Novavax Inc (NVAX) 2024 Q3 法說會逐字稿

Good morning and welcome to Novavax's third quarter, 2024 financial results and operational highlights conference call.

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I would now like to turn the conference over to Louis de Vice President, investor relations.

Please go ahead.

Good morning and thank you all for joining us today to discuss our third quarter, 2024 operational highlights and financial results.

A press release announcing our results is currently available on our website at Novavax dotcom and an audio archive of this conference call will be available on our website later today.

Please turn to slide 2.

Before we begin with prepared remarks.

I need to remind you that this presentation includes forward-looking statements including but not limited to statements related to Novavax's corporate strategy and operating plans.

Its value drivers and near term priorities.

Its partnerships and expectations with respect to potential royalties, milestones and cost reimbursements.

Its expectations regarding manufacturing capacity, timing, production and delivery for its COVID 19 vaccine, the development of Novavax's clinical and preclinical product candidates full year 2024 financial guidance and Novavax's future financial or business performance.

Each forward-looking statement contained in this presentation is subject to certain risks and uncertainties that could cause actual results to differ materially from those projected in such statements.

Additional information regarding these factors appears under the heading, cautionary note regarding forward-looking statements in the presentation we issued this morning and under the heading risk factors.

In our most recent form, 10-K and subsequent form, 10 QS filed with the Securities and Exchange Commission available at sec.gov and our website at novavax dotcom.

The forward-looking statements in this presentation speak only as of the original date of this presentation and we undertake no obligation to update or revise any of these statements.

Please turn to slide 3.

This presentation also includes references to a nongaap financial measure which is forward-looking information for combined R&D and SGNA expenses as adjusted for expense reimbursement from Sanofi under the Sanofi agreement.

Please turn to slide 4.

Joining me today is John Jacobs, our President and CEO who will provide an update on our progress during the quarter and highlight our four key value drivers.

Additionally, John Reino, our President and Chief Operating Officer will provide an update on our current commercial season and Dr Bob Walker, Chief Medical Officer will discuss our clinical development and R&D strategy.

Finally, Jim Kelly, Chief Financial Officer and treasurer will provide an overview of our financial results.

I would now like to hand over the call to John Jacobs.

Thank you, Lewis and thank you everyone for joining us.

Please turn to slide 5.

I'm pleased to be with you here today along with members of our executive team to discuss Novavax's progress during the third quarter, as well as how we have advanced the new corporate growth strategy that we outlined during our second quarter call in August.

This strategy is focused on driving future value from additional business development activities and organic research and development using our proven technology.

All while reshaping the company into a leaner and more agile organization.

This strategy has already resulted in the Sanofi partnership we announced this year which has enabled us to transition away from Novavax's prior business model of devoting all our resources and time to commercializing one product, our COVID 19 vaccine and to move instead toward additional value generating activities, which we will talk about more today.

First, I want to take a moment to recap the four key drivers of value for this strategy and then share with you both the progress we have already made.

And our next steps on each, the four value drivers are value driver, one, the Sanofi partnership, value driver.

Two, our late stage pipeline kick and flu value driver.

Three, leveraging our proven technology platform to drive additional partnerships and deals and value driver.

Four are emerging early stage pipeline.

We intend to deliver on these value drivers using a more lean corporate infrastructure built on the core capabilities needed to execute this new approach and disciplined expense management on which we have already made significant progress and we will elaborate on later in the call.

So first, let's talk about value driver one, the Sanofi partnership as we discussed last quarter, the partnership with Sanofi is a license and collaboration agreement that combines Novavax's proprietary protein and nanoparticle technologies.

Matrix adjuvant and our R&D expertise with Sanofi's world class leadership in launching and commercializing innovative vaccines.

Sanofi will take the lead co commercialization role for our COVID 19 vaccine starting in 2025 enabling us to monetize our existing COVID 19 vaccine program through double digit royalties from Sanofi sales into the future.

We also have the potential for multiple additional revenue streams generated from other vaccines developed by Sanofi either in combination with our existing COVID 19 product or using our matrix M adjuvant as they look to leverage the power of our proven technology.

As a reminder in the second quarter, we received an initial cash payment of $500 million upfront and an approximately $70 million equity investment in Novovax.

We are also eligible to receive up to $700 million in additional milestone payments related to our COVID 19 vaccine and Sanofi zone combination COVID flu vaccine.

Along with future milestone payments and royalties.

We anticipate from these programs.

We also have the potential for additional royalties and or milestones from other vaccines developed either in combination with our existing COVID 19 product or using our matrix M technology.

As you can see, Sanofis strong global presence and proven track record in developing and commercializing vaccines combined with Novavax's R&D expertise has created the potential for this partnership to drive significant value for years to come.

Both for our shareholders and the people who would have broadened access to our vaccine technology and the protection it can provide.

Our second value.

Driver is Novavax's late stage pipeline.

Our late stage pipeline is comprised of our COVID 19 influenza combination and standalone influenza vaccine candidates.

We believe that combination vaccines such as our KIC candidate represent a significant market opportunity and we're excited about the prospect of advancing these assets.

In addition, our standalone influenza vaccine program is based on a platform that has demonstrated enhanced immunogenicity in late stage trials.

And we believe that if successful, this could be the first and only recombinant based protein adjuvanted flu vaccine in the market.

And one which can serve as the foundation to advance an innovative and differentiated pandemic influenza program, as well as we previously communicated.

Our intention is to partner these assets.

Dr Bob Walker will provide updates on this program shortly and now moving on to value driver three, which is to leverage our proven technology platform to drive additional partnerships and deals our proven tech platform consists of both our matrix M adjuvant and our nanoparticle protein based technology, which we believe provide us the potential for multiple business development opportunities with a diverse set of potential partners across a range of vaccines.

We believe matrix M holds incredible promise not just to develop our own vaccines as we've already seen with our marketed COVID 19 product, but importantly, to also potentially improve other companies' existing vaccines and or enable them to develop new vaccines using our adjuvant last quarter.

We shared data from existing vaccines combined with Matrix M to demonstrate how our adjuvant can be leveraged to potentially improve them.

The data we showed of inactivated influenza and bacterial polysaccharide vaccines adjuvanted with our matrix M are just two examples of the significant value we believe our adjuvent could provide to the existing vaccine portfolios of other companies.

And we continue to explore other ways to leverage its potential and finally value driver for our emerging early stage pipeline.

Our fourth value driver focuses on generating additional value from our tech platform through the development of a new diversified pipeline.

Employing a disciplined approach, we intend to develop an early stage pipeline based on our proven technology platform starting from our core of infectious disease and potentially going beyond that core into other areas where we see the most unmet medical need and the greatest potential for our technology.

Importantly, we intend to expand our pipeline strategically using a rigorous set of guiding principles, aimed to focus our time and investments on the highest value programs.

This will include considerations such as scientific, rationale and reasons to believe our technology can be differentiated and win in a specific therapeutic area, market opportunity and the level of unmet medical need.

Emerging competitive pipelines, attractiveness of the asset to other companies and ability to partner and several other factors to help us make high quality choices with our investments in R&D.

Importantly, we intend to execute this strategy in a capital efficient manner.

One that maintains our flexibility and preserves the potential for maximum value creation.

Dr Bob Walker will expand further on both how we intend to apply these guiding principles and our next steps during his portion of today's call.

So in summary, our corporate growth strategy channels all of our resources into driving value from our proven technology platform via partnering in R&D and to doing so in a much more lean and efficient organization for the remainder of this year.

And in line with our key value drivers, we're focused on executing our four priorities which you will see on slide, six priority one, the successful execution of our partnership with Sanofi priority two, driving incremental value from our technology platform with the advancement of our kick and flu programs, the ongoing development of an emerging early stage pipeline and pursuing new business development opportunities.

Priority three further reduction of our R&D and SG and a costs in line with our guidance along with implementing additional reductions to scale as we enter 2025 and beyond and priority for delivery of our updated COVID 19 vaccine for the 2,425 vaccination season.

Before I hand the call over to additional members of our team.

I want to take a moment to welcome Dr Raex Sandra drag our new head of R&D who started just yesterday.

Rexana brings more than 20 years of extensive clinical corporate and global public health expertise to Novavax and we believe she will be instrumental as we evaluate our future pipeline and opportunities for our tech platform.

You will hear more from Alexandra in the coming weeks as she settles into her new role.

Now to discuss our third quarter in more detail, I'd like to turn the call to John Trezzo for our operating updates.

John.

Thank you, John.

Please turn to slide 7.

We are pleased with the progress in our COVID vaccine program through the first part of the 2,425 season.

And with this progress, we are already seeing that season to date.

Novavax's vaccine administrations in the US already outperform those done in the entire 2,324 season with our current weekly market share averaging about 3%.

Let me take a moment to highlight our progress last quarter, all of which we believe will position Sanofi for success when they take over lead commercialization of New Vaccinid in the 2,526 season, please turn to slide 8.

Our primary commercial efforts remain dedicated to the largest market opportunity.

The US, we initiated our 2,425 COVID 19 commercial season in mid-september shortly after achieving our goal to get our vaccine authorized at the end of August in line with the timing of the competitors in order to facilitate a timely season start compared to last season.

This was a significant improvement in timing for Novovax.

At the same time, the current COVID 19 vaccine season initiated three weeks earlier in the US as compared to last season.

And we believe that if current trends continue, the total market size could be approximately 40 to 50 million shots in arms this season.

Specific progress for this season also included our product presentation, offering our vaccine in a prefilled syringe compared to last year's five dose vial presentation, broader access and improved contracting, doubling the number of locations with no vaccinated available in over 30,000 locations including CVS Pharmacy Rite aid, Walgreens, Meyer, and hundreds of other grocers and thousands of independent pharmacies.

Higher visibility of novovax on vaccine schedulers in most major retailers and a targeted commercial approach, executing marketing and selling activities, targeted to select opportunity markets rather than last year's broader national approach.

Please turn to slide 9 in situations with more favorable market access contracts.

Novavax is demonstrating the ability to compete with the MRNA vaccines in one regional supplier of vaccinations.

Novavax has achieved approximately 70% market share as reported by that retailer.

In addition, we executed on a targeted marketing strategy geared towards select age cohorts.

And to date, we are seeing that 53% of the Novax claims are in our primary target audience of 65 plus.

It is important to note that this audience aligns to Aci's recent recommendation for this age cohort to revaccinate this season.

After their initial updated seasonal dose.

At the same time, we experienced some challenges that have prevented us from achieving our initial market share goals.

Namely minimum purchase commitment contracts for Mrna vaccines, limited initial retail stocking of our vaccine, a limited commercial infrastructure of just 30% of our previous size and three month product dating for our prefilled syringe, which we intend to work with the FDA to improve for future seasons.

We are managing through these challenges and we do not believe our current market share is representative of the overall demand and potential of our COVID 19 vaccine.

In fact of the greater than 30,000 retail outlets stocking our vaccine.

We have seen an increase in the level of restocking quantities demonstrating growing demand as we advance through the remainder of the season, we believe these efforts will continue to strengthen the opportunity and establish a solid foundation for Sanofi in preparation for next season, we continue to work closely with our partner to enable a seamless transition of lead commercial activities.

We believe that Sanofi's significant scale and strong presence coupled with the increasing consumer demand we have seen for Novex COVID 19 vaccine will result in successful upcoming seasons for the product.

Please turn to slide 10 outside of the US.

We were pleased to receive marketing authorization for our updated vaccine from the European Commission last month, we remain focused on conducting a lean, limited and targeted commercial season in Europe and Asia while we continue to work with Sanofi to position them to take over lead commercial operations for the 2,526 season in other regions.

As we've noted in the past, we are continuing to prioritize the completion of our APAS with the intent to transition key markets to Sanofi.

In summary, we believe there remains a continued demand for COVID 19 vaccines and believe that Santa Fe with its large commercial reach and greater resources will drive additional market share in 2025.

And beyond.

With that, I'd like to hand the call to Bob to discuss our research and development updates.

Thank you, John.

Please turn to slide 11 and 12.

Today, I will elaborate on important updates in our research and development program that support each of the four key value drivers.

John Jacobs outlined earlier.

I'll start with our updated 2024 25 COVID 19 vaccine followed by our late stage program in KIC and influenza.

Then I'll discuss expanding potential opportunities for matrix M and conclude with an update on our internal preclinical pipeline and our R&D strategy going forward.

Please turn to slide 13 with regard to our 2024 25 COVID 19 vaccine targeting the JN one strain.

We continue to monitor the performance of our vaccine against newly circulating variants in nonclinical models.

And these data continue to demonstrate broad cross neutralizing antibody responses to each new strain including both KP 311 and XCC.

Please turn to slide 14.

This slide shows neutralizing antibody responses, pre and post receipt of our JN one vaccine in Rhesus.

M.

You can see that the antibody titers are robust against all of the variants tested including the KP 311 and XEC variants that are now widely circulating.

So these data for the newer variants indicate that our vaccine should provide acceptable coverage against the variants that are currently circulating.

Please turn to slide 15.

I'll now move on to our late stage pipeline comprised of our COVID 19 influenza combination or kick vaccine program and our seasonal influenza vaccine program, which is the second value driver that John discussed.

We issued a press release yesterday stating that the clinical hold on our IND for our KIC and standalone influenza vaccine candidates has been removed by the US FDA.

The safety event recently reported by a participant in our phase two study was reviewed in detail by the FDA along with our responses to their comments and they determined that we had satisfactorily addressed all clinical hold issues.

The information provided to the FDA supported our assessment that the serious adverse event was not related to our vaccine.

We intend to begin enrolling our phase three immunogenicity trial as soon as possible.

Please turn to slide 16 data from our now completed phase two kick study support noninferior immunogenicity of both our KIC and influenza vaccines.

During the phase three pre ID process, the FDA and Novovax aligned on a single phase three trial for both candidates with an updated trial design as shown in the graphic on the right.

Participants will be randomized to one of four vaccine arms and immunologic comparisons to establish noninferiority for KIC will be made to the Nova Novavax's COVID 19 vaccine and to an age recommended commercial influenza vaccine immunologic comparisons to establish noninferiority for Novavax's seasonal influenza vaccine will also be made to the same commercial flu vaccine.

The trial will enroll adults aged 65 years and older and is currently planned to be conducted in Australia and New Zealand during their current spring and upcoming summer.

Please turn to slide 17.

Now I'd like to turn to our proven technology platform, our third value driver and to the attributes of matrix M that we believe could be of significant interest to partners with established or developing vaccine franchises on prior earnings calls we presented data supporting each of the matrix M attributes listed on this slide.

We believe these attributes provide the potential for matrix M to improve the activity of existing vaccines as in the case of inactivated egg based influenza vaccines.

And we previously shared those data while maintaining excellent tolerability.

And we believe matrix M has the potential to be antigen sparing and reduce cost of production such as for pneumococcal polysaccharide vaccines.

And we previously shared those data as well.

We also believe that Matrix M may enable new vaccines to be developed for certain poorly immunogenic pathogens that have not been regarded as good vaccine candidates.

To date.

During the third quarter, Novovax entered into a material transfer agreement with a leading pharmaceutical company to evaluate Matrix M in a bacterial vaccine program.

We intend to continue to seek out similar opportunities to further leverage matrix and proven adjuvant activity and impressive safety profile which includes its role as a component of two authorized vaccines.

Our COVID 19 vaccine for ages 12 and over and R 21 for malaria prevention recommended for infants as young as five months of age.

Please turn to slide 18.

Finally, I would like to provide updates on our emerging early stage pipeline.

Our fourth value driver John talked about the ongoing strategic assessment of our technology platform which is a major focus for our R&D organization and we are excited to continue this assessment under the leadership of our new head of R&D, Dr Rex Sandra drag our strategy to drive value through innovation and R&D that leverages our validated technology platform is based on expansion beyond our existing core expertise in COVID 19 influenza and KIC vaccines, our R&D strategy will be executed within the framework and key guiding principles.

John noted earlier.

First, we intend to move forward with RSV combinations and pandemic flu, which are disease areas that leverage our existing experience and internal expertise in infectious disease.

Both are based on our protein nanoparticle and matrix M technology platform and we hope to advance both through I&D enabling activities.

In the near term, we will focus on exploring RSV containing combinations that would give this acting candidate the highest probability of success given the number of RSV standalone vaccines.

Now available characterization of our RSV candidate is ongoing in preparation for an I&D enabling toxicology study that is planned to start next year for the for the pandemic flu candidate toxicology studies are now underway and we are actively discussing funding opportunities with the relevant government agencies to support early and late stage clinical development and the manufacturing of this promising candidate outside of RSV combinations and pandemic influenza.

Our next step is to identify other infectious diseases that are or could become vaccine preventable, meet other predefined criteria and for which our technology could possess different differentiating attributes for potential advancement to I&D.

We will prioritize areas where we believe we can make a meaningful impact while leveraging our existing expertise areas that are currently under consideration for more rigorous scientific and business case analysis range from reactivated infections that are known to be vaccine preventable, such as veracel exore, where our technology has produced a candidate VVV vaccine that we believe may be better tolerated and comparably effective to the currently approved vaccine.

And with a large market size to areas of great need such as antibiotic associated infections such as C difficile, where the scientific challenges are significant and where we believe our technology could have a meaningful impact.

We intend to evaluate these and other opportunities in infectious disease.

And we intend to prioritize our efforts over the next few months to make decisions on which preclinical programs we want to advance.

Finally, the third step in our portfolio development process, we potentially may expand more broadly beyond infectious diseases into therapeutic areas where we believe there are real opportunities for our technology to augment and improve on current approaches.

If so, we would plan to leverage specialized scientific knowledge and robust translational models to evaluate a range of chronic diseases where our technology could lead to the development of preclinical constructs to advance the proof of mechanism and proof of concept studies.

And beyond here, we are evaluating therapeutic areas, for example, oncology, immune mediated diseases and diseases of protein aggregation, where initial evaluations of our technology could be used to quickly generate proof of concept go no go data.

Before establishing a formal development program, we plan to apply a low cost approach with rapid in vitro assessments and nonclinical models to identify a small number of specific diseases.

For further focused assessment, key considerations include balancing available resources and necessary spend by leveraging existing screening technologies and collaborations.

We will engage in a similar comprehensive and rigorous scientific and business assessment that would be needed to support further advancement.

We continue to evaluate opportunities under this framework and we will provide regular updates as we execute this strategy.

Now to discuss our financials for the quarter, I want to hand the call over to Jim.

Thank you, Bob.

Please turn to slide 19.

Today we announced our financial results for the third quarter of 2024.

Details of our results can be found in our press release and in our 10-Q filing, please turn to side 20.

We remain focused on improving the financial strength and performance of NOVEX to drive shareholder value.

I'll start by covering key themes for the third quarter and a look towards the remainder of 2024 and beyond for the third quarter of 2024 novax recorded total revenue of 85 million including 38 million primarily from the US market sales and reflecting initial stocking orders that were in line with our expectations.

Although we are seeing an improvement in market share compared to the 2023 vaccination season, our current market share of approximately 3% is trending below our full season expectations.

And as a result, we are updating our full year 2024 total revenue guidance.

As we continue to transform Novax into a more lean and agile organization, we reduced our Q3 2024 R&D and SG and A expenses by 26% compared to prior year for full year 2024.

We are reiterating the guidance range for R&D and SGNA expenses of between 707 150 million at midpoint.

This reflects a decrease of approximately 40% in 500 million as compared to full year 2023 NOVAX is prepared to initiate an additional cost reduction program to reduce combined R&D and SG expenses in 2025 and 2026 to better align our go forward cost structure with our value creation strategy.

We maintained a strong cash position and ended the third quarter of 2024 with over a billion in cash and accounts receivables.

And finally, we remain focused on prioritizing the completion of our AP S to enable a smooth transition of commercial leadership to Sanofi.

Please turn to slide 21 for a more detailed view of our third quarter.

2024 financial results for the third quarter of 2024 we recorded total revenue of 85 million compared to 187 million for the same period in 2023 of note product sales for the third quarter of 2024 were 38 million compared to 2 million in the same period for 2023.

As a result of higher us market sales in the current quarter, our cost of sales for the third quarter of 2024 were 61 million as compared to 99 million for the same period in 2023.

For the third quarter of 2024 Novax is combined R&D and SDNA expenses of 158 million reflects a 26% reduction from the same period.

In 2023 approximately 30 million of this current quarter amount is related to commercial and medical affairs related spend that we do not expect to incur after this year.

Based on this, we believe we're on track to further reduce our cost structure in 2025 and beyond.

Please turn to slide 22.

We are committed to creating a more lean and agile organization to align with the company's market opportunities to advance that goal.

We expect to reduce our R&D plus D&A to approximately 350 million in 2026 an approximately 1.4 billion, an 80% decrease when compared to full year 2022 for 2025 and net of expected reimbursement.

We expect our non-GAAP combined R&D and DNA to be approximately 450 million to achieve this Novax is prepared to initiate an additional cost reduction program to better align our go forward cost structure with our value creation strategy as we transition lead commercial activities to Sanofi, this will enable the reduction of commercial and supply chain costs.

We are also actively exploring the sale of our Czech Republic manufacturing facility which could provide both cash proceeds and a reduction to our ongoing operating cost.

Please turn to slide 23.

Now turning to our updated financial guidance for the full year 2024.

We are revising our guidance for total revenue to between 650 million and 700 million from our prior guidance of 700 million to 800 million at midpoint of 675 million.

This is a 75 million decrease to our total revenue guidance based on a revised full year 2024 product sales guidance, we now expect product sales of between 175 million and 225 million at midpoint of 200 million.

This revised guidance includes 100 million from EP delivered in the first half of 2024 and 100 million commercial market.

Product sales from the US market and ex US markets in the second half of 2024.

The decrease of 125 million at midpoint compared to prior guidance is driven primarily by our COVID 19 trends in the US market.

We are also revising and increasing our full year 2024 licensing royalties and other revenue guidance and now expect to achieve 475 million.

The 50 million increase compared to the prior guidance is driven by a combination of revenue recognition for the upfront payment and cost reimbursement under the Sanofi Agreement.

A few comments on our expectations for 2025 and beyond for the remaining AP a agreements.

Our intent is to amicably negotiate or deliver doses or when appropriate exit agreements with the goal of these activities to be cash flow neutral or favorable on a go forward basis to be conservative.

We have removed AP a sales from our forward-looking revenue expectations until further clarity is available for each.

Our current operating plan including the multi year expense targets.

Highlight a path to our goal of maintaining at least 1 to 2 years of cash on hand prior to receipt of cash flows from the Sanofi Agreement in the form of milestones and royalties.

Please turn to slide 24 as we enter 2025 the future cash flows to the company under the Sanofi Agreement become of greater importance.

We expect up to 700 million in near term COVID 19 and flu COVID combination milestones under that agreement for the 350 million and to vaccinate COVID 19 milestones.

We expect to complete database lock of a related pediatric clinical trial in the fourth quarter of 2024 which would enable earning the 1st 50 million milestone revenue recognition for this milestone will be allocated over the transition services period through 2026.

All other milestones under the agreement will be recognized in full in the period when earned the 175 million B milestone is anticipated to align with our B Padua action date and approval which is presently targeted for April 2025.

The 2 25 million authorization transfer milestones are expected to follow as we enable Sanofi to commercialize Nox in the US and Europe for the 2025 26 vaccination season.

The 75 million technology transfer milestone is expected to follow the completion of our transition services obligations that we currently estimate to occur in late 2026 for the Sanofi flu COVID 19 program.

There are two milestones totaling 350 million related to the development and first commercial US commercial sale.

Sanofi recently noted on their Q3 earnings call that they expect to start their phase 12 study this year and if that data are positive, they would move towards phase three in 2025.

In addition, Novavax is eligible to receive tiered royalties on net sales from COVID 19, standalone and COVID 19 combination products.

This enables Novax.

Novavax's meaningful participation in future economics from the current and future products.

Under this agreement, Novax will support SINOS prepares to advance all programs associated with this agreement and Novax will be eligible for cost reimbursement across a host of spend categories.

We expect this reimbursement to occur during 2025 and 2026.

As we supply product conduct R&D and technical transfer activities for products supplied to Sanofi, we will book both cost of goods sold and reimbursement revenue.

We look forward to sharing additional updates as we seek to improve Novavax's financial performance cost structure and strength to deliver shareholder value.

With that.

I'd like to turn the call back over to John for some closing remarks.

Thank you, Jim.

Please turn to slide 25.

Thank you all for joining us today and thank you to all our employees for their continued efforts in advancing our business.

I am proud of our accomplishments to date and excited about our opportunity to drive value in the future with our new strategy.

I'd now like to turn the call over to our operator for Q&A.

We will now begin the question and answer session to ask a question.

You may press star then one on your touchtone phone.

If you are using a speakerphone, please pick up your handset before pressing the keys to withdraw your question.

Please press star.

Then two at this time, we will pause momentarily to assemble the roster.

The first question comes from Roger Song with Jefferies LLC.

Please go ahead.

Thank you.

Thanks for the update and then congrats on the speedy removal of the clinical hold on your kick and the flu program.

So a couple of questions from us maybe first on the clinical hold removal.

Understanding you want to start a phase three as soon as possible.

Can you give us some clarity around the timing of the star?

You know what will be the gating factor for you to start the phase three?

And then given this severe sae occurrence, how much additional safety requirement now is in place or required by the FDA?

Any potential post marketing requirement suggested or recommended by the FDA?

I have a couple follow up.

Thank you.

Thank you, Roger.

We'll let Bob Walker address your questions starting with timing, Bob.

Great, thanks.

Well, first of all, let me just say we got the news on Friday.

So we after market close or close to market close.

So we've had, you know, the weekend and yesterday to assess and I would say that we're working on study logistics right now.

Our intent, of course, as you've heard start the trial as soon as possible.

We're not prepared to give you a specific starting date at this moment but expected in the coming weeks, we will be able to provide more clarity on the specifically when we plan to start the trial, the let me just remind you that the safety event that was reported to FDA led to the clinical hold was determined by us not to be related to study vaccine.

And based on the FDA'S reaction, it appears that they concur with our assessment, it certainly substantiates our assessment.

So in terms of additional safety precautions that need to be introduced, they're, they're really the standard safety oversight and monitoring that essentially was already in the trial or with slight tweaks in response to the back and forth while we were assessing this event.

So what I'm trying to say is we don't expect an impact from any of those kind of operational changes to the protocol other than the standard types of impacts that are, you know, that everyone encounters when they make administrative changes to a protocol.

And Roger, this is John.

Thank you for your congratulations on that hold being lifted.

We're very excited about them and we were to just build upon Bob's answer.

We were ready to go on track to go Bob right in Q4 with our study.

So having this lifted is excellent.

There's just a little bit of work we need to do.

But in the near term, we think we'll be able to start that study.

We're just avoiding giving a specific date yet as we're still digesting the feedback from FDA, which is clear and expected and we just have to get that reset and going.

But we think in the near term we'll be able to restart that study.

We're very excited about it.

Thank you.

Great.

Thanks for the clarity.

Yeah, I understand you just got the news and then thank you for confirming.

You're still going to start a trial in.

So maybe.

Shift to Roger.

Let me just clarify.

We're not giving a time frame right now on it.

We're just digesting the feedback and have to reset the logistics to get it started.

So it may be sooner rather than later.

But we don't want to give a specific date yet until we finish our planning.

That's what we were saying.

So not giving a specific time frame yet, but in the near term, we should be able to provide clarity and we think we'll be able to start it in the near term.

Got it.

Okay.

Your turn.

Thank you and then shifting towards the commercial.

So you got 38 million commercial sales mostly coming from us.

Can you give us some additional color around the stocking versus the real short arm?

So we all track a QA data since you got, you know, at least from the for a third party, the script capturing you have one around 1 60,000 scripts in the retail channel.

So how should we think about the percentage captured by the retail versus non retail?

And the last part of the question is, what's your working assumption on the net price per dose?

Thank you.

Go ahead John, you want to take that one?

Yeah, so just a little bit of clarification on on some of the stats there.

I think what we're seeing so far with the IQV data which everybody is monitoring is a season that started a bit earlier than last year.

And so we're seeing reflected in some of the trend lines.

We're we're seeing a AAA leveling off of shots in arms into the marketplace through retail pharmacies.

And I think that's consistent with what you would see as a normal pattern of vaccination.

You know, the trend lines that we're seeing are also indicating that there's a slight increase in overall demand in shots in arms this year over over last, we'll have to see how the rest of the season progresses to determine whether or not that's going to hold true for the balance of the full season, the full 2,425 season just to be clear about how some other numbers have been reported by other other companies.

This would take us through through the first quarter.

So far, you know, we're holding at about approximately 3% market share.

We're significantly greater even season to date than we did in all of last season, some 3 to 4 times, the total number of what we did already in in market expect that to continue.

As I mentioned, the script also, we were focusing on the 65 plus market.

There's some updated policy that's going to enable some second doses to be administered late in the year and early into next year so that we'll see some benefit there.

But you know where we, you know, the ACU data is hovering somewhere around total 800,000 doses or so shots in arms at this point.

And I think that that's, that's significant.

Got it.

Thank you.

And the next question comes from Mayank Montani from B Riley Securities.

Please go ahead.

Good morning team.

Thanks for taking our questions and, and, and welcome aboard Roana.

So may maybe just some following up on the prior question.

You know, just thinking forward-looking in terms of having the vaccine now as part of Sanofis product portfolio and, and distribution channel next year, are you able to comment on, you know what you know, trends around net price.

I know market share might be too early to comment on, but just split by channel and, and some of the pricing dynamic could look like.

And then I.

Have a follow up, go ahead John T.

This is really important so far about what is happening this year versus what is happening, you know, next year with Santa, right?

Of course, this partnership is, is strategically very beneficial to us.

We're not seeing the benefit yet of that relationship and we're beginning through all the transition activities, there's a high level of cooperation and collaboration across all markets and and, and so therefore, what we expect to see happening as they fully embrace the relationship.

You know, next year is the depth and strength of their marketing capabilities.

Globally us Europe across, across the globe.

But also remember how deeply penetrated they are in the vaccine space, including influenza, having a COVID vaccine available alongside of their flu vaccines should have a dramatic impact in overall demand.

So we see significant progress being made as we go into the 2,526 season.

I understood and then on the structure quickly, how how are you thinking steady state in this 2026 27 time frame?

Knowing, you know, you may not have a commercial infrastructure there and then may not look to perhaps even do a large scale phase three program beyond obviously, the phase three K program you're executing.

So I think to make sure I understand your question correctly as a commercial infrastructure to support any other future development activities.

If that's, if that's the question, I think what we're primarily looking at is partnering some of these latest stage assets, right?

And, and not having the significant cost infrastructure to support a commercial organization, you know, going forward and we would see the benefit of partnering out these assets, you know, going forward, which is exactly what we did with Sanofi and what we potentially do with our own, you know, KIC program going forward.

In my view, if you kind of look back at the some of the prepared remarks I provided earlier.

One of the things you're going to see I noted is this quarter we had approximately 30 million in spend related to commercial and called it field based medical affairs activities.

So at annual rise to about 120 million that we don't expect and anticipate spending in future years.

And that is part of the reason why we've got significant confidence in our ability to continue to decrease our run rate on R&D and SDNA in line with the guidance, we've been providing.

Understood and and lastly on your next IND filing coming from Bob and Roxana, I, I know you talked about a number of pipeline initiatives, just maybe if you narrow down on what could be the next IND filing for, you know, one of your prioritized programs and, and in the same context, if you are able to talk to also sign of prioritization of any next candidate beyond the the accident would also be helpful.

Thanks again for taking my question.

Bob.

Do you want to take the question on thoughts around our next in and how we're approaching that process?

Yeah, sure.

As I mentioned in the R&D strategy going forward, we do have two candidates right now that are moving toward I&D and in or soon to begin I&D enabling activities.

And so that's the RSV combination program as well as the pandemic influenza.

So, too soon, I think to give you anything more specific in terms of timing, but those are the two that I think I would regard as being next in line.

And then, you know, the other, the other areas that we talked about will be able to, you know, give you more clarity in the months ahead.

But yeah.

Okay.

I think, I think that answers your question.

Let me know.

Thank you, Bob and Mike, you asked a second question about Sanofi, obviously in their most recent earnings call, they noted they're preparing to initiate a phase 12 KIC study this year.

And with a positive readout, if they get that positive readout, they would move towards a phase three.

Sometime in 2025 you can go check their commentary to clarify that for your notes and then we can't comment on any other things that Sanofi may be working on right now.

But I think just referring everyone back to that contract and the agreement that we have where there are multiple opportunities to partner with Sanofi on our Matrix M adjuvant.

And they can also make that they're choosing multiple combinations with COVID vaccine.

Should they choose to do so?

Each new asset they would, they would develop with matrix M has towards 200 million in potential onetime milestone payments and ongoing royalties for years to come.

So certainly a lot of opportunity in that contract over time to develop multiple assets.

Should they choose to take that pathway?

You'll have to look to them for further commentary on the plans.

Noted.

Thank thanks for that.

Helpful color and congrats on the.

Progress.

Thank you, Mike.

And the next question comes from Alex Stranahan with Bank of America.

Go ahead.

Hi guys, Matthew.

I'm for Alec here.

Thanks for taking our questions and congrats on the choir.

Just two quick ones from us.

Curious if you can provide some color on the net price for new activ this year and how much of that channel was outside of retail and whether you expect that to be similar going forward in the future years?

Sorry, if you could just restate the question real quick.

Sorry.

Yeah, just looking for some color on the net price for new back this year.

And how much of that was outside of retail and whether you expect those dynamics to continue in the upcoming years?

Yeah, go ahead.

Excellent.

Hey, I'm happy to address the net price question while we have not given a specific net price.

Some of the feedback that I've shared more generally about this marketplace has been the following.

You know, all three COVID vaccines on a on a gross basis are approximately the same around 140 per dose.

It is reasonable to assume that the net price after deductions would be in the 50 to 75% of gross that would put you at 70 to 100.

And then in addition to that, depending on the dynamics of returns at any given time, hey, that number can fluctuate.

But I think that does give you hopefully a sort of generalized view and then with respect to the retail versus nonretail, let John comment on market dynamics last year and what we're seeing this year as well.

Yeah, and let me just follow up just a point of clarification on a previous question, right?

So while we're we're looking at I QIA data and there are multiple sources of shots and arms data and also there's the what's revenue generating out to the distributor versus what actual shots and arms are?

The clarification?

I said 800,000 doses before the actual number is closer to 500,000 doses with the one week lag simply coming off of the IQVIA data.

So a lot of data points here, I think where the updated guidance is considering all of the trends, what we're seeing in the market so far, but just to be crystal clear and specific about what the Iqvia data is reporting so far.

Operator.

Next.

Question, the next question comes from Eric Joseph from JP Morgan.

Please go ahead.

You on the phase three kick trial.

Your prior guidance was for an expected re in the mid 25 time frame.

Is that still your expectation or should we be carrying more conservative, you know, timeline assumption perhaps in the second half.

And just kind of having gone through this clinical hold experience.

I I wonder to what extent your phase three IND might be exposed to any additional longer term follow up from the phase two trial.

Have you sort of reviewed any, you know, potential at risk patients to sort of, you know, rule out the potential for similar, you know SAE type of events.

And then finally, just when it relates to the standalone flu portion of the phase three study, I just want to confirm whether that would be intended for and the design is intended to support registration of this blue standalone.

And if so, whether you have superior immunity in mind there via the within the trial design or if it's more around a noninferior signal.

Thanks for taking the questions.

Thank you for your questions, Eric, I think you had three questions into the question there.

So let's but very good points.

So number one on timing, we did address that a little earlier.

Let me just reframe that.

So everyone's clear that we were on track in Q4 as we stated before to initiate our trial and then the clinical hold occurred.

We're happy that that was lifted in a short order and now we're gearing up to reinitiate that trial.

So we just got the feedback from FDA on Friday close of business or so worked on it over the weekend and yesterday.

So we're not going to commit to a precise timing to restart that trial or to start that trial.

Now, I should say, but give us in the near term, another couple of weeks or so, we'll be able to provide more clarity on trial start timing, but we don't see a significant delay.

We think we can get it started relatively in the near term.

But again, we'll clarify once we finish working through FDA feedback.

So thanks for that question, Bob.

Did you want to take the other two questions that Eric had?

Thank you.

Sure.

So the follow up on the trial is the standard length of safety monitoring for adjuvanted vaccines.

And I think I'll just leave it there.

And in terms of the design for the phase three and the flu standalone product similar to KIC, the, the intent of the study is to demonstrate noninferior immunogenicity.

So that's true for the KIC product and that's equally true for our flu standalone.

The study will be able to obviously generate more than non inferiority data.

So, you know, the statistical analysis has the ability to demonstrate superiority, but the study is designed and powered for noninferiority.

So I hope that's clear.

And I think Eric was also asking Eric if we heard your question correctly.

Is that designed for registration that trial, Bob?

Could it provide a registrational opportunity?

Yeah.

Yeah, absolutely.

This study is designed as a phase three, a immunogenicity trial to support licensure of the products with the understanding that a follow on clinical efficacy trial would need to be demonstrated postapproval.

And again, that whether or not, it can be, will be determined by the FDA in their overall oversight based on the data and other factors, Bob.

Correct.

That's.

Right.

Excellent.

Well, thank you very.

Much for taking the questions.

The next question comes from Brendan Smith from TD Cowan.

Please go ahead.

Hi, this is Jack for Brandon.

Maybe just one on your expectations for your analyst event next year.

Will you confirm any new pipeline programs?

And are you planning to be in the clinic with any other wholly owned assets besides the flu in the next 18 months?

Jim Kelly, you want to take the analyst.

Day?

Yes, certainly.

And thanks for the question.

And you know, as we evolve into the post commercial version of novavax, we're really looking forward to unveil more and more of our thinking on, not just R&D but all four pillars.

You know, our anticipation of how this will unfold is, you can expect more updates from us between now and our earnings for the fourth quarter, which would be at the end of at the end of February.

And then we think we'd be best positioned to do something like an investor day after that time at some point in 2025.

So that's our, that's our thinking, you know, expect to hear more of our thinking unfold as the coming months go by.

We're really excited to have Roxana here and everything she's going to bring to our very thoughtful and disciplined approach.

To advancing our investments in our technology.

Great.

Thank you.

Once again, if you have a question, press star followed by the one and the next question comes from Vernon Bernardino from HC Wainwright.

Go ahead.

Hi, thanks for taking my question.

I actually have two questions.

Excuse me.

The first question I had is there's some evidence that the flu vaccine this year was not as good as in prior years.

Just wondering how the cake vaccine formulation for the flu vaccine component is handling that.

And then the second question I have is just wondering if you could provide us insight into how the gross margins may change going forward.

Thank you.

Bob.

You want to take Vernon's first question.

So the strains that we're using in the, that we are planning to use in the phase three trial are the US or northern hemisphere strains for the last season for the season that we're currently in.

And again, just to remind you, the trial is not designed as a clinical efficacy trial, but is a comparative immunogenicity study, right?

So the readout is going to be whether or not the immune responses induced by the flu component in their vaccine are not inferior to the imagic of the comparator flu vaccine and in good efficacy years or less good efficacy years of the image EIC is, is a kind of a standalone readout that's that's going to be driving the analysis of this study.

So I don't, it's very helpful.

Thank you.

Yeah.

Okay.

Ben and happy to answer the question about gross margins in 2025 and forward.

You know, this year is our last commercial year.

Certainly in us markets Europe.

We had noted that while there's some trailing A PS, we're excluding them from our future guidance at this time.

So I'll focus my comments on, you know, what will be our cost of goods sold for 2,526 and beyond, it is going to reflect providing supply to Sanofi for 2025 and 2026.

That's on a cost plus basis.

And so you can see that, you know, the traditional commercial company relevance of gross margin is not going to be the same from 25 for that's going to be a more cost.

Plus.

This concludes the question and answer session.

I would now like to turn the conference back to John Jacobs for any closing remarks.

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I will now turn the conference back over to John Jacobs for any closing remarks.

Please go ahead.

Thank you everyone for joining us today.

Appreciate it.

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Thank you very much.

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