CMF on behalf of the PAH, a request for extension of the time for disclosure election, and filing under this Article IX, paragraph C, may be approved by ACC-NJ, which ACC-NJ approval shall not be unreasonably withheld.

Section 10.04   Conditions When the Government May Obtain Title

Upon written request to the CMF, the PAH shall convey to the Government title to any Subject Invention under any of the following conditions:

(1)If the PAH fails to disclose or elects not to retain title to the Subject Invention within the times specified in Section 10.03 of this Article X, Patent Rights; provided, that the Government may only request title within sixty (60) days after learning of the failure of the PAH to disclose or elect within the specified times.

(2)In those countries in which the PAH fails to file patent applications within the times specified in Section 10.03 of this Article X, Patent Rights; provided, that if the PAH has filed a patent application in a country after times specified in Section 10.03 of this Article X, Patent Rights, but prior to its receipt of the written request by the Government through the CMF, the PAH shall continue to retain title in that country; or

(3)In any country in which the PAH decides not to continue the prosecution of any application for, to pay the maintenance fees on, or defend in reexamination or opposition proceedings on, a patent on a Subject Invention.

Section 10.05   Minimum Rights to the MCDC PAH and Protection of the MCDC PAH’s Right to File

The Parties agree that:

(1)The PAH shall retain a non-exclusive, royalty-free license throughout the world in each Subject Invention to which the Government obtains title, except if the PAH fails to disclose the invention within the times specified in Section 10.03 of this Article X, Patent Rights. PAH's license extends to the domestic (including Canada) subsidiaries and affiliates, if any, of the PAH within the corporate structure of which the PAH is a party and includes the right to grant licenses of the same scope to the extent that PAH was legally obligated to do so at the time the Project Agreement was funded. The license is transferable only with the approval of the Government, except when transferred to the successor of that part of the business to which the invention pertains. Government approval for license transfer shall not be unreasonably withheld.

(2)The PAH domestic license may be revoked or modified by the Government to the extent necessary to achieve expeditious practical application of the Subject Invention pursuant to an application for an exclusive license submitted consistent with appropriate provisions at 37 CFR Part 404. This license shall not be revoked in that field of use or the geographical areas in which the PAH has achieved practical

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application and continues to make the benefits of the invention reasonably accessible to the public. The license in any foreign country may be revoked or modified at the discretion of the Government to the extent the PAH, its licensees, or the subsidiaries or affiliates have failed to achieve practical application in that foreign country.

(3)Before revocation or modification of the license, the Government shall furnish the CMF, and the CMF shall forward to the PAH, a written notice of the Government's intention to revoke or modify the license, and the PAH shall be allowed thirty (30) calendar days (or such other time as may be authorized for good cause shown) after the notice to show cause why the license should not be revoked or modified.

Section 10.06   Action to Protect the Government’s Interest

(1)The PAH shall execute or have executed and promptly deliver to CMF all instruments necessary to (i) establish or confirm the rights the Government has throughout the world in those Subject Inventions to which the PAH elects to retain title, and (ii) convey title to the Government when requested under Section

10.04 of this Article X, Patent Rights, and to enable the Government to obtain patent protection throughout the world in that Subject Invention.

(2)The PAH agrees to require, by written agreement, that its employees working on Project Agreements, other than clerical and non-technical employees, agree to disclose promptly in writing, to personnel identified as responsible for the administration of patent matters and in a format acceptable to the CMF, each Subject Invention made under this Agreement in order that the CMF on behalf of the PAH can comply with disclosure provisions of Section 10.03 of the Article X, Patent Rights, and to execute all papers necessary to file the patent applications on the Subject Invention and to establish the Government’s rights in the Subject Invention. The PAH acknowledges and shall instruct its employees, through employee agreements or other suitable educational programs, on the importance of reporting inventions in sufficient time to permit the filing of patent applications prior to U.S. or foreign statutory bars.

(3)The PAH shall notify the CMF of any decision not to continue the prosecution of a patent application, pay maintenance fees, or defend in a reexamination or opposition proceedings on a patent, in any country, not less than thirty (30) days before the expiration of the response period required by the relevant patent office.

(4)The PAH shall include, within the specification of any United States patent application and any patent issuing thereon covering a Subject Invention, the following statement: “This invention was made with U.S. Government support under Agreement No. W15QKN-16-9-1002 awarded by the ACC-NJ to the MCDC. The Government has certain rights in the invention.”

Section 10.07   Lower Tier Agreements

The PAH shall include the Article X, Patent Rights, suitably modified to identify the parties, in all lower tier agreements, regardless of tier, for experimental, development, or research work.

Section 10.08   Reporting on Utilization of Subject Inventions

The PAH shall submit, on request during the term of the Project Agreement, periodic reports no more frequently than annually on the utilization of a Subject Invention or on efforts at obtaining such utilization that are being made by the PAH or its licensees or assignees. Such reports shall include information regarding the status of development date of first commercial sale or use, gross royalties received by the PAH, and such other data and information as the agency may reasonably specify. The PAH also agrees to provide additional reports as may be requested by the Government, through CMF, in connection with any march-in proceedings undertaken by the Government in accordance with Section 10.10 of this Article X, Patent Rights. Consistent with 35 U.S.C. § 205, the Government agrees it shall not disclose such information to persons outside the Government without permission of the MCDC on behalf of the PAHs.

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Section 10.09   Preference for American Industry

Notwithstanding any other provision of the Article X, Patent Rights, the PAH is not to grant to any person the exclusive right to use or sell any Subject Invention in the United States or Canada unless such person agrees that any product embodying the Subject Invention or produced through the use of the Subject Invention shall be manufactured substantially in the United States or Canada. However, in individual cases, the requirements for such an agreement may be waived by the Government upon a showing by the PAH that reasonable but unsuccessful efforts have been made to grant licenses on similar terms to potential licensees that would be likely to manufacture substantially in the United States or that, under the circumstances, domestic manufacture is not commercially feasible.

Section 10.10   March-in Rights

The PAH agrees that, with respect to any Subject Invention in which its PAH has retained title, the Government, through CMF, has the right to require the PAH to obtain and grant a non-exclusive license to a responsible applicant or applicants, upon terms that are reasonable under the circumstances, and if the PAH refuses such a request, the Government has the right to grant such a licensee itself if the Government determines that:

(1)Such action is necessary because the PAH or assignee has not taken effective steps, consistent with the intent of this Agreement, to achieve practical application of the Subject Invention;

(2)Such action is necessary to alleviate health or safety needs which are not reasonably satisfied by the PAH, assignee, or their licensees;

(3)Such action is necessary to meet requirements for public use and such requirements are not reasonably satisfied by the PAH, assignee, or licensees; or

(4)Such action is necessary because the Agreement required by Section 10.09 of this Article X, Patent Rights, has not been obtained or waived or because a licensee who has the exclusive right to use or sell any Subject Invention in the United States is in the breach of such Agreement.

Section 10.11   Opportunity to Cure

Certain provisions of this Article X, Patent Rights, provide that the Government may gain title or license to a Subject Invention by reason of the PAH’s action, or failure to act, within the times required by this Article X, Patent Rights. Prior to claiming such rights (including any rights under Article X, Section 10.10 March-In Rights), the Government will give written notice to MCDC, through its CMF, and CMF will convey such written notice to PAH, of the Government's intent, and afford the PAH a reasonable time to cure such action or failure to act. The length of the cure period will depend on the circumstances, but in no event will be more than 60 days. PAH may also use the cure period to show good cause why the claiming of such title or right would be inconsistent with the intent of this Agreement in light of the appropriate timing for introduction of the technology in question, the relative funding and participation of the parties in the development, and other factors.

Section 10.12   Background Information

In no event shall the provisions set forth in this Article X apply to any Background Inventions or Patents. The PAHs or their subcontractors shall retain the entire right, title, and interest throughout the world to each such Inventions and Patents that each party has brought through MCDC to the project issued under this Agreement and the Government shall not have any rights under this Agreement. Projects to be funded under this Agreement will list Background Inventions and Patents anticipated to be used on the project; such listing may be amended by the parties as appropriate to reflect changes in such plans.

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Section 10.13   Survival Rights

Provisions of this Article X shall survive termination of this Agreement under Article II.

Notwithstanding the terms of this Article, differing rights in patents may be negotiated among the Parties to each individual project on a case-by-case basis.

Article XI.       DATA RIGHTS

This is a Data Rights Clause specifically tailored for this OTA to address respective rights of the Government and MCDC on behalf of its actual or prospective MCDC PAHs to such Data as is owned, developed, to be developed or used by an actual or prospective MCDC member entity or PAH (1) as identified in a MCDC member entity(ies) proposal submitted to the Government through the CMF in response to a competitive Government OTA call for proposals, and (2) when such proposal is selected by the Government for funded performance and the Project Agreement is issued by the CMF to that MCDC member entity for performance of such Government OTA project.

Section 11.01   Definitions

(1) “Commercial Computer Software” as used in the Article is defined in DFARS 252-227-7014(a)(1) (Jun 1995).

(2)“Commercial Computer Software License” means the license terms under which commercial computer software and Data (as defined in this OTA) is sold or offered for sale, lease or license to the general public.

(3)“Computer Data Base” as used in this Agreement, means a collection of data recorded in a form capable of being processed by a computer. The term does not include computer software.

(4)“Computer program” as used in this Agreement means a set of instructions, rules, or routines in a form that is capable of causing a computer to perform a specific operation or series of operations.

(5)“Computer software” as used in this Agreement means computer programs, source code, source code listings, object code listings, design details, algorithms, processes, flow charts, formulae and related material that would enable the software to be reproduced, recreated or recompiled. Computer software does not include computer data bases or computer software documentation.

(6)“Computer software documentation” means owner’s manuals, user’s manuals, installation instructions, operating instructions, and other similar items, regardless of storage medium, that explain the capabilities of the computer software or provide instructions for using the software.

(7)“Data” as used in this Article of the Agreement, means computer software, computer software documentation, form, fit and function data, and technical data as defined in this Article.

(8)“Form, fit and function data” means technical data that describes the required overall physical, functional and performance characteristics (along with the qualification requirements, if applicable) of an item, component, or process to the extent necessary to permit identification of physically and functionally interchangeable items.

(9)“Government purpose rights” means the rights to use, modify, duplicate or disclose the “Data” licensed with such rights under this OTA within the Government for United States Government purposes only; and to release or disclose data outside the Government to any authorized persons pursuant to an executed non-disclosure agreement for such persons use, modification, or reproduction for United States Government purposes only. United States Government purposes include Foreign Military Sales purposes. Under this Agreement, the period of Government purpose rights shall be no less than ten (10) years and during such time the MCDC member entity or PAH developing or providing such Data to the Government with government purpose rights shall have the sole and exclusive right to use such Data for commercial purposes. In the event this Data is used to perform another project issued to that MCDC member entity or PAH under this OTA during this ten (10) year period, the period of

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government purpose rights shall be extended an additional ten (10) years starting with the date of completion of performance of the additional project.

(10)“Limited rights” as used in this Article is as defined in DFARS 252.227-7013(a)(13) (Nov 1995).

(11) “Restricted rights” as used in this Article is as defined in DFARS 252.227-7014(a)(14) (Jun 1995).

(12)“Specially Negotiated License Rights” are those rights to Data that have been specifically negotiated between the Government and the MCDC on behalf of the member entity or PAH whose proposal is selected by the Government under a call for proposals issued under the OTA.

(13)“Technical data” means recorded information, regardless of the form or method of the recording, of a scientific or technical nature (including computer software documentation). The term does not include computer software or data incidental to contract administration, such as financial and/or management information.

(14) “Unlimited rights” as used in this Article is as defined n DFARS 252.227-7013(a)(16).

Section 11.02   Data Categories

(1)Category A is the Data developed and paid for totally by private funds, or the PAH's (or its subcontractor's) IR&D funds and it is Data to which the PAH (or its subcontractor) retains all rights. Category A Data shall include, but not be limited to,

(a)Data as defined in this Article and any designs or other material provided by the PAH for a project under this Agreement which was not developed in the performance of work under that project, and for which the PAH retains all rights.

(b)Any initial Data or technical, marketing, or financial Data provided at the onset of the project by any of the MCDC member entities or PAHs. Such Data shall be marked “Category A” and any rights to be provided to the Government for such Data under a specific project shall be as identified in the proposal submitted to the Government and included into the Technical Direction Letter and CMF issued Project Agreements.

(2)Category B is any Data developed under this OTA with mixed funding, i.e. development was accomplished partially with costs charged to a PAH’s indirect cost pools and/or costs not allocated to a PAH’s Project Agreement under this OTA, and partially with Government funding under this OTA. Any Data developed outside of this OTA whether or not developed with any Government funding in whole or in part under a Government agreement, contract or subcontract shall have the rights negotiated under such prior agreement, contract or subcontract; the Government shall get no additional rights in such Data.

(3)Category C is any Data developed exclusively with Government funds under this OTA. Research and Development performed was not accomplished exclusively or partially at private expense. Under this category,

(a)the Government will have Government Purpose Rights in Data developed exclusively with Government funds under a project funded by the Government under this OTA that is:

(i)Data pertaining to an item, component, or process which has been or will be developed exclusively with Government funds;

(ii)Studies, analyses, test data, or similar data produced for this contract, when the study, analysis, test, or similar work was specified as an element of performance;

(iii)Data created in the performance of the OTA that does not require the development, manufacture, construction, or production of items, components, or processes;

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(iv) Form, fit, and function data;

(v)Data necessary for installation, operation, maintenance, or training purposes (other than detailed manufacturing or process data);

(vi) Corrections or changes to technical data furnished to the Contractor by the Government;

The Government can only order such Data as is developed under the OTA project where the order request is made within one (1) year following OTA project completion. In the event the Government orders such Data, it shall pay the PAH the reasonable costs for all efforts to deliver such requested Data, including but not limited to costs of locating such Data, formatting, reproducing, shipping, and associated administrative costs.

(b) The Government shall have unlimited rights in Data

(i)Otherwise publicly available or that has been released or disclosed by PAH without restrictions on further use, release or disclosure, other than a release or disclosure resulting from the sale, transfer, or other assignment of interest in the Data to another party or the sale or transfer of some or all of a business entity or its assets to another party;

(ii)Data in which the Government has obtained unlimited rights under another Government contract or as a result of negotiations; or

(iii)Data furnished to the Government, under this or any other Government contract or subcontract thereunder, with—

(1)Government Purpose Rights or limited rights and the restrictive condition(s) has/have expired; or

(2)Government purpose rights and the PAH's exclusive right to use such Data for commercial purposes under such contract or subcontract has expired.

(c)However, any Data developed outside of this OTA whether or not developed with any Government funding in whole or in part under a Government agreement, contract or subcontract shall have the rights negotiated under such prior agreement, contract or subcontract; the Government shall get no additional rights in such Data.

(d)Further, the Government's rights to Commercial Computer Software and Data licensed under a Commercial Computer Software License under this OTA, and the treatment of Data relating thereto, shall be as set forth in the Commercial Computer Software License.

(4)The parties to this Agreement understand and agree that the CMF shall require PAHs stamp all documents in accordance with this Article and that the Freedom of Information Act (FOIA) and Trade Secrets Act (TSA) apply to Data.

Section 11.03     Allocation of Principal Rights

(1) The Government shall have no rights to Category A Data.

(2)The Government shall have immediate Government Purpose Rights to Category B or C Data upon delivery or project or Agreement completion (whichever is earlier), except that

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(a)where the PAH whose Data it is, is a small business as defined under the Small Business Innovation research Program (SBIR) under 15 U.S.C. 638, and such data was developed under a project designated by the Government in the RPP as an SBIR program project, such PAH automatically shall be entitled to a delay in the start of the Government Purpose Rights period for at least five (5) years from project completion, or such longer period as may be negotiated among the Government and MCDC on behalf of the PAH, and

(b)The CMF, at the request of small business or an other than small business MCDC member entity or PAH, may request on such member entity's or PAH's behalf a delay of the start of Government Purpose Rights in Category B or C Data for a period not to exceed five (5) years from project or Agreement completion (whichever is earlier). Such requests will only be made in those cases where the CMF has provided information from the affected actual or prospective PAH demonstrating the need for this additional restriction on Government use and shall be submitted to the ACC-NJ AO for approval, which approval shall not be unreasonably withheld. In the event of any dispute regarding approval of this request, the parties agree to treat this as a dispute and shall follow the provisions of Article VII, Disputes.

(c)for Article XI. Section 11.02 3(c) Category C Data, the Government shall have only the rights established under prior agreements.

(d)for Article XI. Section 11.02 3(d) Category C Data, the Government shall only have the rights set forth in the Commercial Computer Software Data license agreement.

(3)Data that will be delivered, furnished, or otherwise provided to the Government as specified in a specific project award funded under this Agreement, in which the Government has previously obtained rights, shall be delivered, furnished, or provided with the pre-existing rights, unless (a) the parties have agreed otherwise, or (b) any restrictions on the Government’s rights to use, modify, reproduce, release, perform, display, or disclose the data have expired or no longer apply.

(4)Each proposal submitted by the MCDC member entities in response to a Government call for proposals under this OTA shall include a list of the Category A, B and C Data to be used or developed under the proposal if selected. Rights in such Data shall be as established under the terms of this Agreement, unless otherwise asserted in the proposal and agreed to by the Government. The Government AO will incorporate the list of Category A, B and C Data and the identified rights therefor in the award document.

Following issuance of a Technical Direction Letter and subsequent CMF issuance of the Project Agreement to the Government selected MCDC member entity (the PAH), the PAH shall update the list to identify any additional, previously unidentified, Data if such Data will be used or generated in the performance of the funded work. Rights in such Data shall be as established under the terms of this Agreement, unless otherwise asserted in a supplemental listing and agreed to by the Government.

Section 11.04    Marking of Data

Except for Data delivered with unlimited rights, Data to be delivered under this Agreement subject to restrictions on use, duplication or disclosure shall be marked with the following legend:

Use, duplication, or disclosure is subject to the restrictions as stated in the Agreement between the U.S. Government and the MCDC, Agreement No. W15QKN-16-9-1002, Project Title and the MCDC Project Agreement with [insert name of company] No. ​ ​.

It is not anticipated that any Category A Data will be delivered to the Government under this Agreement.

In the event commercial computer software and Data is licensed under a commercial computer software license under this OTA, a Special License rights marking legend shall be used as agreed to by the parties.

The Government shall have unlimited rights in all unmarked Data. In the event that a PAH learns of a release to the Government of its unmarked Data that should have contained a restricted legend, the CMF on behalf of the member

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entity or PAH will have the opportunity to cure such omission going forward by providing written notice to the Government AO within three (3) months of the erroneous release.

Section 11.05    Copyright

The PAHs reserve the right to protect by copyright original works developed under this Agreement. All such copyrights will be in the name of the individual PAH. The PAH(s) hereby grant to the U.S. Government a non- exclusive, non-transferable, royalty-free, fully paid-up license to reproduce, prepare derivative works, distribute copies to the public, and perform publicly and display publicly, for governmental purposes, any copyrighted materials developed under this agreement, and to authorize others to do so.

In the event Data is exchanged with a notice indicating that the Data is protected under copyright as a published, copyrighted work and it is also indicated on the Data that such Data existed prior to, or was produced outside of this Agreement, the Party receiving the Data and others acting on its behalf may reproduce, distribute, and prepare derivative works for the sole purpose of carrying out that Party’s responsibilities under this Agreement with the written permission of the Copyright holder.

Copyrighted Data that existed or was produced outside of this Agreement and is unpublished - having only been provided under licensing agreement with restrictions on its use and disclosure - and is provided under this Agreement shall be marked as unpublished copyright in addition to the appropriate license rights legend restricting its use, and treated in accordance with such license rights legend markings restricting its use.

The PAHs are responsible for affixing appropriate markings indicating the rights of the Government on all Data delivered under this Agreement.

The Government agrees not to remove any copyright notices placed on Data and to include such notices on all reproductions of the Data.

Section 11.06    Data First Produced by the Government:

As to Data first produced by the Government in carrying out the Government’s responsibilities under this OTA and which Data would embody trade secrets or would comprise commercial or financial information that is privileged or confidential if obtained from the CMF on behalf of any PAH, such Data will, to the extent permitted by law, be appropriately marked with a suitable notice or legend and maintained in confidence by the CMF and any PAH to whom disclosed for three (3) years after the development of the information, with the express understanding that during the aforesaid period such Data may be disclosed and used by the CMF or any PAH, including its respective employees or subcontractors of any tier, (under suitable protective conditions) by or on behalf of the Government  for Government purposes only.

Section 11.07    Prior Technology

(1)Government Prior Technology: In the event it is necessary for the Government to furnish the CMF or any MCDC member entity or PAH, including their respective employees or their subcontractors of any tier, with Data which existed prior to, or was produced outside of this Agreement, and such Data is so identified with a suitable notice or legend, the Data will be maintained in confidence and disclosed and used only for the purpose of carrying out their responsibilities under this Agreement. Data protection will include proprietary markings and handling, and the signing of non-disclosure agreements by CMF, PAHs, PAH subcontractors of any tier and their respective employees to whom such Data is provided for use under the OTA. Upon completion of activities under this Agreement, such Data will be disposed of as requested by the Government.

(2)CMF and PAH Prior Technology: In the event it is necessary for the CMF or any PAH to furnish the Government with Data which existed prior to, or was produced outside of this Agreement, and such Data embodies trade secrets or comprises commercial or financial information which is privileged or confidential, and such Data is so identified with a suitable notice or legend, the Data will be maintained in confidence and disclosed and used by the Government and such Government Contractors or contract employees that the Government may hire on a temporary or periodic basis only for the purpose of carrying out the Government’s responsibilities under this

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Agreement. Data protection will include proprietary markings and handling, and the signing of nondisclosure agreements by such Government Contractors or contract employees. Neither the CMF nor any PAH shall be obligated to provide Data that existed prior to, or was developed outside of this Agreement to the Government.  Upon completion of activities under this Agreement, such Data will be disposed of as requested by the CMF on behalf of itself or PAHs.

(3)Oral and Visual Information: If information which the PAH (including their subcontractors of any tier and their respective employees) considers to embody trade secrets or to comprise commercial or financial information which is privileged or confidential is expressly disclosed orally or visually directly to the Government and/or CMF, the exchange of such information must be memorialized in tangible, recorded form and marked with a suitable notice or legend, and furnished to the Government and/or CMF within ten (10) calendar days after such oral or visual disclosure, or the Government and/or CMF shall have no duty to limit or restrict, and shall not incur any liability for any disclosure and use of such information. Upon Government and/or CMF request, additional detailed information about the exchange will be provided subject to restrictions on use and disclosure.

(4)Disclaimer of Liability: Notwithstanding the above, neither the Government nor the CMF shall be restricted in, nor incur any liability for, the disclosure and use of:

(a) Data not identified with a suitable notice or legend as set forth in this Article; nor

(b)Information contained in any Data for which disclosure and use is restricted under Article VIII entitled “Confidential Information” above, if such information is or becomes generally known without breach of the above, is properly known to the Government or CMF or is generated by the Government or CMF independent of carrying out responsibilities under this Agreement, is rightfully received from a third party without restriction, or is included in Data which the PAH has furnished, or is required to furnish to the Government or CMF without restriction on disclosure and use.

(5) Marking of Data: Any Data delivered under this Agreement shall be marked with a suitable notice or legend.

Notwithstanding the Paragraphs in this Article, differing rights in Data may be negotiated among the Parties to each individual project on a case-by-case basis.

Section 11.08    Lower Tier Agreements

The PAH shall include this Article, suitably modified to identify the parties, in all subcontracts or lower tier agreements, regardless of tier, or experimental, developmental, or research work.

Section 11.09    Survival Rights

Provisions of this Article shall survive termination of this Agreement under Article II.

Notwithstanding the terms of this in this Article, differing rights in data may be negotiated among the Parties to each individual Technology Project Agreement on a case-by-case basis.

Article XII.      EXPORT CONTROL

Export Control

(1) Information subject to Export Control Laws/International Traffic in Arms Regulation (ITAR):

Public Law 90-629, « Arms Export Control Act, » as amended (22 U.S.C. 2751 et. seq.) requires that all unclassified technical data with military application may not be exported lawfully without an approval, authorization, or license under EO 12470 or the Arms Export Control Act and that such data require an approval, authorization, or license under EO 12470 or the Arms Export Control Act. For purposes of making this determination, the Military Critical Technologies List (MCTL) shall be used as general

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guidance. All documents determined to contain export controlled technical data will be marked with the following notice:

WARNING- this document contains technical data whose export is restricted by the Arms Export Control Act (Title 22, U.S.C., and Sec 2751, et seq.) or the Export Administration Act of 1979, as amended, Title 50, U.S.C., App. 2401 et seq. Violations of these export laws are subject to severe criminal penalties. Disseminate in accordance with provision of DOD Directive 5230.25.

(2) Flowdown.

The PAH shall include this Article, suitably modified, to identify all Parties, in all Project Agreements or lower tier agreements. This Article shall, in turn, be included in all sub-tier subcontracts or other forms of lower tier agreements, regardless of tier.

Article XIII.       TITLE AND DISPOSITION OF PROPERTY

Section 13.01      Definitions

In this Article, “property” means any tangible personal property other than property actually consumed during the execution of work under this Agreement.

Section 13.02     Title to Property

No significant items of property are expected to be acquired under this Agreement by the PAH. Title to any item of property valued $10,000.00 or less that is acquired by the PAH pursuant to a Project Agreement with the MCDC, in performance of the project issued to the PAH under this OTA shall vest in the PAH upon acquisition with no further obligation of the Parties unless otherwise determined by the Government AO. Should any item of property with an acquisition value greater than $10,000.00 be required, the PAH through the CMF shall obtain prior written approval of the Government AO. Title to this property shall also vest in the MCDC member entity or PAH upon acquisition. That PAH shall be responsible for the maintenance, repair, protection, and preservation of all such property at its own expense. Property acquired pursuant to this clause shall not be considered as in exchange for services in performance of the project, but shall be considered a Government contribution to the project.

Section 13.03     Government Furnished Property

The Government may provide the PAH Government Furnished Property (GFP) to facilitate the performance of individual projects under this Other Transaction Agreement. Such GFP will be specifically identified to a particular project and incorporated into the applicable Project Agreement. The GFP shall be utilized only for the performance of that individual project unless a specific exception is made in writing by the Agreements Officer.

The PAH shall assume the risk of and be responsible for any loss or destruction of, or damage to, any Government Furnished Property while in its possession or control, with the exception of reasonable wear and tear or reasonable and proper consumption. All property shall be returned at the end of the Project Agreement in as good as condition as when received with the exception of said reasonable wear and tear or in accordance with the provisions of the Project Agreement regarding its use. The PAH shall obtain explicit written authorization for any transfer or disposition of Government Furnished Property.

Article XIV.     CIVIL RIGHTS ACT

This Agreement and any resulting Project Agreement is subject to the compliance requirements of Title VI of the Civil Rights Act of 1964 as amended (42 U.S.C. 2000-d) relating to nondiscrimination in Federally assisted programs. It is the responsibility of each PAH to assure the PAH has signed an Assurance of Compliance with the nondiscriminatory provisions of the Act (Attachment 1).

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Article XV.       NO SMALL BUSINESS AFFILIATION

Reserved

Article XVI.      ANTITRUST

In the MCDC Articles of Collaboration, members agree to comply with all applicable U.S. laws, including U.S. antitrust laws. The MCDC is recognized under the National Cooperative Research and Production Act of 1993 and the MCDC will be similarly filing under the Act.

Article XVII.     SECURITY & OPSEC

All PAH shall comply with DFARS 252.204-7012 (Oct 2016): Safeguarding Covered Defense Information and Cyber Incident Reporting when applicable.

Covered Defense Information (CDI) will be identified at the Project Agreement level. The MCDC Member shall comply with DFARS 252.204-7012 (Oct 2016): Safeguarding Covered Defense Information and Cyber Incident Reporting, which includes implementing on its covered contractor information systems the security requirements specified by DFARS 252.204-7012. Nothing in this paragraph shall be interpreted to foreclose the MCDC Member's right to seek alternate means of complying with the security requirements in National Institute of Standards and Technology (NIST) Special Publication (SP) 800-171 (as contemplated in DFARS 252.204-7008 (Compliance with Safeguarding Covered Defense Information Controls) (Oct 2016) and DFARS 252.204-7012 (Safeguarding Covered Defense Information and Cyber Incident Reporting (Oct 2016)).

Work performed by a PAH under a Project Agreement may involve access to Controlled Unclassified Information (CUI). All Controlled Unclassified Information (CUI) developed under this Agreement will be managed in accordance with DoD Manual 5200.01, Volume 4 dated February 24, 2012. Contractor personnel shall comply with applicable Technology Protection Plans (TPP), Interim Program Protection Plans (IPPP) and/or Program Protection Plans (PPP). If a project involves a Controlled Unclassified Information (CUI) effort, the below listed Department of Defense Directives, Federal Acquisition Regulation (FAR) and the Defense Federal Acquisition Regulation Supplement (DFARS), and ARDEC clauses will be incorporated into the Project Agreements by reference with the same force and effect as if they were given in full text.

(1) Each project Scope of Work will be provided by the Agreements Officer Representative (AOR) to the Joint Project Manager- Medical Countermeasure Systems Office for dissemination to the appropriate Fort Detrick COMSEC officer prior to award for review.

(2) Each project Scope of Work will be subject to Ft. Detrick policy and procedure according to DoD 5220.22- M, (National Industrial Security Program Operating Manual, NISPOM), as deemed applicable and appropriate during the security review process and prior to award. Additional COMSEC requirements may be required at other locations/facilities (based on service/command requirements).

(3) Specific applicable policies, instructions, and regulations will be identified in each project. Throughout the life of the Agreement, if any policy, instruction, or regulation is replaced or superseded, the replacement or superseding version shall apply. The following is a snapshot of key regulatory documents, policies, regulations, etc. that may be applicable at time of project award.

a) DoDM 5200.01 DoD Information Security Program, 24 Feb 12

b) DoD 5200.2-R Personnel Security Regulation, Jan 87

c) DoDD 5220.22 National Industrial Security Program, 28 Feb 06

d) DoDI 5200.01, Information Security Program and Protection of Sensitive Compartmented Information, 24 Feb 2012

e) DoD 5400.7-R, DOD Freedom of Information Act, Sept 98

f) DoDD 2000.12, Antiterrorism Program, 18 Aug 03

g) FAR Clause 4.402, Safeguarding Classified Information Within Industry

h) FAR Clause 52.204-2, Security Requirements, Aug 1996

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(4) For all Project Agreements, the following statement shall be flowed to the MCDC member entities unless otherwise stated within the Project Agreements.

a) Classification guidance for requirement - “The security level for this agreement is UNCLASSIFIED.”

(5) Anti-Terrorism Level I Training. This provision is for PAH employees with an area of performance within an Army controlled installation, facility or area. All PAH employees requiring access to  Army installations, facilities and controlled access areas shall complete AT Level I awareness training within sixty (60)-calendar- days after project start date or effective date of incorporation of this requirement into the project, whichever is applicable. PAH(s) shall submit certificates of completion for each affected employee and PAH employee, to the AOR or to the Agreements Officer, if an AOR is not assigned, within thirty (30)-calendar-days after completion of training by all employees or personnel. AT level I awareness training is available at the following website: https://atlevel1.dtic.mil/at.

(6) Access and General Protection/Security Policy and Procedures. This standard language text is for PAH employees with an area of performance within an Army controlled installation, facility or area. PAH employees shall comply with applicable installation, facility and area commander installation/facility access and local security policies and procedures (provided by government representative). The PAH also shall provide all information required for background checks to meet installation access requirements to be accomplished by installation Provost Marshal Office, Director of Emergency Services or Security Office. The PAH workforce must comply with all personal identity verification requirements as directed by DOD, HQDA and/or local policy. In addition to the changes otherwise authorized by the changes clause of this agreement, should the Force Protection Condition (FPCON) at any individual facility or installation change, the Government may require changes in PAH security matters or processes.

(7) Anti-Terrorism Awareness Training for PAH Personnel Traveling Overseas. This standard language text requires U.S.-based PAH employees to make available and to receive Government provided area of responsibility (AOR) specific AT awareness training as directed by AR 525-13. Specific AOR training content is directed by the combatant commander with the unit Anti-terrorism Officer (ATO) being the local point of contact.

(8) iWATCH Training. This standard language is for PAH employees with an area of performance within an Army- controlled installation, facility or area. PAH(s) shall brief all employees on the local iWATCH program (training standards provided by the requiring activity ATO). This local developed training will be used to inform employees of the types of behavior to watch for and instruct employees to report suspicious activity to the AOR. This training shall be completed within sixty (60)-calendar-days of a Project Agreement award and within sixty (60)-calendar- days of new employees’ commencing performance with the results reported to the AOR NLT thirty (30)-calendar-days after Project Agreement award.

(9) Impact on PAH performance during increased FPCON during periods of increased threat. During FPCONs Charlie and Delta, services may be discontinued / postponed due to higher threat. Services will resume when FPCON level is reduced to Bravo or lower.

(10) Random Antiterrorism Measures Program (RAMP) participation. PAH personnel working on an installation are subject to participation in Installation RAMP security program (e.g. vehicle searches, wearing of ID badges, etc.).

(11) PAH Employees Who Require Access to Government Information Systems. All PAH employees with access to a government information system must be registered in the ATCTS (Army Training Certification Tracking System) at commencement of services, and must successfully complete the DOD Information Assurance Awareness prior to access to the IS and then annually thereafter.

(12) For projects that Require an OPSEC Standing Operating Procedure/Plan. The PAH shall develop an OPSEC Standard Operating Procedure (SOP)/Plan within ninety (90)-calendar-days of project award to be reviewed and approved by the responsible Government OPSEC officer, per AR 530-1, Operations Security.

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This plan will be submitted by MCDC on behalf of the PAH(s) to the AO for coordination of approvals. This SOP/Plan will include the Government's critical information, why it needs to be protected, where it is located, who is responsible for it and how to protect it. In addition, MCDC shall identify an individual who will be an OPSEC Coordinator. MCDC will ensure this individual becomes OPSEC Level II certified per AR 530-1.

(13) For projects that Require OPSEC Training. Per AR 530-1, Operations Security, new PAH employees assigned by the PAH(s) to perform under a MCDC Project Agreement must complete Level I OPSEC awareness training within thirty (30)-calendar-days of their reporting for duty. All PAH employees performing under an OPSEC-designated project must complete annual Level I OPSEC awareness training. Level I OPSEC awareness training is available at the following website: http://cdsetrain.dtic.mil/opsec/.

(14) For Information assurance (IA)/information technology (IT) training. All PAH employees must complete the DoD IA awareness training before issuance of network access and annually thereafter. All PAH(s) working IA/IT functions must comply with DoD and Army training requirements in DoDD 8570.01, DoD 8570.01-M and AR 25-2 within six (6) months of employment.

(15) For information assurance (IA)/information technology (IT) certification. Per DoD 8570.01-M , DFARS 252.239-7001 and AR 25-2, the PAH employees supporting IA/IT functions shall be appropriately certified upon Project Agreement award. The baseline certification as stipulated in DoD 8570.01-M must be completed upon Project Agreement award.

(16) For PAH personnel authorized to accompany the Force. DFARS Clause 252.225-7040, Contractor Personnel Authorized to Accompany U.S. Armed Forces Deployed Outside the United States. The clause shall be used in projects that authorize PAH personnel to accompany U.S. Armed Forces deployed outside the U.S. in contingency operations; humanitarian or peacekeeping operations; or other military operations or exercises, when designated by the combatant commander. The clause discusses the following AT/OPSEC related topics: required compliance with laws and regulations, pre-deployment requirements, required training (per combatant command guidance) and personnel data required.

(17) For projects requiring Performance or Delivery in a Foreign Country, DFARS Clause 252.225-7043, Antiterrorism/Force Protection for Defense Contractors Outside the U.S. The clause shall be used in projects that require performance or delivery in a foreign country. This clause applies to both contingencies and non-contingency support. The key AT requirement is for non-local national PAH personnel to comply with theater clearance requirements and allows the combatant commander to exercise oversight to ensure the PAH’s compliance with combatant commander and subordinate task force commander policies and directives.

(18) For projects requiring the PAH to obtain U.S. Government Common Access Cards, installation badges, and/or access passes, the PAH shall return all issued U.S. Government Common Access Cards, installation badges, and/or access passes to the AOR when the project is completed or when the PAH employee no longer requires access to the installation or facility.

(19) For projects that require access to Potential Critical Program Information (PCPI) / Critical Program Information (CPI):

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a) The PAH shall comply with the associated Interim Program Protection Plan (IPPP) / Program Protection Plan (PPP) / or Technology Protection Plan (TPP). The PAH shall comply with DOD, DA and AMC technology protection requirements in DODI 5200.39, AR 70-1, DA PAM 70-3 and AMC- R-380-13.

(20) Work by the Consortium Management Firm (CMF) and Project Agreement Holder/Consortium Member (PAH) under Project Agreements may involve access to Controlled Unclassified Information (CUI) as well as information classified as “Confidential”, “Secret”, or “Top Secret”. The CMF and the PAH and their employees who work on such Project Agreements shall comply with (1) the Security Agreement (DD Form 441), including the National Industrial Security Program Operation Manual (DOD 5220.22M), (2) any revisions to that manual that may be issued, and (3) the Agreement security classification specification (DD form 254) if included, and all security requirements including but not limited to OPSEC plans and those security requirements specific to the individual projects. During the course of this Agreement the Parties may determine that information developed by the PAH and/or the Government pursuant to this Agreement shall be treated as classified. Such information shall be classified in accordance with DOD 5220.22M.

a) Each project Scope of Work will be provided by the AOR to the AOR’s local Security Office prior to award for review. For classified efforts that Security Office will provide the overall Security Classification Specification (DD Form 254). The PAH will be responsible for providing a copy of any Subcontract Security Classification Specification (DD Form 254) to lower tier awards.

b) If a Project Agreement involves a classified effort or a Controlled Unclassified Information (CUI) effort, Department of Defense Directives, Federal Acquisition Regulation (FAR) and the Defense Federal Acquisition Regulation Supplement (DFARS) clauses by reference, and local clauses will be incorporated with the same force and effect as if they were given in full text shall be incorporated into this agreement.

c) Specific applicable policies, instructions, and regulations will be identified in each Project Agreement. Throughout the life of the Project Agreement, if any policy, instruction, or regulation is replaced or superseded, the replacement or superseding version shall apply.

d) Agreement Structure

i) Research and Development under these Project Agreements will be in accordance with the Other Transaction Agreement (OTA) between the United States Army Contracting Command – New Jersey (ACC-NJ) and the MCDC in care of its Consortium Management Firm (CMF), Advanced Technology International (ATI).

ii) Within the Project Agreements, sharing of classified information will be on a need to know basis as directed in required Project Agreements.

iii) Upon Project Agreement completion or termination, the PAH must:

(1) Return ALL classified information received or generated under the Project Agreement;

(2) Destroy all of the classified information; or,

(3)Request retention for a specified period of time Flowdown for OPSEC/Security Requirements:

MCDC shall include the aspects of this Article as they pertain to each project requirement. Each project will include specific OPSEC / Security requirements within each SOW and RPP. The requirements delineated  within each project, in turn, shall be included in all sub-tier subcontracts or other forms of lower-tier agreements, regardless of tier.

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Article XVIII.    SAFETY

The PAH shall adhere to all local, state, and federal rules and regulations required in maintaining a safe and non- hazardous occupational environment throughout the duration of the project. At a minimum, the PAH shall provide the following reports and materials on an as needed basis:

Accident/Incident Report: The PAH shall report immediately any major accident/incident (including fire) resulting in any one or more of the following: causing one or more fatalities or one or more disabling injuries; damage of Government property exceeding $10,000; affecting program planning or production schedules; degrading the safety of equipment under a project, such as personnel injury or property damage may be involved; identifying a potential hazard requiring corrective action. The PAH shall prepare the report (DI-SAFT-81563) for each incident.

Material Safety Data Sheets (MSDS): The PAH shall prepare and maintain MSDS for all materials used and generated under this Agreement.

Environmental Requirements include the following:

Pollution Prevention: Consideration should be given to alternative materials and processes in order to eliminate, reduce, or minimize hazardous waste being generated. This is to be accomplished while minimizing item cost and risk to item performance.

Environmental Compliance: All activities must be in compliance with Federal, State, and local environmental  laws and regulations, Executive orders, treaties, and agreements. The PAH shall evaluate the environmental consequences and identify the specific types and amounts of hazardous waste being generated during the conduct of efforts undertaken under this Agreement.

Hazardous Waste Report: The PAH shall evaluate the environmental consequences and identify the specific types and amounts of hazardous waste being generated during this Agreement. The PAH shall submit a Hazardous Waste Report IAW DI-MGMT-80899.

Disposal Instructions for Residual/Scrap Materials: The PAH shall dispose of all residual and scrap materials generated from this Agreement, including high explosives. The PAH shall specify the anticipated quantities, methods, and disposal costs.

Article XIX.        REPRESENTATIONS AND WARRANTIES

Section 19.01      Representations and Warranties of All Parties

Each Party to this Agreement represents and warrants to the other Parties that (1) it is free to enter into this Agreement; (2) in so doing, it will not violate any other agreement to which it is a party; and (3) it has taken all action necessary to authorize the execution and delivery of this Agreement and the performance of its obligations under this Agreement.

Section 19.02      Limitations

Except as expressly provided herein, no party to this Agreement makes any warranty, express or implied, either in fact or by operation of law, by statute or otherwise, relating to (1) any research conducted under this agreement, or

(2)any invention conceived and/or reduced to practice under this agreement, or (3) any other intellectual property developed under this Agreement, and each party to this Agreement specifically disclaims any implied warranty of merchantability or warranty of fitness for a particular purpose.

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Article XX.         LIABILITY OF THE PARTIES

Section 20.01      Waiver of Liability

With regard to the activities undertaken pursuant to this Agreement, no Party shall make any claim against the others, employees of the others, the others’ related entities (e.g., Government, contractors, subcontractors, etc.), or employees of the others’ related entities for any injury to or death of its own employees or employees of its related entities, or for damage to or loss of its own property or that of its related entities, whether such injury, death, damage or loss arises through negligence or otherwise, except in the case of [***].

Section 20.02       Damages

The Parties shall not be liable to each other for [***], whether arising in contract (including warranty), tort (whether or not arising from the negligence of a Party) or otherwise, except to the extent such damages are caused by a Party's [***]; Notwithstanding the foregoing, claims for contribution toward third-party injury, damage, or loss are not limited, waived, released, or disclaimed.

Section 20.03       Extension of Waiver of Liability

The PAH agrees to extend the waiver of liability as set forth above subawardees at any tier under an Project Agreement by requiring them, by contract or otherwise, to agree to waive all claims against the Parties to this Agreement.

Section 20.04       Applicability

Notwithstanding the other provisions of this article, this Waiver of Liability shall not be applicable to:

(1)Claims between the PAH and the CMF regarding a material breach, noncompliance, or nonpayment of funds;

(2) Claims for damage caused by [***]; and

(3) Intellectual property claims.

Section 20.05       Limitation of Liability

In no case shall the CMF, or the PAH’s financial liability exceed the amount obligated by the Government or committed as a Cash Contribution or In-kind Contribution by a MCDC member entity under a Project Agreement. Nothing in this Article shall be construed to create the basis of a claim or suit where none would otherwise exist.

Article XXI.        GENERAL PROVISIONS

Section 21.01       Fees

The PAH will not be constrained from the payment of an appropriate fee or profit for the effort being conducted on a Project Agreement when cost share is not being contributed. The fees shall be specific to the individual Project Agreements and negotiated on project by project basis.

Section 21.02       Waiver

No waiver of any rights shall be effective unless assented to in writing by the party (Government, MCDC, CMF, or PAH) to be charged, and the waiver of any breach or default shall not constitute a waiver of any other right hereunder or any subsequent breach or default.

Section 21.03      Section Headings

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The headings and subheadings of the sections of this Agreement are intended for convenience of reference only and are not intended to be a part of, or to affect the meaning or interpretation of this Agreement.

Section 21.04       Severability

In the event that any provision of this Agreement becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable or void, this Agreement shall continue in full force and effect without said provision; Provided that no such severability shall be effective if the result of such action materially changes the economic benefit of this Agreement to the Parties.

Section 21.05       Force Majeure

No failure or omission by the CMF or the MCDC PAH in the performance of any obligation of this Agreement shall be deemed a breach of this Agreement or create any liability if the same shall arise from any cause or causes beyond the control of the Parties, including but not limited to, the following: acts of God; Acts or omissions of any Government; Any rules, regulations or orders issued by any Governmental authority or by any officer, department, and agency or instrumentality thereof; fire; storm; flood; earthquake; accident; war; rebellion; insurrection; riot; and invasion and provided that such failure or omission resulting from one of the above causes is cured as soon as is practicable after the occurrence of one or more of the above mentioned causes.

Section 21.06       Regulatory Affairs

Development and production of medical products and processes fall under the purview of the Food and Drug Administration (FDA) and research on these products involving animal or human studies is regulated by other laws, directives, and regulations. Project Awards under this Agreement that involve work in support of or related to FDA regulatory approval will address contingencies for Government access to regulatory rights in the event of product development abandonment or failure. Efforts conducted under this OTA shall be done ethically and in accordance with all applicable laws, directives, and regulations.

The Government shall ensure performance includes regulatory expertise and guidance for candidate medical countermeasure development efforts:

(1)This includes allowing the government to discuss/negotiate in partnership with the consortium how to assume appropriate risk in regulatory strategies. The government will review, negotiate, and come to consensus with the PAH on product-specific risk-based decisions.

(2)PAHs will use all regulatory programs to accelerate the pace of candidate medical countermeasure development, including fast-track status, and as appropriate meeting requirements for priority review vouchers, applying for breakthrough therapy and accelerated approval as appropriate (see FDA Guidance for Industry: Expedited Programs for Serious Conditions – Drugs and Biologics).

(3)PAH will provide FDA submissions to the government such as all documentation requested by FDA and all proposals to FDA.

(4)PAH will allow the government to monitor all FDA communications by listening to teleconferences and attending meetings.

(5)PAH will allow the government to attend regulatory site visits and audits, and actively participate in all third-party audits.

(6)PAH will comply with Quality Assurance according to negotiated standards with the government on reports, material for Interim Fielding Capability (such as Emergency Use Authorization or Expanded Access Protocols), product for trials, prototypes, etc.

(7)PAH will provide strategies to address contingencies that could arise from regulatory directives, and regulatory failures.

Section 21.07       Radioactive Materials

PAH shall ensure compliance with the provisions of Title 10 CFR 21. This regulation establishes procedures and requirements for implementation of Section 206 of the Energy Reorganization Act of 1974.

Section 21.08       Recombinant DNA

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PAH shall ensure that all work involving the use of recombinant DNA will be in compliance with guidance provided at the following website: http://www4.od.nih.gov/oba (National Institutes of Health [NIH] Guidelines for Research Involving Recombinant DNA Molecules).

Section 21.09       Required Compliance for Use of Laboratory Animals

Notwithstanding any other provisions contained in this award or incorporated by reference herein, the PAH is expressly forbidden to use or subcontract for the use of laboratory animals in any manner whatsoever without the express written approval of the US Army Medical Research and Materiel Command, Animal Care and Use Office,. The PAH shall receive written approval to begin research under the applicable protocol proposed for a Project Agreement from the US Army Medical Research and Materiel Command, Animal Care and Use Office under separate letter to the PAH and Principal Investigator. A copy of this approval will be provided to the ACC-NJ for the official file. Non-compliance with any provision of this clause may result in the termination of award. Information  is provided at the following website http://mrmc.amedd.army.mil/index.cfm?pageid=Research_Protections.acuro_regulations. The PAH will conduct advanced development/pivotal studies including human safety studies, animal efficacy studies or clinical studies required for approval using validated endpoints, and other studies as deemed necessary by the FDA for licensure of the candidate product in adherence to current Good Laboratory Practice regulations, current Good Clinical Practice regulations, and all other applicable FDA regulations in the conduct of non-clinical and clinical studies as defined by FDA guidance (21 CFR Parts 210-211).

Section 21.10       Required Compliance for Use of Human Subjects

Research under this award involving the use of human subjects may not begin until the U.S. Army Medical  Research and Materiel Command's Office of Research Protections, Human Research Protections Office (HRPO) approves the protocol in accordance with 45 CFR Part 46. Written approval to begin research or subcontract for the use of human subjects under the applicable protocol proposed for this award will be issued from the US Army Medical Research and Materiel Command, HRPO, under separate letter to the funded institution and the Principal Investigator. A copy of this approval will be provided to ACC-NJ for the official file. Non-compliance with any provision of this clause may result in withholding of funds and or the termination of the award. Information is provided at the following website: http://mrmc.amedd.army.mil/index.cfm?pageid=Research_Protections.hrpo.

Section 21.11       Required Compliance for use of Human Anatomical Substances

Research at funded institutions using human anatomical substances may not begin until the U.S. Army Medical Research and Materiel Command's Office of Research Protections, Human Research Protections Office (HRPO) approves the protocol. Written approval to begin research or subcontract for the use of human anatomical substances under the applicable protocol proposed for this award will be issued from the US Army Medical Research and Materiel Command, HRPO, under separate letter to the funded institution and the Principal Investigator. A copy of this approval will be provided to ACC-NJ, from the CMF, for the official file. Non-compliance with any provision of this clause may result in withholding of funds and or the termination of the award. Information is provided at the following web site: http://mrmc.amedd.army.mil/index.cfm?pageid=Research_Protections.hrpo

Section 21.12       Compliance with current Good Manufacturing Processes (cGMP)

Manufacturing Standards as appropriate for the level of prototype Material used for clinical trials, pivotal non- clinical studies, consistency lots, and other uses as defined in regulatory plans should be compliant with current Good Manufacturing Processes (cGMP) as defined by FDA guidance (21 CFR Parts 210-211). If at any time during the life of the award, the PAH fails to comply with cGMP in the manufacturing, processing and packaging of this product and such failure results in a material adverse effect on the safety, purity or potency of the product (a material failure) as identified by the FDA, the PAH shall have thirty (30) calendar days from the time such material failure is identified to cure such material failure.

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Section 21.13       Registration with Select Agent Program

Where required, consortium members performing studies and tasks using select biological agent or toxins should be registered with the program with the Centers for Disease Control and Prevention (CDC), Department of Health and Human Services (DHHS) or the Animal and Plant Health Inspection Services (APHIS), U.S. Department of Agriculture (USDA), as applicable, before performing work, in accordance with 42 CFR 73. No Government funds can be used for work involving Select Agents, as defined in 42 CFR 73, if the final registration certificate is denied. Listings of select agents and toxins, biologic agents and toxins, and overlap agents or toxins as well as information about the registration process, can be obtained on the Select Agent Program Web site at http://www.cdc.gov/od/sap/.

Section 21.14       Duty-Free Entry

(a) Definitions. As used in this clause –

(1)“Component,” means any item supplied to the Government as part of an end product or of another component.

(2) “Customs territory of the United States” means the 50 States, the District of Columbia, and Puerto Rico.

(3) “Eligible product” means –

(i) “Designated country end product” as defined in the Trade Agreements clause;

(ii) “Free Trade Agreement country end product” other than a “Bahrainian end product” or a “Moroccan end product” as defined in the Buy American Act – Free Trade Agreements – Balance of Payments Program; or

(iii) “Canadian end product” as defined in Alternate I of the Buy American Act – Free Trade Agreements – Balance of Payments Program.

(4) “Qualifying country” and “qualifying country end product” have the meanings given in the Trade Agreements clause, the Buy American Act and Balance of Payments Program clause, or the Buy American Act—Free Trade Agreements—Balance of Payments Program.

(b) Except as provided in paragraph (i) of this clause, or unless supplies were imported into the customs territory of the United States before the date of a Project Agreement or the applicable subcontract, the price of this Agreement shall not include any amount for duty on-

(1) End items that are eligible products or qualifying country end products;

(2)Components (including, without limitation, raw materials and intermediate assemblies) produced or made in qualifying countries, that are to be incorporated in U.S – made end products to be delivered under an Project Agreement; or

(3)Other supplies for which the PAH estimates that duty will exceed $200 per shipment into the customs territory of the Unites States

(c) The PAH shall –

(1) Claim duty-free entry only for supplies that the PAH intends to deliver to the Government under an Project Agreement, either as end items or components of end items; and

(2) Pay duty on supplies, or any portion thereof, that are diverted to nongovernmental use, other than –

(i) Scrap or salvage; or

(ii) Competitive sale made, directed, or authorized by the Agreements Officer.

(d) Except as the PAH may otherwise agree, the Government will execute duty-free entry certificates and will afford such assistance as appropriate to obtain the duty-free entry of supplies –

(1)For which no duty is included in the Project Agreement price in accordance with paragraph (b) of this clause; and

(2) For which shipping documents bear the notation specified in paragraph (e) of this clause.

(e) For foreign supplies for which the Government will issue duty-free entry certificates in accordance with this clause, shipping documents submitted to Customs shall –

(1) Consign the shipments to the appropriate –

(i) Military department in care of the PAH, including the PAH’s delivery address; or

(ii) Military installation; and

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(2) Include the following information:

(i) Prime Agreement number and, if applicable, delivery order number.

(ii) Number of the subcontract for foreign supplies, if applicable.

(iii) Identification of the carrier.

(iv) (A) For direct shipments to a U.S. military installation, the notation: “UNITED STATES GOVERNMENT DEPARTMENT OF DEFENSE Duty-Free Entry to be claimed pursuant to Section XXII, Chapter 98, Subchapter VIII, Item 9808.00.30 of the Harmonized Tariff Schedule of the United States. Upon arrival of shipment at the appropriate port of entry, District Director of Customs, please release shipment under 19 CFR Part 142 and notify Commander, Defense Contract management Agency (DCMA) New York, ATTN: Customs Team, DCMAE-GNTF, 207 New York Avenue, Staten Island, New York, 10305-5013, for execution of Customs Form 7501, 7501A, or 7506 and any required duty-free entry certificates.”

(B) If the shipment will be consigned to other than a military installation, e.g., a domestic contractor’s plant, the shipping document notation shall be altered to include the name and address of the contractor, agent, or broker who will notify Commander, DCMA New York, for execution of the duty- free certificate. (If the shipment will be consigned to a contractor’s plant and no duty-free entry certificate is required due to a trade agreement, the PAH shall claim duty-free entry under the applicable trade agreement and shall comply with the U.S. Customs Service requirements. No notification to Commander, DCMA New York, is required.)

(v) Gross weight in pounds (if freight is based on space tonnage, state cubic feet in addition to gross shipping weight.)

(vi) Estimated value in U.S. dollars.

(vii) Activity address number of the contract administration office administering the prime contract, e.g., for DCMA Dayton, S3605A.

(f) Preparation of customs forms.

(1)(i) Except for shipments consigned to a military installation, the PAH shall –

(A) Prepare any customs forms required for the entry of foreign supplies into the customs territory of the United States in connection with this Agreement; and

(B)Submit the completed customs forms to the District Director of Customs, with a copy to DCMA NY for execution of any required duty-free entry certificates.

(ii) Shipments consigned directly to a military installation will be released in accordance with sections

10.101 and 10.102 of the U.S. Customs regulations.

(2) For shipments containing both supplies that are to be accorded duty-free entry and supplies that are not, the PAH shall identify on the customs forms those items that are eligible for duty-free entry.

(g) The PAH shall –

(1) Prepare (if the PAH is a foreign supplier), or shall instruct the foreign supplier to prepare, a sufficient number of copies of the bill of lading (or other shipping document) so that at least two of the copies accompanying the shipment will be available for use by the District Director of Customs at the port of entry;

(2) Consign the shipment as specified in paragraph (e) of this clause; and

(3) Mark on the exterior of all packages –

(i) “UNITED STATES GOVERNMENT, DEPARTMENT OF DEFENSE”; and

(ii) The activity address number of the contract administration office administering the prime Agreement.

(h) The PAH through the MCDC CMF shall notify the ACO in writing of any purchase of eligible products of qualifying country supplies to be accorded duty-free entry, that are to be imported into the customs territory of the United States for delivery to the Government or for incorporation in end items to be delivered to the Government. The PAH through the MCDC CMF shall furnish the notice to the ACO immediately upon award to the supplier and shall include in the notice –

(1) The PAH’s name, address, and Commercial and Government Entity (CAGE) code;

(2) Prime Agreement number and Project Agreement number;

(3) Total dollar value of the prime Agreement or Project Agreement number;

(4) Date of the last scheduled delivery under the prime Agreement or Project Agreement number;

(5) Foreign supplier’s name and address;

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(6) Number of the subcontract for foreign supplies;

(7) Total dollar value of the subcontract for foreign supplies;

(8) Date of the last scheduled delivery under the subcontract for foreign supplies;

(9) List of items purchased;

(10) An agreement that the PAH will pay duty on supplies, or any portion thereof, that are diverted to nongovernmental use other than –

(i) Scrap of salvage; or

(ii) Competitive sale made, directed, or authorized by the Agreements Officer;

(11) Country or origin; and

(12) Scheduled delivery date(s).

(i) This clause does not apply to purchases of eligible products or qualifying country supplies in connection with this Agreement if –

(1) The supplies are identical in nature to supplies purchased by the PAH or any subcontractor in connection with its commercial business; and

(2) It is not economical or feasible to account for such supplies so as to ensure that the amount of the supplies for which duty-free entry is claimed does not exceed the amount purchased in connection with this Agreement.

(j) The PAH shall –

(1) Insert the substance of this clause, including this paragraph (j), in all subcontracts for –

(i) Qualifying country components; or

(ii) Nonqualifying country components for which the PAH estimates that duty will exceed $200 per unit;

(2) Require subcontractors to include the number of this Agreement on all shipping documents submitted to Customs for supplies for which duty-free entry is claimed pursuant to this clause; and

(3) Include in applicable subcontracts –

(i) The name and address of the ACO for this Agreement;

(ii) The name, address, and activity address number of the contract administration office specified in this Agreement; and

(iii) The information required by paragraphs (h)(1), (2), and (3) of this clause.

Section 21.15       Follow-On Production

10 U.S.C. § 2371b, Section 815 authorizes the use of a follow-on production contract (FAR) or transaction (OTA). In order to be eligible for follow-on production, the following criteria is required: (1) the follow-on shall be awarded to the same participants named in the Project Agreement; (2) competitive procedures were used to award the Project Agreement in question; and (3) the Project Agreement was successfully completed. This Agreement was the result of competitive procedures, and competitive procedures are used to award individual projects under this Agreement. The Agreements Officer shall be responsible for documenting whether or not a Project Agreement was successfully completed. Follow-on production efforts shall be strictly limited to the scope of the successfully completed prototype. This Agreement will not be used to award follow-on production efforts; Government customers will be responsible for working with their contracting personnel.

All Project Agreements shall include the following statement:

"In accordance with 10 U.S.C. § 2371b(f), and upon a determination that this competitively awarded prototype project has been successfully completed, this prototype project may result in the award of a follow-on production contract or transaction without the use of competitive procedures."

Article XXII.       ASSIGNMENT OF AGENCY

Section 22.01       Assignment.

Neither this Agreement nor any rights or obligations of any party hereunder shall be assigned or otherwise transferred by either party without the prior written consent of the other party.

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Article XXIII.       ORDER OF PRECEDENCE

In the event of any inconsistency between the general terms of this Agreement, the inconsistency shall be resolved by giving precedence in the following order: (1) the Agreement; (2) Attachments to the Agreement; (3) the Project Agreement documentation (including but not limited to the PAH proposal selected for funding by the Government). In any event, specifically negotiated Project Agreement terms will govern over general terms of this Agreement.

Article XXIV.       EXECUTION

This Agreement constitutes the entire Agreement of the Parties and supersedes all prior and contemporaneous agreements, understandings, negotiations and discussions among the Parties, whether oral or written, with respect to the subject matter hereof. This Agreement may be revised only by written consent of the PAH and the CMF Contracting Representative designated in this Agreement.

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Attachment I - Assurance of Compliance with Title VI of the Civil Rights Act of 1964

Statement of Assurance of Compliance with

Title VI of the Civil Rights Act of 1964

For MCDC Member Organizations

The Novavax, Inc. hereby agrees that it will comply with the provisions of the Title VI Civil Rights Act  of 1964 as amended (42 U.S.C 2000-d) and all requirements imposed pursuant thereto, to the end that, in accordance with Title VI of that Act and the Regulation, no person in the United States shall, on the ground of race, color, or national origin, be excluded from participation in, be denied the benefits of, or be otherwise subjected to discrimination under any MCDC Project for which the MCDC member organization receives Federal financial assistance from the Government.

The MCDC member organization agrees that compliance with this assurance constitutes a condition of continued receipt of Federal financial assistance, and that it is binding upon the MCDC member organization, its successors, transferees and assignees for the period during which such assistance is provided.

The MCDC member organization further recognizes and agrees that the United States shall have the right to seek judicial enforcement of this assurance.

The person or persons whose signature(s) appear(s) below is/are authorized to sign this assurance, and commit the MCDC member organization to the above provisions.

/s/ John A. Herrmann III

John A. Herrmann III, SVP, General Counsel

Novavax, Inc.

Date

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Attachment A

Statement of Work

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

1.0INTRODUCTION, SCOPE, AND OBJECTIVES

1.1Introduction

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.

1.2Definition 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-CoV2373, 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.

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 (2-8^oC).

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).

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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.

1.3Follow-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 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).

1.4Scope

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:

o 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

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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.

The scope includes the following activities:

o 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.

o 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.

o Non-clinical

· Studies to support EUA and regulatory approval (BLA).

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o 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.

o Project Management

· Mandatory reporting requirements, as described in the Base Agreement.

· Submission of Monthly 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.

1.4.1Novavax 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.

1.5Resolution 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.

2.0APPLICABLE REFERENCES

N/A

3.0REQUIREMENTS

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3.1Major Task: cGMP Manufacturing of NVX-CoV-2373 compliant with 21 CFR 210 and 211

3.1.1Subtask: 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.

3.1.2Subtask: 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).

3.1.3Subtask: Raw Materials – [***] Intermediates to Produce Matrix-M Adjuvant Matrix-M Adjuvant a

[***] 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.

3.1.4Subtask: 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.

3.1.5Subtask: 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.

3.1.6Subtask: 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.

3.1.7Subtask: 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.

3.2Major 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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3.2.1Subtask: 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.

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[***] – dose determined by Phase 2 dose confirmation study, Placebo; [***].

Enrollment: TOTAL N: ~30,000 (adjusted for expected endpoint incidence). [***]

3.2.2Subtask: 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-[***]; not greater than [***], [***] to allow for rapid initiation. Placebo.  ~0.5 mL dose IM injection, up to 2 doses at Day 0 and Day 21.

Enrollment: TOTAL: N [***]. Adjusted for expected event occurrence. Event driven analysis. Initiation of study gated on completion of Phase 1 study, dose-selection and regulatory approval.

3.2.3Subtask: 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-M1; Placebo, 0.5 mL dose IM injection, up to 2 doses at Day 0 and Day 21.

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.

3.2.4Subtask: [***]

Study: [***]

Population: [***]

Locations: [***]

Primary Objectives: [***]

Design: Randomized, observer-blinded, placebo-controlled.

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Test Product(s); Dose Regimen; Route of Administration: Vaccine + Matrix-[***].

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.

3.2.5Subtask: 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-[***].

Enrollment: ~600 per cohort, each cohort having 1:1 randomization with Emergent (antigen)/Novavax AB (adjuvant) manufacturing site and new manufacturing sites. Study size may be adjusted to allow non-inferiority testing.

3.2.6Subtask: Phase 2, Maternal Immunization

Study: Phase 2, maternal immunization, (trial ID TBD).

Population: Adults ≥ 18 to < 40 years.

Locations: Global.

Primary Objectives: Safety, immunogenicity.

Design: Randomized, observer-blinded, placebo-controlled.

Test Product(s); Dose Regimen; Route of Administration: Vaccine + Matrix-M1; Placebo, 0.5 mL dose IM injection, up to 2 doses at Day 0 and Day 22.

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.

3.2.7Subtask: Pharmacovigilance; Establishment of Registration Safety Database

A registration safety database will be established to comply with FDA requirements for product safety and licensure.

3.2.8Subtask: [***]

Study: [***].

Population: [***].

Location: [***].

Primary Objective: [***].

Design: Randomized, observer-blinded, placebo (or active vaccine) control.

Test Product(s); Dose Regimen; Route of Administration: Vaccine + Matrix[***].

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.

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3.3Major Task: Non-Clinical Studies

Novavax will perform these non-clinical studies and deliver the results in a study report at completion.

3.3.1Mouse Study, Immunogenicity

Study 702-100. Immunogenicity [***] in mice for vaccine efficacy profile to comply with FDA guidelines.

3.3.2Rhesus Study, Immunogenicity

Study 702-099. Immunogenicity/challenge [***] in rhesus monkeys for vaccine efficacy profile to comply with FDA guidelines.

3.3.3Hamster Study, Immunogenicity

Study 702-102. Immunogenicity/challenge study in hamster [***] for vaccine efficacy profile to comply with FDA guidelines.

3.3.4Mouse Study, T-Cell Immunogenicity

Study 702-103. T-cell immunogenicity/challenge study in mice [***] for vaccine efficacy profile to comply with FDA guidelines.

3.3.5Hamster Study, T-Cell Immunogenicity

Study 702-105. Immunogenicity/challenge study in hamster [***] for vaccine efficacy profile to comply with FDA guidelines.

3.3.6Mouse Study, T-Cell Immunogenicity

Study 702-104. Immunogenicity/challenge study in hamster [***] for vaccine efficacy profile to comply with FDA guidelines.

3.3.7Non-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.

3.3.8Structural 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.

3.3.9Neutralizing Assay Histopathology for On-going [***]

Histopathology readings for current neutralization studies in [***]. This will support the safety profile of the vaccine for FDA approval.

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3.3.10Mouse Study, Immunogenicity [***] Studies

Individual immunogenicity studies [***] in mice for vaccine efficacy profile in different sub-populations to comply with FDA guidelines.

3.4Major 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.

3.4.1Subtask: 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.

3.4.2Subtask: 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.

3.4.3Subtask: 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.

3.5Major Task: Project Management and Reporting

3.5.1Subtask: 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.

3.5.2Subtask: 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.

3.5.3Subtask: Written Quarterly Reports

Novavax shall submit quarterly reports to the USG.

3.5.4Subtask: Written Annual Reports

Novavax shall submit the annual reports to the USG.

3.5.5Subtask: Written Final Report

Novavax shall submit the final report to the USG.

3.6Optional Task: Follow-On Production

Follow-on production of finished doses of vaccine up to 560M doses.

4.0DELIVERABLES

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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	[***]
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	[***]
	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	[***]
	Regulatory Affairs
4.26	[***]	[***]	5.26	3.4.1	Reviewer	[***]
4.27	[***]	[***]	5.27	3.4.2	Reviewer	[***]
4.28	[***]	[***]	5.28	3.4.3	Reviewer	[***]
	Project Management
4.29	[***]	[***]	5.29	3.5.1	Reviewer	[***]
4.30	[***]	[***]	5.30	3.5.2	Reviewer	[***]
4.31	[***]	[***]	5.31	3.5.3	Reviewer	[***]
4.32	[***]	[***]	5.32	3.5.4	Reviewer	[***]
4.33	[***]	[***]	5.33	3.5.4	Reviewer	[***]
4.34	[***]	[***]	5.34	3.5.5	Reviewer	[***]

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Del. #	Deliverable Description	Due Date	Milestone Reference	SOW Reference	Government Role	Data Type/Data Rights
TBD	[***]	[***]	Option 1	3.6	Reviewer	[***]

5.0MILESTONE PAYMENT SCHEDULE

Milestone #	Milestone Description (Deliverable Reference)	Due Date	Total Program Funds
	Manufacturing
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
	Clinical
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
	Non- Clinical
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
	Regulatory Affairs		[***]
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
	Project Management		[***]
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]

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Milestone #	Milestone Description (Deliverable Reference)	Due Date	Total Program Funds
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
Total (Cost Plus Fixed Fee)			$1,600,434,522
Period of Performance (July 6, 2020 – December 31, 2021)			18 Months (Base)
Option 1: Follow-On Production			Cost: [***]

Simplified Table: Estimated Cost by Project Areas

Area	Cost
Manufacturing (100M doses)	$418,151,118
Non-Clinical	$5,092,957
Clinical	$1,158,524,498
Regulatory	$10,362,788
Project Management	$8,303,163
Total Project Cost	$1,600,434,523

Simplified Table: Selected Estimated Costs for Key Deliverables*

Area	Milestone/Deliverable	Start	Finish	Cost
[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]

* For key deliverables only; does not encompass total project costs.

** Time to obtaining vaccine efficacy data.

6.0SHIPPING 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.

7.0INTELLECTUAL PROPERTY, DATA RIGHTS, AND COPYRIGHTS

7.1BACKGROUND IP

(a)Ownership.  Prior to June 8, 2020, Novavax had funded the development of NVX-CoV2373, and other antecedent vaccine programs relevant to Novavax’ proprietary position in the development of NVX-CoV2373, 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-Cov2373 manufacturing process

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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-CoV2373 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. 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.

7.2FOREGROUND 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.

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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 unlimited rights license (as the term is defined in Article XI, Section 11.01(14) of the Base Agreement)¹ 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 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.

¹ 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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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.

10.0ENSURING 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:

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:

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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-CoV2373 vaccine;

ii. necessary FDA regulatory filings or authorizations owned or controlled by Novavax related to NVX-Cov2373 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.

12.0 MISCELLANEOUS REQUIREMENTS (SAFETY, ENVIRONMENTAL, ETC.)

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: TBD

MAILING ADDRESS:

EMAIL:

PHONE:

AGENCY NAME/DIVISION/SECTION: HHS/ASPR/BARDA

BASE AGREEMENT NO.: 2020-530

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ENCLOSURE 3: PAYMENT REQUEST INFORMATION

Novavax, Inc. is requesting a payment upon incurring costs, for a total of $[***] to support the development of NVX-CoV2373 as a vaccine for SARS-CoV-2 Coronavirus. The costs, as outlined below, are incorporated into estimates from subcontractors under milestones associated with manufacture. Novavax will work with subcontractors to ensure the appropriate accounting for pre-award costs during subcontract finalization and subsequent billing.

Projected Expenditures

Cost Element	Task/Purpose	Amount
Materials
Antigen	[***]	[***]
Adjuvant	[***]	[***]
Adjuvant	[***]	[***]
Reservations Fees
AGC Bio Seattle	[***]	[***]
PolyPeptide	[***]	[***]
Fuji RTP	[***]	[***]
Fuji Texas	[***]	[***]
Acceleration Fee
Fuji	[***]	[***]
Subtotal		[***]
Indirect + Fee Burden		[***]
Total Requested Amount		[***]

I. Financial Institution Information

Novavax, Inc.

21 Firstfield Road

Gaithersburg, MD 20878

Name of Bank:[***]

Address: [***]

ABA #: [***]

II. Justification for Requesting the Payment

· Materials Costs: - $[***] Direct Costs

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Procurement and qualification of critical long lead raw materials needed to produce 100M doses of NVX-CoV-2373 in 2020 and to ensure availability of 100M additional doses of NVX-CoV-2373 in 2021. This also includes materials for the purchase of a stockpile of certain critical long lead raw materials for the Matrix-M Adjuvant, necessary to rapidly initiate large-scale manufacturing without a delay. This will ensure timely availability of the vaccine candidate to the US population when needed, a primary mission of HHS in support of OWS.

· Reservation and Acceleration Fees: - [***] Direct Costs

To quickly address the urgent need presented by the COVID-19 pandemic, Novavax will rely on the reservation of dedicated capacity from manufacturing service provides to be able to produce NVX-CoV-2373. This will ensure timely availability of the vaccine candidate to the US population when needed, a primary mission of HHS in support of OWS.

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ENCLOSURE 4: PATENT LISTING

[***]

BASE AGREEMENT NO.: 2020-530

July 2018

EX-10.2

EXHIBIT 10.2

CERTAIN INFORMATION IDENTIFIED WITH [***] HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS BOTH (i) NOT MATERIAL AND (ii) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED.

UNDEFINITIZED PROJECT AGREEMENT NO.:                   1

MCDC BASE AGREEMENT NO.:                    2020-530

PROJECT TITLE:	MCDC2011-0011; Rapid Advanced Development to Large Scale
	Manufacturing of NVX-CoV-2373

PARTIES:      Advanced Technology International (“MCDC CMF”) and Novavax, Inc. (“Project Agreement Holder”)

This Undefinitized Project Agreement is awarded under the authority of MCDC Base Agreement No. 2020-530, and herein incorporates all the terms and conditions thereof.

1.   PAYMENT METHOD

The Payment Method for this Undefinitized Project Agreement is Cost Plus Fixed Fee with a not to exceed ceiling.

2.   TERM OF THE PROJECT AGREEMENT

The period of performance for this Project Agreement is from the effective date, which is the date of the last signature through December 31, 2021.

3.   OBLIGATION

The MCDC CMF’s liability to make payments to the Project Agreement Holder is limited to only those funds obligated under this Undefinitized Project Agreement or by modification to the Undefintized Project Agreement. MCDC CMF may incrementally fund this Undefintized Project Agreement.

4.   UNDEFINITIZED PROJECT AGREEMENT (UPA)

MCDC2011-001 is a Cost Plus Fixed Fee (CPFF) Agreement that will be awarded under W15QKN-16-9-1002 (hereinafter “Agreement”). Due to urgency concerns, this Undefinitized Project Action (UPA) is being issued to the Project Agreement Holder for Rapid (WF10) Advanced Research & Development to Large Scale Manufacturing of NVX-CoV-2373 as a Vaccine for SARS-CoV-2 Coronavirus. The following is hereby incorporated as part of this Agreement.

1.   DEFINITIZATION:

a)   This Agreement covers a CPFF UPA that awards prototype project MCDC2011-001. The Project Agreement Holder agrees to promptly begin negotiating with the Agreements Officer on the terms of a definitive Agreement for the project, which will include: (1) all mutually agreeable terms and conditions related to this Agreement, and (2) all other terms and conditions required by law. The Project Agreement Holder will be

required to submit a qualifying cost proposal with all necessary supporting documentation, in order to allow for a full evaluation of costs.

b)   The schedule for definitizing this Agreement is as follows:

i.          Receipt of Qualifying Proposal: 10 September 2020

ii.         Estimated Start of Negotiations: 01 October 2020

iii.        Estimated Date of Definitization: 09 December 2020

c)   The Parties will use best efforts to finalize the definitive agreement. If a definitive Agreement is not finalized to supersede this UPA by the target date in paragraph 2(b)(iii), or within any extension granted in writing by the Agreements Officer, the Agreements Officer may, with the approval of the Army Contracting Command-New Jersey, Senior Contracting Official, unilaterally determine a fair and reasonable price. This determination is subject to Project Agreement Holder appeal, as provided for in the Disputes article of W15QKN-16-9-1002, but the Project Agreement Holder shall not cease performance of this Agreement while proceeding through the dispute process.

d)   After the Agreements Officer’s determination of a fair and reasonable price, the Agreement shall be governed by all of the terms and conditions of the definitive Agreement. Furthermore, all the terms and conditions of this UPA shall continue in effect, except for those that by their nature apply only to UPAs.

e)   The Government and Project Agreement Holder agree that this UPA will include a ceiling in the amount of $1,600,434,522.00. This ceiling may be adjusted only by the written agreement of both parties.

2.   PAYMENT OF ALLOWABLE COSTS BEFORE DEFINITZATION:

Prior to definitization of this Agreement, the Government will reimburse the Project Agreement Holder for all allowable and allocable costs up to 50% of the approved Not- To-Exceed (NTE) Price of $1,600,434,522.00. At any time before a payment, the Agreements Officer may have the Project Agreement Holder's invoices or vouchers audited. Any payment may be (1) reduced by any amounts found by the Agreements Officer not deemed authorized in accordance with the Statement of Work, or (2) adjusted for overpayments made on preceding invoices or vouchers.

3.   LIMITATIONS ON OBLIGATIONS:

The Government will not obligate more than 50 percent of the NTE Price before definitization.

4.   LIMITATION OF GOVERNMENT LIABILITY:

a)   In performance of this Agreement, the Project Agreement Holder is not authorized to make expenditures or incur obligations exceeding $800,217,261.00 dollars.

b)   The maximum amount for which the Government shall be liable if this Agreement is terminated is $800,217,261.00 dollars.

5.   EXECUTION AND COMMENCEMENT OF WORK:

Upon acceptance by both parties, the Project Agreement Holder shall proceed with performance of the Statement of Work, including the purchase of any necessary materials.

5.   MILESTONE PAYMENT SCHEDULE

The Project Agreement Holder shall segregate and track all Undefinitized Project Agreement costs separately and shall document the accomplishments of each Project Payable Milestone under each

Project Agreement. Acceptance of Milestones shall be contingent upon approval from the government Agreements Officer Representative (AOR) detailed in Clause No. 9, Technical and Administrative Representatives. Milestone payments will be paid in the amount indicated in the attached Milestone Payment Schedule (Attachment A) and are adjustable based on actual expenditures.

6.   PAYMENT OF FIXED FEE

The fixed fee specified herein, subject to any adjustments required by other provisions of this Undefinitized Project Agreement will be paid in installments at the time of each provisional payment on account of the allowable costs. The amount of fixed fee paid will be based upon the ratio that the Project Agreement Holder's incurred allowable costs bear to the total estimated cost. In the event the work cannot be completed within the estimated cost, the MCDC CMF may increase the estimated cost without increasing the fixed fee.

7.   APPROACH TO MEETING THE OTHER TRANSACTION AUTHORITY

In accordance with provision contained in 10 USC 2371b governing the use Other Transaction Agreements each MCDC Member Organization must meet at least one of the following conditions: have at least one nontraditional defense contractor or nonprofit research institution participating to a significant extent in the performance of an awarded Project Agreement; all significant participants in the Project Agreement other than the Federal Government are small businesses (including small businesses participating in a program described under section 9 of the Small Business Act (15 U.S.C. 638)) or nontraditional defense contractors; or provide a cost share of no less than one third of the value of the Project Agreement awarded to the Member Organization. The Project Agreement Holder’s approach to meeting the Other Transaction Authority requirement is identified below. Throughout the period of performance of any Project Agreement, the CMF and the Government will actively monitor the award to ensure compliance with this provision in accordance with implementation guidance from Headquarters – Department of the Army (HQDA) and/or Office of the Secretary of Defense (OSD). The Project Agreement Holder will be given the opportunity to become compliant with the guidance should they be found non-compliant. Failure to comply may result in termination.

The warranties and representations submitted as part of the proposal are hereby incorporated into this Undefinitized Project Agreement. The Project Agreement Holder was proposed as a nontraditional defense contractor and determined to be providing a significant contribution.

8.   STATEMENT OF WORK

The Statement of Work, Attachment A, provides a detailed description of the work to be accomplished and reports and deliverables required by this Undefinitized Project Agreement. All changes to Attachment A must be incorporated via written modification to this Project Agreement. Additional guidance on report requirements is in Attachment B, Report Requirements.

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:
[***], Contracts Administrator
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:	Contractual Representative:
[***]	[***]
21 Firstfield Road	21 Firstfield Road
Gaithersburg, MD 20878	Gaithersburg, MD 20878
Email: [***]	Email: [***]
Phone: [***]	Phone: [***]

10. MARKING OF DELIVERABLES

Any Data delivered under this Undefinitized Project Agreement, by the Project Agreement Holder, shall be marked with a suitable notice or legend.

11. SECURITY ADMINISTRATION

The security level for this project is UNCLASSIFIED.

12. ATTACHMENTS

Attachments listed herein are hereby incorporated by reference into this Project Agreement.

A.  Statement of Work, “Rapid Advanced Development to Large Scale Manufacturing of NVX- CoV-2373”

B.   Report Requirements

13. GOVERNMENT FURNISHED PROPERTY

At this time, Government Furnished Property is not provided for use under this Project Agreement.

14. DATA RIGHTS

Please reference Section 8 of Attachment A, Statement of Work.

15. FOLLOW-ON PRODUCTION PROVISION

In accordance with 10.U.S.C. 2371b(f), and upon a determination that this competitively awarded prototype project has been successfully completed, this prototype project may result in the award

of a follow-on production contract or transaction without the use of competitive procedures.

16. SECURITY & OPSEC

The below language shall be used as Paragraph 6 of Article XVII in the Project Agreement Holder's Base Agreement:

Access and General Protection/Security Policy and Procedures. This standard language text is applicable to ALL Project Agreement Holder employees working on critical program information or covered defense information related to Operation Warp Speed (OWS), and to those with an area of performance within an Army controlled installation, facility or area. Project Agreement Holder employees shall comply with applicable installation, facility and area commander installation/facility access and local security policies and procedures (provided by government representative). The Project Agreement Holder also shall provide all information required for background checks necessary to access critical program information or covered defense information related to OWS, and to meet installation access requirements to be accomplished by installation Provost Marshal Office, Director of Emergency Services or Security Office. The Project Agreement Holder workforce must comply with all personal identity verification requirements as directed by DOD, HQDA and/or local policy. In addition to the changes otherwise authorized by the changes clause of this agreement, should the Force Protection Condition (FPCON) at any individual facility or installation change, the Government may require changes in Project Agreement Holder security matters or processes.

17. ENTIRE AGREEMENT

This Project Agreement and the MCDC Base Agreement under which it is issued constitute the entire understanding and agreement between the parties with respect to the subject matter hereof.

Except as provided herein, all Terms and Conditions of the MCDC Base Agreement and its 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, Chief Legal Officer	Title:	[***]
Date:	06 July 2020	Date:	06 July 2020

Attachment A
Statement of Work

This page intentionally left blank. See separate document for Attachment A.

Attachment B
Report Requirements

This page intentionally left blank. See separate document for Attachment B.

EX-10.3

Exhibit 10.3

CERTAIN INFORMATION IDENTIFIED WITH [***] HAS BEEN EXCLUDED FROM THIS
EXHIBIT BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD BE
COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED.

Applied Technologies Center 315 Sigma Drive Summerville, SC 29486 www.ati.org

July 8, 2020

Novavax, Inc.

21 Firstfield Road

Gaithersburg, MD 20878

Attention:        [***]

Subject:           Modification No. 01 to Project Agreement No. 01; MCDC2011-001

Reference:       MCDC Base Agreement No. 2020-530

Dear [***]:

THIS MODIFICATION NO. 01 TO UNDEFINITIZED PROJECT AGREEMENT (UPA) NO. 01 (“Modification”) is made effective as of the later date of signature below (the “Modification Effective Date”) by and between Novavax, Inc. (“Project Agreement Holder”) and Advanced Technology International (“MCDC CMF”).

WHEREAS, Project Agreement Holder and MCDC CMF are parties to that certain Undefinitized Project Agreement No. 1 (“UPA”) under MCDC Base Agreement No: 2020-530 (“Base Agreement”); and

WHEREAS, Project Agreement Holder and MCDC CMF desire to modify and clarify certain provisions of the UPA.

NOW THEREFORE, in consideration of the mutual promises and covenants hereinafter set forth and other good and valuable consideration, the receipt of which is hereby acknowledged by the parties, the parties hereto agree that the UPA is amended by this Modification as follows:

DESCRIPTION OF MODIFICATION

1)         The Milestone Payment Schedule clause of the Undefinitized Project Agreement is hereby replaced in its entirety as indicated below:

5. MILESTONE PAYMENT SCHEDULE

The parties have established Project milestones to identify key project objectives and measure the progress toward completion of such objectives. The amounts of payments associated with each Milestone are indicated in Section 5 (Milestone Payment Schedule) of Attachment A (Statement of Work), and are adjustable based on actual expenditures. Notwithstanding anything in the Base Agreement, UPA or Attachment A to the contrary, the parties agree that (a) the Project Agreement Holder shall invoice the MCDC CMF on a monthly basis for actual costs incurred by Project

Agreement Holder in performing activities and tasks for each Milestone under the Project, up to the maximum amount allowable under the applicable Project milestones (as such, maximum amount may be adjusted over time); and (b) Project Agreement Holder shall not be required to complete performance of a Milestone, or receive the MCDC CMF’s acceptance of a Deliverable, to invoice or receive payment from the MCDC CMF each month. To support its invoices, the Project Agreement Holder shall segregate and track all UPA costs separately and shall document its progress towards the accomplishment of each Project milestone under this UPA. Payment to the Project Agreement Holder of a monthly invoice is contingent upon the Project Agreement Holder’s satisfactory performance of tasks and activities towards completion of a Project milestone; acceptance by the MCDC CMF of the Project Agreement Holder’s monthly invoices for payment of amounts under the UPA, shall be contingent upon approval from the Government Agreements Officer’s Representative (AOR) detailed in Clause No. 9, Technical and Administrative Representatives.

2)         Effectiveness of Modification. Except as modified hereby, the UPA shall remain in full force and effect. Capitalized terms used in this Modification and not otherwise defined herein shall have the meanings ascribed to such terms in the UPA or Base Agreement.

3)         Counterparts. This Modification may be executed in separate counterparts, and by facsimile, each of which when so executed and delivered shall be an original and all such counterparts shall together constitute one and the same instrument.

4)         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 Herrmann III	By:	/s/ [***]
Name:	John Herrmann III	Name:	[***]
Title:	EVP Chief Legal Officer	Title:	Contracts Administrator
Date:	07/09/2020	Date:	09 Jul 2020 10:56 AM

Attachment A

Statement of Work

(Incorporated as of Modification No. 01; changes to Section 5 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-CoV2373, 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.

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 (2-8^oC).

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 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:

o    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.

The scope includes the following activities:

o    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.

o    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.

o    Non-clinical

·     Studies to support EUA and regulatory approval (BLA).

o    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.

o    Project Management

·     Mandatory reporting requirements, as described in the Base Agreement.

·    Submission of Monthly 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.

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.

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.

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[***] – dose determined by Phase 2 dose confirmation study, Placebo; [***].

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-[***]; not greater than [***], [***] to allow for rapid initiation. Placebo.  ~0.5 mL dose IM injection, up to 2 doses at Day 0 and Day 21.

Enrollment: TOTAL: N [***] 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-M1; Placebo, 0.5 mL dose IM injection, up to 2 doses at Day 0 and Day 21.

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-[***].

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-[***].

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-[***].

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.

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[***].

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. Immunogenicity [***] in mice for vaccine efficacy profile to comply with FDA guidelines.

3.3.2    Rhesus Study, Immunogenicity

Study 702-099. Immunogenicity/challenge [***] 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.

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.

3.4       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

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	[***]

Del. #	Deliverable Description	Due Date	Milestone Reference	SOW Reference	Government Role	Data Type/Data Rights
	Clinical
4.8	[***]	[***]	5.8	3.2.1	Reviewer	[***]
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	[***]
	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	[***]
	Regulatory Affairs
4.26	[***]	[***]	5.26	3.4.1	Reviewer	[***]
4.27	[***]	[***]	5.27	3.4.2	Reviewer	[***]
4.28	[***]	[***]	5.28	3.4.3	Reviewer	[***]
	Project Management
4.29	[***]	[***]	5.29	3.5.1	Reviewer	[***]
4.30	[***]	[***]	5.30	3.5.2	Reviewer	[***]
4.31	[***]	[***]	5.31	3.5.3	Reviewer	[***]
4.32	[***]	[***]	5.32	3.5.4	Reviewer	[***]
4.33	[***]	[***]	5.33	3.5.4	Reviewer	[***]
4.34	[***]	[***]	5.34	3.5.5	Reviewer	[***]
TBD	[***]	[***]	Option 1	3.6	Reviewer	[***]

5.0       MILESTONE PAYMENT SCHEDULE

Milestone #	Milestone Description(Deliverable Reference)	Due Date	Total Program Funds
	Manufacturing
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]

Milestone #	Milestone Description(Deliverable Reference)	Due Date	Total Program Funds
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
	Clinical
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
	Non- Clinical
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
	Regulatory Affairs		[***]
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
	Project Management		[***]
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
	Advanced Material Purchases
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
	Reservation Fees
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
	Acceleration Fees
[***]	[***]	[***]	[***]

Milestone #	Milestone Description(Deliverable Reference)	Due Date	Total Program Funds
Total (Cost Plus Fixed Fee)			$1,600,434,522
Period of Performance (July 6, 2020 – December 31, 2021)			18 Months (Base)
Option 1: Follow-On Production			Cost: [***]

Simplified Table: Estimated Cost by Project Areas

Area	Cost
Manufacturing (100M doses)	$418,151,118
Non-Clinical	$5,092,957
Clinical	$1,158,524,498
Regulatory	$10,362,788
Project Management	$8,303,163
Total Project Cost	$1,600,434,523

Simplified Table: Selected Estimated Costs for Key Deliverables*

Area	Milestone/Deliverable	Start	Finish	Cost
[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]

* For key deliverables only; does not encompass total project costs.

** Time to obtaining vaccine efficacy data.

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-CoV2373, and other antecedent vaccine programs relevant to Novavax’ proprietary position in the development of NVX-CoV2373, 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-Cov2373 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-CoV2373 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. 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 unlimited rights license (as the term is defined in Article XI, Section 11.01(14) of the Base Agreement)¹ 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 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:

¹       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.

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:

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-CoV2373 vaccine;

ii.   necessary FDA regulatory filings or authorizations owned or controlled by Novavax related to NVX-Cov2373 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.

12.0     MISCELLANEOUS REQUIREMENTS (SAFETY, ENVIRONMENTAL, ETC.)

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: TBD

MAILING ADDRESS:

EMAIL:

PHONE:

AGENCY NAME/DIVISION/SECTION: HHS/ASPR/BARDA

ENCLOSURE 3: PAYMENT REQUEST INFORMATION

Novavax, Inc. is requesting a payment upon incurring costs, for a total of $[***] to support the development of NVX-CoV2373 as a vaccine for SARS-CoV-2 Coronavirus. The costs, as outlined below, are incorporated into estimates from subcontractors under milestones associated with manufacture. Novavax will work with subcontractors to ensure the appropriate accounting for pre-award costs during subcontract finalization and subsequent billing.

Projected Expenditures

Cost Element	Task/Purpose	Amount
Materials
Antigen	[***]	[***]
Adjuvant	[***]	[***]
Adjuvant	[***]	[***]
Reservations Fees
AGC Bio Seattle	[***]	[***]
PolyPeptide	[***]	[***]
Fuji RTP	[***]	[***]
Fuji Texas	[***]	[***]
Acceleration Fee
Fuji	[***]	[***]
Subtotal		[***]
Indirect + Fee Burden		[***]
Total Requested Amount		[***]

I.           Financial Institution Information

Novavax, Inc.

21 Firstfield Road

Gaithersburg, MD 20878

Name of Bank:         [***]

Address:                   [***]

ABA #: [***], Checking Account #: [***]

Swift: [***]

II.          Justification for Requesting the Payment

·Materials Costs: - [***] Direct Costs

Procurement and qualification of critical long lead raw materials needed to produce 100M doses of NVX-CoV-2373 in 2020 and to ensure availability of 100M additional doses of NVX-CoV-2373 in 2021. This also includes materials for the purchase of a stockpile of certain critical long lead raw materials for the Matrix-M Adjuvant, necessary to rapidly initiate large-scale manufacturing without a delay. This will ensure timely availability of the vaccine candidate to the US population when needed, a primary mission of HHS in support of OWS.

·Reservation and Acceleration Fees: - [***] Direct Costs

To quickly address the urgent need presented by the COVID-19 pandemic, Novavax will rely on the reservation of dedicated capacity from manufacturing service provides to be able to produce NVX-CoV-2373. This will ensure timely availability of the vaccine candidate to the US population when needed, a primary mission of HHS in support of OWS.

ENCLOSURE 4: PATENT LISTING

[***]

EX-10.4

Exhibit 10.4

CERTAIN INFORMATION IDENTIFIED WITH [***] HAS BEEN EXCLUDED FROM THIS
EXHIBIT BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD BE COMPETITIVELY
HARMFUL IF PUBLICLY DISCLOSED.

SUPPLY AND LICENSE AGREEMENT

BETWEEN

SERUM INSTITUTE OF INDIA PRIVATE LIMITED

AND

NOVAVAX, INC.

Dated: 30 July, 2020

SUPPLY AND LICENSE AGREEMENT

This Supply and License Agreement (the “Agreement”) is entered into and made effective as of July 30, 2020 (the “Effective Date”), 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 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 NVX-CoV2373 (“Drug Substance”) and Matrix-M^TM (“Adjuvant”) which are collectively referred to as the (“Vaccine Components”);

WHEREAS, SIIPL is a global vaccine manufacturer specializing in life saving vaccines;

WHEREAS, SIIPL desires to use the Vaccine Components and Licensed Know-How to Develop, Manufacture, and Commercialize by SIIPL a vaccine product derived from a coformulation of the Vaccine Components (not as a combination product with any other active ingredient), and use such vaccine product in the Field (hereinafter referred to as the “Product”);

WHEREAS, subject to the terms of this Agreement, Novavax agrees to (a) continuously supply to SIIPL Vaccine Components as per the Forecast requirement of SIIPL in the SIIPL Territory, (b) grant to SIIPL an exclusive license in the SIIPL Exclusive Territory (defined hereunder) to use the Vaccine Components to enable SIIPL to Manufacture, and Commercialize the Product, (c) grant to SIIPL a nonexclusive license in the SIIPL Non- Exclusive Territory (defined hereunder) to use the Vaccine Components to enable SIIPL to Manufacture, and Commercialize the Product, and (d) provide to SIIPL that Licensed Know- How Controlled by Novavax or its Affiliates (including the improvements if any), in accordance with the terms and conditions of this Agreement.

NOW THEREFORE, SIIPL AND NOVAVAX AGREE AS FOLLOWS:

ARTICLE 1.DEFINITIONS

Capitalized terms used in this Agreement will have the meaning ascribed to them in the preamble and recitals to this Agreement above, Appendix A, or otherwise as defined in this Agreement below.

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ARTICLE 2. SUPPLY AND OTHER RESPONSIBILITIES

2.1   Supply.

a.   Supply of Vaccine Components to SIIPL. During the Term, Novavax will supply to SIIPL its requirements of Vaccine Components as per a Forecast to Manufacture and Commercialize the Product in the SIIPL Territory. Vaccine Components 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 (the “Vaccine Component Specifications”).

b.   Transfer of Licensed Know-How to SIIPL. Novavax will provide to SIIPL all of the Licensed Know-How to the extent necessary to Manufacture and Commercialize the Product in the SIIPL Territory.

c.   Pharmacovigilance Agreement. Prior to SIIPL’s commencement of Development and Commercialization of the Product in the SIIPL Territory, the Parties will negotiate and enter into a safety reporting agreement on customary, commercially reasonable and mutually agreeable terms.

2.2   Safety Stock.

Subject to the last sentence of this Section 2.2, Novavax shall establish a safety stock of the Vaccine Components 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 Vaccine Components to be kept in the Safety Stock shall be [***].

2.3   Product 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 will [***] 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.

2.4   Responsibilities of Novavax.

a.    Supply of Vaccine Components. 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

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Manufacture and deliver to SIIPL the Vaccine Components in accordance with this Agreement. Novavax will solely be responsible for all vendors, employees, contractors, and other Persons employed or engaged by it to Manufacture the Vaccine Components. Novavax will provide to SIIPL [***] necessary to enable SIIPL to formulate the components of the Vaccine Components (i.e. the Drug Substance and the Adjuvant), [***], so as to enable SIIPL to formulate the Vaccine Components and Manufacture the Product.

b.   Novavax Improvements. In the event Novavax makes any Novavax Improvements during the Term to the Vaccine Components, the same shall be provided to SIIPL [***] under the terms and conditions agreed herein this Agreement.

2.5   Responsibilities of SIIPL.

a.   Manufacture of the Product. Subject to and as further described in Sections 2.5.b. and 2.5.c., 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 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, a 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.

b.   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 2.5.b. SIIPL will obtain and maintain all Regulatory Approvals required to Develop and Commercialize the

4

Product throughout the SIIPL Territory. SIIPL will perform all Development of the Product (including all regulatory actions) in accordance with the written plan for such Development to be mutually agreed by the Parties [***] (the “Development Plan”). The Development Plan 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 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. 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.

c.    Regulatory Activities. Subject to and as further described in this Section 2.5.(c), 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, [***].

d.   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.

2.6  Restrictions on Use. SIIPL may use the Vaccine Components supplied by Novavax and the Licensed Know How under this Agreement solely to (i) Manufacture the Product in

5

the Field for the SIIPL Territory, (ii) conduct analytical and process development activities, and (iii) Commercialize the Product in the SIIPL Territory. SIIPL will not, and will cause its Affiliates and other Permitted Recipients not to, (a) attempt to reverse engineer the Vaccine Components or otherwise analyze, circumvent, or design around the Vaccine Components, or (b) sell the Vaccine Components to any third party. Notwithstanding the foregoing. Upon [***] notice to Novavax, SIIPL may transfer Vaccine Components to Affiliates. Further, SIIPL may transfer the Vaccine Components to third party manufacturers engaged to Manufacture of the Product (“Permitted Recipients”) upon [***], provided that Permitted Recipients are bound by written restrictions on use and confidentiality no less stringent than those specified in this Agreement, and SIIPL remains liable to Novavax for such Permitted Recipient’s use of Vaccine Components. Nothing set forth in this Agreement will limit Novavax’ ability to Manufacture or supply Vaccine Components to any third party or to use the Vaccine Components for any other purposes.

2.7   Governance.

a.    Joint Collaboration Steering Committee.

1.       JSC Establishment. As soon as practicable, but no later than [***] following the Effective Date, the Parties will form a joint collaboration steering committee (“JSC”) to monitor and coordinate the Exploitation of the Licensed Products throughout the SIIPL Territory. 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 coordinate within their respective organization to enable each Party to fulfill its obligations as agreed upon between the Parties under this 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. The JSC will, amongst other duties and responsibilities:

6

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, for 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 global allocation body endorsed by CEPI, currently expected to be 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 submitted by such Party to the JSC at such meeting under this 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

7

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 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 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.

2.     Decisions of JSC. The JSC will use good faith efforts, in compliance with this Section 2.7.C.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 2.7.D.1 (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 2.7.C.2 (Decisions of the JSC) to refer a matter on which the JSC cannot reach a [***]

8

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 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 [***].

2.8   Step in Rights of Novavax. Unless there is [***] in the event SIIPL is unable to fulfil its commitments towards supply of [***] volumes of the Product within a particular country in the SIIPL Territory (“Shortfall”), then, for each such case of Shortfall on a case-by-case and country-by-country bases, Novavax may provide SIIPL a written notice of [***] that if SIIPL is unable to remedy the Shortfall within said period of [***] (“Shortfall Notice”), then Novavax may, temporarily, step- in to manufacture and commercialize or cause the manufacture and commercialization of the remainder of the agreed volumes of the Product for that particular Shortfall. Once the agreed supply volumes have been achieved and the Shortfall has been remedied, Novavax shall cease forthwith from any further commercialization of Product within the applicable country in the SIIPL Territory and SIIPL shall resume all its rights and obligations towards manufacture and commercialize of the Product within the applicable country in SIIPL Territory. Nothing agreed herein shall be deemed or interpreted to affect the license rights granted to SIIPL hereunder for commercialisation of the Product within the SIIPL Territory, provided that if SIIPL is unable to remedy any Shortfall within [***] of receipt of the Shortfall Notice, then the Parties agree to mutually decide on the terms and conditions thereafter [***]. The Parties agree that during the any such [***] notice period to remedy any Shortfall, this Agreement shall otherwise continue to remain in force.

ARTICLE 3.FORECASTS AND ORDERS.

3.1   Forecast. Within [***] of the Effective Date, SIIPL will provide Novavax with a [***] forecast of SIIPL’s anticipated demand for the Vaccine Components for Manufacture of the Product in SIIPL Territory (the “Forecast”) for Novavax’ review and acceptance. SIIPL will update such Forecast on a [***] basis within [***] for Novavax’ review and

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acceptance. The quantity specified for [***] of each Forecast accepted by Novavax (an “Accepted Forecast”) will be binding upon both Parties and not subject to change (a “Firm Order”). Thereafter it is agreed that the subsequent [***] of each Accepted Forecast (the “Non-Binding Period”) will be a good faith, non-binding estimate of the quantities of Vaccine Components 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..

3.2   Purchase Order. 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 Vaccine Components 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 Vaccine Components (a “Purchase Order”). If any such purchase order requests a quantity of Vaccine Components 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 Vaccine Components 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 Agreement or any Purchase Order, regardless of any failure of SIIPL or Novavax to object to such terms, provisions, or conditions.

3.3   Delivery; Title; Risk of Loss. Unless otherwise agreed by the Parties, Novavax will deliver Vaccine Components [***]. 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 Vaccine Components and Know How to Manufacture the Products.

ARTICLE 4.INSPECTION, QUALITY, AND AUDIT

4.1   Inspection; Acceptance and Rejection. SIIPL will inspect shipments upon receipt for any visible damage or missing quantities of the Vaccine Components or Licensed Know- How. SIIPL may also test shipments of Vaccine Components using the applicable methods of analysis specified in the Quality Agreements. If there are any issues with a shipment of Vaccine Components or Licensed Know-How or if SIIPL [***] believes that the Vaccine Components do not comply with the Vaccine Component 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 Vaccine Components or Licensed Know- How as conforming to the order and meeting the applicable Vaccine Component Specifications and quality requirements under this Agreement.

4.2   Rejection Procedure. Upon Novavax’ receipt of a notice from SIIPL pursuant to Section 4.1(Inspection; Acceptance and Rejection), unless Novavax informs SIIPL to the contrary

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within [***] after receipt of such notice, Novavax will replace such missing, damaged, or defective Vaccine Components or License Know-How at [***] cost and expense. To the extent a defect of the Vaccine Components 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 Vaccine Components or Licensed Know-How at [***]; provided any such notice must be provided [***].

4.3   Disagreement Regarding Defect. In the event of any disagreement between the Parties as to any defect in or non-conformance of any Vaccine Components and Licensed Know- How, including any non-conformity with the Vaccine Component Specifications and defect in the Licensed Know-How, either Party may require that the matter be submitted to [***] to determine whether or not such Vaccine Components or License Know-How is nonconforming or otherwise defective, and the Parties [***]. Notwithstanding the general dispute resolution mechanisms set forth in this 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 [***].

4.4   Records. Each Party will provide [***] to support the other Party’s efforts to obtain or maintain Regulatory Approvals related to the Vaccine Components or Product.

4.5   Right of Reference; Regulatory Cooperation.

a.   Documentation. Novavax will provide SIIPL with applicable information, reports, documents, certificates, and any other materials regarding Vaccine Components 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 Vaccine Components and each facility in which Novavax Manufactures the Vaccine Components, 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 Vaccine Components and each facility in which SIIPL Manufactures the Vaccine Components.

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 Vaccine Components or the Product as permitted under this Agreement or any other agreement between the Parties. Each Party will, at the other Party’s 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 Vaccine Components 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 Vaccine Components or the Product as requested by such regulatory authorities or the other Party in connection with obtaining and maintaining Regulatory Approvals for the Vaccine Components and the

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Product as set forth in this Agreement.

4.6   Quality 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 Vaccine Components 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 Agreement, Novavax will provide its quality inspection reports for such contract manufacturer(s) upon request from SIIPL.

4.7   Regulatory Inquiries. Novavax will [***] notify SIIPL in writing of any governmental or regulatory inquiries, inspections, or audits directly related to the Vaccine Components and Licensed Know-How 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 Vaccine Components at [***] cost and expense, and notify and update Novavax of such inquiries, inspections and audits.

4.8   Recalls. Each Party will [***] notify the other in writing in detail if (a) any batch of Vaccine Components provided hereunder or 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 Vaccine Components or 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 Vaccine Components Manufactured by Novavax to meet the Vaccine Component Specification at the time of delivery, or failure of Novavax to Manufacture Vaccine Components 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.

4.9   Safety Reporting. Each Party will advise the other Party in writing of any adverse event related to the Vaccine Components or Product within [***] after becoming aware of such event, and provide any and all information, document, and materials that are related to such adverse event. Further details of the Parties’ obligations in regard to safety reporting will be set forth in the Pharmacovigilance Agreements.

ARTICLE 5. TECHNOLOGY TRANSFER

5.1    Technology Transfer. [***] the execution of this Agreement, Novavax shall transfer to SIIPL (a) all Licensed Know-How Controlled by Novavax that necessary to use the Vaccine Components for the Manufacture of the Product, 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”).

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ARTICLE 6. LICENSE GRANTS

6.1    License Grants to SIIPL.

a.    Exclusive License. Subject to the terms and conditions of this Agreement, Novavax hereby grants to SIIPL an exclusive but royalty bearing license under the Novavax Proprietary Rights to the extent necessary to use Vaccine Components 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 Vaccine Components in whole or part under this Agreement. This SIIPL Exclusive License shall continue during and after the Pandemic Period until expiration or termination of this Agreement.

b.    Non-Exclusive License. Subject to the terms and conditions of this Agreement, Novavax hereby grants to SIIPL a non-exclusive but royalty bearing license under the Novavax Proprietary Rights to the extent necessary to use Vaccine Components 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 Vaccine Components in whole or part under this 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.

c.    Sub-License. SIIPL may sub-license to a third party in the SIIPL Exclusive Territory, the Vaccine Components and Licensed Know-How with [***].

6.2    Covenant Not to Sue. SIIPL, 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 [***]. Each Covenant Beneficiary that is not party to this Agreement is a third party beneficiary solely of this Section6.2(Covenant Not to Sue). If SIIPL or any of its Affiliates sells, assigns, exclusively licenses, transfers, or otherwise grants any right under any SIIPL Improvement to a third party, then SIIPL 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 its Affiliates in this Section 6.2(Covenant Not to Sue).

6.3    No Implied Licenses. Neither Party is granted any rights to any Patent Rights, Know-

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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

7.1    SIIPL 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 Calendar Quarter bases (the “SIIPL Royalty Payment”). All payments under this 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 prior Calendar Quarter.

7.2    Vaccine Component Payment. The payments pertaining to DS Price and 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 “Vaccine Component Payment”).

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7.3    Taxes. The amounts payable by one Party (the “Paying Party”) to the other Party (the “Payee Party”) pursuant to this Agreement (each, a “Payment”) shall be paid 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

8.1   Records; Reports. During the term of this 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 Agreement.

8.2   Quarterly Reports. As agreed in this Agreement, SIIIIPL shall furnish a certificate from its Certified Auditors for the calculation of SIIPL Royalty Payment and Vaccine Component Payment as per ARTICLE 7 for every Calendar Quarter (the “Quarterly Certificates”) within [***] of end of each such quarter. As used herein, “Certified Auditors” means an auditor firm duly licensed to practice as an auditor and whose lead individual responsible for quarterly audits will have [***] and who is responsible and liable under Applicable Law.

8.3   Royalty Certifications.

a.   As agreed in this Agreement, SIIPL shall furnish Quarterly Certificates from their Certified Auditors for the calculation of SIIPL Royalty Payment and Vaccine Component Payment.

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SIIPL shall pay any underpayment reflected in a Quarterly Certificate within [***] of the applicable Calendar Quarter, and may credit any overpayment based on the results disclosed by such Quarterly Certificates against future SIIPL Royalty Payment or Vaccine Component Payment due Novavax.

b.   The Parties agree to conduct [***] reconciliation of the payments made in accordance with Section 8.3 a. Within [***], SIIPL shall furnish Novavax with an 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 pay any underpayment reflected in such [***] Recalculation Certificate, and may credit any overpayment against future SIIPL Royalty Payment or Vaccine Component 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

9.1   Ownership of Intellectual Property Rights

a.   Subject to Sections 9.1(c) 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 Agreement or (ii) was developed or obtained by or on behalf of such Party independent of this 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 Vaccine Components and the Licensed Know-How, shall be the exclusive proprietary concern of Novavax.

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9.2  Prosecution and Maintenance. As between the Parties, [***] would be responsible for the filing, prosecution and maintenance of any and all Intellectual Property Rights in 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.

9.3  Notification 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 Agreement (an “Infringement”) as and when it becomes aware of such Infringement.

9.4  Enforcement. 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.

9.5  Back-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 [***] 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.

9.6   Infringement 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 [***], 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

10.1  Novavax Representations and Warranties. Novavax represents and warrants to SIIPL that:

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a.    the Vaccine Components supplied to SIIPL hereunder has been Manufactured according to all Applicable Laws and cGMPs; and

b.    to its knowledge as of the Effective Date, Novavax Controls all rights, title, and interests in and to Intellectual Property Rights in the Vaccine Components and the Licensed Know-How necessary for it to grant the licenses under Section 6.1 (License Grant);

10.2  SIIPL Representation and Warranty. SIIPL represents and warrants to Novavax that all Product shall be manufactured and commercialized by SIIPL according to all Applicable Laws and cGMPs.

10.3  Mutual. 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 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 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 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 Agreement.

e.    No Debarment. Neither Party nor any of its Affiliates, or any of their employees, contractors or agents performing any activities under this 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 Agreement, they and their Affiliates will comply with and that they will take commercially reasonable measures 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 ANYKIND, EITHER EXPRESS OR IMPLIED, TO THE OTHER PARTY WITH RESPECT TO ANYTECHNOLOGY 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

11.1   By 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).

11.2   By 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 ).

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11.3    Indemnification 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 employ counsel (in which case the indemnified Party may control the defense and settlement of such claim). Notwithstanding the aforesaid, Parties agree that, [***].

11.4    Insurance. 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 Agreement.

11.5   Limitation of Liability. IN NO EVENT WILL EITHER PARTY BE LIABLE TO THE OTHERPARTY 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

12.1    Definition. “Confidential Information” means any and all proprietary scientific, technical, clinical, financial, business, and other information and material disclosed by

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one Party in the performance of this 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 Agreement, as well as all information and documents regarding the conclusion, implementation, and termination of this 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.

12.2    Reasonable 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 Agreement.

12.3    Exceptions. 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 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.

12.4    Permitted Disclosure. In the event that a Receiving Party is required to disclose any of the Disclosing Party’s Confidential Information by law, 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..

12.5    Termination 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

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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.

12.6    Survival. This ARTICLE 12 (Confidential Information) will survive the termination or expiration of this Agreement for a period [***].

ARTICLE 13.TERM AND TERMINATION

13.1     Term. This Agreement will come into full force and effect on the Effective Date 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 Agreement (the “Term”).

13.2    Termination. 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 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 [***].

13.3     Effects of Expiration and Termination by SIIPL for Cause.

a.    Upon expiration of this 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 Property Rights in the Vaccine Components 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.

b.    Upon early termination of this Agreement by SIIPL for a (i) material breach by Novavax in accordance with Section 13.2.a. or (ii) Bankruptcy of Novavax in accordance with Section 13.2.b., 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 Vaccine Components 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 Agreement were not terminated under Section 13.3; provided that in the event of bankruptcy SIIPL shall reasonably insure that the then-

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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, SIIPL shall pay a royalty in an amount equal to [***].

13.4     Survival. In the event of any termination or expiration of this Agreement, each of the provisions of ARTICLE 4, 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 and 8 shall also survive), Section 13.4. (Survival), ARTICLE 14 (General Provisions), and Appendix A will survive termination or expiration of this Agreement and continue to be enforceable. In no event will termination of this 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

14.1     Further 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 Agreement.

14.2     Manufacturing Agreement. The Parties agree that Novavax and SIIPL shall enter into a manufacturing agreement on terms and conditions as may be mutually agreed, wherein SIIPL shall manufacture the Drug Substance and Product for Novavax (the “Manufacturing Agreement”). This agreement when executed shall run in parallel to the license Agreement and the same shall be treated as independent co-parallel agreements. The Parties agree that they have mutually agreed to the financial terms with respect to the said Manufacturing Agreement. For clarity, such agreed financial terms have been duly recorded in Appendix B herein annexed.

14.3     Force Majeure. No Party will be liable for failure to perform any obligation under this 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 [***].

14.4     Governing 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 Agreement.

14.5     Negotiation; Escalation. The Parties will negotiate in good faith and use [***] to

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settle any dispute under this Agreement, other than matters subject to resolution under Article 2.7 (Governance). Any dispute as to the breach, enforcement, interpretation, or validity of this 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).

14.6     Equitable 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) 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 been entitled to appropriate equitable relief (without the posting of any bond) in addition to whatever remedies it might have at law.

14.7     Rights in Bankruptcy. All rights and licenses granted under or pursuant to this 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 Agreement, including the royalty payments pursuant to ARTICLE 7 (SIIPL Royalties), shall be considered· ”royalties” for purposes of Section 365(n) of the U.S. Bankruptcy Code.

14.8     Notices. All notices that are required or permitted hereunder will be in writing and sufficient if delivered by internationally-recognized overnight courier (return receipt

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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.

14.9    Publicity. 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 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.

14.10  Severability. If any provision of this Agreement is determined to be invalid, illegal, or unenforceable, then such provision will be deemed to be severable from the remainder of this Agreement and will not cause the invalidity or unenforceability of the remainder of this 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

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unenforceable provisions that it can be [***] assumed that the Parties would have entered into this Agreement with such valid provisions.

14.11   Waiver. No failure on the part of either Party to exercise, and no delay in exercising, any right, power, remedy, or privilege under this 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 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.

14.12   Assignment. Each Party’s rights and obligations under this 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 [***], however, either Party may transfer any and all of its rights and/or obligations hereunder to any of its Affiliates by providing [***] notice of [***]. In addition, either Party may assign and transfer all of its rights and obligations hereunder to any third party that acquires all or substantially all of the stock or assets of the business to which this Agreement relates (by merger, stock or asset purchase, operation of law, or otherwise). In such an event where such third party which acquires all or substantially all of the stock or assets of the business of either Party to which this Agreement relates (by merger, stock or asset purchase, operation of law, or otherwise) does not honour this Agreement, or refuses to be bound by the terms of this Agreement, [***].

14.13   Change 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, such acquiring party of Novavax shall be bound by the terms and conditions of this Agreement and in the event such acquiring party does not agree or is restricted under Applicable Laws to be bound by the terms of this Agreement, [***].

14.14   Data Protection. The Parties do not envisage that any material personal data will be exchanged between the Parties in the performance of this Agreement and hence no data protection act(s) / law(s) will be applicable to either Party.

14.15   Interpretation. 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

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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 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 Agreement, and references to this 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 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 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 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 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 Agreement relating to quality or safety matters for the Vaccine Components or Product.

14.16   Performance by Affiliates. Only in the event either Party assigns any of its rights and obligations under this 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 Agreement and will cause such assignee Affiliate to comply with the provisions of this Agreement in connection with such performance.

14.17   Independent Contractors. Nothing in this 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.

14.18   No 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 Agreement.

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14.19   Entire 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 Agreement will be binding upon the Parties unless reduced in writing and signed by the respective authorized officers of the Parties.

14.20   Execution 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 Agreement on the date first above written.

SIIPL _________		NOVAVAX, INC.
By:	/s/ [***]	By:	/s/ John A. Herrmann
Name: [***]		Name: John A. Herrmann
Title: Director R&D		Title: EVP, CLO & Secretary
Date: 30/7/2020		Date: 30 July 2020

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Appendix A Definitions

A-1       “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 Price” means [***].

A-4       “Affiliate” means:

(i)        with respect to Novavax, any Person that controls, is controlled by, or is under common control with another Person, and

(ii)       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-5       “Agreement” has the meaning set forth in the preamble.

A-6       “[***] Recalculation Certificate” shall have the meaning ascribed in Section 8.3.b. (Royalty Certifications).

A-7       “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-8       “Background IP” shall have the meaning ascribed to it in Section 9.1.e (Ownership of Intellectual Property Rights).

A-9       “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

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countries to obtain Regulatory Approval to Commercialize a Product in that country or in that group of countries, including all supplements and amendments thereto.

A-10     “Calendar Quarter” means each successive period of three months commencing on January1, April 1, July 1, and October 1.

A-11     “Calendar Year” means each successive period of 12 months commencing on January 1 and ending on December 31.

A-12     “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-13     “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-14     “Claims” shall have the meaning ascribed to it in Section 11.3 (Indemnification by SIIPL).

A-15     “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.

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A-16   “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 Agreement. The Commercialization Plan must include in reasonable detail the: (a) [***]; and (b) [***]. At least [***] prior to the anticipated First 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-17     “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-18     “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-19     “Confidential Information” shall have the meaning ascribed to it in Section 12.1.

A-20     “Control” or “Controlled” the possession by a Party (whether by ownership, license, or otherwise other than pursuant to this 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

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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-21     “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-22     “Delivery Date” shall have the meaning ascribed in Section 3.1 (Forecast).

A-23     “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, (b)and 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 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-24     “Development Plan” has the meaning set forth in Section 2.6.b (Development of the Product).

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A-25     “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-26     “Disclosing Party” shall have the meaning ascribed to it in Section 12.1 (Confidential Information – Definition).

A-27     “DP Cost” means [***].

A-28     “Drug Substance” shall have meaning ascribed to it in the Recitals.

A-29     “DS Price” means [***].

A-30     “Effective Date” has the meaning set forth in the preamble.

A-31     “Executive Officers shall have the meaning ascribed to it in Section 2.7.c.2 (Decisions of JSC).

A-32     “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-33     “Field” means human prophylactic uses of a vaccine for SARS-CoV-2 disease.

A-34     “Firm Order” shall have the meaning ascribed in Section 3.1 (Forecast).

A-35     “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-36     “Forecast” shall have the meaning ascribed in Section 3.1 (Forecast).

A-37     “Fully-Loaded Cost” means [***].

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A-38     “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-39     “Infringement” shall have the meaning ascribed to it in Section 9.3 (Infringement).

A-40     “Infringer” shall have the meaning ascribed to it in Section 9.4 (Infringer).

A-41    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-42     “JSC” shall have the meaning ascribed to it in Section 2.7a.1 (JSC Establishment).

A-43     “JSC Chairperson” shall have the meaning ascribed to it in Section 2.7a.1 (JSC Establishment).

A-44     “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-45     “Licensed Know-How” means all Know-How that is Controlled by Novavax or its Affiliates as of the Effective Date in relation to the Vaccine Components and which is necessary for the Development, Manufacture or Commercialization of Product

A-46     “Licensed Patents” means the Patent Rights of Novavax in relation to the Vaccine Components, which are licensed to SIIPL under this Agreement, and which are annexed herein as Appendix C.

A-47     “Losses” has the meaning set forth in Section 11.1(Indemnification By SIIPL).

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A-48     “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-49     “Manufacturing Agreement” has the meaning set forth in Section 14.2 (Manufacturing Agreement).

A-50     “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-51     “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:

i.          [***];

ii.         [***];

iii.        [***];

iv.        [***];

v.         [***];

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vi.        [***]; and

vii.       [***].

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 [***]. 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.

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-52     “Non-Binding Period” shall have the meaning ascribed in Section 3.1 (Forecast).

A-53     “Novavax Exclusive Territory” shall mean a) during the Pandemic Period (as determined by the WHO) the countries of [***] and b) immediately following the Pandemic Period, any other country designated as a high income country (including sub-designations of high income countries (e.g., a “low high income country”) according to the then most recent published Word Bank classification of world countries as of the first day of the end of the Pandemic Period or included within the Novavax Territory in accordance with Section 6.1.b. (Non-Exclusive License).

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A-54     “Novavax Improvements” shall mean and include all Know-How related to the Vaccine Components invented or developed solely by either Party or jointly by both Parties during the Term in the performance of this Agreement.

A-55     “Novavax Indemnitees” shall have the meaning ascribed to it in Section 11.1 (Indemnification by SIIPL).

A-56     “Novavax Proprietary Rights” shall mean all proprietary rights, including any and all Intellectual Property Rights, in the Licensed Patents and Novavax Improvements.

A-57     “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-58     “Payee Party” shall have the meaning ascribed to it in Section 7.3 (Taxes).

A-59     “Paying Party” shall have the meaning ascribed to it in Section 7.3 (Taxes).

A-60     “Payment” shall have the meaning ascribed to it in Section 7.3 (Taxes).

A-61     “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 Vaccine Components shall include the Licensed Patents, list of which is annexed to this Agreement in Appendix B.

A-62     “Permitted Recipients” shall have the meaning ascribed to in Section 2.6 (Restrictions on Use).

A-63     “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-64     “Pharmacovigilance Agreement” has the meaning set forth in Section 2.1c (Pharmacovigilance Agreement).

38

A-65     “Product” has the meaning set forth in the Recitals.

A-66     “Purchase Order” shall have the meaning ascribed in Section 3.1 (Forecast).

A-67     “Quality Agreement” means an agreement containing customary and commercially reasonable terms that will provide, among other things, quality standards for the Vaccine Components 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-68     “Quarterly Certificates” shall have the meaning ascribed to in Section 8.2 (Quarterly Reports).

A-69     “Receiving Party” shall have the meaning ascribed to it in Section 12.1 (Confidential Information – Definition).

A-70     “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 Vaccine Components or Product, as applicable.

A-71     “Regulatory Report” means a brief description in English of [***] provided to the JSC [***] of receipt thereof.

A-72     “Revenue” means the Net Sales of Product, less (a) DS Price, (b) Adjuvant Price and

(c) DP Price. (a), (b) and (c) collectively referred to as “Agreed Cost Price”.

A-73     “Safety Stock” shall the meaning ascribed to it in 2.2 (Safety Stock).

A-74     “Shortfall” shall have the meaning ascribed to it in Section 2.8 (Shortfall Notice).

A-75     “Shortfall Notice” shall have the meaning ascribed to it in Section 2.8 (Shortfall Notice).

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.

39

A-78     “SIIPL Improvements” shall mean and include all Know-How, invented or developed by SIIPL during the formulation, Manufacture, Development and further Commercialization of the Product during the Term and which are not Novavax Improvements.

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).

A-86     “Vaccine Components” shall have the meaning ascribed to it in the Recitals.

A-87     “Vaccine Component Payment” shall have the meaning ascribed to it in Section 7.2 (Vaccine Component Payment).

A-88     “Vaccine Component Specifications” shall have the meaning ascribed to it in the Section 2.1.a (Supply of Vaccine Components to SIIPL) as further described in the Quality Agreement.

40

Appendix B

Novavax shall pay SIIPL a royalty (the “Novavax Royalty Payment”) for sales by Novavax of Product supplied by SIIPL or its licensees in the SIIPL Nonexclusive Territory in the applicable year. Such Novavax Royalty Payment shall equal fifty percent (50%) of the Revenue for Products sold by Novavax during a calendar year, as further articulated and described in the Manufacturing Agreement.

41

Appendix C

Licensed Patents

[Beginning on the following page]

{The schedule of licensed patents follows this cover 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.]f

42

EX-10.5

Exhibit 10.5

CERTAIN INFORMATION IDENTIFIED WITH [***] HAS BEEN EXCLUDED FROM THIS
EXHIBIT BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD BE COMPETITIVELY
HARMFUL IF PUBLICLY DISCLOSED.

Amendment to

SUPPLY AND LICENSE AGREEMENT DATED 30 JULY 2020 (“Agreement”)

Between

Novavax, Inc.

And

Serum Institute of India Private Limited

This Amendment (“Amendment”) to the SUPPLY AND LICENSE AGREEMENT dated July 30, 2020 (“Agreement”), is entered into between 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) and Serum Institute of India Private Limited, a company incorporated under the Companies Act, 1956 with registration number U80903PN1984PTC03294, and having its registered address as 212/2, Off Soli Poonawalla Road, Hadapsar, Pune 411028 (“SIIPL”, which expression shall, unless repugnant to the context thereof, mean and include its successors and permitted assigns), and is entered into and made effective as of September 11, 2020 (“Effective Date of Amendment”). All capitalized terms or otherwise undefined terms herein this Amendment shall have the same meaning and interpretation as in the Agreement

WHEREAS, Novavax and SIIPL entered into said Agreement under which Novavax agreed to (a) continuously supply to SIIPL Vaccine Components as per the Forecast requirement of SIIPL in the SIIPL Territory, (b) grant to SIIPL an exclusive license in the SIIPL Exclusive Territory to use the Vaccine Components 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 Vaccine Components to enable SIIPL to Manufacture, and Commercialize the Product, and (d) provide to SIIPL that Licensed Know–How Controlled by Novavax or its Affiliates (including the improvements if any), in accordance with the terms and conditions of the Agreement;

WHEREAS, subsequently, Parties have negotiated in good faith and subject to the mutually agreed terms and conditions stated herein, Novavax has agreed to additionally grant SIIPL a non–exclusive license to Manufacture the Drug Substance for the purpose of Manufacturing of the Product (“Purpose of the Amendment”); and

WHEREAS, it is the express mutual intent of Parties to amend and supplement certain terms and conditions of the Agreement to reduce to and record in writing the Purpose of the Amendment, and therefore Parties have mutually decided to execute this Amendment to the Agreement; and

NOW THEREFORE, SIIPL and Novavax agree to amend the Agreement as under:

1.   The definition of Vaccine Components as listed under Appendix A, Clause 86, shall stand amended and modified as under–

“A–87 “Vaccine Components” shall mean the Adjuvant, and any reference to “Vaccine Components” anywhere in the Agreement shall be read and interpreted accordingly”.

2.   The definition of SIIPL Improvements as listed under Appendix A, Clause 78, shall stand amended and modified as under–

“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 SIPPL during the Manufacture of the Drug Substance; provided in no case shall SIIPL Improvements include Novavax Improvements.”

3.   Any reference to ”Product” in the Agreement shall also include a reference to Drug Substance Manufactured by SIIPL as the context dictates

4.   The definition of Licensed Know–How as listed under Appendix A, Clause 45 shall stand modified and amended as under–

“A–45 “Licensed Know–How” means all Know–How that is Controlled by Novavax or its Affiliates as of the Effective Date in relation to the (a) Vaccine Components and (b) Manufacture of the Drug Substance, including any biological materials to be mutually agreed by the Parties, and which is necessary for the Development, Manufacture or Commercialization of Product”

5.   The definition of Licensed Patents as listed under Appendix , Clause 46 shall stand modified and amended as under–

“A–46 “Licensed Patents” means the Patent Rights of Novavax in relation to the (a) Vaccine Components and (b) Drug Substance, and which are licensed to SIIPL under this Agreement, and which are annexed herein as Appendix C.”

6.   The definition of DS Price as listed under Appendix A, Clause 29, shall stand amended and modified as under–

“A–29 “DS Price” means [***].

7.   The definition of DP Price as listed under Appendix A, Clause 27, shall stand amended and modified as under–

“A-27 “DP Cost” means [***]

8.   The definition of Adjuvant Price as listed under Annexure A, Clause 2, shall stand amended and modified as under-

“Adjuvant Price” means [***]

9.   Any and all references to “DP Price” in Agreement shall be replace with “DP Cost”.

2

10. In Article 2 Clause 2.4 (a) of the Agreement, the words “the Drug Substance and”, shall be deleted, and the modified and amended Article 2 Clause 2.4 (a) of the Agreement shall now state as under–

“a   Supply of Vaccine Components. 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 Vaccine Components in accordance with this Agreement. Novavax will solely be responsible for all vendors, employees, contractors, and other Persons employed or engaged by it to Manufacture the Vaccine Components. Novavax will provide to SIIPL [***] necessary to enable SIIPL to formulate the components of the Vaccine Components (i.e., the Adjuvant), [***], so as to enable SIIPL to formulate the Vaccine Components and Manufacture the Product.”

11. Article 3 (Global Allocation Tenets) shall now state as follows

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, for 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 global allocation body endorsed by CEPI, currently expected to be 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.

[***]

12. Article 4, Clause 4.5 (a) of the Agreement shall stand amended and modified as under–

“a.Documentation. Novavax will provide SIIPL with applicable information, reports, documents, certificates, and any other materials regarding Vaccine Components 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 Vaccine Components and each facility in which Novavax Manufactures the Vaccine Components, 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.”

13. Article 4 Clause 4.7 of the Agreement shall stand amended and modified as under–

“4.7      Regulatory Inquiries. Novavax will [***] notify SIIPL in writing of any governmental or regulatory inquiries, inspections, or audits directly related to the Vaccine Components 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 and any findings related to the same.  SIIPL will permit such governmental or regulatory body to inspect and audit its facilities and

3

4

documents, including facilities and documents of its contract manufacturer(s), related to Vaccine Components at [***] cost and expense, and notify and update Novavax of such inquiries, inspections and audits.”

14. Article 5, Clause 5.1 of the Agreement shall stand amended and modified as under–

“5.1 Technology Transfer. Within [***], Novavax 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 Vaccine Components, for the Manufacture of the Product, 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”).”

15. Clause 5.2 stated hereunder shall be inserted in in the Agreement and shall follow Clause 5.1 of the Agreement–

“5.2 Drug Substance Manufacture: In addition to the Clause 5.1 of the Agreement, as amended, stated hereinabove, the Parties further agree that for the purpose mentioned in the Amendment, the Technology Transfer and process Development and Manufacture of the Drug Substance shall be dealt in the manner provided hereunder:

5.2.1 Premises: The Parties hereby agree that SIIPL shall perform Technology Transfer, 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 Amendment.

5.2.2 Provision Raw Materials. The Parties agree that SIIPL shall be free to procure the raw materials necessary for SIIPL to Manufacture the Drug Substance. In the event SIIPL and Novavax agree that SIIPL may procure certain critical raw materials from certain of Novavax’ designated vendors, Novavax will instruct  and authorize such designated vendors to directly transact with and supply SIIPL such critical raw materials as well as other consumables and information related thereto as may be necessary and required for SIIPL’s Manufacture of the Drug Substance at SIIPL’s manufacturing facility; provided Novavax shall have no liability and responsibility whatsoever regarding the quality of any such raw materials supplied to SIIPL by any such designated vendor. The list of critical raw materials and Novavax’ designated vendors is set forth in Appendix D and the template letter of authorization to be provided by Novavax to its designated vendors is set forth in Appendix E (provided that Novavax may provide such authorization in any form it deems sufficient). The Parties agree that if any raw materials are to be purchased from such Novavax’ authorized vendors, SIIPL shall seek prior written approval from Novavax of the quantities of such raw materials as may be required by SIIPL.”

16. Article 6, Clause 6.1.(c) shall be renumbered as Clause 6.1.(d) and the following new Clause 6.1.(c) shall be inserted in the Agreement–

“6.4 Manufacturing License. Subject to the terms and conditions of this Agreement, as amended, Novavax hereby grants to SIIPL a non–exclusive, sublicensable (subject to Novavax’ prior written consent) license under the Licensed Know–How and Licensed Patents to Manufacture the Drug Substance solely for use in the Manufacture of the Product in the Territory during the Term in the performance of this Agreement.”

5

6

17. In Article 7, Clause 7.2 of the Agreement shall stand amended and modified as under–

“7.2 Vaccine Component 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 “Vaccine Component Payment”).”

18. Article 9, Clause 9.1.(a) of the Agreement shall stand amended and modified as under–

Subject to Sections 9.1(c) and 9.1(d), 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 SIIPL.

19. Clause 9.1.(e) as stated hereunder shall be inserted in the Agreement, and shall follow Clause 9.1.(d) of the Agreement–

“e. Inventorship of SIIPL Improvements pertaining to Drug Substance shall be determined in accordance with U.S. patent laws, and ownership shall follow inventorship. Novavax shall [***] disclose in writing to SIIPL of any Novavax Improvements to the Vaccine Components conceived, developed or reduced to practice during the Term. SIIPL shall [***] disclose in writing to Novavax of any SIIPL Improvements conceived, developed or reduced to practice during the Term.”

20. Article 10, Clause 10.2 of the Agreement shall stand amended and modified as under–

“10.2 SIIPL Representation and Warranty.

“a. SIIPL represents and warrants to Novavax that all Product 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 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.”

21. Article 14 Clause 14.2 of the Agreement shall be cancelled and instead the clause stated hereunder shall replace said Clause 14.2–

“14.2 Supply of Drug Substance to Novavax-Parties agree that in the event Novavax requires SIIPL to supply the Drug Substance 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 writing at the relevant time.”

14.2.2 Purchase of Drug Substance manufactured by Novavax’ designated assignee-

In the event the Parties agree that Drug Substance 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.”

7

22. The provisions of this Amendment shall be incorporated into and are hereby made an essential part of the Agreement and this Amendment shall be co–terminus with the Agreement.

23. Except for the terms and conditions amended or added by this Amendment, all other  terms and conditions of the Agreement shall remain in full force and effect.

24. Parties agree and accept that any modification or alteration or amendment to this Amendment shall be invalid unless mutually executed in writing by both Parties.

25. This Amendment is for the specific Purpose of the Amendment and for amending the clauses hereinabove and nothing stated in this Amendment shall mean or be interpreted as a waiver of any of the rights of either Party under the Agreement

IN WITNESS WHEREOF, the Parties hereto have caused their authorized representatives to execute this Amendment on the date first above written.

For and on behalf of	For and on behalf of
Novavax, Inc.	Serum Institute of India Private Limited
/s/ John A. Herrmann III	/s/ [***]
Name – John A. Herrmann III	Name– [***]
Designation – Executive Vice President,	Designation – [***]
Chief Legal Officer and Corporate Secretary

8

Appendix D

Authorized Vendors for Supply of Raw Materials from Novavax

[Pursuant to Regulation S-K, Item 601(a)(5), this Appendix setting forth the authorized suppliers for 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.]

[***]

9

Appendix E

Draft Authorization Letter

Novavax, Inc. Letterhead

_______2020

Dear________

___________________

Re: Authorization for Supply of Raw Material for manufacturing of BV2373 (Drug Substance).

NOVAVAX, INC. (“Novavax”) and SERUM INSTITUTE OF INDIA PRIVATE LIMITED (“SIIPL”) have entered into certain Supply and License Agreement, under which Novavax has granted SIIPL a manufacturing license for the Novavax’ BV2373 (Drug Substance) at its manufacturing facility in India.

In this connection, we hereby authorize you to provide supply of [____] to SIIPL in quantities up tounder terms and conditions to be negotiated between you and SIIPL. We further authorize you to deal and transact with SIIPL directly in order to expedite the procurement of such materials. For clarity, Novavax shall have no responsibility for payment for any such materials or other liability or obligation.

Sincerely

________________

Name:

Title:

CC to: Serum Institute of India Private Limited at 212/2, Off Soli Poonawalla Road, Hadapsar, Pune 411028, India

10

EX-10.6

Exhibit 10.6

CERTAIN INFORMATION IDENTIFIED WITH [***] HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED.

AMENDMENT OF SOLICITATION/MODIFICATION OF CONTRACT

1. CONTRACT ID CODE

PAGE OF PAGES

S

1

3

2. AMENDMENT/MODIFICATION NO. P00001

3. EFFECTIVE DATE 16-Sep-2020

4. REQUISITION/PURCHASE REG. NO. SEE SCHEDULE

5. PROJECT NO. (If applicable)

6. ISSUED BY

CODE

W911QY

7. ADMINISTERED BY (If other than item 6)CODE

S2101A

W6QK ACC-APG NATICK DIVISION [***]

DEFENSE CONTRACT MANAGEMENT AGENCY DCMA BALTIMORE 217 EAST REDWOOD STREETSCD: A SUITE 1800 BALTIMORE MD 21202-3375

8. NAME AND ADDRESS OF CONTRACTOR (No., Street, Country, State and Zip Code) NOVAVAX, INC. 20 FIRSTFIELD RD GAITHERSBURG MD 20878-1760

9A. AMENDMENT OF SOLICITION NO.

9B. DATED (SEE ITEM 11)

X

10A. MOD. OF CONTRACT/ORDER NO. W911QY20C0077

X

10B. DATED (SEE ITEM 13) 04-Jun-2020

CODE1UCZ4

FACILITY CODE

11. THIS ITEM ONLY APPLIES TO AMENDMENTS OF SOLICITATIONS

☐

The above numbered solicitation is amended as set forth in Item 14. The hour and date specified for receipt of Offer ☐ is extended, ☐ is not extended. Offer must acknowledge receipt of this amendment prior to the hour and date specified in the solicitation or as amended by one of the following methods: (a) By completing Items 8 and 15, and returning                copies of the amendment; (b) By acknowledging receipt of this amendment on each copy of the offer submitted; or (c) By separate letter or telegram which includes a reference to the solicitation and amendment numbers. FAILURE OF YOUR ACKNOWLEDGMENT TO BE RECEIVED AT THE PLACE DESIGNATED FOR THE RECEIPT OF OFFERS PRIOR TO THE HOUR AND DATE SPECIFIED MAY RESULT IN REJECTION OF YOUR OFFER. If by virtue of this amendment you desire to change an offer already submitted, such change may be made by telegram or letter, provided each telegram or letter makes reference to the solicitation and this amendment, and is received prior to the opening hour and date specified.

12. ACCOUNTING AND APPROPRIATE DATA (if required) See Schedule

13. THIS ITEM APPLIES ONLY TO MODIFICATIONS OF CONTRACT/ORDERS IT MODIFIES THE CONTRACT/ORDER NO. AS DESCRIBED IN ITEM 14.

A. THIS CHANGE ORDER IS ISSUED PURSUANT TO: (Specify authority) THE CHANGES SET FORTH IN ITEM 14 ARE MADE IN THE CONTRACT ORDER NO. IN ITEM 10A.

B. THE ABOVE NUMBERED CONTRACT/ORDER IS MODIFIED TO REFLECT THE ADMINISTRATIVE CHANGES (such as changes in paying office, appropriation date, etc.) SET FORTH IN ITEM 14, PURSUANT TO THE AUTHORITY OF FAR 43.103(B).

C THIS SUPPLEMENTAL AGREEMENT IS ENTERED INTO PURSUANT TO AUTHORITY OF:

X

D.OTHER (Specify type of modification and authority) FAR Clause 52.232-22 Limitation of Funds

E. IMPORTANT: Contractor ☒ is not, ☐is required to sign this document and return               copies to the issuing office.

14. DESCRIPTION OF AMENDMENT/MODIFICATION (Organized by UCF section headings, including solicitation/contract subject matter where feasible) Modification Control Number:soconnel202894 The purpose of this modification is to add incremental funding as follows: Except as provided herein, all terms and conditions of the document referenced in Item 9A or 10A, as heretofore change, remains unchanged and in full force and effect.

15A. NAME AND TITLE OF SIGNER (Type or print)

16A. NAME AND TITLE OF CONTRACTING OFFICER (Type or print) [***] / CONTRACTING OFFICER TEL: [***]EMAIL: [***]

15B. CONTRACTOR/OFFEROR (Signature of person authorized to sign)

15C. DATE SIGNED

16B. UNITED STATES OF AMERICA BY​ ​     /s/ [***]                                            (Signature of Contracting Officer)

16C. DATE SIGNED 16-Sep-2020

Exception TO SF 30 30-105-04 STANDARD FORM 30 (Rev. 10-83)
Prescribed by GSA
FAR (48 CFR) 53.243

SECTION SF 30 BLOCK 14 CONTINUATION PAGE

SUMMARY OF CHANGES

SECTION B - SUPPLIES OR SERVICES AND PRICES

SUBCLIN 000103 is added as follows:

ITEM NO	SUPPLIES/SERVICES	QUANTITY	UNIT	UNIT PRICE	AMOUNT
000103	Funding for CLIN 0001				$0.00
	COST
	PURCHASE REQUEST NUMBER:	0011504522-0001
			ESTIMATED COST		$0.00
	ACRN AC				$8,000,000.00
	CIN: GFEBS001150452200003

SECTION E - INSPECTION AND ACCEPTANCE

The following Acceptance/Inspection Schedule was added for SUBCLIN 000103:

INSPECT AT	INSPECT BY	ACCEPT AT	ACCEPT BY
N/A	N/A	N/A	N/A

SECTION G - CONTRACT ADMINISTRATION DATA

Accounting and Appropriation

Summary for the Payment Office

As a result of this modification, the total funded amount for this document was increased by $8,000,000.00 from $21,952,384.00 to $29,952,384.00.

SUBCLIN 000103:
Funding on SUBCLIN 000103 is initiated as follows:

ACRN: AC

CIN: GFEBS001150452200003

Acctng Data: 09720202021013000018170552520252 S.0074658.1.1.5 6100.9000021001

Increase:

$8,000,000.00]Total:

$8,000,000.00

Cost Code: AHPDD

(End of Summary of Changes)

Page 2 of 3

EX-31.1

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 10, 2020	By:	/s/ Stanley C. Erck
			Stanley C. Erck
			President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

I, John J. Trizzino, 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 10, 2020	By:	/s/ John J. Trizzino
			John J. Trizzino
			Executive Vice President,
			Chief Business Officer,
			Chief Financial Officer and Treasurer

EX-32.1

Exhibit 32.1

CERTIFICATION OF CHEIF 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, 2020 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 10, 2020	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.

EX-32.2

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, 2020 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, John J. Trizzino, Executive Vice President, Chief Business Officer and Chief Financial 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 10, 2020	By:	/s/ John J. Trizzino
			John J. Trizzino
			Executive Vice President,
			Chief Business Officer,
			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.

XML

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2020	Oct. 31, 2020
Document and Entity Information
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2020
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q3
Entity Registrant Name	NOVAVAX INC
Entity Central Index Key	0001000694
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Trading Symbol	NVAX
Entity Common Stock, Shares Outstanding		63,659,952
Entity Interactive Data Current	Yes
Entity Current Reporting Status	Yes
Entity Emerging Growth Company	false
Entity Small Business	true
Entity Shell Company	false
Document Quarterly Report	true
Document Transition Report	false
Entity File Number	000-26770
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	22-2816046
Entity Address, Address Line One	21 Firstfield Road
Entity Address, City or Town	Gaithersburg
Entity Address, Country	MD
Entity Address, Postal Zip Code	20878
City Area Code	240
Local Phone Number	268-2000
Title of 12(b) Security	Common Stock, Par Value $0.01 per share
Security Exchange Name	NASDAQ

XML

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Current assets:
Cash and cash equivalents	$ 334,171	$ 78,823
Marketable securities	169,860
Restricted cash	67,154	2,947
Accounts receivable	12,355	7,500
Unbilled services	3,826
Prepaid expenses and other current assets	83,851	7,977
Total current assets	671,217	97,247
Restricted cash	411	410
Property and equipment, net	131,834	11,445
Intangible assets, net	5,332	5,581
Goodwill	126,932	51,154
Other non-current assets	8,294	7,120
Total assets	944,020	172,957
Current liabilities:
Accounts payable	15,097	2,910
Accrued expenses	78,812	14,867
Accrued interest	2,031	5,078
Deferred revenue	81,814	1,678
Current portion of finance lease liabilities	55,860
Other current liabilities	5,604	1,262
Total current liabilities	239,218	25,795
Deferred revenue	2,500	2,500
Convertible notes payable	321,679	320,611
Non-current finance lease liabilities	63,099
Other non-current liabilities	11,262	10,068
Total liabilities	637,758	358,974
Commitments and contingencies
Preferred stock, $0.01 par value, 2,000,000 shares authorized; 438,885 shares of redeemable Series A Convertible Preferred Stock issued and outstanding at September 30, 2020 and no shares issued and outstanding at December 31, 2019	199,822
Stockholders' deficit:
Common stock, $0.01 par value, 600,000,000 shares authorized at September 30, 2020 and 2019; and 63,318,888 shares issued and 62,927,485 shares outstanding at September 30, 2020 and 32,399,352 shares issued and 32,352,416 shares outstanding at December 31, 2019	633	324
Additional paid-in capital	1,848,644	1,260,551
Accumulated deficit	(1,696,635)	(1,431,801)
Treasury stock, 391,403 shares, cost basis at September 30, 2020 and 46,936 shares, cost basis at December 31, 2019	(41,207)	(2,583)
Accumulated other comprehensive loss	(4,995)	(12,508)
Total stockholders' equity (deficit)	106,440	(186,017)
Total liabilities and stockholders' equity (deficit)	$ 944,020	$ 172,957

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CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Sep. 30, 2020	Dec. 31, 2019
Preferred stock, par value per share	$ 0.01	$ 0.01
Preferred stock, shares authorized	2,000,000	2,000,000
Common stock, par value per share	$ 0.01	$ 0.01
Common stock, shares authorized	600,000,000	600,000,000
Common stock, shares issued	63,318,888	32,399,352
Common stock, shares outstanding	62,927,485	32,352,416
Treasury stock, shares	391,403	46,936
Series A Convertible
Preferred stock, shares issued	438,885	0
Preferred stock, shares outstanding	438,885	0

XML

CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Revenue:
Total revenue	$ 157,024	$ 2,507	$ 195,939	$ 9,846
Expenses:
Research and development	294,087	18,611	345,828	84,502
Gain on Catalent transaction		(9,016)		(9,016)
General and administrative	56,879	7,899	83,977	26,236
Total expenses	350,966	17,494	429,805	101,722
Loss from operations	(193,942)	(14,987)	(233,866)	(91,876)
Other income (expense):
Investment income	140	342	872	1,236
Interest expense	(4,460)	(3,403)	(11,266)	(10,209)
Other income (expense)	952	5	3,565	(15)
Net loss	$ (197,310)	$ (18,043)	$ (240,695)	$ (100,864)
Basic and diluted net loss per share	$ (3.21)	$ (0.74)	$ (4.39)	$ (4.43)
Basic and diluted weighted average number of common shares outstanding	61,554	24,327	54,810	22,761
Grant and other
Revenue:
Total revenue	$ 114,086	$ 2,507	$ 152,690	$ 9,846
Government contract
Revenue:
Total revenue	$ 42,938		$ 43,249

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
Net loss	$ (197,310)	$ (18,043)	$ (240,695)	$ (100,864)
Other comprehensive income (loss):
Net unrealized gains (losses) on marketable securities available-for-sale	(26)		18	5
Foreign currency translation adjustment	8,226	(1,564)	7,495	(2,668)
Other comprehensive income (loss)	8,200	(1,564)	7,513	(2,663)
Comprehensive loss	$ (189,110)	$ (19,607)	$ (233,182)	$ (103,527)

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CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) - USD ($)	Common Stock	Additional Paid-in Capital	Accumulated Deficit	Treasury Stock	Other Comprehensive Income (Loss)	Total
Balance beginning at Dec. 31, 2018	$ 192,000	$ 1,144,621,000	$ (1,299,107,000)	$ (2,450,000)	$ (11,191,000)	$ (167,935,000)
Balance beginning (in shares) at Dec. 31, 2018	19,245,302
Non-cash stock-based compensation		12,803,000				12,803,000
Stock issued under incentive programs	$ 2,000	1,122,000		(132,000)		992,000
Stock issued under incentive programs (shares)	173,873
Fractional shares purchased in stock split				(1,000)		(1,000)
Issuance of common stock, net of issuance costs	$ 62,000	67,768,000				67,830,000
Issuance of common stock, net of issuance costs, (in shares)	6,156,403
Unrealized (loss) gain on marketable securities					5,000	5,000
Foreign currency translation adjustment					(2,668,000)	(2,668,000)
Net loss			(100,864,000)			(100,864,000)
Balance ending at Sep. 30, 2019	$ 256,000	1,226,314,000	(1,399,971,000)	(2,583,000)	(13,854,000)	(189,838,000)
Balance ending (in shares) at Sep. 30, 2019	25,575,578
Balance beginning at Jun. 30, 2019	$ 235,000	1,210,941,000	(1,381,928,000)	(2,451,000)	(12,290,000)	(185,493,000)
Balance beginning (in shares) at Jun. 30, 2019	23,495,466
Non-cash stock-based compensation		2,624,000				2,624,000
Stock issued under incentive programs	$ 1,000	181,000		(132,000)		50,000
Stock issued under incentive programs (shares)	122,485
Issuance of common stock, net of issuance costs	$ 20,000	12,568,000				12,588,000
Issuance of common stock, net of issuance costs, (in shares)	1,957,627
Foreign currency translation adjustment					(1,564,000)	(1,564,000)
Net loss			(18,043,000)			(18,043,000)
Balance ending at Sep. 30, 2019	$ 256,000	1,226,314,000	(1,399,971,000)	(2,583,000)	(13,854,000)	(189,838,000)
Balance ending (in shares) at Sep. 30, 2019	25,575,578
Balance beginning at Dec. 31, 2019	$ 324,000	1,260,551,000	(1,431,801,000)	(2,583,000)	(12,508,000)	(186,017,000)
Balance beginning (in shares) at Dec. 31, 2019	32,399,352
Balance ending at Jun. 30, 2020	$ 612,000	1,699,072,000	(1,499,325,000)	(2,638,000)	(13,195,000)	184,526,000
Balance ending (in shares) at Jun. 30, 2020	61,262,632
Balance beginning at Dec. 31, 2019	$ 324,000	1,260,551,000	(1,431,801,000)	(2,583,000)	(12,508,000)	(186,017,000)
Balance beginning (in shares) at Dec. 31, 2019	32,399,352
Preferred stock beneficial conversion feature	$ 0	24,139,000	(24,139,000)	0	0	0
Non-cash stock-based compensation		77,602,000				77,602,000
Stock issued under incentive programs	$ 19,000	35,689,000		(38,624,000)		(2,916,000)
Stock issued under incentive programs (shares)	1,884,399
Issuance of common stock, net of issuance costs	$ 290,000	450,663,000				450,953,000
Issuance of common stock, net of issuance costs, (in shares)	29,035,137
Unrealized (loss) gain on marketable securities					18,000	18,000
Foreign currency translation adjustment					7,495,000	7,495,000
Net loss			(240,695,000)			(240,695,000)
Balance ending at Sep. 30, 2020	$ 633,000	1,848,644,000	(1,696,635,000)	(41,207,000)	(4,995,000)	106,440,000
Balance ending (in shares) at Sep. 30, 2020	63,318,888
Balance beginning at Jun. 30, 2020	$ 612,000	1,699,072,000	(1,499,325,000)	(2,638,000)	(13,195,000)	184,526,000
Balance beginning (in shares) at Jun. 30, 2020	61,262,632
Non-cash stock-based compensation		65,705,000				65,705,000
Stock issued under incentive programs	$ 16,000	26,682,000		(38,569,000)		(11,871,000)
Stock issued under incentive programs (shares)	1,534,345
Issuance of common stock, net of issuance costs	$ 5,000	57,185,000				57,190,000
Issuance of common stock, net of issuance costs, (in shares)	521,911
Unrealized (loss) gain on marketable securities					(26,000)	(26,000)
Foreign currency translation adjustment					8,226,000	8,226,000
Net loss			(197,310,000)			(197,310,000)
Balance ending at Sep. 30, 2020	$ 633,000	$ 1,848,644,000	$ (1,696,635,000)	$ (41,207,000)	$ (4,995,000)	$ 106,440,000
Balance ending (in shares) at Sep. 30, 2020	63,318,888

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CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
Issuance of common stock, issuance costs	$ 725	$ 161	$ 5,870	$ 1,273

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CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019
Operating Activities:
Net loss	$ (240,695)	$ (100,864)
Reconciliation of net loss to net cash used in operating activities:
Depreciation and amortization	3,091	4,744
Loss on disposal of property and equipment		88
Gain on Catalent transaction		(9,016)
Amortization of debt issuance costs	1,068	1,068
Non-cash stock-based compensation	77,602	12,803
Write off of right-of-use assets	187,193
Other	(4,119)	1,269
Changes in operating assets and liabilities:
Prepaid expenses and other assets	(78,788)	1,326
Accounts payable and accrued expenses	60,540	(16,882)
Deferred revenue	80,135	(7,416)
Net cash provided by (used in) operating activities	86,027	(112,880)
Investing Activities:
Capital expenditures	(12,610)	(1,641)
Acquisition of Novavax CZ, net of cash acquired	(164,204)
Proceeds from Catalent transaction		18,333
Purchases of marketable securities	(266,330)	(17,484)
Proceeds from maturities of marketable securities	96,488	39,500
Net cash (used in) provided by investing activities	(346,656)	38,708
Financing Activities:
Net proceeds from sale of preferred stock	199,822
Net proceeds from sales of common stock	447,070	67,220
Proceeds from the exercise of stock based awards and incentive programs	35,708	992
Treasury stock related to tax withholding on stock-based awards	(37,024)
Finance lease payments	(65,424)
Net cash provided by financing activities	580,152	68,212
Effect of exchange rate on cash, cash equivalents and restricted cash	33	(69)
Net increase (decrease) in cash, cash equivalents and restricted cash	319,556	(6,029)
Cash, cash equivalents and restricted cash at beginning of period	82,180	81,959
Cash, cash equivalents and restricted cash at end of period	401,736	75,930
Supplemental disclosure of non-cash activities:
Sale of common stock under the Sales Agreement not settled at quarter-end	3,883	610
Capital expenditures included in accounts payable and accrued expenses	6,189	183
Right-of-use assets from new lease agreements	188,362
Supplemental disclosure of cash flow information:
Cash interest payments	$ 12,188	$ 12,188

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Organization

9 Months Ended

Sep. 30, 2020

Organization

Organization

Note 1 – Organization

Novavax, Inc. (“Novavax,” and together with its wholly owned subsidiaries, Novavax AB and Novavax CZ (formerly, Praha Vaccines a.s.), the “Company”) is a late-stage biotechnology company that promotes improved global health through the discovery, development and commercialization of innovative vaccines to prevent serious infectious diseases and address urgent, global health needs. The Company’s vaccine candidates, including both its coronavirus vaccine candidate, NVX-CoV2373, and its lead influenza vaccine candidate, NanoFlu^TM, are genetically engineered, three-dimensional nanostructures of recombinant proteins critical to disease pathogenesis and may elicit differentiated immune responses, which may be more efficacious than naturally occurring immunity or traditional vaccines. The Company’s technology targets a variety of infectious diseases. The Company is also developing proprietary immune stimulating saponin-based adjuvants at Novavax AB, its wholly owned Swedish subsidiary. The Company’s lead adjuvant, Matrix-M™, has been shown to enhance immune responses and has been well-tolerated in multiple clinical trials.

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Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2020

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

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, 2020, the consolidated statements of operations and the consolidated statements of comprehensive loss for the three and nine months ended September 30, 2020 and 2019, the consolidated statements of changes in stockholders’ equity (deficit) for the three and nine months ended September 30, 2020 and 2019 and the consolidated statements of cash flows for the nine months ended September 30, 2020 and 2019 are unaudited, but include all adjustments (consisting of normal recurring adjustments) that the Company considers necessary for a fair presentation of the financial position, operating results, comprehensive loss, changes in stockholders’ equity (deficit) and cash flows, respectively, for the periods presented. Although the Company believes that the disclosures in these unaudited consolidated financial statements are adequate to make the information presented not misleading, certain information and footnote information normally included in consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted as permitted under the rules and regulations of the United States Securities and Exchange Commission (“SEC”).

The unaudited consolidated financial statements include the accounts of Novavax, Inc. and its wholly owned subsidiaries, 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 loss in the accompanying unaudited consolidated balance sheets. The foreign currency translation adjustment balance included in accumulated other comprehensive loss was $5.0 million and $12.5 million as of September  30, 2020 and December 31, 2019, respectively.

The accompanying unaudited consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2019. Results for this or any interim period are not necessarily indicative of results for any future interim period or for the entire year. The Company operates in one business segment.

Use of Estimates

The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ materially from those estimates.

Cash and Cash Equivalents

Cash and cash equivalents consist of highly liquid investments with maturities of three months or less from the date of purchase. Cash and cash equivalents consist of the following at (in thousands):

	September 30,		December 31,
	2020		2019
Cash	$	126,505	$	15,863
Money market funds		79,950		42,960
Government-backed securities		43,250		20,000
Treasury securities		24,998		—
Corporate debt securities		59,468		—
Cash and cash equivalents	$	334,171	$	78,823

Cash equivalents are recorded at cost, which approximate fair value due to their short-term nature.

Marketable Securities

Marketable securities consist of debt securities with maturities greater than three months from the date of purchase that include commercial paper, 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' deficit until realized. Marketable securities are evaluated periodically to determine whether a decline in value is “other-than-temporary.” The term “other-than-temporary” is not intended to indicate a permanent decline in value. Rather, it means that the prospects for a near term recovery of value are not necessarily favorable, or that there is a lack of evidence to support fair values equal to, or greater than, the carrying value of the security. Management reviews criteria, such as the magnitude and duration of the decline, as well as the Company's ability to hold the securities, including whether the Company will be required to sell a security prior to recovery of its amortized cost basis, the investment issuer's financial condition and business outlook to predict whether the loss in value is other-than-temporary. 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. The cost of securities sold is based on the specific identification method.

Restricted Cash

The Company’s current and non-current restricted cash includes payments received under the Coalition for Epidemic Preparedness Innovations (“CEPI”) funding agreements (see Note 12), payments received under the Bill & Melinda Gates Foundation (“BMGF”) grant agreements (see Note 12), escrow funds paid in connection with the acquisition of Novavax CZ (see Note 5), escrow funds received in connection with a transaction in 2019 with Catalent Maryland, Inc. (formerly Paragon Bioservices, Inc.), a unit of Catalent Biologics (“Catalent”), 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, 2020, the restricted cash balances (both current and non-current) consisted of $9.1 million for payments received from BMGF, $46.3 million of payments under the CEPI funding agreements, $11.7 million held in escrow that was paid by the Company in connection with the Novavax CZ acquisition and $0.4 million of security deposits. As of December 31, 2019, the restricted cash balances (both current and non-current) consisted of $1.4 million for payments received from BMGF, $1.5 million held in escrow received in connection with the Catalent transaction and $0.4 million of security deposits.

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amounts shown in the statement of cash flows (in thousands):

	September 30,		December 31,
	2020		2019
Cash and cash equivalents	$	334,171	$	78,823
Restricted cash current		67,154		2,947
Restricted cash non-current		411		410
Cash, cash equivalents and restricted cash	$	401,736	$	82,180

Acquisitions

The Company applies the acquisition method of accounting to business combinations in accordance with Accounting Standards Codification (“ASC”) Topic 805, Business Combinations. The Company’s consolidated financial statements include the operating results of an acquired entity from the date on which it obtains control of the business acquired. The Company recognizes and measures the identifiable assets acquired and liabilities assumed, as of the acquisition date, based on their estimated fair value with the excess purchase consideration, if any, recognized as goodwill. In determining fair value, the Company uses various recognized valuation methods, including the cost and market approaches. The Company initially performs these valuations based on preliminary estimates and assumptions by management or independent valuation specialists under Company supervision, where appropriate, and makes revisions as estimates and assumptions are finalized. The final determination of fair values must be completed no later than the first anniversary of the date of acquisition. The Company expenses acquisition related costs as incurred. See Note 5 for further discussion around the Company’s recent acquisition of Novavax CZ.

Lease Accounting

The Company determines at the inception of a contract if an arrangement is, or contains, a lease, which exists when the contract conveys the right to control the use of identified property or equipment for a period of time in exchange for consideration. Depending on the contract, the lease commencement date, defined as the date on which the lessor makes the underlying asset available for use by the lessee, may be different than the inception date of the contract. Leases are classified as either operating or finance leases based on the economic substance of the agreement.

The Company enters into non-cancelable lease agreements for office space and certain equipment. Further, the Company enters into supply agreements with contract manufacturing organizations and contract development and manufacturing organizations to manufacture its vaccine candidates. Certain of these supply agreements include the use of identified manufacturing facilities and equipment that are controlled by the Company and may qualify as an embedded lease. Supply agreements that contain a lease are treated as lease arrangements in their entirety.

For leases that have a lease term of more than 12 months at the lease commencement date, the Company recognizes lease liabilities, which represent the Company’s obligation to make lease payments arising from the lease, and corresponding right-of-use (“ROU”) assets, which represent the right to use an underlying asset for the lease term, based on the present value of the fixed future payments over the lease term. The Company calculates the present value of future payments using the discount rate implicit in the lease, if available, or the Company’s incremental borrowing rate.  For all leases that have a lease term of 12 months or less at the commencement date (referred to as “short-term” leases), the Company has elected to apply the practical expedient in ASC Topic 842, Leases (“ASC 842”), to not recognize a lease liability or ROU asset but instead, recognize lease payments as an expense on a straight-line basis over the lease term and variable lease payments that do not depend on an index or rate, as an expense in the period in which the variable lease costs are incurred based on performance or usage in accordance with contractual agreements.  In determining the lease period, the Company evaluates facts and circumstances that could affect the period over which it is reasonably certain to

use the underlying asset while taking into consideration the non-cancelable period over which it has the right to use the underlying asset and any option period to extend or terminate the lease if it is reasonably certain to exercise the option. The Company reevaluates short-term leases that are modified and if they no longer meets the requirements to be treated as short-term leases, recognizes and measures the lease liability and ROU asset as if the date of the modification is the lease commencement date.

For operating leases, the Company recognizes lease expense related to fixed payments on a straight-line basis over the lease term and lease expense related to variable payments as incurred based on performance or usage in accordance with the contractual agreements. For finance leases, the Company recognizes the amortization of the ROU asset over the shorter of the lease term or useful life of the underlying asset. The Company expenses ROU assets acquired for research and development activities under ASC Topic 730, Research and Development, if they do not have an alternative future use, in research and development projects or otherwise.

The Company uses significant assumptions and judgment in evaluating its lease contracts and other agreements under ASC 842, including the determination of whether an agreement is or contains a lease, whether a lease represents an operating or finance lease, the discount rate used to determine the present value of lease obligations and the term of a lease embedded in its supply agreements.

Revenue Recognition

The Company performs research and development under government funding, grant, license and clinical development agreements. The revenue primarily consists of funding under U.S. government contracts and other arrangements to advance the clinical development and manufacturing of NVX-CoV2373. The Company’s U.S. government contracts are with the U.S. Department of Defense (the “DoD”) and its participation in Operation Warp Speed (“OWS”) (see Note 12). Other funding arrangements primarily include a grant and forgivable loan funding from CEPI (see Note 12).

At contract inception, the Company analyzes the revenue arrangement to determine the appropriate accounting under U.S. GAAP. Currently, the Company’s revenue arrangements represent customer contracts within the scope of ASC Topic 606, Revenue from Contracts with Customers (Topic 606) (“ASC 606”) or are contributions under the scope of ASC Topic 958-605, Not-for-Profit Entities – Revenue Recognition (“ASC 958-605”.) The Company recognizes revenue from arrangements within the scope of ASC 606 following the five-step model: (i) identify the contract(s) with a customer; (ii) identify the performance obligation(s) in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligation(s) in the contract; and (v) recognize revenue when (or as) it satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that it will collect the consideration it is entitled to in exchange for the goods or services it transfers to its customer. The Company recognizes contribution revenue within the scope of ASC 958-605 when the funder-imposed conditions have been substantially met. Contributions are recorded as deferred revenue until the period in which research and development activities are performed that satisfy the funder-imposed conditions.

Under the U.S. government contracts, the Company is entitled to receive funding of up to $1.66 billion, on a reimbursable-cost or reimbursable-cost-plus-fixed-fee basis, to support certain activities related to the development, manufacture and delivery of NVX-CoV2373 to the U.S. government. The Company analyzed these contracts and determined that they are within the scope of ASC 606. The obligations under each of the contracts are not distinct in the context of the contract as they are highly interdependent or interrelated and, as such, they are accounted for as a single performance obligation. The transaction price under these arrangements is the consideration the Company is expecting to receive and consists of the funded contract amount and the unfunded variable amount to the extent that it is probable that a significant reversal of revenue will not occur. The Company recognizes revenue for these contracts over time as the Company transfers control over the goods and services and satisfies the performance obligation. The Company measures progress toward satisfaction of the performance obligation using an Estimate-at-Completion (“EAC”) process, which is a cost-based input method that reviews and monitors the progress towards the completion of the Company’s performance obligation. Under this process, management considers the costs that have been incurred to-date, as well as projections to completion using various inputs and assumptions, including, but not limited to, progress towards completion, labor costs and productivity, material and subcontractor costs and identified risks. Estimating the total allowable cost at completion of the performance obligation under a contract is subjective and requires the Company to make assumptions about future activity and cost drivers. Changes in these estimates can occur for a variety of reasons and, if significant, may impact the timing of revenue and fee recognition on the Company’s contracts. Allowable contract costs include direct costs incurred

on the contract and indirect costs that are applied in the form of rates to the direct costs. Billings under the contracts are initially based on provisional indirect billing rates, agreed upon between the Company and the U.S. government. These indirect rates are subject to audit on an annual basis. The Company records the impact of changes in the indirect billing rates in the period when such changes are identified. These changes reflect the difference between actual indirect costs incurred compared to the estimated amounts used to determine the provisional indirect billing rates agreed upon with the U.S. government. The Company recognizes revenue on the U.S government contracts based on reimbursable allowable contract costs incurred in the period up to the transaction price. For reimbursable-cost-plus-fixed-fee contracts, the Company recognizes the fixed-fee based on the proportion of reimbursable contract costs incurred to total estimated allowable contract costs expected to be incurred on completion of the underlying performance obligation as determined under the EAC process. The Company recognizes changes in estimates related to the EAC process in the period when such changes are made on a cumulative catch-up basis. The Company includes the transaction price comprising both funded and unfunded portions of customer contracts, in this estimate. As of September 30, 2020, $1.62 billion of the total transaction price of $1.66 billion was not yet satisfied and the Company had a contract asset of $3.8 million and a contract liability of $26.5 million.

The Company’s other funding agreements currently include funding from CEPI of $399.5 million in the form of a grant of $257.0 million (“CEPI Grant Funding”) and one or more forgivable no interest term loans of $142.5 million (“CEPI Forgivable Loan Funding”). Under the Company’s grant funding arrangements, including the CEPI Grant Funding, the Company is primarily entitled to reimbursement for costs that support development related activities of NVX-CoV2373. The CEPI Forgivable Loan Funding is designated for the prepayment of certain manufacturing activities. The Company analyzed these other funding arrangements and determined that they are not within the scope of ASC 606 as they do not provide a direct economic benefit to the grantor. Payments received under the grant funding arrangements are considered conditional contributions under the scope of ASC 958-605 and are recorded as deferred revenue until the period in which such research and development activities are actually performed that satisfy the funder-imposed conditions. Payments received under the CEPI Forgivable Loan Funding agreements are only repayable if the proceeds of sales to one or more third parties of NVX-CoV2373 cover the Company’s costs of manufacturing such vaccine candidate, not including manufacturing costs funded by CEPI. As the financial risk remains with CEPI, the Company determined that the use of the CEPI Forgivable Loan Funding is outside the scope of ASC Topic 470, Debt. The research and development risk is considered substantive, such that it is not yet probable that the development will be successful. Therefore, the Company has concluded that ASC 730 is considered applicable and most appropriate. Given the financial risk associated with the research and development activities lies with CEPI because repayment of any funds provided by CEPI depends solely on the results of the research and development activities having future economic benefit, the Company has accounted for the obligation under the CEPI Forgivable Loan Funding as a contract to perform research and development for others. The Company has determined that payments received under these agreements should be recorded as revenue under ASC 958-605 rather than a reduction to research and development expenses. This is consistent with the Company’s policy of presenting such amounts as revenue. In reaching this determination, the Company considered a number of factors, including whether it is principal under the arrangement, and whether the arrangement is significant to, and part of, the Company’s core operations. The Company will record revenue as it performs the contractual research and development services.

Net Loss per Share

Net loss per share is computed using the weighted average number of shares of common stock outstanding. As of September 30, 2020 and 2019, the Company had outstanding stock options, stock appreciation rights (“SARs”) and unvested restricted stock units (“RSUs”) totaling 6,623,466 and 5,041,526, respectively. In addition, as of September 30, 2020, the Company had 438,885 shares outstanding of its newly designated Series A Convertible Preferred Stock , which are convertible into 4,388,850 shares of the Company’s common stock.

As of September 30, 2020, the Company’s Notes (see Note 8) would have been convertible into approximately 2,385,800 shares of the Company’s common stock assuming a common stock price of $136.20 or higher. These and any shares due to the Company upon settlement of its capped call transactions are excluded from the computation, as their effect is antidilutive.

Recent Accounting Pronouncements

Recently Adopted

In January 2017, the FASB issued Accounting Standards Update (“ASU”) No. 2017-04, Intangibles-Goodwill and Other (Topic 350) (“ASU 2017-04”), which will simplify the goodwill impairment calculation by eliminating Step 2 from the current goodwill impairment test. The new standard does not change how a goodwill impairment is identified. The Company will continue to perform its quantitative goodwill impairment test by comparing the fair value of its reporting unit to its carrying amount, but if the Company is required to recognize a goodwill impairment charge, under the new standard, the amount of the charge will be calculated by subtracting the reporting unit's fair value from its carrying amount. Under the current standard, if the Company is required to recognize a goodwill impairment charge, Step 2 requires it to calculate the implied value of goodwill by assigning the fair value of a reporting unit to all of its assets and liabilities as if that reporting unit had been acquired in a business combination and the amount of the charge is calculated by subtracting the reporting unit's implied fair value of goodwill from the goodwill carrying amount. The standard was effective January 1, 2020 for the Company and will be applied prospectively from the date of adoption. The adoption of ASU 2017-04 did not have a material impact on the Company’s historical financial statements.

Not Yet Adopted

In August 2020, the FASB issued 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 on 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. Early adoption is permitted, but no earlier than January 1, 2021 for the Company. Management is evaluating the impact of adopting ASU 2020-06 and whether it will have a material impact on the Company’s consolidated financial statements.

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Fair Value Measurements

9 Months Ended

Sep. 30, 2020

Fair Value Measurements

Fair Value Measurements

Note 3 – Fair Value Measurements

The following table represents the Company's fair value hierarchy for its financial assets and liabilities measured at fair value (in thousands):

	Fair Value at September 30, 2020						Fair Value at December 31, 2019
Assets	Level 1		Level 2		Level 3		Level 1		Level 2		Level 3
Money market funds(1)	$	79,950	$	―	$	—	$	42,960	$	—	$	—
Government-backed securities(2)		―		43,250		―		―		20,000		―
Treasury securities(3)		—		65,093		—		—		—		—
Corporate debt securities(4)		―		148,583		―		―		—		―
Agency securities	$	―		40,651		—		—		—		—
Total cash equivalents and marketable securities	$	79,950	$	297,577	$	—	$	42,960	$	20,000	$	—
Liabilities
Convertible notes payable	$	―	$	389,217	$	—	$	—	$	125,811	$	—

(1) Classified as cash and cash equivalents as of September 30, 2020 and December 31, 2019, respectively, on the consolidated balance sheets.

(2) Includes $43,250 and $20,000 classified as cash and cash equivalents as of September 30, 2020 and December 31, 2019, respectively, on the consolidated balance sheets.

(3) Includes $24,998 classified as cash and cash equivalents as of September 30, 2020 on the consolidated balance sheets.

(4) Includes $59,468 classified as cash and cash equivalents as of September 30, 2020 on the consolidated balance sheets.

Fixed-income investments categorized as Level 2 are valued at the custodian bank by a third-party pricing vendor's valuation models that use verifiable observable market data, e.g., interest rates and yield curves observable at

commonly quoted intervals and credit spreads, bids provided by brokers or dealers or quoted prices of securities with similar characteristics. Pricing of the Company's Notes (see Note 8) 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, 2020 and 2019, the Company did not have any transfers between levels.

The amount recorded in the Company's unaudited consolidated balance sheets for accounts payable and accrued expenses approximates its fair value due to its short-term nature.

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Marketable Securities

9 Months Ended

Sep. 30, 2020

Marketable Securities

Marketable Securities

Note 4 – Marketable Securities

Marketable securities classified as available-for-sale as of September 30, 2020 and December 31, 2019 were comprised of (in thousands):

	September 30, 2020								December 31, 2019
			Gross		Gross						Gross		Gross
	Amortized		Unrealized		Unrealized				Amortized		Unrealized		Unrealized
	Cost		Gains		Losses		Fair Value		Cost		Gains		Losses		Fair Value
Treasury securities	$	40,093	$	2	$	—	$	40,095	$	—	$	—	$	—	$	—
Corporate debt securities		89,104		12		(2)		89,114		—		—		—		—
Agency securities		40,645		6		—		40,651		—		—		—		—
Total	$	169,842	$	20	$	(2)	$	169,860	$	—	$	—	$	—	$	—

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.

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Acquisition of Novavax CZ.

9 Months Ended

Sep. 30, 2020

Acquisition of Novavax CZ

Acquisition of Novavax CZ

Note 5 – Acquisition of Novavax CZ

On May 27, 2020 (the “Acquisition Date”), the Company entered into a Share Purchase Agreement (the “Deed”) by and among Novavax AB, the Company’s wholly-owned Swedish subsidiary (the “Buyer”), and De Bilt Holdings B.V., Poonawalla Science Park B.V., and Bilthoven Biologicals B.V. (collectively, the “Sellers”) and, solely as guarantors, each of Serum International B.V. and the Company. Pursuant to the terms and conditions of the Deed, the Buyer acquired all the issued and outstanding shares of Novavax CZ (formerly, Praha Vaccines a.s.), a vaccine manufacturing company (the “Acquisition”). The assets of Novavax CZ acquired as part of the Acquisition include a biologics manufacturing facility and associated assets in Bohumil, Czech Republic and will be used by the Company to expand its manufacturing capacity.

The Purchase Price includes €10.0 million (approximately $11.1 million at the time of the Acquisition), which was placed in an escrow account and subsequently paid to the Sellers after September 30, 2020. The Deed and ancillary agreements contain customary warranties and post-completion covenants, as well as indemnities by each of the parties thereto.

Preliminary Allocation of Purchase Price to Assets Acquired and Liabilities Assumed

The Company has accounted for the Acquisition as a business combination using the acquisition method of accounting, with the Company as the acquirer. The acquisition method requires the Company to record the assets acquired and liabilities assumed at fair value. The amount by which the purchase price exceeds the fair value of net assets acquired is recorded as goodwill. The Company has commenced the appraisal process necessary to assess the fair values of the assets acquired and liabilities assumed to determine the amount of goodwill to be recognized as of the Acquisition Date. These appraisals are not yet complete and therefore, the amounts recorded for certain assets and liabilities are preliminary and are subject to adjustment as additional information is obtained about the facts and circumstances that existed as of the Acquisition Date. The final determination of the fair value of certain assets and liabilities will be completed within the measurement period of up to one year from the Acquisition Date. The final values may also result in changes to depreciation and amortization expense related to certain assets such as buildings and equipment. Any potential adjustments made could be material in relation to the preliminary values presented in the table below.

The table below summarizes the preliminary allocation of the Purchase Price based upon the fair values of assets acquired and liabilities assumed at the Acquisition Date, adjusted for an increase in the Purchase Price of $0.2 million in the three months ended ended September 30, 2020 for a customary working capital adjustment. The preliminary allocation is based upon information that was available to management at the time the consolidated financial statements were prepared and is subject to change prior to completion of the measurement period (in thousands):

Prepaid expense and other current assets	$	326
Property and equipment		96,739
Goodwill		70,662
Accounts payable		(1,193)
Accrued expenses		(205)
Other non-current liabilities		(813)
Purchase Price, net of cash acquired	$	165,516

The fair value of the assets acquired and liabilities assumed were preliminarily determined using market and cost valuation methodologies. The fair value measurements are based on significant unobservable inputs that were developed by the Company using publicly available information, market participant assumptions, and cost and development assumptions. Because of the use of significant unobservable inputs, the fair value measurements represent a Level 3 measurement as defined in ASC 820, Fair Value Measurement and Disclosures. The market approach is a valuation technique that uses prices and other relevant information generated by market transactions involving identical or comparable assets, liabilities, or a group of assets or liabilities. The cost approach estimates value by determining the current cost of replacing an asset with another of equivalent utility. The cost to replace a given asset reflects the estimated reproduction or replacement cost for the property, less an allowance for loss in value due to depreciation.

The cost approach was the primary approach used to value fixed assets, including the real property. Fixed assets are depreciated on a straight-line basis over their expected remaining useful lives, ranging from 4 to 25 years. The carrying value and expected lives of the fixed assets may change upon finalizing the purchase price allocation as valuation and engineering reports are finalized.

The Company recorded $70.7 million in goodwill related to the Acquisition representing the Purchase Price that was in excess of the fair value of the assets acquired and liabilities assumed. The goodwill generated from the Acquisition is not expected to be deductible for U.S. federal income tax purposes. The goodwill recognized is attributable to intangible assets that do not qualify for separate recognition, such as the assembled workforce of Novavax CZ.

Current assets and current liabilities were recorded at their contractual or historical acquisition amounts, which approximate their fair value.

Determining the fair value of assets acquired and liabilities assumed requires the exercise of significant professional judgment. Use of different estimates and judgments could yield different results.

Impact to Financial Results for the Three and Nine Months Ended September 30, 2020

The results of operations from Novavax CZ have been included in the consolidated financial statements since the Acquisition Date. As a result, the consolidated financial results for the nine months ended September 30, 2020 does not reflect a full nine months of Novavax CZ results. From the Acquisition Date through September 30, 2020, Novavax CZ has not recognized any revenue and recorded a net loss of $4.3 million from Novavax CZ’ operations.

The Company incurred approximately $0.7 million and $2.7 million of costs related to the Acquisition in the three months and nine months ended September 30, 2020, respectively, which are included within general and administrative expenses in the consolidated statements of operations.

Supplemental Pro Forma Financial Information (Unaudited)

The unaudited pro forma financial information for the periods set forth below gives effect to the Acquisition as if it had occurred as of January 1, 2019.  The pro forma financial information is presented for informational purposes only and is not necessarily indicative of the results of operations that would have been achieved had the Acquisition been consummated as of that time. The unaudited pro forma financial information combines the historical results of operations

of the Company and Novavax CZ for the periods presented below and reflects the application of certain pro forma adjustments (in thousands, except per share amounts):

	Three Months Ended				Nine Months Ended
	September 30, 2020				September 30,
	2020		2019		2020		2019
Revenue	$	157,024	$	2,507	$	195,939	$	9,846
Net loss		(196,590)		(19,982)		(242,411)		(107,349)
Basic and diluted net loss per share		(3.19)		(0.45)		(4.21)		(2.51)

Pro forma adjustments include the recognition of depreciation expense based on the Acquisition Date fair value and remaining useful lives of Novavax CZ’ fixed assets (net of historical depreciation expense) and the elimination of costs related to the Acquisition, which are non-recurring in nature.

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Goodwill and Other Intangible Assets

9 Months Ended

Sep. 30, 2020

Goodwill and Other Intangible Assets

Goodwill and Other Intangible Assets

Note 6 – Goodwill and Other Intangible Assets

Goodwill

The change in the carrying amounts of goodwill for the nine months ended September 30, 2020 was as follows (in thousands):

	Amount
Balance at December 31, 2019	$	51,154
Goodwill resulting from the acquisition of Novavax CZ		70,662
Currency translation adjustments		5,116
Balance at September 30, 2020	$	126,932

Identifiable Intangible Assets

Purchased intangible assets consisted of the following as of September 30, 2020 and December 31, 2019 (in thousands):

	September 30, 2020						December 31, 2019
	Gross						Gross
	Carrying		Accumulated		Intangible		Carrying		Accumulated		Intangible
	Amount		Amortization		Assets, Net		Amount		Amortization		Assets, Net
Finite-lived intangible assets:
Proprietary adjuvant technology	$	8,309	$	(2,977)	$	5,332	$	7,985	$	(2,562)	$	5,423
Collaboration agreements		3,752		(3,752)		—		3,606		(3,448)		158
Total identifiable intangible assets	$	12,061	$	(6,729)	$	5,332	$	11,591	$	(6,010)	$	5,581

Amortization expense for the nine months ended September 30, 2020 and 2019 was $0.5 million.

Estimated amortization expense for existing intangible assets for the remainder of 2020 and for each of the five succeeding years ending December 31 will be as follows (in thousands):

Year	Amount
2020	$	104
2021		415
2022		415
2023		415
2024		415
2025		415

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Leases

9 Months Ended

Sep. 30, 2020

Leases

Leases

Note 7 - Leases

During the three months ended September 30, 2020, there were no material new or modified real estate lease arrangements.

During the three months ended September 30, 2020, the Company entered into multiple supply agreements with contract manufacturing organizations and contract development and manufacturing organizations to manufacture the Company’s COVID-19 vaccine candidate, NVX-CoV2373. The agreements include the use of identified manufacturing facilities, contain fixed or minimum commitments and include variable costs related to production and material costs in excess of the fixed or minimum commitment specified in the agreements. The Company evaluated the agreements at inception and determined that certain of these arrangements contain an embedded lease under ASC 842 as it has the exclusive use of, and control over, a portion of the manufacturing facility and equipment of the supplier during the contractual term of the arrangement. The Company recognized a financing lease liability and ROU asset of $187.2 million related to its supply agreements using the Company’s Incremental Borrowing Rate of 6.6%. The Company used significant judgment and estimates, including the estimated value of the underlying leased asset and financial profile of comparable companies to analyze the credit spread as on the date of the lease inception. The Company expensed the ROU asset as it represents an asset acquired for research and development activities related to the development of NVX-CoV2373 that currently does not have an alternative future use.

Supplemental balance sheet information for embedded leases in supply agreements entered into by the Company during the three months ended September 30, 2020 is as follows (in thousands, except weighted-average remaining lease term and discount rate):

Lease Liabilities	Classification		Amount
Current operating lease liabilities	Other current liabilities	$	3,868
Current portion of finance lease liabilities	Current portion of finance lease liabilities		55,860
Non-current finance lease liabilities	Non-current finance lease liabilities		63,099
Weighted-average remaining lease term (years):
Operating lease			1.1
Finance lease			4.9
Weighted-average discount rate:
Operating lease			6.5%
Finance lease			6.6%

Lease expense for the operating, finance and short-term embedded leases related to the supply agreements entered into by the Company during the three months ended September 30, 2020 was as follows (in thousands):

		Three Months Ended September 30, 2020
Operating lease expense:
Fixed lease expense	$	16
Finance lease expense:
Fixed lease expense		65,424
Interest expense		1,041
Short-term expense		19,390
Total lease expense	$	85,871

Supplemental cash flow information related to the embedded leases for three months ended September 30, 2020 was as follows (in thousands):

Cash paid for amounts included in the measurement of lease liabilities:		Amount
Financing cash flows from finance lease	$	65,424

As of September 30, 2020, maturities of embedded lease liabilities were as follows (in thousands):

Year		Operating		Finance
2021	$	3,900	$	62,623
2022		-		65,235
Total minimum lease payments		3,900		127,858
Less: Imputed interest		(32)		(8,899)
Total lease liabilities	$	3,868	$	118,959

As of September 30, 2020, the Company had one agreement that contains an embedded finance lease for a manufacturing arrangement that is expected to commence in the fourth quarter of 2020 with a lease term of approximately 5 years.

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Long-Term Debt

9 Months Ended

Sep. 30, 2020

Long-Term Debt

Long-Term Debt

Note 8 – 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):

	September 30,		December 31,
	2020		2019
Principal amount of Notes	$	325,000	$	325,000
Unamortized debt issuance costs		(3,321)		(4,389)
Total convertible notes payable	$	321,679	$	320,611

Interest expense incurred in connection with the Notes consisted of the following (in thousands):

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2020		2019		2020		2019
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

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Preferred Stock

9 Months Ended

Sep. 30, 2020

Preferred Stock

Preferred Stock.

Note 9 – Preferred Stock

In June 2020, the Company entered into a redeemable Series A Convertible Preferred Stock Subscription Agreement (“Subscription Agreement”), pursuant to which the Company agreed to issue and sell in a private placement 438,885 shares of its newly designated redeemable Series A Convertible Preferred Stock, par value $0.01 per share (“Preferred Stock”), at a purchase price of $455.70 per share, for total gross proceeds of $200.0 million (the “Preferred Private Placement”). Under the terms of the Preferred Stock, any holder thereof has the right to redeem shares of the Preferred Stock at the original purchase price if the Company fails to meet certain SEC filing requirements and file and maintain for at least one year a registration statement for the resale of the shares of common stock underlying the Preferred Stock. Because certain of these features are outside of the Company's control, the Company has classified the Preferred Stock outside of permanent equity.

Each share of Preferred Stock is convertible into ten shares of common stock. The conversion price is equal to $45.57 and is subject to adjustment based on standard anti-dilution provisions. Holders of Preferred Stock are not entitled to cumulative dividends, are not entitled to vote on matters submitted to common stockholders and have a liquidation preference over common stockholders equal to the greater of the original purchase price, plus declared and unpaid Preferred Stock dividends, and the amount that would be payable in respect of common stock assuming the Preferred Stock converted immediately prior to the liquidation. The Company recognized a beneficial conversion feature of approximately $24.1 million that was recorded within additional paid-in capital and accumulated deficit as the Preferred Stock issuance is only contingently redeemable and convertible at any time at the option of the holder.

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Stockholders' Equity (Deficit)

9 Months Ended

Sep. 30, 2020

Stockholders' Equity (Deficit)

Stockholders' Equity (Deficit)

Note 10 – Stockholders' Equity (Deficit)

In June 2020, in advance of David M. Mott joining the Company’s Board of Directors, the Company agreed to sell 32,916 shares of common stock to him at a purchase price of $45.57 per share, reflecting the closing price of the Company’s common stock on the trading date prior to the date the parties’ agreement regarding the sale, for total gross proceeds of $1.5 million. Mr. Mott joined the Company’s Board of Directors later in the same month.

In May 2020, the Company entered into an At Market Issuance Sales Agreement ("May 2020 Sales Agreement"), which allows it to issue and sell up to $250 million in gross proceeds of its common stock. During the nine months ended September 30, 2020, the Company sold 2.8 million shares of common stock under the May 2020 Sales Agreement resulting in $160.3 million in net proceeds (this amount excludes $3.9 million received in the fourth quarter of 2020 for shares traded in late September 2020). From October 1, 2020 through November 3, 2020, the Company sold 0.7 million shares of common stock resulting in $74.1 million in net proceeds, leaving $8.7 million remaining under the May 2020 Sales Agreement.

In March 2020, the Company entered into an At Market Issuance Sales Agreement (“March 2020 Sales Agreement”), which allowed it to issue and sell up to $150 million in gross proceeds of its common stock. During the six months ended June 30, 2020, the Company sold 8.6 million shares of common stock under the March 2020 Sales Agreement resulting in $148.1 million in net proceeds. The March 2020 Sales Agreement was fully utilized at that time.

In January 2020, the Company entered into an At Market Issuance Sales Agreement ("January 2020 Sales Agreement"), which allowed it to issue and sell up to $100 million in gross proceeds of its common stock. During the first quarter of 2020, the Company sold 10.5 million shares of common stock under the January 2020 Sales Agreement resulting in $98.7 million in net proceeds. The January 2020 Sales Agreement was fully utilized at that time.

In December 2018, the Company entered into an At Market Issuance Sales Agreement (“December 2018 Sales Agreement”), which allowed it to issue and sell up to $100 million in gross proceeds of its common stock. During the nine months ended September 30, 2019, the Company sold 3.6 million shares of common stock under the December 2018 Sales Agreement, of which 1.7 million shares of common stock were sold in the first quarter of 2019, resulting in $29.3 million in net proceeds. In January 2020, the Company sold 7.2 million shares of common stock under the December 2018 Sales Agreement  resulting in $38.5 million in net proceeds. The December 2018 Sales Agreement was fully utilized at that time.

In December 2017, the Company entered into an At Market Issuance Sales Agreement (“December 2017 Sales Agreement”), which allowed it to issue and sell up to $75 million in gross proceeds of its common stock. During the three months ended March 31, 2019, the Company sold 2.5 million shares of common stock under the December 2017 Sales

Agreement resulting in $37.9 million in net proceeds. The December 2017 Sales Agreement was fully utilized at that time.

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Stock-Based Compensation

9 Months Ended

Sep. 30, 2020

Stock-Based Compensation

Stock-Based Compensation

Note 11 – Stock-Based Compensation

Stock Options

The 2015 Stock Incentive Plan, as amended (“2015 Plan”), was approved at the Company's annual meeting of stockholders in June 2015. Under the 2015 Plan, equity awards may be granted to officers, directors, employees and consultants of and advisors to the Company and any present or future subsidiary.

The 2015 Plan authorizes the issuance of up to 10,900,000 shares of common stock under equity awards granted under the 2015 Plan, which includes an increase of 7,100,000 shares approved for issuance under the 2015 Plan at the Company's 2020 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, stock appreciation rights and restricted stock units. In addition, under the 2015 Plan, unrestricted stock, stock units and performance awards may be granted. Stock options and stock appreciation rights generally have a maximum term of 10 years and may be or were granted with an exercise price that is no less than 100% of the fair market value of the Company's common stock at the time of grant. Grants of stock options are generally subject to vesting over periods ranging from one to four years.

Stock Options and Stock Appreciation Rights

The following is a summary of stock options and stock appreciation rights activity under the 2015 Plan and 2005 Plan for the nine months ended September 30, 2020:

	2015 Plan			2005 Plan
		Weighted-			Weighted-
		Average			Average
	Stock	Exercise		Stock	Exercise
	Options	Price		Options	Price
Outstanding at January 1, 2020	3,388,750	$	35.64	501,780	$	64.19
Granted	3,110,566	$	31.16	—	$	—
Exercised	(874,586)	$	31.08	(189,378)	$	44.14
Canceled	(80,366)	$	50.29	(23,329)	$	51.92
Outstanding at September 30, 2020	5,544,364	$	33.66	289,073	$	78.32
Shares exercisable at September 30, 2020	771,002	$	86.28	289,073	$	78.32
Shares available for grant at September 30, 2020	2,814,405

In 2019, the Company granted 192,400 stock appreciation rights, with a weighted-average exercise price of $5.95, under the 2015 Plan.

Additionally, in 2019, due to limitations on the equity awards available under the 2015 Plan, the Company granted to certain employees 1,014,200 stock options, with a weighted-average exercise price of $5.95, under the 2015 Plan that were subject to approval of an increase in the number of shares under the 2015 Plan at the Company's 2020 annual meeting of stockholders. Furthermore, in April 2020, due to limitations on the equity awards available under the 2015 Plan, the Company granted to all of its employees collectively 2,501,600 stock options, with a weighted-average exercise price of $19.08, and 326,050 restricted stock units under the 2015 Plan that include a performance requirement related to its NVX-CoV2373 program that were also subject to approval of an increase in the number of shares under the 2015 Plan at the Company's 2020 annual meeting of stockholders. Since the proposal to increase the number of shares under the 2015 Plan was approved at the Company’s 2020 annual meeting of stockholders, as discussed in the “Stock Options” section above, the Company began to record stock-based compensation expense for these awards at that time.

The fair value of stock options granted under the 2015 Plan was estimated at the date of grant or the date upon which the 2015 Plan was approved by the Company’s stockholders for stock options discussed above using the Black-Scholes option-pricing model with the following assumptions:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2020		2019		2020		2019
Weighted average Black-Scholes fair value of stock options and SARs granted		$102.41		$4.91		$78.78		$5.42
Risk-free interest rate		0.2%-0.4%		1.5%-1.6%		0.2%-1.5%		1.5%-2.6%
Dividend yield		0%		0%		0%		0%
Volatility		135.4%-152.2%		128.0%-133.8%		116.0%-152.2%		111.6%-133.8%
Expected term (in years)		4.0-5.3		4.0-4.4		4.0-7.6		4.0-4.5
Expected forfeiture rate		0%		0%		0%		0%

The total aggregate intrinsic value and weighted-average remaining contractual term of stock options and stock appreciation rights outstanding under the 2015 Plan and 2005 Plan as of September 30, 2020 was $446.5 million and 8.5 years, respectively. The total aggregate intrinsic value and weighted-average remaining contractual term of stock options and stock appreciation rights exercisable under the 2015 Plan and 2005 Plan as of September 30, 2020 was $43.3 million and 5.3 years, respectively. The aggregate intrinsic value represents the total intrinsic value (the difference between the Company's closing stock price on the last trading day of the period and the exercise price, multiplied by the number of in-the-money stock options and stock appreciation rights) that would have been received by the holders had all stock option  and stock appreciation rights holders exercised their stock options and stock appreciation rights on September 30, 2020. This amount is subject to change based on changes to the closing price of the Company's common stock. The aggregate intrinsic value of stock options and vesting of restricted stock awards for the nine months ended September 30, 2020 and 2019 was $164.3 million and $0.1 million, respectively.

Employee Stock Purchase Plan

The Employee Stock Purchase Plan, as amended (the “ESPP”), was approved at the Company's annual meeting of stockholders in June 2013. The ESPP currently authorizes an aggregate of 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, 2020, there were 255,596 shares available for issuance under the ESPP.

The ESPP is considered compensatory for financial reporting purposes. As such, the fair value of ESPP shares was estimated at the date of grant using the Black-Scholes option-pricing model with the following assumptions:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2020		2019		2020		2019
Range of Black-Scholes fair values of ESPP shares granted		$3.08-$92.67		$2.57-$35.00		$2.57-$92.67		$2.57-$35.00
Risk-free interest rate		0.2%-2.5%		1.3%-2.6%		0.2%-2.6%		1.2%-2.6%
Dividend yield		0%		0%		0%		0%
Volatility		77.5%-189.7%		59.7%-171.6%		66.6%-189.7%		52.2%-171.6%
Expected term (in years)		0.5-2.0		0.5-2.0		0.5-2.0		0.5-2.0
Expected forfeiture rate		0%		0%		0%		0%

Restricted Stock Units

The following is a summary of restricted stock units activity for the nine months ended September 30, 2020:

		Per Share
		Weighted-
	Number of	Average
	Shares	Fair Value
Outstanding and Unvested at January 1, 2020	1,102,311	$	5.95
Restricted stock units granted	508,854	$	82.02
Restricted stock units vested	(781,812)	$	6.74
Restricted stock units forfeited	(39,324)	$	45.73
Outstanding and Unvested at September 30, 2020	790,029	$	52.17

The Company recorded all stock-based compensation expense in the consolidated statements of operations as follows (in thousands):

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2020		2019		2020		2019
Research and development	$	28,730	$	723	$	34,735	$	6,347
General and administrative		36,975		1,901		42,867		6,456
Total stock-based compensation expense	$	65,705	$	2,624	$	77,602	$	12,803

As of September 30, 2020, there was approximately $311 million of total unrecognized compensation expense related to unvested stock options, SARs, restricted stock units and the ESPP. The increase in unrecognized compensation expense is primarily due to the awards that were subject to approval of an increase in the number of shares under the 2015 Plan at the Company's 2020 annual meeting of stockholders, as discussed in the "Stock Options" section above, and the significant increase in the Company's common stock price in 2020. This unrecognized non-cash compensation expense is expected to be recognized over a weighted-average period of 1.4 years, and will be allocated between research and development and general and administrative expenses accordingly. This estimate does not include the impact of other possible stock-based awards that may be made during future periods  and awards that require approval by the stockholders.

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U.S. Government Agreements, Grants and Licenses

9 Months Ended

Sep. 30, 2020

U.S. Government Agreements, Grants and Licenses

U.S. Government Agreements, Grants and Licenses

Note 12 – U.S. Government Agreements, Grants and Licenses

Operation Warp Speed

In July 2020, the Company entered into a Project Agreement (the “Project Agreement”) with Advanced Technology International, Inc. (“ATI”), the Consortium Management Firm acting on behalf of the Medical CBRN Defense Consortium in connection with OWS. OWS is a partnership among components of the U.S. Department of Health and Human Services and the U.S. Department of Defense working to accelerate the development, manufacturing and distribution of COVID-19 vaccines, therapeutics and diagnostics. The Project Agreement relates to the Base Agreement the Company entered into with ATI in June 2020 (the “Base Agreement”, together with the Project Agreement, the “OWS Agreement”). Under the OWS Agreement, the Company is entitled to receive funding of up to $1.6 billion to support certain activities related to the development of NVX-CoV2373 and the manufacture and delivery of the vaccine candidate to the U.S. Government. Pursuant to the OWS Agreement, the Company is currently authorized to make expenditures or incur obligations of up to $800 million, and the parties have committed to negotiate a definitive agreement by December 2020 that provides for aggregate costs payable to the Company up to but not in excess of the approved budget of $1.6 billion. If the parties have not agreed on definitive pricing or other terms by December 2020, or any extension of such target date granted by the U.S. Government, the U.S. Government has the discretion to unilaterally determine a fair and reasonable price for completion of the definitive agreement.

The OWS Agreement requires the Company to conduct certain clinical, regulatory and other activities, including a pivotal Phase 3 clinical trial to determine the safety and efficacy of NVX-CoV2373, and to manufacture and deliver to the U.S. Government 100 million doses of the vaccine candidate. Funding under the OWS Agreement is payable to the Company for various development, clinical trial, manufacturing, regulatory and other activities. The OWS Agreement contains terms and conditions that are customary for U.S. Government agreements of this nature, including provisions giving the U.S. Government the right to terminate the Base Agreement and/or the Project Agreement based on a

reasonable determination that the funded project will not produce beneficial results commensurate with the expenditure of resources and that termination would be in the U.S. Government’s interest. If the Project Agreement is terminated prior to completion, the Company is entitled to be paid for work performed and costs or obligations incurred prior to termination and consistent with the terms of the OWS Agreement. The performance period under the Project Agreement extends from July 2020 through December 2021, subject to early termination by the U.S. Government or extension by mutual agreement of the parties. During the three months ended September 30, 2020, the Company recognized revenue from the OWS Agreement of $39.4 million.

U.S. Department of Defense

In June 2020, the Company entered into a letter contract (the “DoD Contract”) with the DoD Joint Program Executive Office for Chemical, Biological, Radiological and Nuclear Defense (“JPEO-CRBND-EB”), under which JPEO-CRBND-EB agreed to provide funding of up to $60.0 million to the Company to support the manufacture of NVX-CoV2373. Under the DoD Contract, the Company is currently authorized to make expenditures or incur obligations up to $30.0 million, and the Company and the DoD have committed to negotiate a definitive cost-reimbursement contract by December 2020 that provides for costs payable by the DoD not to exceed $60.0 million. If the Company and the DoD have not agreed on pricing or terms by December 2020, or any extension of such target date granted by the DoD, the DoD has the discretion to determine a reasonable price or fee for completion of the contract.

Under the DoD Contract, the Company is expected to deliver 10 million doses of NVX-CoV2373 to the DoD. The 10 million doses of NVX-CoV2373 may be used in Phase 2/3 clinical trials or under an Emergency Use Authorization, if approved by the U.S. Food and Drug Administration (“FDA”). Pursuant to the DoD Contract, if NVX-CoV2373 is approved by the FDA, the DoD is entitled to most-favored customer status for a period of five years from the award of the DoD Contract, meaning that the Company cannot give any comparable commercial client in the United States more favorable pricing than the DoD under similar transactional circumstances. During the three months and nine months ended September 30, 2020, the Company recognized revenue from the DoD Contract of $3.6 million and $3.9 million, respectively.

Coalition for Epidemic Preparedness Innovations

In May 2020, the Company entered into a restated funding agreement which was modified in November 2020 (the “CEPI Funding Agreement”) with CEPI, under which CEPI agreed to provide funding of up to $399.5 million to the Company to support the development of NVX-CoV2373, in addition to the $3.9 million of funding CEPI provided to the Company pursuant to an initial funding agreement entered into between the Company and CEPI in March 2020. The  CEPI Funding Agreement provides up to $257.0 million in Grant Funding and up to $142.5 million in Forgivable Loan Funding, which loans are in the form of one or more forgivable no interest term loans in order to prepay certain manufacturing activities and are not subject to restrictive or financial covenants. The Company is only required to repay any CEPI Forgivable Loan Funding under certain circumstances to the extent it sells doses of NVX-CoV2373, produced with the funds provided and included in such loan(s), to a third party.

Under the terms of the CEPI Funding Agreement, among other things, the Company and CEPI agreed on the importance of global equitable access to any vaccines produced pursuant to the CEPI Funding Agreement. Any such vaccines, if approved, are expected to be procured and allocated through global mechanisms under discussion as part of the Access to COVID-19 Tools (ACT) Accelerator, an international initiative launched by the World Health Organization (“WHO”), Gavi the Vaccine Alliance, CEPI and other global non-governmental organizations and governmental leaders in 2020.

The scope and continuation of the CEPI Funding Agreement may be modified depending on ongoing developments of the COVID-19 outbreak and the success of NVX-CoV2373 relative to other third-party COVID-19 vaccine candidates or treatments. If the WHO, CEPI or a regulatory authority having jurisdiction over a clinical trial of NVX-CoV2373 determines that a third-party product candidate has substantially greater potential than a Company vaccine product, the Company must cease its clinical trial in the relevant region, and will be reimbursed for any costs incurred as a result thereof. In addition, CEPI has the right to unilaterally terminate the CEPI Funding Agreement if CEPI reasonably determines that (i) there are material safety, regulatory or ethical issues with the development of NVX-CoV2373, (ii) NVX-CoV2373 development should be limited in scope or terminated, (iii) the Company becomes unable to discharge its obligations under the agreement, (iv) the Company fails to meet certain milestones, or (v) the Company commits fraud or a financial irregularity.

Payments received in advance that are related to future performance are deferred and recognized as revenue when the research and development activities are performed. Cash payments received under the funding agreements are restricted as to their use until expenditures contemplated in the funding agreements are incurred. During the three and nine months ended September 30, 2020, the Company recognized revenue from the funding agreements of $111.3 million and $147.8 million, respectively.

Bill & Melinda Gates Foundation

In support of the Company's development of ResVax^TM, in September 2015, the Company entered into the grant agreement with BMGF (the “BMGF Grant Agreement”), under which it was awarded a grant totaling up to $89.1 million (the “Grant”). The Grant supports ResVax development activities, including the Company's global Phase 3 clinical trial in pregnant women in their third trimester and other regulatory efforts. Unless terminated earlier by BMGF, the BMGF Grant Agreement will continue in effect until the end of 2021. The Company concurrently entered into a Global Access Commitments Agreement (“GACA”) with BMGF as a part of the BMGF Grant Agreement. Under the terms of the GACA, among other things, the Company agreed to make a certain amount of ResVax available and accessible at affordable pricing to people in certain low- and middle-income countries. Unless terminated earlier by BMGF, the GACA will continue in effect until the later of 15 years from its effective date, or 10 years after the first sale of a product under defined circumstances. The term of the GACA may be extended in certain circumstances, by a period of up to five additional years.

In July 2020, the Company entered into a grant agreement with BMGF (the “BMGF SA Grant Agreement”) under which it was awarded a grant of $15.0 million to support a Phase 2b clinical trial in the Republic of South Africa to evaluate the safety, immunogenicity, and potential efficacy of NVX-CoV2373.

Payments received in advance that are related to future performance are deferred and recognized as revenue when the research and development activities are performed. Cash payments received under the BMGF Grant Agreement and the BMGF SA Grant Agreement are restricted as to their use until expenditures contemplated in the agreements are incurred. During the nine months ended September 30, 2020, the Company recognized revenue from the BMGF Grant Agreement of less than $0.1 million and $0.4 million, respectively, and has recognized approximately $82 million in revenue since the inception of the agreement. During the three months ended September 30, 2020, the Company recognized revenue from the BMGF SA Grant Agreement of $2.4 million.

Serum Institute of India Private Limited

In July 2020, the Company entered into a supply and license agreement with Serum Institute of India Private Limited (“SIIPL”), as amended by the parties in September 2020, under which the Company granted exclusive and non-exclusive licenses to SIIPL for the development, co-formulation, filling and finishing, registration and commercialization by SIIPL of NVX-CoV2373. SIIPL has agreed to purchase Matrix-M adjuvant from the Company and the Company has 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 sale of NVX-CoV2373 by SIIPL in its licensed territory, net of agreed costs. The Company granted to SIIPL (i) an exclusive license in India during the agreement, and (ii) a non-exclusive license (a) during the “Pandemic Period” (as declared by the World Health Organization), in all countries other than specified countries designated by the World Bank as upper-middle or high-income countries, with respect to which the Company retains rights, and (b) after the Pandemic Period, in only those countries designated as low or middle-income by the World Bank. Following the Pandemic Period, the Company may notify SIIPL of any bona fide opportunities for the Company

to license NVX-CoV2373 to a third party in such low and middle-income countries and SIIPL would have an opportunity to match or improve such third party terms, failing which, the Company would have the discretion to remove one or more non-exclusive countries from SIIPL’s license.

Takeda Pharmaceutical Company Limited

In August 2020, the Company announced a partnership with Takeda Pharmaceutical Company Limited (“Takeda”) for the exclusive development, manufacturing and commercialization of NVX-CoV2373 in Japan. Takeda will receive funding from the Government of Japan’s Ministry of Health, Labour and Welfare to support the technology transfer, establishment of infrastructure and scale-up of manufacturing. The Company will be entitled to receive payments based on the achievement of certain development and commercial milestones, as well as a portion of proceeds from the sale of the vaccine.

UK SARS-CoV-2 Vaccine Supply Agreement

In October 2020, the Company entered into a SARS-CoV-2 vaccine supply agreement with The Secretary of State for Business, Energy and Industrial Strategy, acting on behalf of the United Kingdom (“UK”) government (the “Authority”) under which the Authority agreed to purchase up to 60 million doses of NVX-CoV2372, plus such additional orders as the Authority may make from time to time. The Company agreed to continue to conduct its UK-based Phase 3 clinical trial of NVX-CoV2373, establish a committed supply chain for NVX-CoV2373 in the UK and seek regulatory approval for NVX-CoV2373 in the UK.

Pursuant to the terms of the agreement, the Company agreed to supply the initial 60 million doses of NVX-CoV2373 to the Authority on a priority supply basis and to supply any additional orders of NVX-CoV2373 to the Authority on an equal priority basis with other third parties. The Authority has certain termination rights, or rights to reduce or cancel orders, if the Authority's supply of NVX-CoV2373 is materially interrupted, delayed or deferred.

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CARES Act

9 Months Ended

Sep. 30, 2020

CARES Act

CARES Act

Note 13 – CARES Act

On March 27, 2020, Congress enacted the Coronavirus Aid, Relief and Economic Security Act ("CARES Act") to provide certain relief as a result of the COVID-19 pandemic. Amongst other items, the CARES Act lifts certain interest expense deduction limitations originally imposed by the Tax Cuts and Jobs Act of 2017. The enactment of the CARES Act did not result in any material adjustments to the Company's income tax provision or net deferred tax assets for the nine months ended September 30, 2020.

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Subsequent Events

9 Months Ended

Sep. 30, 2020

Subsequent Events

Subsequent Events

Note 14 – Subsequent Events

In October 2020, the Company entered into a lease for approximately 170,000 square feet of space for premises located at 700 Quince Orchard Road Gaithersburg, MD. The Company intends to use the premises for manufacturing, research and development and offices. The term of the lease is approximately 15 years with options to extend the lease. The lease provides for an annual base rent of $5.8 million that is subject to future rent increases, and obligates the Company to pay building operating costs. The Landlord will contribute an aggregate of $30.6 million toward tenant improvements.

In addition, in October 2020, the Company purchased a parcel of land at 14 Firstfield Road, Gaithersburg, MD that the Company plans to develop in the future to accommodate growth of the Company. The purchase price of the parcel of land was $14.5 million.

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Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2020

Summary of Significant Accounting Policies

Basis of Presentation

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, 2020, the consolidated statements of operations and the consolidated statements of comprehensive loss for the three and nine months ended September 30, 2020 and 2019, the consolidated statements of changes in stockholders’ equity (deficit) for the three and nine months ended September 30, 2020 and 2019 and the consolidated statements of cash flows for the nine months ended September 30, 2020 and 2019 are unaudited, but include all adjustments (consisting of normal recurring adjustments) that the Company considers necessary for a fair presentation of the financial position, operating results, comprehensive loss, changes in stockholders’ equity (deficit) and cash flows, respectively, for the periods presented. Although the Company believes that the disclosures in these unaudited consolidated financial statements are adequate to make the information presented not misleading, certain information and footnote information normally included in consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted as permitted under the rules and regulations of the United States Securities and Exchange Commission (“SEC”).

The unaudited consolidated financial statements include the accounts of Novavax, Inc. and its wholly owned subsidiaries, 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 loss in the accompanying unaudited consolidated balance sheets. The foreign currency translation adjustment balance included in accumulated other comprehensive loss was $5.0 million and $12.5 million as of September  30, 2020 and December 31, 2019, respectively.

The accompanying unaudited consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2019. Results for this or any interim period are not necessarily indicative of results for any future interim period or for the entire year. The Company operates in one business segment.

Use of Estimates

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

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,		December 31,
	2020		2019
Cash	$	126,505	$	15,863
Money market funds		79,950		42,960
Government-backed securities		43,250		20,000
Treasury securities		24,998		—
Corporate debt securities		59,468		—
Cash and cash equivalents	$	334,171	$	78,823

Cash equivalents are recorded at cost, which approximate fair value due to their short-term nature.

Marketable Securities

Marketable Securities

Marketable securities 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' deficit until realized. Marketable securities are evaluated periodically to determine whether a decline in value is “other-than-temporary.” The term “other-than-temporary” is not intended to indicate a permanent decline in value. Rather, it means that the prospects for a near term recovery of value are not necessarily favorable, or that there is a lack of evidence to support fair values equal to, or greater than, the carrying value of the security. Management reviews criteria, such as the magnitude and duration of the decline, as well as the Company's ability to hold the securities, including whether the Company will be required to sell a security prior to recovery of its amortized cost basis, the investment issuer's financial condition and business outlook to predict whether the loss in value is other-than-temporary. 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. The cost of securities sold is based on the specific identification method.

Restricted Cash

Restricted Cash

The Company’s current and non-current restricted cash includes payments received under the Coalition for Epidemic Preparedness Innovations (“CEPI”) funding agreements (see Note 12), payments received under the Bill & Melinda Gates Foundation (“BMGF”) grant agreements (see Note 12), escrow funds paid in connection with the acquisition of Novavax CZ (see Note 5), escrow funds received in connection with a transaction in 2019 with Catalent Maryland, Inc. (formerly Paragon Bioservices, Inc.), a unit of Catalent Biologics (“Catalent”), 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, 2020, the restricted cash balances (both current and non-current) consisted of $9.1 million for payments received from BMGF, $46.3 million of payments under the CEPI funding agreements, $11.7 million held in escrow that was paid by the Company in connection with the Novavax CZ acquisition and $0.4 million of security deposits. As of December 31, 2019, the restricted cash balances (both current and non-current) consisted of $1.4 million for payments received from BMGF, $1.5 million held in escrow received in connection with the Catalent transaction and $0.4 million of security deposits.

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amounts shown in the statement of cash flows (in thousands):

	September 30,		December 31,
	2020		2019
Cash and cash equivalents	$	334,171	$	78,823
Restricted cash current		67,154		2,947
Restricted cash non-current		411		410
Cash, cash equivalents and restricted cash	$	401,736	$	82,180

Acquisitions

Acquisitions

The Company applies the acquisition method of accounting to business combinations in accordance with Accounting Standards Codification (“ASC”) Topic 805, Business Combinations. The Company’s consolidated financial statements include the operating results of an acquired entity from the date on which it obtains control of the business acquired. The Company recognizes and measures the identifiable assets acquired and liabilities assumed, as of the acquisition date, based on their estimated fair value with the excess purchase consideration, if any, recognized as goodwill. In determining fair value, the Company uses various recognized valuation methods, including the cost and market approaches. The Company initially performs these valuations based on preliminary estimates and assumptions by management or independent valuation specialists under Company supervision, where appropriate, and makes revisions as estimates and assumptions are finalized. The final determination of fair values must be completed no later than the first anniversary of the date of acquisition. The Company expenses acquisition related costs as incurred. See Note 5 for further discussion around the Company’s recent acquisition of Novavax CZ.

Lease Accounting

Lease Accounting

The Company determines at the inception of a contract if an arrangement is, or contains, a lease, which exists when the contract conveys the right to control the use of identified property or equipment for a period of time in exchange for consideration. Depending on the contract, the lease commencement date, defined as the date on which the lessor makes the underlying asset available for use by the lessee, may be different than the inception date of the contract. Leases are classified as either operating or finance leases based on the economic substance of the agreement.

The Company enters into non-cancelable lease agreements for office space and certain equipment. Further, the Company enters into supply agreements with contract manufacturing organizations and contract development and manufacturing organizations to manufacture its vaccine candidates. Certain of these supply agreements include the use of identified manufacturing facilities and equipment that are controlled by the Company and may qualify as an embedded lease. Supply agreements that contain a lease are treated as lease arrangements in their entirety.

For leases that have a lease term of more than 12 months at the lease commencement date, the Company recognizes lease liabilities, which represent the Company’s obligation to make lease payments arising from the lease, and corresponding right-of-use (“ROU”) assets, which represent the right to use an underlying asset for the lease term, based on the present value of the fixed future payments over the lease term. The Company calculates the present value of future payments using the discount rate implicit in the lease, if available, or the Company’s incremental borrowing rate.  For all leases that have a lease term of 12 months or less at the commencement date (referred to as “short-term” leases), the Company has elected to apply the practical expedient in ASC Topic 842, Leases (“ASC 842”), to not recognize a lease liability or ROU asset but instead, recognize lease payments as an expense on a straight-line basis over the lease term and variable lease payments that do not depend on an index or rate, as an expense in the period in which the variable lease costs are incurred based on performance or usage in accordance with contractual agreements.  In determining the lease period, the Company evaluates facts and circumstances that could affect the period over which it is reasonably certain to

use the underlying asset while taking into consideration the non-cancelable period over which it has the right to use the underlying asset and any option period to extend or terminate the lease if it is reasonably certain to exercise the option. The Company reevaluates short-term leases that are modified and if they no longer meets the requirements to be treated as short-term leases, recognizes and measures the lease liability and ROU asset as if the date of the modification is the lease commencement date.

For operating leases, the Company recognizes lease expense related to fixed payments on a straight-line basis over the lease term and lease expense related to variable payments as incurred based on performance or usage in accordance with the contractual agreements. For finance leases, the Company recognizes the amortization of the ROU asset over the shorter of the lease term or useful life of the underlying asset. The Company expenses ROU assets acquired for research and development activities under ASC Topic 730, Research and Development, if they do not have an alternative future use, in research and development projects or otherwise.

The Company uses significant assumptions and judgment in evaluating its lease contracts and other agreements under ASC 842, including the determination of whether an agreement is or contains a lease, whether a lease represents an operating or finance lease, the discount rate used to determine the present value of lease obligations and the term of a lease embedded in its supply agreements.

Revenue Recognition

Revenue Recognition

The Company performs research and development under government funding, grant, license and clinical development agreements. The revenue primarily consists of funding under U.S. government contracts and other arrangements to advance the clinical development and manufacturing of NVX-CoV2373. The Company’s U.S. government contracts are with the U.S. Department of Defense (the “DoD”) and its participation in Operation Warp Speed (“OWS”) (see Note 12). Other funding arrangements primarily include a grant and forgivable loan funding from CEPI (see Note 12).

At contract inception, the Company analyzes the revenue arrangement to determine the appropriate accounting under U.S. GAAP. Currently, the Company’s revenue arrangements represent customer contracts within the scope of ASC Topic 606, Revenue from Contracts with Customers (Topic 606) (“ASC 606”) or are contributions under the scope of ASC Topic 958-605, Not-for-Profit Entities – Revenue Recognition (“ASC 958-605”.) The Company recognizes revenue from arrangements within the scope of ASC 606 following the five-step model: (i) identify the contract(s) with a customer; (ii) identify the performance obligation(s) in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligation(s) in the contract; and (v) recognize revenue when (or as) it satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that it will collect the consideration it is entitled to in exchange for the goods or services it transfers to its customer. The Company recognizes contribution revenue within the scope of ASC 958-605 when the funder-imposed conditions have been substantially met. Contributions are recorded as deferred revenue until the period in which research and development activities are performed that satisfy the funder-imposed conditions.

Under the U.S. government contracts, the Company is entitled to receive funding of up to $1.66 billion, on a reimbursable-cost or reimbursable-cost-plus-fixed-fee basis, to support certain activities related to the development, manufacture and delivery of NVX-CoV2373 to the U.S. government. The Company analyzed these contracts and determined that they are within the scope of ASC 606. The obligations under each of the contracts are not distinct in the context of the contract as they are highly interdependent or interrelated and, as such, they are accounted for as a single performance obligation. The transaction price under these arrangements is the consideration the Company is expecting to receive and consists of the funded contract amount and the unfunded variable amount to the extent that it is probable that a significant reversal of revenue will not occur. The Company recognizes revenue for these contracts over time as the Company transfers control over the goods and services and satisfies the performance obligation. The Company measures progress toward satisfaction of the performance obligation using an Estimate-at-Completion (“EAC”) process, which is a cost-based input method that reviews and monitors the progress towards the completion of the Company’s performance obligation. Under this process, management considers the costs that have been incurred to-date, as well as projections to completion using various inputs and assumptions, including, but not limited to, progress towards completion, labor costs and productivity, material and subcontractor costs and identified risks. Estimating the total allowable cost at completion of the performance obligation under a contract is subjective and requires the Company to make assumptions about future activity and cost drivers. Changes in these estimates can occur for a variety of reasons and, if significant, may impact the timing of revenue and fee recognition on the Company’s contracts. Allowable contract costs include direct costs incurred

on the contract and indirect costs that are applied in the form of rates to the direct costs. Billings under the contracts are initially based on provisional indirect billing rates, agreed upon between the Company and the U.S. government. These indirect rates are subject to audit on an annual basis. The Company records the impact of changes in the indirect billing rates in the period when such changes are identified. These changes reflect the difference between actual indirect costs incurred compared to the estimated amounts used to determine the provisional indirect billing rates agreed upon with the U.S. government. The Company recognizes revenue on the U.S government contracts based on reimbursable allowable contract costs incurred in the period up to the transaction price. For reimbursable-cost-plus-fixed-fee contracts, the Company recognizes the fixed-fee based on the proportion of reimbursable contract costs incurred to total estimated allowable contract costs expected to be incurred on completion of the underlying performance obligation as determined under the EAC process. The Company recognizes changes in estimates related to the EAC process in the period when such changes are made on a cumulative catch-up basis. The Company includes the transaction price comprising both funded and unfunded portions of customer contracts, in this estimate. As of September 30, 2020, $1.62 billion of the total transaction price of $1.66 billion was not yet satisfied and the Company had a contract asset of $3.8 million and a contract liability of $26.5 million.

The Company’s other funding agreements currently include funding from CEPI of $399.5 million in the form of a grant of $257.0 million (“CEPI Grant Funding”) and one or more forgivable no interest term loans of $142.5 million (“CEPI Forgivable Loan Funding”). Under the Company’s grant funding arrangements, including the CEPI Grant Funding, the Company is primarily entitled to reimbursement for costs that support development related activities of NVX-CoV2373. The CEPI Forgivable Loan Funding is designated for the prepayment of certain manufacturing activities. The Company analyzed these other funding arrangements and determined that they are not within the scope of ASC 606 as they do not provide a direct economic benefit to the grantor. Payments received under the grant funding arrangements are considered conditional contributions under the scope of ASC 958-605 and are recorded as deferred revenue until the period in which such research and development activities are actually performed that satisfy the funder-imposed conditions. Payments received under the CEPI Forgivable Loan Funding agreements are only repayable if the proceeds of sales to one or more third parties of NVX-CoV2373 cover the Company’s costs of manufacturing such vaccine candidate, not including manufacturing costs funded by CEPI. As the financial risk remains with CEPI, the Company determined that the use of the CEPI Forgivable Loan Funding is outside the scope of ASC Topic 470, Debt. The research and development risk is considered substantive, such that it is not yet probable that the development will be successful. Therefore, the Company has concluded that ASC 730 is considered applicable and most appropriate. Given the financial risk associated with the research and development activities lies with CEPI because repayment of any funds provided by CEPI depends solely on the results of the research and development activities having future economic benefit, the Company has accounted for the obligation under the CEPI Forgivable Loan Funding as a contract to perform research and development for others. The Company has determined that payments received under these agreements should be recorded as revenue under ASC 958-605 rather than a reduction to research and development expenses. This is consistent with the Company’s policy of presenting such amounts as revenue. In reaching this determination, the Company considered a number of factors, including whether it is principal under the arrangement, and whether the arrangement is significant to, and part of, the Company’s core operations. The Company will record revenue as it performs the contractual research and development services.

Net Loss per Share

Net Loss per Share

Net loss per share is computed using the weighted average number of shares of common stock outstanding. As of September 30, 2020 and 2019, the Company had outstanding stock options, stock appreciation rights (“SARs”) and unvested restricted stock units (“RSUs”) totaling 6,623,466 and 5,041,526, respectively. In addition, as of September 30, 2020, the Company had 438,885 shares outstanding of its newly designated Series A Convertible Preferred Stock , which are convertible into 4,388,850 shares of the Company’s common stock.

As of September 30, 2020, the Company’s Notes (see Note 8) would have been convertible into approximately 2,385,800 shares of the Company’s common stock assuming a common stock price of $136.20 or higher. These and any shares due to the Company upon settlement of its capped call transactions are excluded from the computation, as their effect is antidilutive.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

Recently Adopted

In January 2017, the FASB issued Accounting Standards Update (“ASU”) No. 2017-04, Intangibles-Goodwill and Other (Topic 350) (“ASU 2017-04”), which will simplify the goodwill impairment calculation by eliminating Step 2 from the current goodwill impairment test. The new standard does not change how a goodwill impairment is identified. The Company will continue to perform its quantitative goodwill impairment test by comparing the fair value of its reporting unit to its carrying amount, but if the Company is required to recognize a goodwill impairment charge, under the new standard, the amount of the charge will be calculated by subtracting the reporting unit's fair value from its carrying amount. Under the current standard, if the Company is required to recognize a goodwill impairment charge, Step 2 requires it to calculate the implied value of goodwill by assigning the fair value of a reporting unit to all of its assets and liabilities as if that reporting unit had been acquired in a business combination and the amount of the charge is calculated by subtracting the reporting unit's implied fair value of goodwill from the goodwill carrying amount. The standard was effective January 1, 2020 for the Company and will be applied prospectively from the date of adoption. The adoption of ASU 2017-04 did not have a material impact on the Company’s historical financial statements.

Not Yet Adopted

In August 2020, the FASB issued 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 on 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. Early adoption is permitted, but no earlier than January 1, 2021 for the Company. Management is evaluating the impact of adopting ASU 2020-06 and whether it will have a material impact on the Company’s consolidated financial statements.

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Summary of Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2020

Summary of Significant Accounting Policies

Schedule of 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,		December 31,
	2020		2019
Cash	$	126,505	$	15,863
Money market funds		79,950		42,960
Government-backed securities		43,250		20,000
Treasury securities		24,998		—
Corporate debt securities		59,468		—
Cash and cash equivalents	$	334,171	$	78,823

Schedule of reconciliation of cash, cash equivalents and restricted cash

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amounts shown in the statement of cash flows (in thousands):

	September 30,		December 31,
	2020		2019
Cash and cash equivalents	$	334,171	$	78,823
Restricted cash current		67,154		2,947
Restricted cash non-current		411		410
Cash, cash equivalents and restricted cash	$	401,736	$	82,180

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Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2020

Fair Value Measurements

Schedule of fair value hierarchy

The following table represents the Company's fair value hierarchy for its financial assets and liabilities measured at fair value (in thousands):

	Fair Value at September 30, 2020						Fair Value at December 31, 2019
Assets	Level 1		Level 2		Level 3		Level 1		Level 2		Level 3
Money market funds(1)	$	79,950	$	―	$	—	$	42,960	$	—	$	—
Government-backed securities(2)		―		43,250		―		―		20,000		―
Treasury securities(3)		—		65,093		—		—		—		—
Corporate debt securities(4)		―		148,583		―		―		—		―
Agency securities	$	―		40,651		—		—		—		—
Total cash equivalents and marketable securities	$	79,950	$	297,577	$	—	$	42,960	$	20,000	$	—
Liabilities
Convertible notes payable	$	―	$	389,217	$	—	$	—	$	125,811	$	—

(1) Classified as cash and cash equivalents as of September 30, 2020 and December 31, 2019, respectively, on the consolidated balance sheets.

(2) Includes $43,250 and $20,000 classified as cash and cash equivalents as of September 30, 2020 and December 31, 2019, respectively, on the consolidated balance sheets.

(3) Includes $24,998 classified as cash and cash equivalents as of September 30, 2020 on the consolidated balance sheets.

(4) Includes $59,468 classified as cash and cash equivalents as of September 30, 2020 on the consolidated balance sheets.

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Marketable Securities (Tables)

9 Months Ended

Sep. 30, 2020

Marketable Securities

Schedule of investments classified as available-for-sale

Marketable securities classified as available-for-sale as of September 30, 2020 and December 31, 2019 were comprised of (in thousands):

	September 30, 2020								December 31, 2019
			Gross		Gross						Gross		Gross
	Amortized		Unrealized		Unrealized				Amortized		Unrealized		Unrealized
	Cost		Gains		Losses		Fair Value		Cost		Gains		Losses		Fair Value
Treasury securities	$	40,093	$	2	$	—	$	40,095	$	—	$	—	$	—	$	—
Corporate debt securities		89,104		12		(2)		89,114		—		—		—		—
Agency securities		40,645		6		—		40,651		—		—		—		—
Total	$	169,842	$	20	$	(2)	$	169,860	$	—	$	—	$	—	$	—

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Acquisition of Novavax CZ. (Tables)

9 Months Ended

Sep. 30, 2020

Acquisition of Novavax CZ

Summary of preliminary allocation of the Purchase Price based upon the fair values of assets acquired and liabilities assumed at the Acquisition Date

The preliminary allocation is based upon information that was available to management at the time the consolidated financial statements were prepared and is subject to change prior to completion of the measurement period (in thousands):

Prepaid expense and other current assets	$	326
Property and equipment		96,739
Goodwill		70,662
Accounts payable		(1,193)
Accrued expenses		(205)
Other non-current liabilities		(813)
Purchase Price, net of cash acquired	$	165,516

Summary of unaudited pro forma financial information

The unaudited pro forma financial information combines the historical results of operations of the Company and Novavax CZ for the periods presented below and reflects the application of certain pro forma adjustments (in thousands, except per share amounts):

	Three Months Ended				Nine Months Ended
	September 30, 2020				September 30,
	2020		2019		2020		2019
Revenue	$	157,024	$	2,507	$	195,939	$	9,846
Net loss		(196,590)		(19,982)		(242,411)		(107,349)
Basic and diluted net loss per share		(3.19)		(0.45)		(4.21)		(2.51)

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Goodwill and Other Intangible Assets (Tables)

9 Months Ended

Sep. 30, 2020

Goodwill and Other Intangible Assets

Schedule of goodwill

The change in the carrying amounts of goodwill for the nine months ended September 30, 2020 was as follows (in thousands):

	Amount
Balance at December 31, 2019	$	51,154
Goodwill resulting from the acquisition of Novavax CZ		70,662
Currency translation adjustments		5,116
Balance at September 30, 2020	$	126,932

Schedule of identifiable intangible assets

Purchased intangible assets consisted of the following as of September 30, 2020 and December 31, 2019 (in thousands):

	September 30, 2020						December 31, 2019
	Gross						Gross
	Carrying		Accumulated		Intangible		Carrying		Accumulated		Intangible
	Amount		Amortization		Assets, Net		Amount		Amortization		Assets, Net
Finite-lived intangible assets:
Proprietary adjuvant technology	$	8,309	$	(2,977)	$	5,332	$	7,985	$	(2,562)	$	5,423
Collaboration agreements		3,752		(3,752)		—		3,606		(3,448)		158
Total identifiable intangible assets	$	12,061	$	(6,729)	$	5,332	$	11,591	$	(6,010)	$	5,581

Schedule of estimated amortization expense

Estimated amortization expense for existing intangible assets for the remainder of 2020 and for each of the five succeeding years ending December 31 will be as follows (in thousands):

Year	Amount
2020	$	104
2021		415
2022		415
2023		415
2024		415
2025		415

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Leases (Tables)

9 Months Ended

Sep. 30, 2020

Leases

Schedule of Supplemental Balance Sheet Information Related to Lease

Supplemental balance sheet information for embedded leases in supply agreements entered into by the Company during the three months ended September 30, 2020 is as follows (in thousands, except weighted-average remaining lease term and discount rate):

Lease Liabilities	Classification		Amount
Current operating lease liabilities	Other current liabilities	$	3,868
Current portion of finance lease liabilities	Current portion of finance lease liabilities		55,860
Non-current finance lease liabilities	Non-current finance lease liabilities		63,099
Weighted-average remaining lease term (years):
Operating lease			1.1
Finance lease			4.9
Weighted-average discount rate:
Operating lease			6.5%
Finance lease			6.6%

Schedule of lease expenses

Lease Liabilities	Classification		Amount
Current operating lease liabilities	Other current liabilities	$	3,868
Current portion of finance lease liabilities	Current portion of finance lease liabilities		55,860
Non-current finance lease liabilities	Non-current finance lease liabilities		63,099
Weighted-average remaining lease term (years):
Operating lease			1.1
Finance lease			4.9
Weighted-average discount rate:
Operating lease			6.5%
Finance lease			6.6%

Schedule of Supplemental Cash Flow information of Lease

Supplemental cash flow information related to the embedded leases for three months ended September 30, 2020 was as follows (in thousands):

Cash paid for amounts included in the measurement of lease liabilities:		Amount
Financing cash flows from finance lease	$	65,424

Schedule of maturities of lease liabilities

Cash paid for amounts included in the measurement of lease liabilities:		Amount
Financing cash flows from finance lease	$	65,424

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Long-Term Debt (Tables)

9 Months Ended

Sep. 30, 2020

Long-Term Debt

Schedule of convertible notes payable

Total convertible notes payable consisted of the following at (in thousands):

	September 30,		December 31,
	2020		2019
Principal amount of Notes	$	325,000	$	325,000
Unamortized debt issuance costs		(3,321)		(4,389)
Total convertible notes payable	$	321,679	$	320,611

Schedule of interest expense

Interest expense incurred in connection with the Notes consisted of the following (in thousands):

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2020		2019		2020		2019
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

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Stock-Based Compensation (Tables)

9 Months Ended

Sep. 30, 2020

Stock-Based Compensation

Schedule of summary of option activity

	2015 Plan			2005 Plan
		Weighted-			Weighted-
		Average			Average
	Stock	Exercise		Stock	Exercise
	Options	Price		Options	Price
Outstanding at January 1, 2020	3,388,750	$	35.64	501,780	$	64.19
Granted	3,110,566	$	31.16	—	$	—
Exercised	(874,586)	$	31.08	(189,378)	$	44.14
Canceled	(80,366)	$	50.29	(23,329)	$	51.92
Outstanding at September 30, 2020	5,544,364	$	33.66	289,073	$	78.32
Shares exercisable at September 30, 2020	771,002	$	86.28	289,073	$	78.32
Shares available for grant at September 30, 2020	2,814,405

Schedule of stock unit activity

		Per Share
		Weighted-
	Number of	Average
	Shares	Fair Value
Outstanding and Unvested at January 1, 2020	1,102,311	$	5.95
Restricted stock units granted	508,854	$	82.02
Restricted stock units vested	(781,812)	$	6.74
Restricted stock units forfeited	(39,324)	$	45.73
Outstanding and Unvested at September 30, 2020	790,029	$	52.17

Schedule of stock-based compensation expense

The Company recorded all stock-based compensation expense in the consolidated statements of operations as follows (in thousands):

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2020		2019		2020		2019
Research and development	$	28,730	$	723	$	34,735	$	6,347
General and administrative		36,975		1,901		42,867		6,456
Total stock-based compensation expense	$	65,705	$	2,624	$	77,602	$	12,803

Stock options

Stock-Based Compensation

Schedule of assumptions used to estimate grant date fair value of stock options and stock appreciation rights granted using black-scholes option-pricing model

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2020		2019		2020		2019
Weighted average Black-Scholes fair value of stock options and SARs granted		$102.41		$4.91		$78.78		$5.42
Risk-free interest rate		0.2%-0.4%		1.5%-1.6%		0.2%-1.5%		1.5%-2.6%
Dividend yield		0%		0%		0%		0%
Volatility		135.4%-152.2%		128.0%-133.8%		116.0%-152.2%		111.6%-133.8%
Expected term (in years)		4.0-5.3		4.0-4.4		4.0-7.6		4.0-4.5
Expected forfeiture rate		0%		0%		0%		0%

ESPP

Stock-Based Compensation

Schedule of assumptions used to estimate grant date fair value of stock options and stock appreciation rights granted using black-scholes option-pricing model

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2020		2019		2020		2019
Range of Black-Scholes fair values of ESPP shares granted		$3.08-$92.67		$2.57-$35.00		$2.57-$92.67		$2.57-$35.00
Risk-free interest rate		0.2%-2.5%		1.3%-2.6%		0.2%-2.6%		1.2%-2.6%
Dividend yield		0%		0%		0%		0%
Volatility		77.5%-189.7%		59.7%-171.6%		66.6%-189.7%		52.2%-171.6%
Expected term (in years)		0.5-2.0		0.5-2.0		0.5-2.0		0.5-2.0
Expected forfeiture rate		0%		0%		0%		0%

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Summary of Significant Accounting Policies - Basis of Presentation (Details) - USD ($) $ in Millions	Sep. 30, 2020	Dec. 31, 2019
Summary of Significant Accounting Policies
Foreign currency translation adjustment	$ 5.0	$ 12.5

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Summary of Significant Accounting Policies - Cash and Cash Equivalents (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Cash and Cash Equivalents
Cash and cash equivalents	$ 334,171	$ 78,823
Cash
Cash and Cash Equivalents
Cash and cash equivalents	126,505	15,863
Money market funds
Cash and Cash Equivalents
Cash and cash equivalents	79,950	42,960
Government Backed Securities (REPO)
Cash and Cash Equivalents
Cash and cash equivalents	43,250	$ 20,000
Treasury securities
Cash and Cash Equivalents
Cash and cash equivalents	24,998
Corporate debt securities
Cash and Cash Equivalents
Cash and cash equivalents	$ 59,468

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Summary of Significant Accounting Policies - Restricted Cash (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019	Sep. 30, 2019	Dec. 31, 2018
Restricted Cash
Security Deposit	$ 400	$ 400
Cash, Cash equivalents and restricted cash
Cash and cash equivalents	334,171	78,823
Restricted cash current	67,154	2,947
Restricted cash non-current	411	410
Cash, cash equivalents and restricted stock	401,736	82,180	$ 75,930	$ 81,959
CEPI
Restricted Cash
Restricted cash, current and non current	46,300
Novavax CZ
Restricted Cash
Restricted cash, current and non current	11,700
BMGF Grant Agreement
Restricted Cash
Restricted cash, current and non current	$ 9,100	1,400
Catalent Maryland, Inc
Restricted Cash
Restricted cash, current and non current		$ 1,500

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Summary of Significant Accounting Policies - Revenue (Detail) - USD ($) $ in Millions	1 Months Ended		9 Months Ended
	May 31, 2020	Mar. 31, 2020	Sep. 30, 2020
CEPI
Revenue Recognition
Funding from CEPI	$ 399.5	$ 3.9
Amount of CEPI Grant Funding	257.0
Amount of CEPI Forgivable Loan Funding	$ 142.5
Government contract
Revenue Recognition
Maximum funding entitled to receive from U.S. government			$ 1,660.0
Amount of transaction price not yet satisfied			1,620.0
Contract asset			3.8
Contract liability			26.5
Grant and other | CEPI
Revenue Recognition
Funding from CEPI			399.5
Amount of CEPI Grant Funding			257.0
Amount of CEPI Forgivable Loan Funding			$ 142.5

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Summary of Significant Accounting Policies - Net Loss per Share (Details)	9 Months Ended
	Sep. 30, 2020 USD ($) $ / shares shares	Sep. 30, 2019 shares	Dec. 31, 2019 shares
Series A Convertible
Net loss per share:
Preferred stock, shares outstanding	438,885		0
Stock appreciation rights
Net loss per share:
Antidilutive securities excluded (in shares)	6,623,466	5,041,526
Series A Convertible
Net loss per share:
Antidilutive securities excluded (in shares)	4,388,850
Convertible Debt Securities [Member]
Net loss per share:
Converted (in shares) | $	2,385,800
Conversion price | $ / shares	$ 136.20

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Fair Value Measurements (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Cash and Cash Equivalents
Cash and cash equivalents	$ 334,171	$ 78,823
Transfers between levels
Fair Value, Assets, Level 1 to Level 2 Transfers, Amount	0
Fair Value, Assets, Level 2 to Level 1 Transfers, Amount	0
Fair Value, Liabilities, Level 1 to Level 2 Transfers, Amount	0
Fair Value, Liabilities, Level 2 to Level 1 Transfers, Amount	0
Government Backed Securities (REPO)
Cash and Cash Equivalents
Cash and cash equivalents	43,250	20,000
Treasury securities
Cash and Cash Equivalents
Cash and cash equivalents	24,998
Corporate debt securities
Cash and Cash Equivalents
Cash and cash equivalents	59,468
Level 1
Assets
Cash equivalents and marketable securities	79,950	42,960
Level 1 | Money market funds
Assets
Cash equivalents and marketable securities	79,950	42,960
Level 2
Assets
Cash equivalents and marketable securities	297,577	20,000
Liabilities
Convertible notes payable	389,217	125,811
Level 2 | Government Backed Securities (REPO)
Assets
Cash equivalents and marketable securities	43,250	$ 20,000
Level 2 | Treasury securities
Assets
Cash equivalents and marketable securities	65,093
Level 2 | Corporate debt securities
Assets
Cash equivalents and marketable securities	148,583
Level 2 | Agency Securities
Assets
Cash equivalents and marketable securities	$ 40,651

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Marketable Securities (Details) $ in Thousands	Sep. 30, 2020 USD ($)
Marketable Securities
Amortized Cost	$ 169,842
Gross Unrealized Gains	20
Gross Unrealized Losses	(2)
Fair Value	169,860
Treasury securities
Marketable Securities
Amortized Cost	40,093
Gross Unrealized Gains	2
Fair Value	40,095
Corporate debt securities
Marketable Securities
Amortized Cost	89,104
Gross Unrealized Gains	12
Gross Unrealized Losses	(2)
Fair Value	89,114
Agency Securities
Marketable Securities
Amortized Cost	40,645
Gross Unrealized Gains	6
Fair Value	$ 40,651

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Acquisition of Novavax CZ (Details) - May 27, 2020 € in Millions, $ in Millions	EUR (€)	USD ($)
Novavax CZ
Business Acquisition
Escrow	€ 10.0	$ 11.1

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Acquisition of Novavax CZ - Preliminary Allocation of Purchase Price to Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Thousands	May 27, 2020	Sep. 30, 2020	Dec. 31, 2019
Preliminary allocation of purchase price:
Goodwill		$ 126,932	$ 51,154
Novavax CZ
Preliminary allocation of purchase price:
Prepaid expense and other current assets	$ 326
Property and equipment	96,739
Goodwill	70,662
Accounts payable	(1,193)
Accrued expenses	(205)
Other non-current liabilities	(813)
Purchase Price, net of cash acquired	$ 165,516	$ 200
Novavax CZ | Minimum
Preliminary allocation of purchase price:
Expected remaining useful lives of fixed assets	4 years
Novavax CZ | Maximum
Preliminary allocation of purchase price:
Expected remaining useful lives of fixed assets	25 years

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Acquisition of Novavax CZ - Impact to Financial Results for the Three and Nine Months Ended September 30, 2020 (Details) - USD ($) $ in Millions	3 Months Ended	4 Months Ended	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2020	Sep. 30, 2020
Business Acquisition
Earnings (loss) of acquiree		$ (4.3)
General and administrative
Business Acquisition
Acquisition costs	$ 0.7		$ 2.7

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Acquisition of Novavax CZ - Supplemental Pro Forma Financial Information (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Proforma financial information:
Revenue	$ 157,024	$ 2,507	$ 195,939	$ 9,846
Net loss	$ (196,590)	$ (19,982)	$ (242,411)	$ (107,349)
Basic and diluted net loss per share	$ (3.19)	$ (0.45)	$ (4.21)	$ (2.51)

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Goodwill and Other Intangible Assets - Goodwill (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2020 USD ($)
Goodwill [Roll Forward]
Beginning balance	$ 51,154
Goodwill resulting from the acquisition of Novavax CZ	70,662
Currency translation adjustments	5,116
Ending balance	$ 126,932

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Goodwill and Other Intangible Assets - Identifiable Intangible Assets (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Dec. 31, 2019
Intangible assets:
Amortization expense	$ 500	$ 500
Purchased intangible assets:
Gross Carrying Amount	12,061		$ 11,591
Accumulated Amortization	(6,729)		(6,010)
Intangible Assets, Net	5,332		5,581
Proprietary adjuvant technology
Purchased intangible assets:
Gross Carrying Amount	8,309		7,985
Accumulated Amortization	(2,977)		(2,562)
Intangible Assets, Net	5,332		5,423
Collaboration agreements
Purchased intangible assets:
Gross Carrying Amount	3,752		3,606
Accumulated Amortization	$ (3,752)		(3,448)
Intangible Assets, Net			$ 158

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Goodwill and Other Intangible Assets - Identifiable Intangible Assets, estimated amortization (Details) $ in Thousands	Sep. 30, 2020 USD ($)
Amortization expense, fiscal year maturity
2020	$ 104
2021	415
2022	415
2023	415
2024	415
2025	$ 415

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Leases (Details) $ in Thousands	Sep. 30, 2020 USD ($)
Leases
Finance lease liability	$ 118,959
Finance lease liability, initial recognition	187,200
Finance lease right of use asset	$ 187,200
Finance lease, discount rate	6.60%

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Leases - Supplemental Balance Sheet Information Related to Leases (Details) $ in Thousands	Sep. 30, 2020 USD ($)
Lease Assets and Liabilities
Current portion of finance lease liabilities	$ 55,860
Non-current finance lease liabilities	$ 63,099
Operating lease, term	1 year 1 month 6 days
Finance lease, term	4 years 10 months 24 days
Operating lease, discount rate	6.50%
Finance lease, discount rate	6.60%
Other Current Liabilities
Lease Assets and Liabilities
Current operating lease liability	$ 3,868
Current portion of finance lease liabilities	55,860
Other Noncurrent Liabilities
Lease Assets and Liabilities
Non-current finance lease liabilities	$ 63,099

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Leases - Lease Cost (Details) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2020
Operating lease cost:
Fixed lease expense	$ 16
Fixed lease expense	65,424	$ 65,424
Interest expense	1,041
Short-term cost	19,390
Total lease cost	$ 85,871

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Leases - Supplemental Cash flow information (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2020 USD ($)
Leases
Financing cash flows from finance lease	$ 65,424

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Leases - Maturities of Lease Liabilities (Details) $ in Thousands	Sep. 30, 2020 USD ($)
Operating
2021	$ 3,900
Total operating lease payments	3,900
Less: imputed interest	(32)
Total operating lease liabilities	3,868
Finance
2021	62,623
2022	65,235
Total minimum lease payments	127,858
Less: imputed interest	(8,899)
Finance lease liability	$ 118,959
Finance lease not commenced yet
Term (in years)	5 years

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Long-Term Debt (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Sep. 30, 2020	Dec. 31, 2019
Long-Term Debt
Debt Issuance Costs	$ 10,000
Face amount	325,000	$ 325,000	$ 325,000
Deferred issuance costs	$ 10,000
Term	7 years

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Long-Term Debt - Notes Payable (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019	Mar. 31, 2016
Long-Term Debt
Principal amount of Notes	$ 325,000	$ 325,000	$ 325,000
Unamortized debt issuance costs	(3,321)	(4,389)
Total convertible notes payable	$ 321,679	$ 320,611

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Long-Term Debt - Interest Expense (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Long-Term Debt
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
Coupon interest rate	3.75%	3.75%	3.75%	3.75%

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Preferred Stock (Details) - USD ($) $ / shares in Units, $ in Millions	6 Months Ended
	Jun. 30, 2020	Sep. 30, 2020	Dec. 31, 2019
Preferred Stock
Par value per share		$ 0.01	$ 0.01
Beneficial conversion feature	$ 24.1
Subscription agreement
Preferred Stock
Conversion price	$ 45.57
Issued upon conversion (in shares)	10
Series A Convertible
Preferred Stock
Preferred stock, shares issued		438,885	0
Series A Convertible | Subscription agreement
Preferred Stock
Preferred stock, shares issued	438,885
Par value per share	$ 0.01
Share price (per share)	$ 455.70
Preferred stock, value	$ 200.0

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Stockholders' Equity (Deficit) (Details) - USD ($) $ / shares in Units, $ in Thousands	1 Months Ended			3 Months Ended					6 Months Ended	9 Months Ended
	Nov. 03, 2020	Jun. 30, 2020	Jan. 31, 2020	Dec. 31, 2020	Sep. 30, 2020	Mar. 31, 2020	Sep. 30, 2019	Mar. 31, 2019	Jun. 30, 2020	Sep. 30, 2020	Sep. 30, 2019	May 31, 2020	Dec. 31, 2018	Dec. 31, 2017
Stockholders' Equity
Proceeds from shares sold, net					$ 57,190		$ 12,588			$ 450,953	$ 67,830
Market Issuance Sales Agreements
Stockholders' Equity
Issued (in shares)									8,600,000
Proceeds from shares sold, net									$ 148,100
Maximum potential proceeds						$ 150,000
May 2020 Issuance Sales Agreement
Stockholders' Equity
Issued (in shares)	700,000									2,800,000
Proceeds from shares sold, net	$ 74,100			$ 3,900						$ 160,300
Maximum potential proceeds	$ 8,700											$ 250,000
January 2020 Issuance Sales Agreement
Stockholders' Equity
Issued (in shares)						10,500,000
Proceeds from shares sold, net						$ 98,700
Maximum potential proceeds			$ 100,000
December 2018 Issuance Sales Agreement
Stockholders' Equity
Issued (in shares)			7,200,000			7,200,000		1,700,000			3,600,000
Proceeds from shares sold, net			$ 38,500			$ 38,500		$ 29,300
Maximum potential proceeds													$ 100,000
December 2017 Issuance Sales Agreement
Stockholders' Equity
Issued (in shares)								2,500,000
Proceeds from shares sold, net								$ 37,900
Maximum potential proceeds														$ 75,000
Member of the Board
Stockholders' Equity
Issued (in shares)		32,916
Share price (per share)		$ 45.57							$ 45.57
Gross proceeds from sale of common stock		$ 1,500

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Stock-Based Compensation - Stock Options (Details) - shares		9 Months Ended
	Jun. 25, 2020	Sep. 30, 2020
Stock-Based Compensation
Term (in years)		P10Y
Minimum grant price, percent of common stock fair value		100.00%
Minimum
Stock-Based Compensation
Vesting period		1 year
Maximum
Stock-Based Compensation
Vesting period		4 years
2015 Plan
Stock-Based Compensation
Authorized (in shares)		10,900,000
Additional authorized (in shares)	7,100,000

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Stock-Based Compensation - Stock Options and Appreciation Rights (Details) - $ / shares	1 Months Ended	9 Months Ended	12 Months Ended
	Apr. 30, 2020	Sep. 30, 2020	Dec. 31, 2019
Restricted stock units
Stock-Based Compensation
Restricted stock units granted		508,854
2015 Plan
Stock Options
Outstanding at January 1, 2020		3,388,750
Granted		3,110,566
Exercised		(874,586)
Canceled		(80,366)
Outstanding at September 30, 2020		5,544,364	3,388,750
Shares exercisable at September 30, 2020		771,002
Shares available for grant at September 30, 2020		2,814,405
Weighted-Average Exercise Price
Outstanding at January 1, 2020		$ 35.64
Granted		31.16
Exercised		31.08
Canceled		50.29
Outstanding at September 30, 2020		33.66	$ 35.64
Shares exercisable at September 30, 2020		$ 86.28
2015 Plan | Stock appreciation rights
Stock Options
Granted			192,400
Weighted-Average Exercise Price
Granted			$ 5.95
2015 Plan | Stock options | Employees
Stock Options
Granted	2,501,600
Weighted-Average Exercise Price
Granted	$ 19.08
2015 Plan | Stock options | Employees | Certain Employees
Stock Options
Granted			1,014,200
Weighted-Average Exercise Price
Granted			$ 5.95
2015 Plan | Restricted stock units | Employees
Stock-Based Compensation
Restricted stock units granted	326,050
2005 Plan
Stock Options
Outstanding at January 1, 2020		501,780
Exercised		(189,378)
Canceled		(23,329)
Outstanding at September 30, 2020		289,073	501,780
Shares exercisable at September 30, 2020		289,073
Weighted-Average Exercise Price
Outstanding at January 1, 2020		$ 64.19
Exercised		44.14
Canceled		51.92
Outstanding at September 30, 2020		78.32	$ 64.19
Shares exercisable at September 30, 2020		$ 78.32

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Stock-Based Compensation - Stock Options and Appreciation Rights, fair value (Details) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Fair Value
Risk-free interest rate, maximum				2.60%
Additional disclosures:
Aggregate intrinsic value, outstanding	$ 446.5		$ 446.5
Remaining term, outstanding (in years)			8 years 6 months
Aggregate intrinsic value, exercisable	$ 43.3		$ 43.3
Remaining term, exercisable (in years)			5 years 3 months 18 days
Aggregate intrinsic value, stock options and vesting RSA's			$ 164.3	$ 0.1
Stock options
Fair Value
Weighted average (per share)	$ 102.41	$ 4.91	$ 78.78	$ 5.42
Risk-free interest rate, minimum	0.20%	1.50%	0.20%	1.50%
Risk-free interest rate, maximum	0.40%	1.60%	1.50%	2.60%
Dividend yield	0.00%	0.00%	0.00%	0.00%
Volatility, minimum	135.40%	128.00%	116.00%	111.60%
Volatility, maximum	152.20%	133.80%	152.20%	133.80%
Expected forfeiture rate	0.00%	0.00%	0.00%	0.00%
Stock options | Minimum
Fair Value
Expected term (in years)	4 years	4 years	4 years	4 years
Stock options | Maximum
Fair Value
Expected term (in years)	5 years 3 months 18 days	4 years 4 months 24 days	7 years 7 months 6 days	4 years 6 months

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Stock-Based Compensation - Employee Stock Purchase Plan (Details) - $ / shares	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Fair Value
Risk-free interest rate, maximum				2.60%
ESPP
Fair Value
Risk-free interest rate, minimum	0.20%	1.30%	0.20%	1.20%
Risk-free interest rate, maximum	2.50%	2.60%	2.60%
Dividend yield	0.00%	0.00%	0.00%	0.00%
Volatility, minimum	77.50%	59.70%	66.60%	52.20%
Volatility, maximum	189.70%	171.60%	189.70%	171.60%
Expected forfeiture rate	0.00%	0.00%	0.00%	0.00%
Additional disclosures:
Authorized (in shares)	600,000		600,000
Subscription rate cap	15.00%		15.00%
Maximum discount rate			85.00%
Shares available for grant	255,596		255,596
ESPP | Minimum
Fair Value
Weighted average (per share)	$ 3.08	$ 2.57	$ 2.57	$ 2.57
Expected term (in years)	6 months	6 months	6 months	6 months
ESPP | Maximum
Fair Value
Weighted average (per share)	$ 92.67	$ 35.00	$ 92.67	$ 35.00
Expected term (in years)	2 years	2 years	2 years	2 years

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Stock-Based Compensation - Restricted Stock Units (Details) - Restricted stock units	9 Months Ended
	Sep. 30, 2020 $ / shares shares
Number of shares
Outstanding and Unvested, Bgn | shares	1,102,311
Restricted stock units granted | shares	508,854
Restricted stock units vested | shares	(781,812)
Restricted stock units forfeited | shares	(39,324)
Outstanding and Unvested, End | shares	790,029
Per Share Weighted-Average Grant-Date Fair Value
Outstanding and Unvested, Bgn | $ / shares	$ 5.95
Restricted stock units granted | $ / shares	82.02
Restricted stock units vested | $ / shares	6.74
Restricted stock units forfeited | $ / shares	45.73
Outstanding and Unvested, End | $ / shares	$ 52.17

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Stock-Based Compensation - Compensation Expense (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Compensation expense:
Total stock-based compensation expense	$ 65,705	$ 2,624	$ 77,602	$ 12,803
Additional disclosures:
Unrecognized compensation expense	311,000		$ 311,000
Unrecognized compensation expense, recognition period			1 year 4 months 24 days
Research and development
Compensation expense:
Total stock-based compensation expense	28,730	723	$ 34,735	6,347
General and administrative
Compensation expense:
Total stock-based compensation expense	$ 36,975	$ 1,901	$ 42,867	$ 6,456

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U.S. Government Agreements, Grants and Licenses - Operation Warp Speed (Details) - USD ($) $ in Thousands	1 Months Ended	3 Months Ended		9 Months Ended
	Jun. 30, 2020	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Agreements, Grants and Licenses
Revenue		$ 157,024	$ 2,507	$ 195,939	$ 9,846
Government contract
Agreements, Grants and Licenses
Maximum funding entitled to receive from U.S. government				1,660,000
Revenue		42,938		$ 43,249
Operation Warp Speed - Project Agreement | Government contract
Agreements, Grants and Licenses
Maximum funding entitled to receive from U.S. government	$ 1,600,000
Authorized expenditures or obligations	$ 800,000
Number of doses of the vaccine	100,000
Revenue		$ 39,400

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U.S. Government Agreements, Grants and Licenses - U.S. Department of Defense (Details) $ in Thousands, product in Millions	1 Months Ended	3 Months Ended			9 Months Ended
	Jun. 30, 2020 USD ($)	Dec. 31, 2020 USD ($) product	Sep. 30, 2020 USD ($)	Sep. 30, 2019 USD ($)	Sep. 30, 2020 USD ($)	Sep. 30, 2019 USD ($)
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Revenue			$ 157,024	$ 2,507	$ 195,939	$ 9,846
Government contract
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Maximum funding entitled to receive from U.S. government					1,660,000
Revenue			42,938		43,249
U.S. Department of Defense
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Authorized expenditures or obligations	$ 30,000
Most-favored customer status period	5 years
U.S. Department of Defense | Forecast
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Authorized expenditures or obligations		$ 60,000
Number of doses of the vaccine | product		10
U.S. Department of Defense | Government contract
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Maximum funding entitled to receive from U.S. government	$ 60,000
Revenue			$ 3,600		$ 3,900

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U.S. Government Agreements, Grants and Licenses - Coalition for Epidemic Preparedness Innovations (Details) - USD ($) $ in Thousands	1 Months Ended		3 Months Ended		9 Months Ended
	May 31, 2020	Mar. 31, 2020	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Agreements, Grants and Licenses
Revenue			$ 157,024	$ 2,507	$ 195,939	$ 9,846
Grant and other
Agreements, Grants and Licenses
Revenue			114,086	$ 2,507	152,690	$ 9,846
CEPI
Agreements, Grants and Licenses
Funding from CEPI	$ 399,500	$ 3,900
Amount of CEPI Grant Funding	257,000
Amount of CEPI Forgivable Loan Funding	$ 142,500
CEPI | Grant and other
Agreements, Grants and Licenses
Funding from CEPI					399,500
Amount of CEPI Grant Funding					257,000
Amount of CEPI Forgivable Loan Funding					142,500
Revenue			$ 111,300		$ 147,800

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U.S. Government Agreements, Grants and Licenses - Bill & Melinda Gates Foundation and others (Details) $ in Thousands, product in Millions		1 Months Ended			3 Months Ended		9 Months Ended		61 Months Ended
	Sep. 15, 2015	Oct. 31, 2020 product	Jul. 31, 2020 USD ($)	Sep. 30, 2015 USD ($)	Sep. 30, 2020 USD ($)	Sep. 30, 2019 USD ($)	Sep. 30, 2020 USD ($)	Sep. 30, 2019 USD ($)	Sep. 30, 2020 USD ($)
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Revenue					$ 157,024	$ 2,507	$ 195,939	$ 9,846
GAGA
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Contract term after first sale	15 years
Contract term	10 years
Contract term additional years	5 years
UK SARS-CoV-2 Vaccine Supply Agreement
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Number of doses of the vaccine | product		60
UK SARS-CoV-2 Vaccine Supply Agreement | Maximum
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Number of doses of the vaccine | product		60
Grant and other
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Revenue					114,086	$ 2,507	152,690	$ 9,846
Grant and other | BMGF Grant Agreement
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Grant awarded			$ 15,000	$ 89,100
Revenue							$ 400		$ 82,000
Grant and other | BMGF Grant Agreement | Maximum
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Revenue					100
Grant and other | Bmgf Sa Grant Agreement
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Revenue					$ 2,400

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Subsequent Events (Details) - Subsequent Events [Member] $ in Millions	1 Months Ended
	Oct. 31, 2020 USD ($) ft²
700 Quince Orchard Road
Subsequent events
Area (sq feet) | ft²	170,000
Term	15 years
Rent	$ 5.8
Tennant improvements	30.6
14 Firstfield Road
Subsequent events
Payments to acquire land	$ 14.5