Novavax, Inc. Stock

The next session underway. So welcome to the Citi Back-to-School Biotech Conference. My name is Geoffrey cham. I'm the senior biopharma analyst. We're thrilled today to have Novavax. We have CFO, Jim Kelly; and CEO, John Jacobs. Guys, welcome.

Thank you.

Thanks for joining us. So maybe just to kick it off, just level set everyone with kind of the background to Novavax, give us the kind of 2-minute drill, we'll get right into the platform, tech and COVID and everything.

Absolutely. Thank you, Geoff. Appreciate the question, and welcome, everybody. Over the last 3.5 years, we've absolutely transformed Novavax from a company that was solely focused on producing and commercializing a vaccine for COVID to a company that's now out-licensing our technology, partnering our tech, expanding the utility of our technology, seeking to do that beyond infectious disease into oncology and continuing to advance our own assets selectively and carefully with lean R&D bets.

So we're excited about our future. We started out with a deal with Sanofi and Pfizer. We have multiple potential partners in a pipeline of MTA-generated collaborations where they're experimenting with our technology right now. We continue to advance our tech and Matrix-M and learn about oncology.

And in the coming quarters, expect our first set of data from preclinical experiments in oncology on our own and from a partner who's currently a top 10 pharma and a global leader in oncology. So in the coming quarters, we'll get their data and our data, and we'll look to show proof of concept in oncology for Matrix-M. We hope to be in the clinic with our own C. difficile vaccine asset as early as next year.

That sounds great. Yes. So would you prioritize that in that order, John? So getting COVID and getting maybe the combinations together with Sanofi kind of approved and underway and then oncology and then other infectious diseases.

Thanks, Geoff. Yes, maybe we talk about catalysts in the near term and things like that. Certainly, Sanofi is our largest and first partner, and that's key. And what we're looking for from Sanofi are several near-term catalysts.

So number one is beginning to build important market share now in the U.S. market and other markets where they've had their first chance at a full cycle launch. Now just this weekend, shipments began going into pharmacies from Sanofi.

So by the end of this week, you'd expect most major retailers to have Nuvaxovid in stock alongside mRNA. And Sanofi in the coming week to start launching their DTC campaigns to pull that through.

So over the coming month or 2, we expect to see some growing market share from Sanofi and look forward to that as the nearest-term catalyst. Second to that, Sanofi confirmed their commitment with Novavax leadership, and we announced that in our last earnings call that they intend to be one of the first in the world with a COVID-flu combination vaccine and that they are now in late-stage discussions with regulators on the timing to initiate that pivotal trial.

When they do that in either Europe or the U.S., we earn $125 million milestone, Geoff. So that's exciting for Novavax. And we anticipate next year earning a $75 million milestone for a tech transfer.

So Sanofi can take over full manufacture of our Nuvaxovid COVID vaccine. And that additional $200 million, not including royalties, other revenues we may generate from new partnerships, et cetera, would put our cash runway, Jim, into the 2030s or so.

Correct.

Yes. Can we talk about the -- what would be the approximate Sanofi's program, but you guys obviously could inform that would -- if they start the combination study of COVID, flu, is that a 2-year kind of development cycle? Is there a faster path to kind of get there?

Good question. Bob, do you want to take that one?

Sure. Bob Walker, Head of R&D at Novavax. So the types of studies that we anticipate them doing are likely immunogenicity rather than efficacy in terms of the European license.

So our expectation is that those would be single season studies. And so the development cycle would be essentially a year to having results and then the regulatory process that follows.

Okay. So let's talk a little bit about the Pfizer agreement. So that was one of the first ones that you guys communicated for the, let's just call it, the platform. What can you share about that, that may be kind of that we could look forward to future other deals because then you guys are in discussions with a lot of pharmas.

Yes, absolutely. First of all, we're very pleased to have Pfizer as a partner as well as Sanofi. And certainly, they have a remarkable and material presence in the global vaccine space, a lot of know-how there and a lot of history there. And vaccines are very important to Pfizer, not only now but in the future.

So we're very strongly proud to be a partner with them on that journey. And they've obviously seen the value in Matrix-M technology and what that might be able to do. In fact, they've selected a first field Geoff out of 2 potential fields.

We have up to $500 million in milestones that we can earn in addition to the upfront $30 million payment that we've already received, $250 million in potential milestones per field for 2 fields, $70 million for clinical development, and another $180 million for sales-related milestones. And then royalties for 2 decades following that per field.

And they've already selected the first field, so a catalyst our investors should look for is Novavax to make an announcement in the coming quarters that Pfizer has started a clinical study, and we've received a milestone payment. So that would be a signal. Jim, any other comments you'd like to add on the Pfizer deal?

The Pfizer deal comes on the heels of an analogous Sanofi deal. And while John mentioned, 2 fields for Pfizer, Sanofi has access to Matrix-M across as many fields as they like, uncapped.

And therefore, now you've got 2 of the 4 major vaccine players who have identified Matrix-M as an important contributor to their vaccine innovation. I think that alone shows great validation for the platform in addition to the economic promise that -- an opportunity that John outlined.

And Geoff, you asked quickly about what that may mean for other potential deals as well. So I think what we need to look at are the components of that type of deal, right? So you're looking at Novavax and negotiate to pull forward revenue opportunity now.

So versus a company that has a pipeline that may take 5 to 10 years to start generating revenue from early-stage assets through to launch, we can pull forward through milestone payments now today in the near term for clinical efforts as partners use their resources and their capabilities to drive forward assets.

So look for future deals that would include components such as potential upfront payments, milestones for clinical development and for sales approval, et cetera, and also royalties for decades to come per asset.

What would you say on the Matrix platform? Is there a tilt in terms of its value or its viability across different therapeutic areas? I know you're studying oncology, studying infectious disease. But is there kind of what elements of it would a pharma kind of pick and choose from?

Very interesting. I think first, just to comment on the different disease areas. So back in the second half of '24 after the Sanofi deal as we were framing formally our new growth strategy for the future of Novavax that we launched in January '25. We assessed the myriad of disease categories and areas globally.

And we look at multiple factors as to which would be the most viable for us, could our tech work? What's the POS, unmet need, opportunity, speed to market, all multiple factors that you'd expect in a value funnel, or value funnel approach, et cetera.

Oncology rose to the top, above other things like autoimmune diseases, neurological disorders, Alzheimer's, things like that, where vaccines may play a role in the future.

Longer shot. And what we like about oncology a lot and what we saw recently with Moderna and Merck, very exciting news for the whole space for everyone, for all of us and our future health, et cetera. What we like about it a lot, though, is a potential faster proof of concept there. And then there's elements Bob can talk about, about why we believe Matrix may work in oncology, how it could help to light up the immune system there and be part of this new emerging potential ecosystem of vaccine approach there. So Bob, if you want to comment?

Yes, sure. Thanks, John. So we've we've spent much of the past number of years working on the antibody side of Matrix and understanding how it works in the infectious disease space. But what's really interesting about Matrix-M is it also has adjuvant properties on the cell-mediated side of the immune system. So the T cell activation.

And in oncology, that's really important and specifically the CD8 T cell because those are the killer T cells that are tumor killing. So that's an exciting observation that we've made and others have also replicated and that we're hoping to build on with our own R&D and with partner-led R&D to understand better where Matrix can be beneficial in the oncology space.

So maybe, Bob, as a follow-up to that, there are so many new modalities being explored in oncology. You have bispecifics, you have ADCs and John mentioned the mRNA platform coming to light as well. So maybe tell us about Matrix-M's potential in all those applications.

Like could Matrix-M and its CD8 function-mediating properties increase efficacy of all those types of applications?

Well, what I can tell you is that Matrix has been looked at now across a great many platforms, okay? So most of our own experiences with protein-based vaccines, but virusomes, live attenuated vaccines, subunits, the whole slew of technologies that are now in commercial vaccines that we all have received and know a lot about.

And Matrix consistently shows the ability to augment immune responses. when you look across these platforms. And there's no reason to think that, that's not going to continue to be the case as new technologies enter the vaccine space, including mRNA. So yes, I think what I'll say is that, again, we're developing the data as we speak.

Some of that is being done using our own R&D resources. Some of it is being done that's partner-led. We'll be able to leverage all those data sets going forward in order to show these results in a properly confidential way to other prospective partners and hopefully form more partnerships as we go forward.

And Geoff, obviously, nothing works everywhere. And so we're in the process of learning deeply. We're far into that process on the preclinical side and experimentation phase with our own R&D team across multiple tumor categories and types.

And a world leader in oncology ranked in the top of world leaders in oncology. Top 10 pharma is exploring across multiple tumor types as well on their platform with Matrix. So let's see what we learn. As that data rolls in, in the coming quarters, we should get some insight on how well Matrix can work, where it might be more applicable than other areas, and we'll start to narrow that down. So we're in that exploratory phase now, but we started it last year.

So before the news on Moderna and Merck as we did see this as a key category where we might be able to help after infectious disease. And so we're deep into our first big stage of exploration here. Let's see where it takes us.

So if you wouldn't mind sharing with us maybe some of the metrics that would suggest Matrix-M activity, is it -- is it CD8 positive staining? Is it tumor infiltration, tumor regression, durability, checkpoint combination activity?

Just any sort of sign that investors can help anchor on to when you guys do share that type of data.

I think, we haven't disclosed anything specifically, but I think you could speak generally about the types of categories to answer Geoff's questions.

Yes. Thanks, John. Yes. So in the oncology space, there are a number of translational models that are generally well accepted as early proof points to generate interest to want to look further. So we're obviously availing ourselves of those translational models.

And there are standard endpoints that have to do with tumor size, tumor shrinkage, immune cells, infiltrating TIL cells, like you mentioned, other immune properties, surface markers that can be indicative of specific activities that you're trying to tailor your therapy to. So we're looking at the whole broad range of those readouts.

Yes. And then combinations with other potential therapies as well.

Yes.

Good question. Thank you, Geoff.

Guys, a lot of the -- so Sanofi, the partnership funds a lot of the OpEx and really the company, I wanted to ask you at a high level from a COVID maybe demand kind of perspective, what are your thoughts about longer-term picture in that category?

And then maybe speak to kind of the backdrop today as we look to like from a policy context, right, like the attitudes towards COVID, towards vaccines.

Absolutely. And I'll hand this one over to Jim right before I do, I think it's important to understand our position coming into this, right?

So if you're -- the other companies that were there ahead of Novavax originally during the pandemic, had massive amounts of revenue coming in during that time, obviously, and then they've experienced a declination in that curve, right? For Novavax and for Sanofi, this represents upside opportunity right now. And I think Jim will go through the market size of Sanofi is a world leader in flu, what COVID could mean to us with a differentiated asset in Sanofi's hands. So I think that perspective matters for us that we're not defending something that's shrinking.

We're actually looking to grow within what's still a significant opportunity from our perspective in Sanofi. So Jim, you may want to take that one?

Well, certainly. To remind everybody the importance of the respiratory marketplace within broader vaccines, vaccine is about a $60 billion market. The top 5 vaccine markets are about half of that $30 billion.

2 of those 5, flu, about a $5 billion to $6 billion market. And we'd estimate COVID this year is about a $5 billion market, almost 50-50 is just an estimate U.S. ex U.S. This is a top vaccine market.

But that's the dollar view. It's the burden of disease view, which I think more speaks to the durability and where this market may go. So at the May 28 VRBPAC, really nice job by Sanofi, Moderna and Pfizer talking about burden of disease with COVID as compared to flu in 65-plus. The takeaway, they're right on par with each other. They really are. These are -- this is a condition that's not going away.

There's a high burden of disease, both death and hospitalization, and you're seeing that in the recommendations, both domestically and globally. So I'll start with that. Then you say, okay, great. We know that this is something that needs to be treated, high burden of disease, not just in over 65, but immunocompromised.

We expect a significant durability. -- where is the market going? Stand-alone, you heard about a $5 billion market. But importantly, the flu market is converging with the COVID market via combination development, of which Sanofi, right, is an important part of that.

And if you take those 2 markets together, they'll be combined the biggest combined market opportunity in vaccines. This is critical.

As we look at the role our technology can play there, well, we know just from our internal marketing and preference share, there's a strong preference share for protein-based vaccines. And Sanofi invested greatly in tolerability data, the COMPARE study, showing the advantageous reactogenicity profile and tolerability profile. We think they're exceptionally well positioned, and we're looking forward to their work in the coming weeks and years to drive COVID vaccinations with Nuvaxovid.

But as you look at the intersection with Nuvaxovid with their market-leading flu, and I'll remind folks, their enhanced flu, the flu pointed at the most vulnerable, they've got almost 2/3 or 70% market share. That's the exact group that you want to combine COVID vaccinations with, right? That's 65-plus and immunocompromised.

So we see great opportunity for Nuvaxovid, not just as a stand-alone in the hands of Sanofi, but to continue to grow and enhance adoption of Nuvaxovid as a part of a combination treatment with and perhaps even 2 of their vaccines.

They've discussed developing Nuvaxovid plus their market-leading Fluzone High-Dose and Flublok. So they're making significant investments with our technology. So we look forward to the pull-through.

Let me just follow up on that. If you look at the pushback, I would say, on the mRNA kind of platform technology for COVID, there should be kind of an incentive to move away from that, right, on the -- towards protein-based vaccines like Nuvaxovid. But I want to ask you, though, what's been the scorecard though, with respect to Sanofi's rollout?

You haven't seen like massive share, but it's been in the right direction. Totally agree that like combining flu and COVID like really gives you sort of a 1 plus 1 equals 3 kind of idea. But maybe give us your assessment of the -- of the the COVID success, I would say, from Sanofi.

.

I would say, Geoff, it's very early right now in that stage, and it's at the very beginning, really. So last year, they made the product available in the U.S., but no commercial effort behind that.

And that's due to the retail access. So once a product gets licensed and then you can negotiate with pharmacies, you have to have access first. Even if there's consumer demand or interest, you can't pull that through unless the vaccine is in the refrigerator with pharmacy. You have contracts with those pharmacies, prebookings and other things that are part of that seasonal vaccine infrastructure in the U.S. marketplace. And for COVID, even much more significantly than flu, Geoff, right?

It's about 90% or so plus of distribution of COVID is through pharmacy retail chains and stores, not through physicians' offices. Flu, flu is a bit more balanced that way. So this year was the first full launch cycle.

And what we mean by that for Sanofi is under BLA licensure to start the negotiations with retail at the end of last year. In that season actually is when it starts the next year and closed that out roughly in the springtime of this year.

So now Sanofi has told us and they're excited about being available in all the major retailers this year, and they just started shipping. Strains were approved on the same day as mRNA. believe that's the first product was released, and they just started shipping over the weekend.

So this is the first week that pharmacies around the U.S. would begin to be stocked with Nuvaxovid by the end of this week into next week more robustly. So it's very early and premature even now to look at dailies or weeklies as pharmacies are fully stocked. And really, the bulk of the season occurs starting this week into the next 6 to 8 weeks, probably up to Thanksgiving or so, and then you have the majority of shots in arms there.

So I think let's watch this now over the next 8 to 10 weeks, how it materializes. And what we would expect to see is not a gigantic market share win overnight where they gamble everything on that one season, but a methodical purposeful approach to building meaningful share over time from Sanofi.

First year launch here, take that first bite of the apple proverbially and then move from there to next season, again, furthering that negotiation with retail penetrating that refrigerator further in Europe, as the Pfizer APA winds up its last year this year, tenders open up, look to Sanofi to launch in additional countries.

This year, you'll see Canada, Germany, Sweden, others that they're launching in for the first time. So it's a global market, not just the U.S. market. There's opportunity out there, and they're a global player. So we don't expect miracles overnight at all, but we do expect methodical improvement in market share penetration as they build meaningful share into a potential launch of a combination vaccine franchise. So we're excited about that.

Yes. So I mean, following up on that, I definitely heard the news about Sanofi starting their direct-to-consumer campaign with the U.S. pickleball, which I think kind of hit squarely at the demographic that maybe the target demographic is. So maybe on that, do you expect the patients coming to retail asking for COVID for Nuvaxovid?

Is it going to be more consumer-driven? Or do you think it's going to be more messaging out on television and DTC or physician-driven type of messaging? I mean, Jim, I know you mentioned that Nuvaxovid has benefits on tolerability.

So I'd be really curious to see what type of uptake that Novavax is anticipating at least initially for and what's driving some of that uptake momentum?

Yes. So I, let's talk about 2 dimensions to your question. The first one is it's not going to be a mystery. In the coming, I'd say, beginning as early as next week, you're going to see, hey, what is Sanofi able to do as you've got stock into pharmacies and Nuvaxovid addition to the pull-down menu at major retailers, and they've got that distribution through major retailers.

And then we all have IQVIA. -- and they're going to -- it's going to happen live. You're going to be able to witness it over the coming, as John said, 8 to 10 weeks. So not going to be a mystery, we're going to see a pull-through. You asked some important questions about, hey, how do you do it? Like how does this work?

As folks who might be new to the vaccine market, the way it works is prebooks, which occur way early back in Q1, retail pharmacies agree that they're going to take certain deliveries right now. These are the deliveries that are occurring of commitments to buy.

Then that pull-through becomes a function of patient choice and when they go to those pull-down menus and show up in the retail pharmacies. This is where Sanofi's efforts with their direct-to-consumer campaign, which includes digital, right? Digital is a really important part of their campaign right now. And they have an orientation towards tolerability in that campaign, which makes perfect sense in light of the COMPARE data.

I think folks have seen that study. They funded a readout earlier this year that shows significantly better tolerability as compared to mRNA on both systemic and localized reactogenicity. It's exceptional.

So let's see how they pull that through. But importantly, because availability is occurring this week in the pull-down menu, let's start looking at the trends next week and see where this goes. It's not going to be a mystery.

Totally. That makes sense. So I kind of want to circle back to our earlier conversation on the combination vaccine, just given -- we are, call it, maybe halfway through or mostly through third quarter already.

And Sanofi has stated that they are looking forward to launching the late-stage study as soon as possible. But I guess thinking about seasonality and Northern Hemisphere versus Southern Hemisphere strains launching for flu, how does that kind of, in your view, affect timing of when a Phase III may start? Could EU or U.S. kind of accept a Phase III study for combination using a Southern Hemisphere data?

So though we can't comment directly on any plans Sanofi may have in their specific timing. I think Geoff is asking an important question, Bob, about how one in general might approach doing these studies.

And does it have to be tied directly to an in-season moment? Can you generate data outside of that? How might that affect in general, the company's timing on a Phase III trial?

Yes. Well, it's never simple. I think you probably already know that. For the typical big clinical efficacy studies, they tend to be favored towards the Northern Hemisphere just because the population is larger, the access to populations is greater. And the populations tend to be more representative of the markets that dominate the U.S. and Europe, for example.

But the other part about doing a Phase III planning for influenza vaccine studies is that you can rotate between Northern and Southern Hemisphere.

So oftentimes, operationally, companies will set up and just prepare to do around the globe because it's hard to predict where flu is going to break out, and you want to try to cover as many patients as possible, particularly when you're undertaking something as large, expensive and complicated as a Phase III efficacy trial.

And Bob, there are other pathways as well, like an immunity-based pathway like Moderna had in Europe. You may want to comment on that.

Yes. So there's non-inferior immunogenicity as another potential pathway towards licensure. This is accepted in Europe. In the U.S., things have changed. So it's still evolving, a little hard to know exactly as an accelerated approval pathway in the U.S., how open regulators are going to be to that. But there, it's less important to do a study in the season or out of the season because it's immunogenicity that you're looking for.

And the strains don't have to be relevant to the ones that are circulating because you're not trying to prevent disease in those studies. You're trying to demonstrate a biomarker effect that will be extrapolatable from strain to strain. That makes sense.

Yes. So there are different pathways to get there. And for Novavax, whether they start a clinical trial, if Sanofi were to start it either in Europe or the U.S., we earn our $125 million milestone, which is important.

And we would anticipate Sanofi since they want to be and have claimed that they will be one of the first with the combination vaccine to want to penetrate the U.S. market as well. So there's a pathway in both markets. We're getting additional clarity on the U.S. market pathway. And it'd be interesting to watch what Moderna says in the coming months and quarters on where they are with their original application on the COVID vaccine for the combo for the U.S. marketplace. And it was encouraging to see the approval of their flu vaccine.

So we're seeing a bit of change in tone. And I think also the new news around mRNA vaccine platform and vaccines in general in oncology has also helped with that to really resolidify the place that vaccines may have for a long-term future in humankind. I think they're really important for public health, and I don't think there's many people that would deny that, that know about vaccines.

Let's move in a different direction. I want to talk about C. diff and maybe strategically, how important that is to you guys, give us the logic of what you looked at to move into that in an intended way and maybe give us the next kind of data points on that program.

Right, Geoff. When I joined the company, I worked with the R&D team and with our management team to establish an even more rigorous assessment process on what we may choose to invest in from an R&D standpoint.

And when you couple that with our lean infrastructure, Jim, with an 80% to 90% reduction in cost, importantly, while maintaining all of the core capabilities we need to still generate R&D studies and assets, we've been extremely thorough in our assessment of market opportunities.

I won't go into all of the filters if you take like a working value approach and a filter approach, you're going to look at probability of success of your tech, unmet medical need, competitive pipelines, effort that it takes to put something forth, resources and dollars that it takes, what you can't do if you're pursuing a certain thing here, what are you not doing then instead?

All of those trade-offs are assessed. And we filtered that down to a few key target disease areas in infectious disease to begin bringing forward our own vaccine candidate. We landed on C. diff for many reasons, including a potential multibillion-dollar market opportunity for the same reasons that Pfizer has stated publicly. There's an unmet medical need. And in fact, personally, it hit home with our family, my sister and her best friend died of an unanticipated C. diff infection just last year, leaving 3 children behind after a routine surgery on her abdomen.

So folks in -- especially in Western society where there's high antibiotic use, die by the thousands from this every year, Geoff. There's nothing for them. So we are absolutely rooting for our partner, Pfizer, to succeed there. It looks like they're on track with the Phase III. We couldn't be more excited for all of us and for our loved ones and also for them to build that market and establish that market with a successful vaccine.

We think we've got something that's differentiated. That's a pentavalent target, including peptides that cover a broad array of the disease-causing agents in that bacterium. We're excited about what we've seen in our preclinical modeling, and we could be in the clinic as early as 2027 with that, heading toward proof of concept in humans.

And we intend to do this as part of our existing strategy to the first potential value inflection point. And if we have a partner or a potential partner come in that wants to take that on and make those clinical investments and pay us milestones along the way and into our model, and that makes more sense than bringing that forward ourselves, that is the path. That's in our strategy. If we need to bring it a little further for further proof of concept even into a Phase II, that flexibility is already contemplated in our projected financials,

Jim. It wouldn't require anything more than we already stated we're targeting on SG&A and R&D. On SG&A and R&D expenses going forward. So we're ready to move on that to optimize the value within our strategy. Hopefully, that's helpful, Jim.

Yes. Very helpful. Yes. Well, with that, John, Jim, Bob, thank you guys. Appreciate the time.

All right. Thank -- thank you, Geoff. Thank you.

Here we go. With us, we have Novavax, and I'm now pleased to introduce John Jacobs, CEO; Bob Walker, Head of Research and Development; and Jim Kelly, CFO. So with that -- introduction -- please start off with the introduction of yourself, a snapshot of the company for those not familiar.

Thank you, Pete. I'm John Jacobs, CEO. As you said, Bob Walker is to my left, Head of R&D; and Jim Kelly, our esteemed CFO.

And let's talk about Novavax a little bit. Just for those who don't know us, Novavax is an innovative biotech company that has a proven technology platform in vaccines and potentially immunotherapeutics with our nanoparticle protein-based platform for antigen development and our unique and differentiated Matrix-M adjuvant, which can help vaccines perform even better, driving immunity and potentially lower COGS and other things for other pharmaceutical companies when used in combination.

We've really transformed ourselves over the last 3 years from a company, Pete, who was solely focused on commercializing one vaccine, our COVID vaccine during the pandemic to a company now that's in a completely different arena, where our focus is out-licensing our technology to global partners who have the infrastructure and capabilities to build portfolios of potential vaccines that might include our technology. And also while maintaining our own R&D capabilities, we're making select bets to advance our own assets and expand the utility of our own technology.

In fact, we're deep into exploration now on oncology potential, not just infectious disease potential. We'll talk a little bit more about that today. And over that last 3 years, in parallel with developing and launching this new strategy, we have reduced our expense base between 80% and 90%, along with headcount while maintaining key talent and capabilities and positioning the company with over a 2-year cash runway to support the continued execution of our new strategy.

All right. So you joined the company as CEO in 2023. You've been sort of steering the company forward with this new strategy. Just touch where you are and the outcomes to date for the strategy pivot. And how are you sort of positioning the company for long-term value creation?

We're very pleased so far with what we've achieved in the strategic execution. And we launched the new strategy formally and fully in January of 2025, Pete. And to date, we now have 4 of the world's top 10 pharmaceutical companies working with us, either as direct license partners, Sanofi and Pfizer or through MTA's material transfer agreements where they get access to our technology and can experiment with that in their own laboratories. In fact, earlier this year, we announced one of the 4 top 10 was a new signee into this MTA arrangement with us and is a global leader, not only top 10 market cap pharma company, but a global leader in oncology as well.

So we're really excited about where that could take us. Just a few highlights and examples of the progress we've made so far. So as I just said, 4 of the top 10, we are having right now about 30 different unique areas of exploration. That's what our partners have access to right now across infectious disease and oncology targets, encompassing a wide array of tumor types, a wide array of viral and bacterial infectious diseases and across a number of different types of vaccine platforms. Now if you take a look at those 30 areas of exploration and just suppose that works out in our favor and turns to license agreements. We're excited about the potential that represents for Novavax.

All right. So let's touch on the Matrix-M Tech platform. Sort of give us an overview of what Matrix-M is exactly where it's currently being used? And how are you thinking about leveraging for new vaccine disease areas?

Yes, sure. So Matrix-M is a saponin-based adjuvant, which is now available in 2 commercially available vaccines, Nuvaxovid, our own COVID vaccine and R21, malaria vaccine, that is a WHO prequalified vaccine and administered to millions of kids in Africa.

So Matrix has some unique properties. And now that we've had experience with literally tens of millions of people who've received Matrix and a Matrix-containing vaccine, we know that its safety profile, its tolerability profile looks very strong.

I can attest to that because there's one vaccine I did take.

And it's also -- it's antigen sparing. As an immune stimulant, it allows you to administer a smaller dose of antigen to get the same immunologic benefit. And that has advantages not only in terms of exposing individuals to smaller doses of antigens, but there's cost of production manufacturing savings that go along with that, that can be very important. We're leveraging Matrix in basically 2 ways, in the infectious disease portfolio. And here, we're focusing currently on hard-to-treat, hard-to-prevent infections. And C. diff is a perfect example of a candidate vaccine that we're working to get into the clinic.

So difficult-to-treat infections would be one area we would expect to be able to capitalize on some of the properties that Matrix brings. And the other is in the field of oncology that John mentioned a few minutes ago. In oncology, it's all about turning cold tumors hot, making them accessible to the immune system. And Matrix has certain properties that we're excited about and we think could play a really important role in this exciting new area of oncology.

I think it's overlooked, the fact that you actually have a very huge database of safety with Matrix.

I fully agree.

You've already signed the MTAs with multiple top 10 pharma partners. Just can you sort of speak to the level of interest you're sort of seeing around the platform and how you intend to translate this to a level of interest -- this level of interest into new licensing agreements and sort of stable revenue?

Pete, I really appreciate the question because not only is there more interest than we've ever seen before in our technology at Novavax behind the scenes from top 10 pharma, midsized pharma and small innovative biotechs, many of whom explore in the oncology arena, working with us behind the scenes, calling us, talking to us about maybe even signing up for an MTA, that first step. So more interest than we've ever seen since I joined in January of 2023. So it's almost like we say internally, facetiously, the secrets out about Matrix-M, right, with our potential partners and collaborations.

In addition to that, though, Pete, you see the excitement around vaccines starting to build again. It's like this waxing and waning a little bit over time historically. There was a bit of hesitancy with vaccines and some pressure from government officials and things like that. But what you're seeing with the news around Moderna with personalized mRNA oncology vaccine options and a checkpoint inhibitor, Merck's KEYTRUDA, fantastic news for the whole industry, and I think for human time because it shows that there's a new approach that might be able to help to take on this scourge of cancer around the globe. And we had started about 18 to 24 months ago when we launched our new strategy formally in '25 for sure, with certainty to pursue and explore the potential of Matrix-M and our technology in oncology.

We're well into our own experiments. We expect data in the coming quarters on those experiments. The top 10 pharma who signed with us earlier this year, who's a leader in oncology, we will also see data from their experiments, which are underway in the coming quarters. And we hope to see in the future as part of our future vision, licensed partnerships involving targeted oncology immunotherapeutics and vaccine interventions over time. So really exciting to be part of this wave and that excitement is building externally in the macro environment as well as behind the scenes with what we're seeing.

All right. So we did -- you did mention back in April, there was a new MTA signed with a top 10 pharma partner in oncology to explore Matrix-M in oncology. What do you believe Matrix-M could offer in the oncology setting from a mechanistic standpoint?

Bob?

Yes. So -- from a mechanistic perspective, I'll just build on some of the things that John said earlier. Again, it's about converting cold tumors into hot tumors. And what Matrix-M is able to do is activate not only the antibody side of the immune system, but the cell-mediated T cell side. And in oncology, you probably know, I mean, CD8 cells are the key critical killer cells and tumor-directed immunity is -- that story is all about activating CD8 cells, which Matrix-M has the ability to do. And we've seen that, and we're continuing to explore that with our own R&D programs at Novavax.

We have a variety of tumor models that we're exploring that exemplify cells from head and neck tumor, for example, colorectal tumor, pancreatic cancer, melanoma. And in these types of model systems, we're exploring the ability of Matrix-M plus tumor antigens to induce those very specific immune responses that we were talking about a moment ago.

Our partners, and John mentioned this also, are also doing some of the similar types of work in their model systems or with preclinical experiments that are specific to the areas where they're investigating. And so those are data that we expect to be able -- we expect to see in the coming months, and we're very excited about that. We already see early signs that are encouraging. And yes, so again, mechanistically, I come back to that point, it's turning cold tumors warm.

Okay. And we expect to see data generated internally, preclinical data or partners, both. So sort of moving on to Nuvaxovid for COVID. Congrats on getting the recent approval for the updated formulation. Can you just provide us with an overview of where Nuvaxovid will be marketed this season and by which partners plus your views on the global market opportunity?

Jim, do you want to take that?

Yes. Certainly happy to cover that. I think one of the critical things about the market that's being reinforced is that the burden of disease of COVID continues to be exceptionally high, even while vaccination rates are not reaching that equal parity with flu, which has a very similar burden of disease. And therefore, when we look at the market globally, I'll start first with, hey, who are our partners, what areas of the world are they covering?

So, Sanofi. Sanofi under our collaboration license agreement is the lead commercialization partner for Nuvaxovid in the U.S., in Europe, Canada and major markets around the world. We have Takeda as a long-standing partner in Japan. So we believe we've got some of the best partners globally in the respiratory space with Nuvaxovid. In particular, as we look at the U.S. marketplace, your timing of the question couldn't be better. Shipments to retail of Nuvaxovid occurred over the weekend, right? So we had approvals of Nuvaxovid right in line with the other vaccines in late August, shipments over the weekend. And we just began to see some of the early vaccination data coming through public sources like IQVIA overnight. So we're at the very beginnings. Individuals looking to pick a protein-based option, you should expect in coming days, the ability to get Nuvaxovid scheduled at your local pharmacy, exceptionally important.

In terms of the sizing of the market, we are seeing a global market for 2026, say, approximately $5 billion, right, plus or minus, with an expectation -- ex U.S. data, not as good as U.S., but expectation about a 50-50, right, split between U.S., ex U.S. And that gets you a top 5 market in terms of vaccines. COVID is still an exceptionally meaningful market. As we look forward where the market is going, it's a combination, COVID plus flu, flu being a $5 billion to $6 billion market. So when you combine where this market is going, COVID plus flu, and it's a $10-plus billion market, it's one of the top markets in all of vaccines. And that's why you're seeing our partners, and in particular, you're seeing Sanofi lean into not only marketing Nuvaxovid, but the development of the combination of Nuvaxovid plus their market-leading enhanced flu.

And so that's what we're really excited about is not only the ability of our partners to execute today, but where they're headed in terms of driving combination vaccines.

So for Sanofi in the U.S. market, what are the sort of keys to grow share?

Yes, certainly. Part 1 is access to retail. The retail market is 85%, 90% of the total marketplace. Well, step one, make sure you've got contracts and availability across all the major players, check. They've done exactly that. They've stated as much. And in a timely manner, that season is starting now. So availability on the shelf. Part 2 is the pull-through of, hey, what's your direct-to-consumer look like? Are you activating consumers? The answer, yes, they're rolling out their new program and actually started earlier this week, their new program, the digital program, direct-to-consumer to help activate those looking for a protein-based option.

And so those are some of the critical keys to getting product out there. Now I would say, when you look at Sanofi, they've got in the enhanced flu 2/3 market share. So they're like 70% plus in the enhanced flu market. How did they get there? They did it by investing, investing in data and methodically growing that business over time, which leads us to another critical success. Hey, are you generating real-world evidence and data? And they put out earlier this year, something called the COMPARE study that showed the favorable profile of Nuvaxovid versus mRNA.

Build on data we presented, the Utah study, right, SHIELD study, University of Utah, where we showed Nuvaxovid exceptionally favorable tolerability profile. So what we anticipate as Sanofi markets Nuvaxovid over time, methodically growing market share over time and then combining Nuvaxovid with their market-leading flu combination product.

Yes. And Jim, it's not just the U.S., right? They're launching in Canada, U.K., other markets around the world. Sweden, they just recently had a win there. So there's a lot happening around the world, too, as they start to build that base methodically of that business, and we'll penetrate that market successfully over time is our belief.

So maybe we can just sort of switch gears and you just did mention it, COVID-influenza combo. Recently, Sanofi shared that they were in advanced discussions with the regulators regarding the Phase III study timing for their program using Nuvaxovid and their own flu vaccine. What are the next steps and potential time line? And just share your views on the other global market opportunity there.

Jim, do you want to take that one, and I can add to it?

Yes, certainly. In terms of their next steps, while we, of course, don't speak for our partner, they've been clear. They have said that they intend to be an early market entrant into the combination marketplace. All the incentives are there. The market is going there. They've got a market-leading flu. And very recently, mRNA got approved in Europe. So the incentive is there to certainly cover their home base as well. So we have every expectation that in the near term, Sanofi is going to be advancing their late-stage programs, pivotal programs.

And as they described it themselves, they're in late discussions with regulators on the timing of the initiation of these pivotal studies for not just 1, but potentially 2, right, combination products. So that's where they are on the development cycle. In terms of the market opportunity itself, you heard me mention earlier, when you take COVID plus flu, this is a $10 billion-plus marketplace. The opportunity to grow that market because the vaccination rate in 65-plus it's twice as high for flu as COVID. When you combine these products, it has the ability to lift vaccination of COVID and therefore, expand the market. And importantly, given the burden of the disease, it's great for public health. And so we're really looking forward to where this market is headed.

Yes, Jim. And we're excited about Sanofi's potential, assuming they do succeed, launch clinical programs and succeed and launch those products in Europe and the U.S., if they can leverage that world-leading flu business that has that 2/3 roughly market share, Jim, the 65-plus segment where you have higher margins in Western countries on that and greater unmet medical need there. So you see the consumers lining up that are 65-plus to get that high-dose flu from Sanofi. There's a big incentive then why not get your both shots in one if they have the combo. So we can build upon that roughly half of the dollar value of the global flu market is in Sanofi's hands right now, roughly 1/4 of the combined COVID-flu market in their hands right now if you do that similar math.

And how far will they penetrate with Nuvaxovid? This is their first full bite of the apple in the U.S. market. They're expanding launches into other countries that they've made public, including Canada, U.K. and others. So as they start to grow that business, and then we believe that they will continue to go forward and launch their kick vaccines over time and then leverage that market position to drive additional share and growth. So they're well positioned to succeed over time, of course.

So sort of switching gears a little bit, just provide investors the scope of the terms of the Sanofi and Pfizer agreements, including near- and long-term drivers of cash flow. Also, how will the near-term milestones and royalties sort of impact cash flow?

Well, excellent. I'll start first by acknowledging wow, what a change in our business model here to unlock value. As an example, 3 years ago, we were a very large multinational company just uniquely focused on pulling through COVID with significant liabilities, right, and trying to get our cost structure under control. Today, are different, right? You got a cash runway of over 2 years. You've got on track to get to that lean agile operating model.

In the past 3 years, we've already brought in $800 million between upfronts and milestones across both Pfizer and Sanofi. When you bring in that $800 million, what you're doing is you're pulling forward those later cash flows we might have had to wait for on our own commercial efforts and bringing them into today to stabilize the company while getting our technology in the hands of market leaders, right? And so that's an incredibly important strategic pivot to get our technology into as many innovators to drive public health, right, great, great access and the stability and cash flow of the company, right?

So in terms of near term, what are some expectations? We've shared with investors our intent to drive to non-GAAP P&L profitability as early as 2028. To do so, what do we need to do? Well, on the cost structure we've guided to, that would imply, all right, so revenues over $150 million, give or take. Therefore, what's happening as we're moving towards that? Well, we're doing 2 things. You're watching us drive down our cost structure while in parallel, Sanofi in the near term, we're looking to royalties from Nuvaxovid plus milestones, which you mentioned earlier, plus royalties and milestones from our other partners like Takeda and Serum Institute.

So you're seeing the beginnings of that diversified revenue stream. Our intent, it's not just to breakeven, it's to have cash flows that are order of magnitude higher than our cost structure. That's how we're driving value. Along the way, what are some near-term milestones to look for? We've highlighted $200 million worth. $75 million linked to a tech transfer of our Nuvaxovid manufacturing. We said we anticipate having that mid next year as we set up Sanofi to manufacture on their own.

The next one or the next important one, $125 million that we earn when Sanofi initiates a pivotal Phase III for their combination vaccines in the U.S. or Europe. When you look at those $200 million total in milestones, if you heard me mention earlier, we have cash runway through 2028, that incremental $200 million will put us into 2030s, right? So the stability of the company is coming into sharp focus on a financial stability basis. And therefore, we can focus more and more on unlocking incremental cash flows through execution of our partners and potentially new deals, which we're talking about today.

What a journey of the last 3 years, Jim, a lot of hard work to put the company in this position where the vast majority of our energy is now looking forward at a very bright and exciting future.

Exactly.

I would like to ask. You don't have to answer. Okay. The light bulb went off in whose mind or a combination of mines to basically restructure the company and leverage Matrix-M.

The question, Pete, is who thought of that?

Yes.

Well, I never take personal credit for anything. It's our team, our management team, working together always as a team. But I will say that when I decided to come here in January of '23, it was because of the technology and the inherent capabilities and knowledge base in this company, [ AB Sweden ], inventors of Matrix-M. We still have the original scientists who invented Matrix-M on our staff in Sweden and we manufacture the product there.

So the remarkable talent, abilities and the technology of Novavax said to me that it should be very successful, but it needed a different model. So when we put out the first strategy, I think it was Jim, 8 weeks into the job when we had our first earnings call, maybe 6 weeks. And in that earnings call, if you go back and look at that, you'll see Pillar 3, it was the third pillar, now it's first, was to monetize our technology. So from the very beginning, part of the vision that I agreed on with our Board of Directors and the management team that we built together was to get the company to a position where we could truly monetize this technology, not just about revenue, but to position it to have a much better global impact.

You're sitting on a technology platform that has the ability to potentially, we believe, turn cold tumors hot and to help technologies take on cancer, right? We have a technology that could take on some of the world's toughest infectious diseases and help other vaccines perform even better, be lower cost to produce, more accessible to others. We could sit back and make one thing with that technology and try to drive revenue in a fully integrated organization globally taking on big pharma as a small company, or we could open our arms and share that tech with the world in a way that creates a vision that we see.

And from the beginning, the vision was to have a Novavax with multiple partners, big and small, where each partner would have one or more assets, even portfolios of assets that could include our technology, having a positive impact on potentially billions of people around the world on health across cancer, across viral and bacterial infectious diseases. We're already seeing sparks of that now with R21 taking on malaria in Africa, 5 million or so doses per quarter, Jim, or so is the run rate right now. 600,000 or so children a year were dying or having severe disease from malaria that we can help prevent.

Imagine that times multiple assets across multiple disease areas with a low cost structure, maintaining a strong IP base, strong revenue base that's exponentially higher than our costs over time and reaching profitability. And then continuing to innovate. And the last piece is we're driving our own R&D forward, not at a tremendous expense within the parameters Jim has often discussed in our public commentary on where we're taking our costs, that $150 million to $200 million non-GAAP SG&A and R&D range that Jim always talks about within that, innovating and bringing forward assets like our C. diff vaccine, which could be in the clinic as early as next year.

We're looking at other assets to bring forward, and we're also experimenting with Matrix itself. Imagine if Matrix itself might be a therapy or an innovation someday in the future. So we keep on working on it. We believe in our future. We're very excited about where we can take the company. No guarantees in biotech. It's a tough business, and it can be risky. But when you have a proven platform, it's de-risked. We already have assets out. We know it's safe. We know it works. We have a multimillion patient database on safety. There's a lot there to work with already for Novavax, and we're excited about the future.

We have a couple of minutes left. I know Jim wants to answer these questions. So how close are we to having the structure in place to support sustainable growth and cash flow positivity?

Yes, certainly. Given where we are in our journey, the capabilities we need to succeed in the future we have today. We really do. What's occurring as we're advancing our company is we are rolling off some of those capabilities we no longer need to be a commercial entity. So think about all that infrastructure and manufacturing that we once needed for annual strain change to be a stand-alone COVID company. One of the things that I think I've been most impressed with Novavax is the ability to attract top great talent.

And whether that's in Sweden, that's in the United States in a remote environment, we can be anywhere. I just think we've attracted exceptional talent and working with John on defining, and Bob, the key capabilities to unlock some of the great vaccine innovation questions we talked about today, we feel like we've got those capabilities to really drive long-term shareholder value.

Last question. We're sitting here a year from now. But what would you like to see has been sort of the key value-creating accomplishments for Novavax during that year?

Thank you, Pete. Great question. And we just talked about our vision, multiple partners, multiple products around the world that include our technology having an impact on billions of lives if we fast forward maybe to the next Cantor conference here in New York City, so we're sitting here again next year, what would we like to see in ENVISION?

What we'd like to see is continued execution by our existing partners, right, that Sanofi has indeed initiated that combination COVID flu trial and that they're moving forward to progress that, that they have indeed started to grow market share for Nuvaxovid in the United States this season and also around the world in new product launches that our other partners continue to flourish and continue to drive Serum with R21 on malaria, Takeda in Japan, one of the world's largest markets where they've driven meaningful market share for Nuvaxovid. We'd like to see new partnerships emerging, one or more new partnerships. We'd like to see our proof of concept emerge in oncology with some data to show that Matrix-M does have potential to turn cold tumors hot and to have an impact to help the body fight cancers of different types, different tumor types. That's right. That's where we'd like to be.

All right. Well, we ran out of time. I really appreciate your time and coming to the Cantor Healthcare Conference. Looking forward to watching all the progress over the next year and see you here again.

Thanks, Pete. I want to thank our investors and thank our employees for their belief in us and their hard work. And nothing is easy in biotech it takes a village. We appreciate everyone. Thank you.

Thank you.

Thank you for standing by, everyone. My name is Jim, and I'll be your conference operator for today. I would like to welcome everyone to the Novavax Second Quarter 2026 Financial Results and Operational Highlights Conference Call. [Operator Instructions] It's now my pleasure to turn the floor over to Nana Zaman. You may begin.

Good morning, and thank you all for joining us today to discuss our second quarter financial results and operational highlights today on August 6, 2026. A press release announcing our results is available on our website at www.novavax.com, and an audio archive of this conference call will be available on our website later today. Before we begin with prepared remarks, I would like to remind you that this presentation includes forward-looking statements regarding Novavax's current expectations related to, but not limited to, its partnerships, market opportunities and financial guidance. Our actual results may be materially different from such statements as detailed in the presentation. Discussions of non-GAAP figures and reconciliations to GAAP figures are available in our earnings press release and descriptions of the risks and uncertainties associated with Novavax are included in our SEC filings. Both can be accessed through our website. Joining me today are John Jacobs, our President and CEO; Jim Kelly, our Chief Financial Officer; Elaine O'Hara, Chief Strategy Officer; and Dr. Bob Walker, Head of R&D. I would now like to hand the call over to John.

Thanks, Meta, and good morning, everyone. In 2025, we set out to build a different kind of biotechnology company, one powered by partnering our technology, targeted and capital-efficient innovation and a lean and agile operating model. Our ambition is in Novavax with multiple partners and products using our technology, creating both near- and long-term value while potentially having a meaningful impact on millions of lives around the world. Today, the momentum created by executing this new strategy is giving us the potential to have greater impact than ever before. For example, Four of the top 10 global pharmaceutical companies now have licensing or material transfer agreements for Matrix-M. One of those companies is Pfizer in a collaboration that could represent up to $500 million in potential development and commercial milestones and significant potential future royalties. In total, our license partners and MTA holders collectively have the rights to over 30 areas of experimentation across both infectious disease and oncology. The collective utilization and experimentation with Novavax technology potentially opens the door to a substantial portion of a market projected to reach $100 billion in the 2030s, spanning infectious disease, oncology vaccines and cancer immunotherapeutics. In the second quarter, we accelerated our momentum. And today, we're excited to share several important updates. First, we continue to execute well on our Sanofi partnership with Sanofi's strong and growing commitment to Nuvaxovid and our technology. In fact, Sanofi has confirmed to us their intent to be among the first movers in the combination vaccine market and that they are in advanced discussions with regulators regarding Phase III study timing for their program using Nuvaxovid and their own flu vaccines. We're pleased to hear this confirmation, and we are optimistic about the growing potential of our opportunity as partners. Initiation of this trial in either the U.S. will trigger a $125 million milestone payment to Novavax. Additionally, progress continues on the manufacturing tech transfer to Sanofi, which comes with an associated $75 million milestone upon completion and is expected by mid-2027. We believe Sanofi is also well positioned for this commercial season with Nuvaxovid, supported by an expanded U.S. marketing campaign and launches in additional international markets. We're excited for the potential of this work to help increase awareness of Nuvaxovid and build meaningful market share over time. Taken together, this means we now have line of sight to an additional $200 million in potential near-term milestone payments on top of the more than $1 billion in value we have already realized through a combination of upfront payments, milestones and royalties and cost savings related to this partnership. Second, we're seeing growing interest in Matrix-M and increasing progress across our broader partnering portfolio. A growing body of scientific evidence is being generated by Novavax, our partners and MTA collaborators in oncology and infectious disease targets. and we're excited about the progress that's being made. Third, our R&D investments are selective and strategic, and they're designed with 3 goals in mind: to build upon the scientific evidence that makes our technology increasingly compelling to both current and prospective partners, to broaden the utility of our Matrix technology platform and to create new innovative vaccines that have the potential to stimulate additional partnering opportunities and drive value for Novavax and our stakeholders. Later in the call, Bob will discuss the momentum we're seeing across our R&D portfolio, including the growing body of work supporting Matrix-M's utility in oncology. And finally, we're delivering on our commitment to transform Novavax into a leaner, more capital-efficient company. To date, we've reduced our operating expenses by more than 80%, and we remain on track to achieve an approximately 90% reduction from our peak. Importantly, we didn't just cut. We focused, streamlining our company, while at the same time, preserving the capabilities we believe are needed to enable value creation. Taken together, the progress the team and I are sharing today reinforces our belief that the future is bright for Novavax. We continue to successfully execute on and deepen our existing partnerships to take steps towards initiating new partnerships, to strengthen our technology platform and to deliver with financial discipline. We remain confident in the opportunities ahead and believe we're well positioned to create meaningful value for patients and shareholders. I will now turn the call over to Elaine to further discuss the progress we're making across our partnerships and business development activities. Elaine?

Thanks, John. As discussed, one of the clearest indicators that our strategy is working is the momentum we're seeing across our partnerships. We are focused on 2 objectives: maximizing value from our existing collaborations while building the next generation of licensing opportunities. Today, I'll provide an update on both. Beginning with Sanofi. COVID-19 continues to present a meaningful public health challenge, particularly among older adults and other high-risk populations where we see the highest need and the highest vaccination rates. And it remains a significant commercial opportunity as the second biggest infectious disease market behind influenza. Building on last year's COVID-19 launch in the U.S., Sanofi is preparing a broader commercial effort following Nuvaxovid's first full year of approval. The campaign will be supported by pharmacy activation and direct-to-consumer outreach. Internationally, Sanofi plans to expand availability in additional markets this season, including the United Kingdom, Germany and Canada. Results from the Phase IV COMPARE study, a large head-to-head evaluation of Nuvaxovid and a next-generation mRNA COVID-19 vaccine demonstrated Nuvaxovid's favorable tolerability profile. Together, we believe these developments provide health care providers and patients with important information to make more informed vaccine choices. Beyond the commercial COVID opportunity, we remain encouraged by the progress of Sanofi's combined COVID-19 influenza vaccine program. Recent external developments, including the European Commission's approval of the first COVID influenza combination vaccine, reinforced our belief that the regulatory pathway for this category is becoming more clear. As a reminder, Sanofi previously reported positive Phase I/II data for its KIT candidate utilizing Nuvaxovid in combination with their flu vaccines. And as John said, we are encouraged by Sanofi's recent confirmation that they are in advanced discussions with regulators, and they intend to be one of the first movers in the combination vaccine segment. So to reiterate, a Phase III study initiation in either the U.S. or EU will trigger a $125 million milestone payment to Novavax. Finally, on the Sanofi partnership, Sanofi's BARDA-funded H5 pandemic influenza vaccine candidate, which includes Matrix-M, was recently granted U.S. FDA Fast Track designation. So tremendous progress continues with Sanofi. Beyond Sanofi, we're pleased with the continued execution across our broader portfolio of licensed partnerships. Work with Pfizer, Takeda and the Serum Institute continues to progress well and demonstrates the broad applicability of the Matrix-M platform across multiple vaccine programs and of our technology platform more generally across multiple markets. Turning to our Matrix collaboration activity. Today, our existing license partners and NTA holders collectively have the rights to over 30 areas of exploration across both infectious disease and oncology, reflecting the broad applicability of Matrix-M and our technology platform across a diverse range of vaccine programs. While it will take time for partners to complete experiments before these efforts potentially progress into full licensing agreement discussions, we're encouraged by the momentum we're seeing. Materials have been delivered, studies are underway and partner engagement continues to deepen. What stands out most is both the quality and diversity of the organizations evaluating Matrix-M. We are actively collaborating with 4 of the top 10 pharmaceutical companies through license agreements and/or MTAs, and we are also seeing growing interest from innovative biotechnology companies, reinforcing the broad appeal of Matrix-M across the industry. One area where we're seeing particularly strong momentum is oncology. During the second quarter, we executed an MTA with a leading global pharmaceutical company who is also a top player in immuno-oncology related to therapeutic cancer vaccine applications. And we continue to see interest from additional companies in this area. From a partnering perspective, we're encouraged not only by the caliber of these companies, but also at the pace at which therapeutic cancer vaccine programs potentially can generate meaningful data and reach key development milestones. Different to infectious disease vaccines, therapeutic cancer vaccines generally enter clinical testing in patients with active disease, allowing developers to access meaningful data on shorter time lines. Combined with expedited regulatory pathways in areas of high unmet need, we see real potential for these factors to accelerate partnering decisions. Just as importantly, this is an area of profound unmet need, and we are inspired by the hope that next-generation therapeutic cancer vaccines represent for patients and their families. The level of engagement we're seeing reinforces our belief that Matrix has the potential to become a broadly applicable vaccine adjuvant platform. Every new collaboration has the potential to expand scientific evidence supporting the platform, strengthen its value and create additional opportunities for future partnerships. That's the virtuous cycle that we believe will continue to differentiate Novavax.

Now I will pass it over to Bob to discuss the scientific rationale behind these programs in greater detail.

Thanks, Elaine. Our R&D strategy is designed around a simple principle. Every investment we make should create future opportunities to facilitate partnership discussions while strengthening the scientific foundation of Matrix-M and our full technology platform. We're increasingly excited about the potential for Matrix in oncology, which we believe represents one of the most compelling long-term opportunities for our adjuvant. Therapeutic cancer vaccines are experiencing renewed momentum as advances in neoantigen discovery, tumor profiling and antigen design accelerate the field. At the same time, many developers continue to face a common challenge of generating strong, durable cellular immune responses that are critical for effective antitumor activity. We believe that our unique sapenin adjuvant Matrix-M has a differentiated tolerability profile and the potential to stimulate robust cellular immune responses for oncology vaccines used alone or with innate immune stimulators such as TLR agonists. A recently published study by Novavax in NPG Vaccines, a Nature Portfolio journal, demonstrated that our Matrix-M adjuvant supports antigen cross-presentation and subsequent downstream CD8 T cell activation. Achieving strong CD8 T cell activation is considered an important factor for many therapeutic cancer vaccine approaches. Additionally, researchers at Stanford have published their work in science advances, showing that saponin adjuvants alone or combined with innate immune stimulators such as TLR agonists can further enhance the magnitude, breadth, durability and quality of immune responses. Put simply, we believe Matrix-M helps the immune system better recognize and respond to disease-related targets. Its ability to engage the innate immune system, activate immune cells within the draining lymph node, enhance antigen presentation and promote Th1 biased and CD8-positive T cell responses gives us a differentiated mechanism of action that we believe is highly relevant for next-generation cancer vaccines. Our own internal research has continued to generate encouraging immunologic data supporting further evaluation of matrix across multiple oncology settings. In parallel, as Elaine discussed earlier, our oncology collaborations should provide additional data sets generated independently by our partners, further expanding our understanding of the platform. Taken together, we believe the combination of published mechanistic evidence, emerging preclinical data and partner-generated research provides an increasingly compelling scientific rationale for Matrix-M in oncology. Beyond oncology, we've continued to advance a focused internal pipeline that addresses significant unmet medical needs while strengthening the value of our platform. During the quarter, we made meaningful progress in the development of our differentiated multivalent C. difficile vaccine candidate, which has the potential to cover the vast majority of circulating C. diff glades and ribotypes. This progress includes initiating GMP manufacturing and pre-IND interactions with the FDA, keeping us on track for potential clinical entry as early as 2027. More broadly, as we have shared previously, some of our own internal preclinical studies on the combination of Matrix-M with licensed flu, RSV and pneumococcal vaccines produced encouraging results that have already helped generate partnership interest. Building on that, we are continuing our comprehensive program to evaluate the potential ability of Matrix-M to enhance performance in a broad array of licensed vaccines in big commercial markets. As we previously shared, our ambition is to generate a library of data in a cost-efficient manner to show the potential of Matrix-M across significant vaccine programs in a methodical manner. And we expect to complete the next tranche of this work by early next year. The goal is to stimulate new and additional partner interest in the applicability of Matrix-M in their vaccine portfolios. Importantly, oncology, C. diff and our clinical and preclinical pipeline exemplify our broader strategy. Every program we advance, whether internally or through our partners, expands the scientific foundation of Matrix-M and our vaccine technology. With the growing partner interest in Matrix-M, we're encouraged by what is today one of the industry's most comprehensive data sets across mechanistic biology, preclinical research, clinical development and commercial use. That growing body of evidence does more than advance our scientific understanding. It increases confidence in the platform while potentially lowering the barrier for future partners and reinforcing what continues to differentiate Matrix-M and our full technology platform. We believe that this expanding scientific foundation represents a durable competitive advantage, one that becomes stronger with every new study, every new collaboration and every new application of the platform. As a physician and researcher who has spent most of his career working on vaccine development, I believe we're entering an exciting new chapter. Seeing the potential of our technology in new infectious disease targets and the expansion of Matrix-M into areas with significant unmet need such as oncology, represents an opportunity to improve the lives of even more patients and make an even greater impact on public health. We look forward to sharing additional progress over the coming quarters.

I'll now turn it over to Jim for the finance update.

Thank you, Bob. This morning, we announced our financial results for the second quarter of 2026. Details of our results can be found in our press release issued today and in our Form 10-Q filed with the SEC. Let me begin by highlighting several significant updates that we believe demonstrate the progress we're making on our growth strategy. Today, we are announcing our expectation to earn a $75 million manufacturing tech transfer milestone payment from Sanofi mid next year that would extend our current cash runway from 2028 into 2029. We are also encouraged by Sanofi's recent Phase III KICK study update discussed earlier and the potential to earn $125 million milestone payment. In addition to our second quarter results, we will be sharing updates on our improved 2026 financial outlook and reiterate our financial performance objectives to drive shareholder value. First, I'll walk us through our revenue performance. Our second quarter total revenue of $57 million compares to $239 million in the prior year. When comparing year-over-year results, you will see the prior year second quarter 2025 results include a $202 million benefit from a combination of a BLA approval milestone payment and a Takeda amendment. The $57 million total revenue recorded in the second quarter of 2026 includes product sales of $19 million, an increase of 76% year-over-year and are driven by demand for our Matrix-M adjuvant by Takeda and Serum Institute. In addition, we recorded Sanofi revenue of $36 million related primarily to R&D cost reimbursements and amortization. Turning to our full financial statement results. The second quarter of 2026, we recorded a net loss of $53 million and ended the quarter with $743 million in cash and accounts receivables. When reviewing the year-over-year change in net income and loss, we begin with the impact of the prior year's BLA milestone in Takeda amendment. Our second quarter 2026 results highlight meaningful improvements to other aspects of our financial performance, including product sales and other partner-related revenue categories that increased by $20 million year-over-year, while cost reductions were the primary driver of an additional $24 million improvement. We believe these 2026 trends reflect the continued execution of our strategy and financial performance. On the expense front, we continue to reduce our cost structure in the second quarter of 2026 with a 36% decrease to combined R&D and SG&A expenses on a non-GAAP basis. Importantly, we made significant reductions to both R&D and SG&A spend profiles. We believe these improvements to our operating efficiency highlight that we are on track to deliver our full year expense guidance. Today, we are increasing our full year 2026 revenue framework and expect to achieve adjusted total revenues of between $235 million and $275 million. As a reminder, our non-GAAP adjusted total revenue excludes Sanofi supply sales, royalties and milestones. This means there may be revenues in 2026 that are additive to our expectations. That said, we believe in 2026, Nuvaxovid royalties will grow significantly as compared to 2025. At midpoint, our full year 2026 revenue framework for adjusted total revenues is $255 million. This increase of $5 million at midpoint relates to the following updates for 2026: a $5 million increase to adjusted supply sales as we see strong demand from Matrix-M from our commercial partners; a $10 million increase to other partner-related revenues as we see -- as we expect additional royalties and milestones from Takeda and Serum Institute. And finally, a $10 million reduction to partner R&D reimbursements as we deliver efficiently on our partner-related performance obligations. Looking ahead to the second half of 2026, we expect the majority of our remaining revenue to occur in the fourth quarter as driven by the COVID-19 vaccine season. Today, we are also improving our full year 2026 combined GAAP R&D and SG&A expense guidance. At midpoint, we expect to achieve results of $390 million, a $10 million reduction and improvement to our prior guidance. On a non-GAAP basis and net of partner reimbursements, we reiterate that we expect to achieve results of $325 million at midpoint. Today, we are reiterating our 3-year combined non-GAAP R&D and SG&A expense guidance. Looking forward to 2028, we expect to reduce our non-GAAP R&D and SG&A expenses by over $200 million, reflecting a 50% decrease when compared to 2025. Importantly, in 2026, we are already operating at an approximately $200 million core spend profile when excluding costs tied to completion of partner and APA performance obligations. As these near-term activities are completed, we expect to be in a position to further decrease these costs. To reach our 2028 lean and agile operating model target, we anticipate having less than half the headcount as compared to the first quarter of 2026 and are exploring an over 50% reduction to our operating footprint via consolidation of buildings and laboratories. This could result in a noncash fixed asset write-off of up to $35 million in 2027 in addition to our existing expense guidance. As a reminder, in 2025, we recorded noncash write-offs of $98 million to a separate P&L line item called impairment of assets held for sale. For the time being, we suggest analysts and investors use the same P&L line item as part of their forward-looking models until we refine our expectations for both the amount and accounting for these potential noncash write-offs in 2027. Today, we are reaffirming our key financial objectives that support our intent to drive long-term shareholder value. Our strategy is to drive revenue from a diversified set of licensed partners and products to deliver long-term cash flow growth. To enable this strategy, we are making disciplined R&D investments that strengthen the Matrix platform, advance differentiated R&D programs and generate data to support new partnering opportunities. When Novavax engages with new partners, we expand investments in R&D via partner funding of new vaccine programs. Key financial metrics to support our growth strategy include: achieve 2028 combined non-GAAP R&D and SG&A expense of $150 million to $200 million, reach non-GAAP P&L profitability as early as 2028, pay off pandemic era EPA liabilities by the first quarter of 2029. -- and maintain at least 2 years cash runway. As a reminder, the timing of the Sanofi KI launch is a primary contributor to our potential non-GAAP profitability. We look forward to sharing additional updates as we 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. In closing, we're excited about the momentum we continue to build across our business. We've transformed Novavax into a leaner, more focused company, strengthening our balance sheet and continue to execute against our corporate strategy. Matrix-M continues to gain scientific and commercial validation, and we're seeing sustained interest from both existing and prospective partners. At the same time, we're advancing a focused internal pipeline and are excited about the potential of our C. diff vaccine candidate. We believe this reinforces that our future has the potential to be less reliant on any single product, program or partner as we continue to diversify revenue-generating opportunities. While there is still important work ahead, we believe we have more visibility into our future opportunity than at any point since beginning Novavax's transformation. We're confident that our strategy is sound, and we're accelerating our momentum, positioning the company well to enable meaningful value creation for years to come. And importantly, as we continue to execute, we are creating the potential to have a remarkable impact on public health and a legacy we can all be proud of as employees and contributors to this journey. We would all like to thank our employees for their efforts and our shareholders for their belief in our company.

And with that, operator, we'd be happy to open the line for questions. Thank you.

[Operator Instructions] we will hear first today from the line of Roger Song at Jefferies.

Congratulations on the progress. This is Nabeel on for Roger. Lots of exciting progress in the commercial engine, the partnerships in the pipeline. So I guess maybe 2 questions. First, as we look at Sanofi entering its first commercial season, curious if you can give any more color on the seasonal supply. And then on Sanofi and the Phase III advanced discussions on the combo, what needs to be aligned for that Phase III? And then again, if you could just talk about that market opportunity, especially you mentioned international as well.

Jim, why don't you take the first part of the question on the upcoming season?

Yes, absolutely. Nabeel, thanks for the question. We continue to see the COVID marketplace as just an incredibly significant vaccine marketplace opportunity. A reminder, this is a top 5 global vaccine market. It's been in the $5 billion to $7 billion the last few years. As we look forward, I think that the entrant of our partner, Sanofi, who, as you know, is the market leader in the enhanced flu marketplace blue being the anchor to the respiratory season, we're really looking forward to what they're doing to bring a protein-based option to the marketplace, both in the U.S. and globally. So of course, we can't speak for our partner, Sanofi, but we're seeing through really their actions, investing in things like the COMPARE study we discussed last quarter, where they went head-to-head with mRNA and showed the very favorable profile of Nuvaxovid protein-based with respect to adverse events, reactogenicity. So we're really happy and looking forward to seeing their impact of their commercial consumer -- direct-to-consumer program to roll it out this year.

Thank you, Jim. And like Jim said, they're leaning in, not away regarding Sanofi as our partner. Outstanding partnership, positive energy there. And in the case of KI, though we can't speak on behalf of our partners on specifics, actually, we don't -- we can't have the specifics on the background on their R&D program and other things. We're technically a competitor in the KI arena because of our own vaccine asset there. But in this case, Sanofi has confirmed with us their intent to be among the first movers in the combination vaccine market arena and that they are in advanced discussions with regulators regarding Phase III study timing for a combination vaccine program. Very encouraging, very exciting and building upon the news from Moderna yesterday evening on the approval for their flu vaccine. We see that as a positive momentum in the U.S. environment from a regulatory perspective for seasonal infectious disease arena.

We will take our next question from the line of Paul Kohn at TD Cowen.

Congrats on the quarter, guys. Paul Kohn here on for Trace. So I just wondering if you guys could provide any additional color on your potential clinical trial design for C. diff vaccine in Phase I, primarily what endpoints are you guys going to be looking at? And what do you want to see there before initiating a Phase III trial? And then just curious if you guys have embedded any potential Phase II or III C. diff costs in your 2028 operating expense framework.

Bob, why don't you take the first part of the question on trial design commentary? And then, Jim, you can talk about the runway on costs.

Sure. So for the Phase I trial design, we're not really discussing details of that, but I would just say that it's a fairly standard dose escalation safety, characterizing safety. and demonstrating that the safety profile is adequate to take further into advanced development.

And Bob, to that point, as we look at advanced development, which certainly could be as early as 2028, the answer to funding capacity is yes, we have contemplated the ability to keep programs, exciting programs like C. diff moving in our forward-looking guidance.

And that's exactly, Jim, why we provided a range in that forward-looking guidance on expenses, but we're contemplating within that range and to operate the company within the range that's been provided. That's our intention.

Next question will come from Pete Stavropoulos at Cantor Fitzgerald.

On the progress. First question that I have is this will be a full commercial year for Nuvaxovid under Sanofi control, as you mentioned. How much of the 2026 COVID vaccine uptake assumptions depends on contract wins versus physician patient-driven uptake, including the DTC outreach that was mentioned...

Jim, do you want to take that one?

Certainly. V very astute question about the marketplace dynamics. This continues to be a consumer and retail-driven marketplace in the U.S. in particular. We're looking at 85% or more of decision-making or shots coming through the retail market. And this is why this direct-to-consumer advertising by Sanofi this year, emphasizing not just exceptional efficacy, but also great tolerability profile, we think, is exceptionally important. As we watch the way Sanofi has built their market-leading flu vaccine business, we've witnessed the following: one, they invest in data. It's a long game. They're methodical. And so that's what we're anticipating from them. We saw it in sort of them testing the marketplace last year, investing in the compare data, now rolling out their direct-to-consumer. And so that's our anticipation. This is a multiyear, long game. We look forward to seeing what they're going to do this fall, but importantly, bring a protein-based vaccine to the market in a meaningful way.

All right. And just one additional question. Sorry, John, do you want to say something?

Just to build on that, they're also -- though the U.S. is the most important market, it's primary market. They're also launching in other markets this year like Canada, Germany, United Kingdom, and it will be a global footprint over time that continues to expand. And like Jim said, long-term methodical investments. And Elaine, you had one additional point to add.

Yes. Just more specifically, Pete, they've contracted with all the major retailers in the U.S. And so we expect to have a robust season as a result of that. So thanks.

All right. And just one question probably for Bob. It has to do with the C. diff vaccine candidate. One of the design attributes you have alluded to is the possibility of mucosal immunity. Just curious to hear what from the preclinical data sort of gives you confidence that you would be able to develop mucosal immunity, which I assume is IgA response. And -- and are you developing this candidate as an injection? And the reason I ask is what gives you confidence again that you can generate a robust mucosal response with that route of administration?

So yes, one of the things we're looking at preclinically and we intend to look at in the clinic is whether or not the vaccine can induce mucosal immunity. As I mentioned on the last earnings call, we do see evidence of that in some of the preclinical models, but preclinical models are limited, as you know. So when we see it in our human studies, I think we'll talk about it more if we see it in human studies.

Our next question will come from Alex Stranahan at Bank of America.

Two from me. First, just on the 2026 revenue guidance, is there a point in the fall season where you'll have better line of sight on Sanofi supply sales where you provide concrete guidance here? Or will this maybe be easier to do next year after we get a full year of Sanofi commercialization? And second, has strain selection happened for Nuvaxid yet? What the appropriate variant match will be for this fall, whether that's XFG or something else? And thoughts around preparedness to scale manufacturing for this season's strain would be great.

Maybe to take the question on guidance.

Certainly. I would start by reiterating that we are exceptionally excited to have Sanofi as our commercial partner with Nuvaxovid. We're not in a position, however, to guide for them. And it's also true that we're not able to speak to -- for them on strain selection. What we can say is as this year is our final year of offering commercial support directly to Sanofi, they're well prepared. they're well prepared to be out there in line with the competitors at the start of the season and do what they do best, right, bring important vaccines to the marketplace. Regarding your question about, hey, in the future, might we guide to Sanofi. We haven't guided to anything beyond 2026 at this time. But importantly, we, I believe, have set a precedent that we're not at this point in a position to speak on their behalf. But as they, over time, begin to guide, of course, I think that's going to be helpful to all investors.

And then, Alec, your second question was on strain selection. If I would paraphrase the question or just frame it a little differently, do we have the correct strain and a vaccine that's viable for the season, Bob?

Yes. The vaccine that Sanofi will be distributing in the U.S. and beyond is -- matches the strain selection of the U.S. and other regulators.

Yes. And we're on track for delivering doses to Sanofi.

We'll take our next question today from Tom Shrader at BTIG.

On all the progress. Returning to C. diff, kind of a broader question. Is that a treatment vaccine? Is that a prophylactic vaccine? Can you give us a little sense of if it's prophylactic, who would be for? Is there a clear population that's had a lot of infections? And then separately, on your oncology vaccines, we all know those are hard. Do your partners want Matrix-M as it is for these programs? Or are they all asking for licenses to kind of use the components of Matrix-M and kind of experiment? The question is, are you close to the final adjuvant in oncology vaccines? Or are you licensing people to do research in adjuvants related to Matrix-M?

Bob, why don't you take the question on C. diff first?

Yes. So with C. diff early days and generally, we -- I think the general philosophy is that we're looking at preventive vaccines. But we're developing the database as we speak. So we'll consider all the various options.

And on the second question, Tom, regarding Matrix, Look, we have reason to believe we're optimistic about what we're seeing early on. Novavax is engaged. We are engaged in internal research and experiments with Matrix in oncology across multiple target types, and we're looking forward to generating additional data. We've seen some early data that encourages us, but we're not ready to share that in the public domain yet. But as you can imagine, we use data of that nature and data from some of our earlier partnerships in the past that involved oncology to interest and ENTYCE a recent partner who signed up with us through an MTA in a collaboration who's a top 10 pharma company and a global leader in oncology. They are also in a position to explore Matrix-M across a variety of oncology targets. So we look forward to them engaging in and completing that work to our own work coming to fruition. What we're seeing so far, we're very encouraged by, and we believe that some of the early data we were able to share under NDA with that collaboration, that partner and through that collaboration encourage them to take a look as well, and they're a leader and an expert in oncology. It's absolutely exciting. We appreciate the energy of your question and wanting to learn more. We look forward in the future to sharing some of what we're learning as we continue to build the library of knowledge and evidence around the potential for Matrix in this arena.

We'll move next to Jeff Meacham at Citi.

This is Nishant on for Jeff. Going back to the combo vaccine, I know you mentioned Sanofi's intent to pursue, but given the recent leadership change there and the portfolio review, what tangible steps from them gives you confidence that the combo vaccine remains a strategic priority? And are there any remaining internal decision points before the Phase III trial starts?

Could you repeat the question, please? We had a little bit of audio difficulty here.

Yes. So on the combo vaccine, I know you mentioned Sanofi's intent to pursue the combo vaccine, but there has been a recent leadership change over there and then the portfolio review what tangible steps from them gives you confidence that the combo vaccine remains a strategic priority? And are there any remaining internal kind of decision points before the Phase III start?

Thank you for your question. So to paraphrase that then, internal change at Sanofi, new CEO, new Head of R&D, promotions, in fact, of the global vaccine he was promoted and got even more responsibility. They're leaning in not away, as Jim said and as I said. If anything, we're seeing more engagement behind the scenes from Sanofi rather than less despite the changes, in fact, perhaps even with those changes. So we're really encouraged more so than ever before. And by the way, we do not speak on behalf of partners. We are extremely cautious and conservative in what we say about the intentions of those we're working with. A part of our strategy, it may be frustrating at times for investors who'd like to hear more sooner, of course. But we can't share many of the things we know that our partners are working on and doing because we're under NDA. When we do make a comment like we have about Sanofi's commitment about their intention to be one of the first in the KI combination arena market in the U.S. and that they're in late-stage discussions with regulators, those words are signed off on by our partner. They are provided to us by that partner, and we are enabled to then share it with you. So those words are coming from Sanofi themselves. Any further questions about it, you definitely ask them when you circle with them. But what we see behind the scenes is leaning in, stronger commitment, a strong understanding of our technology and its capabilities. They're an outstanding partner, and we're excited about the potential of the partnership as we continue to move forward.

And then a follow-up. Is the combo vaccines like the Phase III trial start in '26 still the base case? And what exactly needs to happen for you to earn the $125 million milestone?

We don't guide to timing of our partners on studies. Jim, did you want to comment on milestones?

Well, reiterating we don't guide. However, we agree it's going to be an exceptionally important catalyst for us. And in fact, when you think about -- I was talking about the size of the global vaccine markets, when you combine COVID plus flu together. So think about it. We're talking about $2 billion, $5 billion, $6 billion marketplaces. You turn this into a top 1, top 2 market. it makes sense to invest. It just does. And so we believe that this advancement to Phase III, when Sanofi makes that announcement is a really important unlock of value creation for our company.

We will hear next from the line of Hardik Parikh at JPMorgan.

Just a couple of high-level ones. One is just on the COVID flu combination vaccine, what do you think is the biggest need on the market right now? And then I know you say you guys are competitor technically with Sanofi in big market. Just what level of engagement do you think you may have with Sanofi as they take their combination in Phase III? Do you expect to play any kind of a role advising them or anything like that?

Jim, Bob, Elaine, do you want to address the first part of the question?

I really appreciate the question because what it does is ask, hey, talk about the burden of disease and the significance and the importance of continued vaccination and the vulnerability of certain age groups, in particular, the over 65. Something I would point any investor or anyone to is the recent VRBPAC where manufacturers shared and of course, industry experts shared just the continued burden of disease, especially in that over 65 when it comes to deaths, hospitalizations. And as that continues, we think we're seeing broadly continued investment in KI programs across major vaccine manufacturers for that reason.

Yes. In fact, GSK made commentary about their intentions around the combination vaccine in their recent earnings call, we've seen Moderna get approved in Europe. We just saw the flu approval in the U.S., which bodes in a positive way, we believe, in the U.S. marketplace for seasonal infectious disease arena. Elaine, additional comment?

The only thing I was going to address, Hardik, is, I think, the second part of your question, and we do not provide guidance to Sanofi on their KIK program. As John had mentioned earlier on in the Q&A session, we have separate entities, and we have our own combination influenza KI program. So we do not advise. But thanks for the question.

We will hear from Mayank Mamtani at B. Riley Securities.

And on the partnership front, you have had many updates. Maybe just quickly on the mRNA and flu label and the regulatory progress that you've had in the recent months. I was really interested to hear your specific thoughts and implications on how a Phase III kick or even a flu program, next generation could be designed? And is there an accelerated approval path in a 65-plus age group based on immunogenicity surrogate endpoint, if you could maybe just comment on that. And then on the Pfizer partnership, I know you're contractually restricted to talk about the fields that they're working on. But I was just curious if anything to watch out for coming there, if you could just give some update there? And lastly, on the 30-plus fields under evaluation, really curious to hear how maybe quarter-over-quarter or year-over-year, some of these evaluation work has progressed and time lines for moving into a licensing kind of format, how that's kind of progressing, that would be very helpful.

All right. Three questions from mine, Bob, did you want to take the first one on his question regarding label and flu and any read-through to KIT programs in the U.S. marketplace?

Just commenting at a high level, the fact that we've seen this recent activity from the FDA, I think, is encouraging. Our flu vaccine plays in the same space where we are in terms of seasonal respiratory virus vaccines. So it's encouraging for all of us, right, to see progression in that space. And I'll just maybe leave it there. Pine?

Thanks, Bob. Thank you. For the second part of the question regarding the Pfizer partnership, we continue to collaborate with Pfizer and uphold our commitments based upon the license agreement that we have with Pfizer. And we're very, very excited about the progress that's being made. I can't speak any further to that, but we continue to support that partnership. And then the third part of the question was the 30-plus fields. Again, that spans both infectious disease and oncology. And we're, again, very, very, very excited about the progress that's being made across the board with Matrix-M in these experimentations. Each MTA is different. Partners evaluate different indications. They conduct different experiments and they move with different time lines. And so hard to say yet where that will end, but we're very, very excited about that progress. We don't guide to specific timing as any specific MTA really depends on the partner and how they conduct their experimentation. Thanks for the question.

Yes. And regarding oncology, just one other comment that I think Tom, back to Tom's question on Matrix-M, we found the final version of Matrix-M for oncology. We believe Matrix-M in and of itself as it stands today has potential in that arena, and we're exploring deeply its potential there. We're also looking at other approaches utilizing Matrix to expand the utility of it, add it to other things in addition to see if we can broaden the utility both within infectious disease and in oncology. So we're turning over every stone. We're encouraged by what we're seeing across that front, but we really believe that the core Matrix-M as it stands today has remarkable potential across a wide array of diseases. Jim, one other comment.

Mike, I'd tell you what I really like about your question is that what you're highlighting is that beyond the forward-looking catalysts that are in the control of Novavax, for example, entering the clinic with C. diff, some of the work we're doing on oncology to have proof points -- we have on a forward-looking near-term basis, some really rich partner catalysts that also are critically important to unlocking value here in our company from major players. I mean you're describing Sanofi, you're describing Pfizer, you're describing new emerging deals that can occur. And so the combination of those 2, what we're doing ourselves, plus the catalyst-rich partner activities in the future are some of the things that we're very excited about here.

Actually, since you mentioned application of Matrix, very quickly on the GSK's Shingrix dementia program, they're launching a big one. I remember you've been working preclinical program on shingles. Maybe just give us an update on that and if that is part of any of these partnership frameworks you're working on.

Yes. So we too are intrigued by some of those observations. I'll just again, indicate that these are observational studies. They're hypothesis generating. So work remains to be done to really nail down whether or not there's a true positive association there. We, as you know, have a VZV candidate that we're developing still early. We're working towards confirming a lead candidate and then our intent is to partner that program.

And that concludes our question-and-answer session, and we do thank all of our participants who signaled today. Mr. Jacobs, I'm pleased to turn the floor back to you, sir, for any additional or closing remarks that you have.

Just a sincere and deep thank you to all of our employees at Novavax for their contributions, the efforts and the energy that they put into this every day and their passion to really help make a difference in the world for global health through our efforts and our energy and to create a legacy we can all be proud of. And a deep thank you to all of our investors from our largest investor to our smallest. We appreciate each and every one of you the belief in our technology and the confidence and patience you show as we continue to execute against what we believe is a robust strategy that has the chance to deliver significant value for all of our stakeholders. Thank you for your attendance today, everyone.

Ladies and gentlemen, this does conclude this Novavax Second Quarter 2026 Financial Results and Operational Highlights Conference Call. We thank you all for your participation. You may now disconnect your lines, and have a great day.

Hello, everyone. Welcome to the Jefferies Healthcare Conference here in New York. It's a pleasure. Thank you for tuning in, everyone in New York and online. I'm here joined by Novavax, Jim, John, Elaine, Doug, great to see you all. And let's get started with some introductions. And let's talk about your new growth strategy early in 2025. What are some proof points that demonstrate your strategy is working? And anything that you think the market and the Street is underappreciating about your story. Let's start with that.

Thank you, Nabeel. It's great to be here with everyone, and thank you for joining our presentation today. Right now, we couldn't be more excited about where we are in Novavax's history. And as you know, we launched our new strategy in January of 2025 and you asked Nabeel about proof points. We're we're really excited about. It's already unfolded in the first trimester of this year, which are the fruits of our labor starting to show, right, through 2025, all of the efforts our team put in to generate and to engender more interest in our technology. First proof point really is the level of interest that we have seen as a management team from third-party companies working with us on our technology is unprecedented in Novavax history since we launched our strategy in January.

In fact, we were proud to announce the new partnership with Pfizer in January. We'll talk a little bit more about that today, as well as in the first trimester of this year 4 new MTAs or material transfer agreements. This is where we provide as Novavax, samples of our Matrix-M to potential partners in -- through a collaboration, and that allows them to experiment in their own labs on targets of interest across infectious disease and oncology.

And those -- that's a step we took with Pfizer as well. And then we -- in the hopes that, that might turn into a license agreement and a full revenue-generating partnership subsequent to the positive experiments that they may have. In fact, of those 4 new MTAs, 1 of them was another top 10 global pharmaceutical company, who also happens to be ranked globally as an oncology leader. So very, very exciting to see the interest not only in infectious disease, but also in oncology indications.

So those are some of the proof points that we've recently shared. I think what might be misunderstood or missed about our strategy currently. Nabeel, it's an interesting question. Number one is the way that we might generate revenue from this. So in a typical traditional biotech approach, a company from the lab all the way through their clinical trials to approval and launch could take many years before they generate the first dollar.

With our Novavax strategy now, we can monetize our technology right now immediately upon the consummation of a partnership and a license through upfront payments as exemplified by the Pfizer $30 million upfront payment. And then through potential milestones, for the clinical development of assets using our Matrix-M. So we announced in the Pfizer deal, $70 million in eligible potential milestones for Novavax per field as they would advance something through clinical trials.

So that allows us to pull forward tens of millions of dollars, potentially hundreds of millions of dollars in the form of other sales or approval milestones that might be in a particular agreement and then royalties for decades to come. So I think that may be underappreciated. The last piece then is amplifying the impact and the value of our technology overall. More than Novavax alone could ever hope to do. We announced in our most recent earnings call, the scope and scale of these collaborations and partnerships combined, which represent currently over 50% of the projected global market opportunity in vaccines for oncology and infectious disease as projected by McKinsey and Evaluate Pharma is currently under assessment or has the potential to be under assessment via our partners, and that's representing 30 unique disease fields across oncology and infectious disease.

And as Elaine said in our recent earnings call, many of those more competitive disease areas and markets have more than 1 partner or collaboration going on, which increases our probability of success for more potential future partnerships and revenue streams along the way. That's how I'd answer that.

Thank you for that big picture overview. And regarding some of the interest and ongoing activity. I think Matrix-M is becoming -- continues to be a bigger story. And that license agreement that you arrived with Pfizer in January. Could you walk us through a little bit about the scope and the terms of that license and what we should anticipate the next steps that Pfizer could do and potential catalysts and milestones that could come out of that?

Sure. Elaine, do you want to take that?

Yes. Thanks, John. So briefly, the Pfizer Matrix-M licensing agreement enables Pfizer to utilize Matrix-M with a field that was disclosed to us, but we are not publicly disclosing it. And then the second, they have an opportunity for a second field, they will study Matrix-M with, bring it through clinical study, and that has not been disclosed yet.

So that $30 million upfront is something that we received earlier this year. And then we have the opportunity to receive sales and development milestones to the tune of $250 million. And then just to characterize, we also have royalty payments coming off of that particular license agreement as well. So let's just say if Pfizer is successful with the development -- clinical development for a product that might be over $1 billion, cumulatively, we'd be able to receive over $1 billion in royalty payments because of the term of the agreement is for 20 years.

So again, as John was mentioning, this gives us a wonderful opportunity then to continue to build revenue from that particular licensing agreement over time. And then that's been our strategy for Matrix-M holistically. We were -- we announced another MTA with another major pharmaceutical company this year as well, as John mentioned, which gives us the opportunity to repeat that. And that particular MTA includes 9 fields of study.

So we're very excited about that as well because each one of those fields has the potential to be over $1 billion for sure, if that particular study is successful. So very excited about that as well.

Yes thank you, Elaine. And then regarding the nature of that license agreement, it's sort of a nonexclusive license. So walk us through kind of what led you to follow that approach to partnering with Matrix-M.

Yes. So the non-exclusivity gives us the opportunity then to partner with major vaccine companies where there may be overlap. And so I think we mentioned during our earnings call, we have overlap, for example, in the pneumococcal space. We also have overlap in RSV potentially. We also have overlap in infectious disease, such as CMV, cytomegalovirus.

So again, having a nonexclusive opportunity gives us our opportunity to partner with companies. And so we are successful, right, because we have multiple shots on goal with our Matrix-M technology. However, that may wind up manifesting itself in the marketplace over time. So if we have 2 or 3 companies, let's say they are utilizing Matrix-M in a pneumococcal space. We would hope that one of them will be successfully and all the way to commercialization. So -- and then if we have another and another, of course, that's additive as well. So we're nonexclusive for a reason because it's certainly very beneficial for us.

And Nabeel, just to build on that for one moment, putting it into a hypothetical example. If we had, say, 3 companies that wound up doing a partnership with us through license, Elaine, right? And they were each pursuing one of those fields, the same field, field A. So if they're pursuing that field if we set those deals up in a similar way to what we've done with Pfizer, then we should be eligible for milestones along the way on their clinical development.

So if you could imagine in that hypothetical example, 3 companies targeting a field with our Matrix-M. And Novavax would have the ability then to earn upfronts from all 3, the ability to earn milestone payments for their clinical efforts on those disease targets. Years before a vaccine might get approved and launched into the marketplace. Even if in that hypothetical example, 2 of those companies didn't succeed in their clinical efforts but made it most of the way through, we would have earned revenues along the way for their efforts. And one of those companies makes it through or more, we are then eligible for potentially larger milestones upon approval and sales and then royalties for potentially decades to come. So that's really exciting. And what it does is show you that if you've got 30-plus fields under assessment now with multiple partners, Four of the top 10 global pharmaceutical companies already engaged with Novavax through collaboration, MTA in partnership plus other smaller and midsized companies that we haven't disclosed yet that are working with us.

You can imagine then that our POS, our probability of success is pretty good and relatively high for the potential for more partnerships and multiple revenue streams over time.

Yes. Thank you for walking through that setup. So regarding the recent MTA with a large oncology or a large top 10 global pharma company, we're looking now into indications beyond ID. And could you kind of walk us through the how Matrix-M might have a mechanistic favorable. What you can offer in the oncology setting and more on that story.

Go ahead, Bob.

Sure. Thanks. Matrix-M has a broad array of immunologic properties that make it such an exciting adjuvant in general, certainly in the infectious disease space and a lot of that we think could have applicability to the oncology space as well. It's been well characterized to be a Th1 profiled adjuvant, which means that it induces not only antibodies or neutralizing antibodies, but cell-mediated immunity. And it's that cell-mediated immunity, which is thought to be so important for oncology, particularly CD8 killer cells that are the antitumor killing activity.

Matrix-M has the ability to induce cross presentation of antigens in the cell. And that leads to the downstream activity of the CD8 cells that we were just talking about. So those are some of the reasons why we think Matrix has great potential in the oncology space. And as we're learning from partners who are also conducting some of these studies, there's a qualitative aspect to the immune effect that Matrix produces as well.

So it's not just numbers of cells, but it's about the quality of the cells that are activated. So anyway, we're very optimistic, and we really look forward to coming back in future sessions and talking more specifically about the data we've generated.

And Nabeel and Bob, thank you for that clear answer. Nabeel, part of our strategy, one of the benefits of our strategy as we get to leverage not only the resources and capital of partners and companies we're collaborating with, but also their expertise. And we're working with some companies that have deep expertise in oncology and infectious disease.

Novavax brings a wealth of experience on the infectious disease side with 2 vaccines that are actually approved and on market with our technology now others that are in Phase III, others that are in early stage development right now. But on the oncology side, Novavax is not an oncology company, nor do we intend to become an oncology company, but we're leveraging the depth of experience, the resources and the expertise of global leaders in that space with our technology, and we're getting the data that they're generating through these MTA collaborations, which further informs our own internal knowledge on this and we certainly have deep expertise and Bob and his team on immunity and immunological responses that are required to take on these diseases and we're learning more and more each day. So really exciting part of our strategy is to get to leverage that deep expertise and the capital of these other companies to accelerate these types of potential advances.

And on those advances, so a pleasure to have you with this, Bob. If we could talk a little bit more about like the R&D investments with the Matrix adjuvant technology. How do you see these advancements impacting new vaccine development and even further potential partnering.

Maybe, Elaine, do you want to take that along with Bob?

Yes. What's really exciting for us is, as John mentioned, we're leveraging external expertise in oncology, generating a host of data like essentially a data bank, right? So we're looking forward to seeing that read out in the next 6 to 12 months. Internally, we're also exploring similar but different types of opportunities with Matrix-M. For example, Matrix with a TLR, how is that going to turn on the immune system to identify tumors. We're looking at different opportunities as it relates to Matrix in terms of its formulation as well.

So what we learn internally, and we'll map that up against what we learn externally, again, to generate data, which will be powerful then in having future discussions with partners who are also very big players in the oncology space.

Yes. Maybe I'll just add that we're also on the antigen side. We're also using our internal R&D engine to explore additional antigens that can be utilized with Matrix. And some of those will be antigens that will use as test cases to help us learn and advance and move the science forward. And others, for example, in the case of our C. diff vaccine will be ones that we may choose to advance internally and take into the clinic.

So it's kind of like a two-pronged part of our R&D strategy there.

And one comment just to add, Elaine had mentioned, 6 to 12 months for some anticipated data, but we already have data generated by some smaller innovative partners in oncology that we had partnered with quite a while ago through MTAs as part of our new strategy launch. And so we have some insights already as to some of the antigen targets and things in oncology. And then we just announced, to your point Elaine, this new MTA collaboration with a top 10 global pharma company. We're excited about the experiments they're starting to undergo and anticipate in the coming quarters, learning from that together as well. So...

Thank you, team. And then taking a step to the Sanofi partnership. So you signed that licensing agreement, Sanofi back in 2024. Could you remind us of the full scope of that agreement and sort of the key next steps in catalysts?

Go ahead, Elaine.

Yes. So that licensing agreement was for the right to execute the commercialization of Nuvaxovid currently in the market. So that's the main focus that Sanofi has at the moment. And the other part of that collaborative license agreement was then also to prosecute a combination influenza and our Nuvaxovid program. So Sanofi is studying that both with Fluzone High-Dose as well as their flu block and should be moving forward with that in the future. And then the third part was for the prosecution of Matrix-M in their earlier preclinical work, which they would potentially then move into clinic.

So very excited about that deal. We're mostly through -- most of the receipt of the milestones at this point in time. So we've executed that very well in partnership with Sanofi to date, excited about that. They're obviously getting ready for the season this year, the upcoming season. And so maybe, Jim, do you want to speak a little bit about that as well?

Absolutely. And as we look forward to the catalyst that lie ahead with us, it includes certainly the fall performance with Nuvaxovid. It includes Sanofi's articulation of the path forward, both U.S., Europe and other markets for their kick programs and then also further development. When we think about the milestones, for example, that lie ahead of us, outstanding, we have $425 million of milestones, $75 million due upon tech transfer.

This is manufacturing tech transfer. There's $350 million in milestones eligible under the CIC programs including $125 million linked to the initiation of a Phase III and then $225 million were eligible for upon a U.S. combination product launch. So a lot to happen there, both in terms of milestones and then really material opportunity in the marketplace, but also for royalties to us. A reminder on that marketplace.

COVID market, it's running about $5 billion to $6 billion and the flu market about, again, $5 billion to $6 billion. So $12 billion total across the two. When you look at Sanofi and the flu in particular, they have almost half of that market in aggregate. So their net sales of the 6, think about $2.5 billion to $3 billion. That sales amount for Sanofi highly concentrated in the enhanced flu market. So I think 50 and older and the higher-priced premium marketplace. There, Sanofi has almost 2/3 market share.

As these markets evolve, COVID plus flu. Sanofi and others see a combination market, COVID plus flu is where this market is going for many, many reasons. We have the ability to be a part of the evolution of Sanofi's market-leading flu when combined with our Nuvaxovid to really take an ever bigger share of that combined $12 billion opportunity.

So super excited about that. This fall, which was your question, is the first step towards that, what should you expect? The same way that Sanofi methodically build that market-leading flu market over time, watch for an analogous approach. Now we're not guiding for them, but we would say their history would say, they invest and they have a methodical approach over time. An example of recent investments in the COMPARE study, really critical study that just read out that showed the favorable safety profile of Nuvaxovid versus the next-gen from Moderna.

So really happy with the investment profile and where they're going with these assets.

Thank you for that overview, Jim. Yes. So we're really excited about seeing that the CIC program. And if you could just update us on the current status of that program? And when might one or both of those Sanofi CIC programs advance to Phase III.

Jim, do you want to start and then have Elaine perhaps build on that?

Well, sure. So one of the reasons why we're always a little careful here is we can't speak for Sanofi, but what I can do, and this is something that we are more than willing to is emphasize what are the public statements Sanofi has made.

Well, it began back in December Sanofi's R&D Day, where they walk through the Phase I/II data of our Nuvaxovid combined with both of their enhanced flu products. This is a co-formulated Phase I/II that was the gateway to a pivotal program. What did they see? Excellent results. In fact, they stated high probability to show non-inferiority in an immuno study. And when you think about that, well, that's type of study, you'd run in Europe, for example, right? I think efficacy U.S. that would be the study in Europe Immuno.

However, the next step was to talk to the agencies. So Sanofi went on to say in the first quarter and leading up to now, they're in active dialogue with the regulatory agencies, U.S. Europe and outside. And based upon those engagements, they anticipate launching into a pivotal program for one or both. And so we're awaiting that those next steps couldn't be happier. The most recent data point World Vaccine Congress. They again presented that data.

They again presented their conviction that this markets go into combination. And importantly, on top of that, when they look Sanofi at their growth drivers and they talk about the big 3 future growth drivers, not just for vaccines, but for their company, the CIC programs was 1 of their big 3. And so that's how important they are saying, Sanofi is saying, the combination programs are to the future of Sanofi.

Well said, Jim. And obviously, we can't speak for them. That's their own public commentary that we're sharing with you. But they are outstanding partners, outstanding levels of communication between our executives at Novavax and Sanofi. And then you just look at the COMPARE data we talked about or we will talk about today. Again, they leaned into that and that's part of their methodical approach to investing in the space and really helping to drive share for and future share for Nuvaxovid.

Yes. And then one more question there. Just as we think about that '26, '27 season, how do you think -- how do you see Sanofi planning to sort of position Nuvaxovid in the marketplace for that upcoming season and beyond?

I mean again, we're not going to speak directly to their marketing campaign. They hold the license for that and they have their hands on the wheel so to speak, on that, Nabeel. But you can see them leaning in with this COMPARE data, really noting the tolerability of Nuvaxovid versus the other products, and they're bringing their expertise to bear to the market from a contracting perspective a marketing perspective, expect them to be reaching out through many vehicles to the consumer audience and the physician audience and really leaning into that tolerability data in particular. But we'll see how they unveil that campaign. We've seen the campaign. They've walked us through their plans. We're very excited about it, and I think you will be, too, when you see at launch.

And looking more internally in the in R&D investment strategy. We talked a little bit about this. We just highlighted a little bit of the C. diff. So I'm curious how we think about advancing the internal vaccine candidates and generating data and how you consider advancing a candidate yourself or going to -- talking about late stage or to the market. And then we can start with C. diff after that.

Go ahead, Elaine.

Yes. Just from a strategic perspective, for us, we look at the fact that there's a significant unmet medical need within this infectious disease, of course. Companies have stepped up to the plate to study this and have failed. We learned from that. We iterated on this for many, many, many months, both from an assessment perspective as well as a scientific perspective. So we're delighted to be advancing our C. diff candidate and our goal is to do that within the next several months. Bob will speak a little bit more specifically about it. But again, the crosshairs for us was the decision around significant unmet need large market, both in the U.S. and globally.

So we're very excited about that opportunity. It's over $1 billion, potentially between $1.5 billion and $3 billion. So that was also a key focus and a key inflection point for us as well. But maybe, Bob, do you want to speak a little bit more about the opportunity.

Yes. Maybe I'll talk a little bit about why we think our particular candidate is differentiated from what else is out there right now. Like Elaine said, it's a huge medical problem, no currently available, no currently licensed vaccine. What we've seen is others in the past have developed toxin-based vaccines that have failed in the clinic thus far. And what we're doing is we're actually -- we've developed a vaccine construct that goes beyond toxin only, right?

So we have toxin antigens, but we also have nontoxin antigens. We've also created our antigen structure such that we're targeting more than 90% of the C. diff strains that are currently circulating globally. And we're coupling it with Matrix-M. So we get all the benefits that have been associated with Matrix-M, some of which we've talked about already. In addition, the potential to induce mucosal immunity. And mucosal immunity is important in a -- or for treating an organism like C. diff because it's immunocosal infection in the gut. So those are the key differentiating factors. We're looking forward, we're in IND-enabling tox studies now and hope to be able to bring this candidate into the clinic as early as 2027.

Thank you for that overview, Bob, I see the unmet need there. Go ahead.

In line with our strategy, we're being very selective on what to bring forward and put into the clinic and into human trials. And C. diff there's no vaccine available today currently. We know that Pfizer is working on a Phase III C. diff candidate. We wish them success and would like to see them succeed and help to build that market and provide patients with an alternative approach to protecting themselves from this significant disease.

In fact, my sister in law's best friend died to a C. diff infection after a routine abdominal surgery just last year before Thanksgiving, leaving her family without her to enjoy that holiday. So we've seen it impact people very close to our own family. It's thousands of people a year are dying in the United States and Europe of this from routine surgeries into nursing homes and other things. So we wish Pfizer success. And then we're very excited that Novavax could be 1 of only 2 or 1 of 1, should we succeed with that and bringing a vaccine forward that we do feel per Bob's comments are, it's very differentiated, and we're very excited about what we've seen early on.

So we think there's significant value inflection to generating human data on that to show that it works in people, not just in animal models and that, that translational medicine can work here and show us some good results.

So we'll keep you posted and very excited to be in the clinic as early as '27. No pressure on Bob.

Yes. No, that would be very meaningful for patients. Now moving to the non-GAAP expense, you've improved the 2028 non-GAAP expense target to $150 million to $200 million. That's about a 50% reduction compared to 2025. Could you go over some of the primary drivers of that change to your cost structure and how you are basically investing to create value at this scale?

Go ahead, Jim.

Certainly. For folks who are familiar with our journey, while a 50% reduction to our non-GAAP R&D and SG&A may sound pretty impressive, right, from 2025 to 2028. When you go back as recently as 2022. We're talking about a reduction of almost 90%. And what it generally captures is the reconfiguration of this company and the focus of this company around this technology and unlocking significant value through our growth strategy.

A growth strategy that's predicated on generating data to drive partnering. It's also generating new data to further enhance our matrix offerings and differentiated candidates. While at the same time, we're also supporting being a matrix manufacturer, right? That's a part of what we do as well. And so our investments as we move forward, our core investments that are ongoing are focused on those exact points, and that's what Bob described earlier. It's -- we've got an amazing Matrix-M vaccine we can probably do some more and unlock some value incremental to that. And so we're really excited about making those investments. And Bob, I loved your points around oncology and the differentiation of what we think Matrix can do there. You heard Alan and Bob talk about C. diff, a case study in how you can apply our technology in a differentiated way, a way that others cannot do because through our partnerships, you'll see, you're hearing, our partners are advancing programs in many areas, and we'd love to let them because it amplifies, right, investments, but not on our spend.

So we're really looking at differentiated investments, and that's our focus. Between 2026 and 2028 as our cost structure is decreasing, here's what you're seeing. We do have some legacy obligations to either APA partners and Sanofi, for example, on co-sharing. Some of our post-marketing commitments as an example, related to Nuvaxovid as those roll off and our support for commercial manufacturing rolls off in the next 12 to 18 months, you're going to see those associated costs come out of our cost structure.

However, underneath that, is a core spend profile, currently about $200 million a year, but reaching the $150 million to $200 million by 2028. So that should give me a good sense of the evolution and where we're focusing our investment to create value.

So really, Jim, another way to look at it from a -- through a non-GAAP lens is from a roughly $1.7 billion annual SG&A and R&D spend. We've driven this down to roughly $200 million, and we're now at that last $50 million of Toggle. Anything above and beyond that this year and a tail going into next year of those trailing obligations to close out APAs and other partner support that's nonreimbursed and that enables us to keep the core capabilities needed to execute on this strategy. We're keeping our R&D core capabilities to generate data, support these partners and make some of these partnerships possible, frankly.

So key to execution is keeping those core capabilities in a lean infrastructure.

Excellent. And I have one more question. As we look at the upcoming. So you guided to non-GAAP profitability as early as 2028. Could you just give us an overview of what potential milestones, any things that we can expect and how you plan on reaching that goal?

So Nabeel, thank you for making that point in this question because this is a spot of high interest with investors and others, namely that, one, we have enough cash on hand to go and fund our company all the way into 2028 without any incremental funding coming into the company, absent the reimbursements. So really important, we've set up a cash runway and coinciding with that 2028, you're hearing our non-GAAP cost structure. We're also seeking to reach that by 2028, and three, we also have the ability to reach non-GAAP profitability, namely through the diversified revenue stream across partners through royalties, milestones, upfronts we see the potential as early as 2028 to be non-GAAP profitable.

What does that look like tangibly? Well, at midpoint, $175 million R&D and SG&A. And so picture you've got $25 million, $30 million in stock-based comp, for example, then your breakeven is about $150. That's what it looks like. But we're not focused on breakeven. We're focused on driving cash flow, orders of magnitude higher than our cost structure over time. And we believe that this partnering model and our existing partners we have today and the ability to supplement it, has the ability to create, as I said, orders of magnitude, more cash than our cost structure, and that is a critical value creation moment. We, of course, will always evaluate our ability to continue to invest in our technology, and we'll evaluate what to do with that cash over time.

Will we just invest in the company or might we contemplate returning efficiently cash to shareholders. All of that is on the table and being evaluated all towards value creation.

Well said, Jim, thank you, Nabeel. I think we're just about out of time. If I could have just a closing comment here to say, another benefit of our strategy is the ability to amplify our tech. And beyond the potential revenues, orders of magnitude of revenue coming in above and beyond our cost structure is our intention. It's really the impact on global public health and human health. And that actually matters a lot to our team. And Bob, we've talked about that time and time again in the hallways of Novavax, right? Our scientists, our employees. They actually really believe in what we're doing. They believe in our technology and they choose to be with us at Novavax.

Like Jim said, we basically reduced our cost in our headcount, 80% to 90% plus and on our way to even more now. And our retention level of talent is well within or even above industry benchmarks when you look at it. There's a passion here. And we want to leave a legacy. So not only to drive capital and reward our investors have been patient with us as we migrate the company into a new strategy, completely rebuild it from the ground up and change our mission and our vision. And we're in the middle of that execution right now. But the chance to leave a legacy to impact billions of lives with potentially dozens of vaccines and immunotherapeutics, taking on cancer, bacterial and viral infectious disease something that we're all really proud of being part of and excited about the future.

Thanks for your time today.

Thank you.

[Audio Gap] Session with Novavax. My name is Alec Stranahan. I cover SMid-biotech at Bank of America, and I'm an analyst covering Novavax and it's my pleasure to introduce and be joined here by John Jacobs, President and CEO of Novavax, as well as Jim Kelly, Chief Financial Officer. Guys, thanks for being here again.

Thanks for having us here. It's always a pleasure.

Yes, great. Looking forward to the conversation. Maybe just at a high level, you've completely executed the pivot from a vertically integrated COVID vaccine company to a technology platform business essentially, built around partnering Matrix-M. Obviously, you've got the Sanofi milestones and royalties from COVID. But I guess what are the most important proof points that demonstrate the new strategy is working? And are there any aspects to your strategy, you believe the market may be underappreciating?

Thank you for the question. We couldn't be more excited about where we're taking the company right now. We launched this new strategy, Alec, as you know, in January of last year. The first proof point really is that there's a remarkable level of interest that we're seeing in our technology from third parties who understand the vaccine and even the oncology immunotherapeutic space really, really well. So some of those proof points include the Pfizer deal, which we announced in January of this year. So that was about a year into launching the strategy.

We have a lot of different irons in the fire, a lot of attempts to get new partnering going and having a lot of success behind the scenes on progress there. Pfizer being the first fully announced license deal, and you saw all the metrics around that. And then followed by just in the first trimester of this year, 4 additional MTAs, these material transfer agreements, where we provide Matrix for clinical research to potential partners who prove out in their own laboratories much of which we've shared with them already behind the scenes from our own experiments and generating data with our R&D team, which is the precursor step to maybe having a potential deal -- licensing deal coming from that. And in fact, one of those new MTAs was with a top 10 pharmaceutical company globally, but also a globally ranked oncology company. And they're going to be studying antibiotic-resistant bacterial infections, viral infections as well as a myriad of oncology targets using Matrix-M, and we would look forward to potentially turning that into a significant licensing deal.

We also have some smaller biotechs that are innovative that have signed MTAs with us that could turn into licensing deals on the oncology side. And overall, we, finally, this earnings call, shared the cumulative results of the last 17 months or so under this strategy through partners and with Novavax. We're currently under assessment or the potential to assess 30-plus unique fields across infectious disease and oncology with our matrix adjuvant through the hands of partners. And that represents over 50% of the projected global opportunity in infectious disease and oncology vaccines as projected by McKinsey and Evaluate Pharma by the early 2030s.

That's quite remarkable. And even more remarkable is amongst those 30-plus fields that are unique, many of them have more than one potential partner assessing these high-value competitive markets. So really excited about the probability of success that might afford the company as we move forward with the strategy and what it means regarding level of interest.

Your second question was what might be underestimated or not fully understood yet about the strategy. On a couple of things, I think, first and foremost, the strategy enables Novavax, when successful, to pull forward revenue and cash, whereas it might take 5, 6, 7, 8 years or more to do that if we were doing a traditional approach of everything on our own from the lab all the way through successful clinical development to launch and having to maintain the infrastructure and the cost to do so before you earn $1. In the construct of the type of deals we're forming, we're eligible for upfront payments, milestones for clinical development efforts of partners.

If a partner were to put 3 or 4 or 5 assets into clinical development, we have the opportunity to earn, along the way, milestone payments for their efforts, even if some of those efforts don't succeed. For those that do, even larger potential milestones upon approval in sales and potentially decades of royalties to come without the cost and the infrastructure needed to carry that. That may be underappreciated. And also the fact that this allows us to amplify the potential impact of our tech and our employees actually are really passionate about this, and they chose Novavax for a reason. They could choose to go somewhere else if they want to. They're good and smart people.

We believe our tech has the chance to leave quite a legacy for human public health, and we can really amplify that impact not only from a value perspective, but from a human perspective and leveraging the capital of these other companies. There's no way Novavax on its own could have brought forward 30-plus assessments on these fields and across oncology and ID by ourselves.

And you've described a compounding dynamic where partners initially explore Matrix-M under the MTAs consistently come back, requesting expanded access and additional fields or a full license. I guess what specifically are partners seeing in their preclinical experiments that is the biggest driver for conversion?

Jim, do you want to comment?

Well, certainly. And as I described this, I think, one of the first things I would emphasize is, the proof is in the actual new agreements or MTAs we described. So for example, most recently, we mentioned we had some MTA existing collaborator who came back to us and said, "Hey, based on our internal experiment, we want 9 more. We want the right to experiment in 9 more." So we're watching that happen.

What we do in our cycle with these potential collaborators is we quite often will take data in our own labs with their antigens alongside our Matrix-M and say this is what we're seeing. They in turn say, "That's great, but you know what, I want to do it myself." And that's fine. That makes perfect sense. And they run those experiments themselves. And as a part of the validation process and as they bring more scientists internally and get them involved, their interest expands. So that's what we're seeing.

So by the time we get to a deal, Jim, right, it's based upon some fundamental data and initial early research that's been done to support the potential of success there. The potential to unlock potentially billions in value depending on the market being targeted, where it might not have been possible before with that potential partner.

That makes sense. And I guess as you're expanding the Matrix-M and number of licensees, is there a template that's formed? Or is it flexible based on the partner's needs? How are you sort of structuring it?

Certainly flexible based on the partner. But I think what you see are those core components that are part of the deal, Alec. So those components could include upfront payments, milestones for clinical development. Again, we'd like to pull and intend to pull, cash and value forward on the time line where it might have taken many years for Novavax and a high level of spend to get there, if we did it all on our own. Monetize this technology now and then in the future have a larger pool of potential resource to pull from assuming success. So upfronts, milestones for clinical development, milestones for sales and approvals and then royalties usually for more than a decade, a couple of decades plus. So very exciting.

That royalty term that you've seen supply now twice with Matrix-M initially within the Sanofi agreement and most recently with Pfizer, where we are receiving, and I use the Pfizer example, high mid-single-digit royalties for 20 years, right? Twenty years from the first sale on a country-by-country basis. That's profound, right? And the amount of value, we tried to map the -- and outline that type of value that can be created. The shorthand for it is for each $1 billion in sales on average over a 20-year period, we receive $1 billion in royalties. So if you sell $2 billion, you get cumulative $2 billion, $3 billion and $3 billion, that's exceptional. And being able to have market leaders like Sanofi and Pfizer do the experiments and determine that this deal structure is worth their while says a ton about the value of the technology.

Yes. And I think an important point to mention is that these are nonexclusive access to Matrix-M, meaning you can license the same adjuvant to multiple partners targeting even the same disease. I guess what sort of -- what's the thought process here to follow this approach to partnering Matrix-M?

Probability of success, right? So if we have, let's say, in a hypothetical, you have a large competitive marketplace, and we have 3 partners in this hypothetical example, competing in that particular space. All 3 of whom start clinical programs with our Matrix-M on their targets, on their assets. We could earn upfronts from all 3, regardless of who succeeds in the end, even if none succeeds in the end. Potential milestone payments for the clinical development pathways for all 3 along the way. If even one of them succeeds, larger sales milestones and royalties for potentially decades to come.

Let's say, all 3 succeed in one example. In that example, if there were 3, maybe there's a fourth that didn't do a deal with us for some reason, maybe they'll come to the table after that when they see what Matrix can do. But let's say there's 4 or 5 assets out there in a particular space and 3 of them are with Matrix. Well, then that's 4, good odds. We happen to be sitting in Las Vegas, though I'm not a gambler. But I don't think you'll find 75% odds anywhere in that kind of example.

So we like the increased probability of success, Alec, the ability to embolden everyone in a certain space for the best possible outcome for patients and for value.

Yes. And you mentioned that these are potentially decades long royalty streams. I guess when you think about the long-term IP moat that you've built around Matrix-M, how do you maintain this and even build upon it over the coming years?

Certainly. With respect to the first comment about the 20-year royalties, that's irrespective of IP. Just to be clear, we get that no matter what. Then when you say, "All right, what's the competitive moat?" As you put it, 3 key factors: IP, trade secrets and then this safety database, an ever-growing safety database, over 30 million individual patient exposures, really tough to replicate.

So in terms of the IP, we have existing or pending patents out through the 2040s and then on the trade secrets front, that's one of the critical things in biotechnology. And we're making sure that we guard that appropriately because we believe that is going to be one of the core important mechanisms, right, to have that competitive moat. And it is because we have these in place, that's the reason why you're seeing these deals being done the way they are with the 20-year.

Yes. Yes. And John, you mentioned the recent Matrix-M MTA with a top 10 global pharma company, looking forward to finding out who that is. But it's also a global leader in oncology, right?

Yes.

What does Matrix-M offer, I guess, mechanistically in an oncology context?

Without getting into details there, and eventually, that will become apparent to everyone who that is and what they may be working on the chance to enhance immunity. And we believe, potentially turn, cold tumors warm or warm tumors hot. And so this is quite exciting, and how they do that with their particular assets is going to be a guarded secret for a while. And I'll let Jim add a little more commentary here. But I think one thing that's important to understand is in this new model, there's less that we're able to share about that type of thing because we're under NDA with these potential partners and partners.

So we're going to guard their confidential secrets very carefully. Our credibility is part of our currency right now in the new Novavax. And so there's a lot we'll know that we can't tell you. That's the case in any public company when you're having this dialogue, but certainly more so even in this case until it can be unveiled. Jim, any other thoughts on Matrix and oncology?

Well, I think that while we'll go into a little bit mechanistically here, the reality is, it is when you see the large oncology players seeking to use Matrix-M, you are being told it has relevance and utility potential. And so really looking forward to advancing these discussions. All right. So what's happening in oncology? John, that's exactly right. It's about making tumors recognizable, right? And how that antigen, right, cross-presentation works, type of immune response and can you create that antitumor immunity. That's it. That's the end game and Matrix-M, we believe, has the ability to enhance that effort. And so you're beginning to see partners who are asking themselves that same question, how might we leverage Matrix-M on that -- in that environment.

And that's an area of significant projected growth in immunotherapeutics and vaccines in the future. The vaccines market is already $57 billion or so and growing to over $60 million by these projections from McKinsey and others, but there's a large -- larger growth engine relatively in that immunotherapeutic and vaccine space in oncology as well. So the ability to potentially play across both of those in a $100 billion-plus market and to have over 50% of that combined market now under the umbrella of potential assessment through partners, and this new strategy is pretty exciting.

Yes. And obviously, we'll have some pretty important card flips in that space within...

Yes, over time...

And others coming up. So maybe shifting gears to the Sanofi partnership, COVID, the CIC, you signed the Sanofi agreement back in 2024. It's crazy to think that it's already been 2 years. I remember when we were on the stage when you had just announced that a couple of years ago.

That's right. I guess it's right around this time.

Yes. Yes, exactly. I guess, could you maybe remind us of the full scope of that agreement and the key next steps and catalysts?

Yes. And I think, Jim, you can cover that really well. But one thing right before we get there perhaps is to make a note of, we -- at the time where Novavax was right before that deal out, right? We had our own global infrastructure, a fully integrated company with commercial teams spending hundreds of millions of dollars a year on infrastructure and manufacturing and strain change selection and sales force and marketing and retail negotiations and all of those things. And we're really, really struggling as a small biotech, taking on these large companies like Pfizer and the like in this arena to sell our COVID vaccine. And by doing the Sanofi deal and putting our precious Nuvaxovid in their hands, we were able to monetize that asset for Novavax to the tune of over $800 million to date on that deal for our COVID vaccine.

In addition, we were able to significantly reduce our expense platform to the tune of hundreds of millions of dollars on top of that each year for the last 2 years. So if you think about the scope of that, we monetized our COVID vaccine to the tune of well over $1 billion in costs not expended plus cash, nondilutive cash into the company instead of trying to do that ourselves. So imagine then what type of market share would we have had to achieve as a small innovator against these other competitors who were well entrenched and ahead of us in the market in order to cover all of those expenses and generate that kind of revenue.

I think a pretty important move on our part to do that. And now we see Sanofi leaning in with the COMPARE data starting this season really being a full -- first full cycle, where under a licensure BLA in the U.S. market, they can do full retail negotiations and begin, we believe, to methodically penetrate that market. But Jim, regarding the overall scope of the Sanofi deal, anything you'd want to add on the potential that still remains, which is quite remarkable ahead?

Certainly. So 3 pieces to that agreement, the Nuvaxovid, the ability to use Nuvaxovid in combination products like CIC. And then finally, real broad utility and use of Matrix in new vaccine development. So on Nuvaxovid, beyond the royalties, right? Royalties, high teens, low 20s, that's fantastic. We have a remaining milestone, $75 million that we're eligible for upon the completion of manufacturing tech transfer. So that's a nice outstanding item. And in our catalyst map, you've got both of those, overall performance and, of course, some milestone achievement.

Then as you look at the combination products, we've got the ability to earn a high single-digit, low subteen royalties on a combination product that we think could be just an incredible player in a large market. Just to clarify, flu market, about $6 billion globally, COVID $5 billion to $6 billion. And this combination market, what's it going to be? Is it going to take a 1/3, a 1/2 of those independent markets and put them into one. The market research would show that there is a high desire for a combination product. Sanofi, when it comes to the premium-priced enhanced flu vaccines, they got 2/3 market share. That is the exact type of market that you be looking for and you combine that franchise with Nuvaxovid.

So we are thrilled to be a partner with Sanofi. Really look forward with where they're going there in terms of milestone catalysts, okay, $125 million eligible upon the initiation of a Phase III in either the U.S. or Europe, and then a $225 million upon U.S. launch, right, in sale, right? So where are we? So far, they announced their Phase I/II data, great R&D day back in December, where they showed exceptional results, positive and the conviction, high probability to show noninferiority against the independents, taken independently, meaning, like, for example, you're familiar in Europe, just approve the combination vaccine on immunogenicity. Okay. That would lead you down the path of saying, "Hey, Sanofi is feeling confident that they've got data that would be supportive of that type of path."

So we're awaiting hearing next steps. We think that even the update from Sanofi on their intended next steps for U.S. and Europe are going to be an important catalyst and then that's the monetary implications on the back end, some milestones. And then this Matrix-M component, $200 million in development and sales-based milestone per new vaccine and single-digit royalties for 20 years. So this could become the backbone for example, of some of their development efforts.

Yes. And that's a less discussed element, Jim, of that Sanofi arrangement and partnership that we have, right, Alec because the focus has been rightfully on the near-term opportunities there. Driving COVID into the marketplace, potentially initiating those clinical trials for CIC in the U.S. and Europe, where we would be eligible for the $125 million milestone on that initiation, et cetera. That's very exciting.

What we haven't talked about as much and it's worth a refresh, is that third leg of the stool, if you will, in the Sanofi partnership. We talk a lot about these new MTAs in the 30 plus. Sanofi has unfettered access to Matrix. They don't tend to discuss their preclinical pipeline quite readily in the public domain. But you can imagine they're interested in Matrix and know what it can do. And it's not necessarily included in what we've already shared on total fields covered on what they're doing with it.

But to Jim's point, any new assets they would bring forward to full development and start to sell, we're eligible for $200 million or so in sales milestones and then royalties for decades to come. So that's pretty exciting on the longer-term potential of that deal, let alone what's right before us here with COVID and CIC.

So it's almost like an MTA kind of prebaked...

Correct.

Into that...

Baked into it and really the first of them, if you will, yes.

In a recent extent example, the pandemic flu. Sanofi recently picked up a BARDA contract, bringing their H5N1, they brought in Matrix-M, right?

Part of that.

So another example of that, when you're looking to innovate and you want to put -- get a great vaccine, give serious consideration to layering on.

And that was an amendment we made to the agreement. We had not originally included the ability for them to put matrix into their flu vaccine for pandemic purposes. They came back and asked us after learning even more about the adjuvant. We granted that and made that amendment that we believe helped facilitate the win of that grant.

So yes. No, that's great. And on the combination vaccine, I think the mCOMBRIAX approval in the EU probably is good incentive for Sanofi to try to protect their flu mono franchise in the EU. It also gives them a good precedent for what it will take to be approved. And I think we'll see what happens in the U.S., right? I think, Moderna is still figuring that out. We'll see if their flu mono gets approved and then how the regulator approaches their combo as well. And you have your own combo. You also have rights to the Sanofi one. So you guys have optionality there.

Yes, we do.

Yes. Maybe on the commercial setup with Sanofi leading the charge this year, the Phase IV COMPARE study ran actually Nuvaxovid head-to-head against Moderna mNEXSPIKE with stat-sig on all the prespecified endpoints, fewer side effects was the key takeaway. Does Sanofi use that in their advertisements this year? Now they can, right, since it's been published. How do you think that feeds into their commercialization strategy?

If and how they apply that data, whether it's this year or later, what is being tipped here in terms of commercial positioning is the great tolerability profile of Nuvaxovid. I mean it's crystal clear, right? When they highlighted the results stat-sig, right, no question, much better tolerability profile. But importantly, twice as many participants said, I would definitely take this Nuvaxovid again next year as compared to the Moderna.

So that's a critical point. And then this echoes what we saw when we were in our own study of Nuvaxovid against Pfizer and BioNTech. Again, great profile of Nuvaxovid much better safety reactogenicity. So that's core to the positioning. You've got a proven efficacious vaccine. But in the end, consumer choice and tolerability got to matter.

Well, I was actually in this room yesterday, and I was talking to someone who very proudly told me that he was one of the original adopters of Nuvaxovid. He was part of the clinical study and he like patted his arm and puffed his chest. He was excited to have been part of that. It's great to hear. So you definitely have some stickiness. It seems like with the product.

I want to ask one question on the rest of the pipeline. I think on the early-stage pipeline, including C. diff. And then we can maybe talk about the COGS and expenses and sort of how that's tracking going forward to close out. But I guess what is your R&D investment strategy at this point? How do you balance internal vaccine development versus generating data for partnerships and what would you consider advancing a candidate yourself to late stage or to market?

It's a great question. And first of all, we've made it clear that our strategy has 2 key pillars, and 1 of those is out-licensing our tech. The other is that R&D engine, that innovation is critical. So we're not just a company that is out-licensing something we've already got. If so, we could even reduce further. We've already greatly reduced our costs and have a new target. Jim can talk about that when we get into the financials. But we're maintaining core capabilities in R&D, Alec. So the purpose is to rotate into preclinical development a series of targets.

So we started at the beginning of last year with the launch of the strategy with VZV or shingles, RSV, right and C. difficile, very important. We had -- we were pleased -- very pleased with the results in all 3 preclinical pre-IND what we selected is C. diff. to move forward for a potential human trial. We're in tox studies now. We intend to meet with regulators on the IND, and we could be as early as 2027 in the clinic with that asset.

So why C. diff.? And why not RSV and shingles, if that data was good. Our goal is to bring the maximum value inflection. So RSV is already a crowded market. A lot of companies are working on an RSV if they don't have one out there already. The market is currently capped at a certain value based on biostability and other factors that have played into that on the regulatory front. And we believe we've already reached that point of reasonable value inflection in our own strategy. And that if Novavax did choose, to spend our precious dollars in human trials, we wouldn't get the return you'd expect from bringing our own RSV forward because we wouldn't intend to build the commercial infrastructure around that and launch it. It's for partnering purposes. It already sits where it needs to be.

Same thing with Shingles. But with C. diff., what you see is Pfizer out there, and we really hope they succeed. We have confidence in Pfizer. They're a current partner. We're not disclosing what they're working on, but we do hope they succeed and build that market, and we could be the second product in that particular market. And if we were, and we thought we have something that's clearly differentiated, and we think we have better. Something that could have the potential to be differentiated and better, should it continue to succeed and meet what we've seen already in the lab. That's a very interesting play.

That could have significant value inflection. And you see companies like CureVac, companies like Vaxcyte, for instance, right, who have the next mousetrap coming along in an established larger marketplace with big players. So it's that type of an opportunity that we would seek to bring into human trial because that could be a significant value pivot and is well worth the investment to go into Phase I with, puts us in a better position to partner it. If that data turns out even better than we might expect to see it. Perhaps we keep that a bit longer and continue to invest in that. Any other thoughts, Jim, on R&D strategy.

Yes, in the end, as you described it, it's just incredible market opportunities. Very selective, but with a differentiated asset. And every time we generate data in a differentiated way, that individual asset, it has a ripple effect through all of our partnering. And so we're seeing that every time we're running experiments. The agreements and value creation you've seen to date could not happen without the R&D effort that continues to create this data.

And our understanding about the value of our tech continues to grow with these experiments. So it's a feedback loop for what we learn in the preclinical arena feeds the business development discussions creating new ideas and opportunities for partnering, new data sets for those partners to take a look at and address their own experiments with. We also get the data that these partners or potential partners through the MTA collaborations are generating. And we're not allowed to share that, right? We're under NDA with those partners. But we can see the data that Pfizer or Sanofi may be generating through some of these arrangements where appropriate. And that helps to fuel our own insights on the tech as well. So maintaining those capabilities matters in R&D for us.

Right, right. I guess when we think about the 2028 vision, you've talked about the non-GAAP expense target of $150 million, $200 million. That's more than a 50% reduction versus last year. You've guided to non-GAAP profitability potentially as early as 2028. So I guess, what are sort of the aspects contemplated within that? And how is everything tracking versus your expectations?

It's been an incredible journey over the last few years. And I know you've heard us and John talked on our calls about since the peak of the pandemic this target would take us almost 90% down in our R&D and SG&A. When it comes to our balance sheet, the unwind, right, in this transition fully integrated, billions of doses a year, over $2 billion reduction in our current liabilities. So we fundamentally changed the company.

Our cash runway, we said we got cash runway into 2028. That's before any new cash flows from deals coming into the company. So then also in '28, as early as '28 non-GAAP profitability, the key levers on that, just to give you what a breakeven could look like, we're targeting midpoint of the range, $175 million in R&D and SG&A. And on just stock-based comp assume that's $25 million or so. So you've got about $150 million breakeven.

You're looking at key contributors from Nuvaxovid royalties, right? You're looking at Sanofi advancement of milestones and even royalties potentially on CIC programs and then additional opportunities for milestones and upfront from our new deals. And you're seeing -- especially this year, you saw the $30 million upfront and you're seeing the activity. You've got a potential to have contribution across all of these. And that -- those are the levers that we're looking at as we look at 2028. But frankly, that's an interesting time and milestone. What we want to do is throw off cash as a company with a lean operating model across a diversified top line that is orders of magnitude higher than our cost structure and create exceptional shareholder value while we're developing vaccines that matter for people.

Very proud of our team on that success, Jim, because it's -- my prior company, we built something up. I was the third employee hired and we took the company public and launched a $1 billion neuroscience asset there, and it was quite a successful ride. I've found now coming to Novavax the last 3 years having to unwind a company from $1.7 billion in SG&A and R&D expenses down to 90% less than that by '28 is our projection, while maintaining our talent. Not having turnover that was any greater than industry average on the people. We want to keep maintaining our capabilities while delivering that rapid declination in size, scope, scale, selling factories, parking lots, planters, lab equipment, right. Saying goodbye to people that had a passion for this company, that's hard to do.

If you can't do it, you can't be a leader, but if you ever enjoy it, you shouldn't be a leader. And really hard to say goodbye to these great people, but we did it and we delivered on our prior obligations all along the way and put the company in a position based on that to launch this new strategy and now drive toward long-term value creation. And we're really through that first chapter and a half of that pivot. And well on our way now, we hope everyone sees by the progress we've made in this new strategy, the exponential increase in our technology from third parties who are in this space. We're always conservative and careful not to overpromise. It's biotech. It has risk. But we can promise our full effort and continued diligence on driving down this path for long-term value creation. We've got an amazing tech. We want to share it with the world. We intend to do so.

Great. Very well said, and I think that's a great note to end on. So please join me in thanking John and Jim for their time. Thank you, guys.

Good morning, and thank you for joining us today to discuss our first quarter 2026 financial results and operational highlights. A press release announcing our results is available on our website at novavax.com, 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 strategic priorities, its partnerships and expectations with respect to potential royalties, milestones, cost reimbursements, the current macro and regulatory environment, the development of Novavax's clinical and preclinical product candidates, the timing and results of clinical trials, timing of regulatory filings and actions, its APA agreements and related negotiations, projected market opportunity, full year 2026 financial guidance and revenue framework and Novavax's future financial or business performance, including long-term growth, cost savings and profitability targets.

Each forward-looking statement contained in this presentation is subject to 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 www.sec.gov and on our website at www.novavax.com.

The forward-looking statements in this presentation are 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 non-GAAP financial measures, including total adjusted revenue and combined R&D and SG&A expenses, less partner reimbursements and non-GAAP profitability.

Please turn to Slide 4. Joining me today is John Jacobs, our President and CEO; Elaine O'Hara, Chief Strategy Officer; and Bob Walker, Head of R&D.

Please turn to Slide 5. I would now like to hand the call over to John.

Thank you, Jim. I'm excited to be here today with members of our executive team to share our first quarter 2026 financial results and operational highlights.

Novavax ended the first quarter having made significant progress against our top priorities and growth strategy, which is designed to deliver value via 3 key strategic pillars, partnering our technology, capital-efficient R&D innovation and a lean and efficient operating model supporting our efforts.

Please turn to Slide 6. Our ambition is clear, to build the future Novavax with multiple partners, both large global pharmaceutical companies and smaller, highly innovative biotechs using our technology platform to develop and commercialize multiple vaccines across a wide array of infectious disease and oncology targets.

And we intend to build upon the business from our current base of existing partners that includes near-term milestone and royalty opportunities from Sanofi related to Nuvaxovid and their CIC programs, royalties from Takeda and potential milestones from our new partnership with Pfizer.

As we advance this strategy, the opportunity is vast. We are targeting the combined global market for infectious disease and oncology vaccines and immunotherapeutics, which is projected to grow to over $100 billion by the early 2030s.

I'm pleased to say that, since we launched our new strategy in 2025, we are seeing significant progress, and we continue building on that momentum.

In January, we announced a new partnership with Pfizer for a nonexclusive license to utilize Matrix-M in 2 infectious disease areas with one already named.

Our partnerships with Sanofi and Pfizer have the potential on their own, to generate billions in revenue from milestone and royalty opportunities. Specific to Sanofi, to date, our partnership has delivered over $800 million in revenue, while enabling us to remove the cost burden of maintaining a global commercial infrastructure.

In the last week, we signed a new MTA with another top 10 pharma company who is also a global leader in oncology to explore Matrix-M in a broad array of oncology targets as well as antibiotic-resistant bacterial infections and other infectious diseases.

And beyond this exciting new collaboration, we also deepened 2 of our relationships with current Matrix-M licensees, resulting in, one; a new MTA to enable access to Matrix-M for preclinical testing in up to 9 additional identified infectious disease areas; and two, an expanded MTA collaboration to explore an additional field.

And finally, we signed a new MTA with a small innovative oncology company earlier in the quarter. We now have either licensing partnerships or MTA collaborations, with 4 of the top 10 global pharma companies and several other innovative companies, who collectively have the rights to explore over 30 unique indications or fields across both infectious diseases and oncology.

Together, these partnerships target diseases that make up more than half of the projected $100 billion combined infectious disease and oncology vaccines and immunotherapeutics market. Given the breadth of the near-term opportunities before us with Sanofi and Pfizer, and the potential additional opportunities currently being contemplated by our partners, and via our many MTA collaborations, we believe our business model has the potential to deliver billions of dollars in revenue over time.

One of the things that makes this strategy compelling in our opinion, is its capital efficiency. Rather than maintaining our own costly infrastructure, we leverage the scale and investment of world-class partners in oncology and infectious disease, while potentially generating cash flow earlier for Novavax through upfront payments and development milestones, well ahead of what a traditional development to launch path would enable.

And of course, our third pillar is to execute this strategy with a lean operating model that retains our core capabilities in R&D. This R&D work will be led by Dr. Bob Walker, who is, as we announced recently, our new Head of R&D. Bob most recently served as Novavax's Chief Medical Officer, and we are confident that he's the right leader for our R&D efforts.

As we look further into 2026, we remain focused on several key priorities. First, executing on existing partnerships, including supporting Sanofi's efforts for the fall season, and supporting Pfizer's efforts to advance their first field to clinical readiness.

Second, pulling through progress on MTA collaborations into potential future licensing agreements. Third, advancing capital-efficient R&D innovation as an engine for future partnerships, and fourth, continuing to drive down our costs while maintaining key capabilities. We believe the future is bright for Novavax as we continue to execute on our strategy.

And with that, I'll turn it over to Elaine to talk more about our partnering efforts. Elaine?

So thank you, John.

Please turn to Slide 7. We've made significant progress this year, leveraging our business model to advance additional business development opportunities.

Please turn to Slide 8. As John mentioned, we signed 4 new material transfer agreements for Matrix-M. We're very excited about the new MTA with a top 10 global pharmaceutical company who is also a global oncology leader. This marks our third oncology-focused collaboration via an MTA and the first with a top 10 global pharmaceutical company.

These collaborations have the potential to address some of the most difficult oncology targets existing today, such as colorectal, pancreatic and head and neck cancers. These MTAs highlight the significant interest we continue to see in Matrix-M, as a potentially differentiated adjuvant, not only for major infectious disease manufacturers, but increasingly among oncology companies as well. Our technology platform and partnership approach have the potential for tremendous value generation.

Matrix-M's ability to significantly increase antibody titers for both viral and bacterial antigens, its broad applicability across disease areas and vaccine platforms and its saponin-based profile relative to traditional aluminum-based adjuvants make it very attractive to partners.

We have developed a model that is successfully delivering a growing number of partnerships utilizing Matrix-M. And what we're seeing is that, when a partner initially accesses Matrix-M under an MTA, they often come back to request expanded access for additional fields and/or to request a collaborative license agreement.

The cumulative impact of this is significant, as John stated, more than 30 unique fields are currently identified for preclinical evaluation by partners.

In fact, the broad utility of our technology has resulted in several companies exploring Matrix-M for applications in the same high potential markets, including infectious diseases areas such as cytomegalovirus, Epstein-Barr Virus, pneumococcal disease and RSV. And this also includes overlap across oncology in areas such as colorectal, pancreatic and head and neck cancer.

In addition to broader use across and within disease areas, our technology is increasingly being used in programs that have previously failed, or shown an inability to get an efficacious and safe vaccine to market. Because our matrix agreements are not exclusive, we are not limited to a single product or partner in any disease area, thus creating the potential for a higher probability of success and for potential revenue across multiple partners in a given disease area.

Let me take this opportunity to provide you with an illustrative example of the opportunities ahead of us. Please turn to Slide 9. Novavax's growth strategy is focused on tapping into the approximately $100 billion future global market, for infectious disease vaccine, approximately $60 billion and the oncology vaccine and immunotherapeutics market, expected to grow to over $40 billion by the early 2030s.

Please turn to Slide 10. Put simply, on the left-hand side of the slide, you'll see that our growth strategy is focused on tapping into the potential $100 billion market I just described. And existing license partners and MTA collaborations currently have the rights to explore over 50% of that potential market opportunity based on current agreements.

This has the potential to result in billions of dollars in revenue from a diversified set of products and partners in the form of upfront payments, milestone payments and royalties from both Matrix-M and product licensing agreements.

Please turn to Slide 11. So let's look at our Pfizer agreement to further emphasize the value of a single Matrix-M agreement. In addition to the $30 million upfront payment we received, plus up to $250 million in future development and sales milestones, Novavax is eligible to receive royalties for up to 20 years from first launch in a given country.

This means that for each $1 billion in average annual sales per asset by Pfizer over the 20-year term, Novavax would be eligible to receive over $1 billion in cumulative royalty payments, with no incremental investment in clinical or commercial development.

The significant scale of the value creation opportunity becomes clear, when you imagine the potential for a portfolio of marketed partner products utilizing our Matrix-M adjuvant technology.

Please turn to Slide 12. Finally, in addition to advancing our business development work, we continue to execute on our partnership agreements. Regarding Sanofi, we were pleased to see the results of their positive Phase IV head-to-head study comparing our COVID vaccine and Moderna's next-generation mNEXSPIKE, which Bob will talk about shortly.

In our opinion, this thoughtful investment further underscores Sanofi's commitment and is consistent with the methodical approach we have seen them take in building other respiratory markets.

For Pfizer, we continue to work with their teams post CLA to enable utilization of our Matrix-M technology according to the remit of that agreement. And as we continue discussions with interested potential partners on the value of Matrix-M in their portfolios, we are also addressing our own pipeline of assets.

We're very excited about the potential for our C. diff vaccine candidate, for which we continue to see a significant unmet need and a differentiated commercial opportunity. The combination of strong C. diff preclinical data generated to date, which Bob will expand on shortly, and the significant market opportunity were the driving factors behind this prioritization towards the clinic as early as 2027.

And so with that, I'll transition the call to Bob.

Thank you, Elaine. Please turn to Slide 13. Let me begin by saying how excited I am to take on the role of Head of R&D at such a transformational time for the company. I'm fully committed to leading our R&D team in close alignment with Elaine's BD and strategy team as we continue to realize the full potential of our Matrix adjuvant, and apply our scientific knowledge and expertise, to enhance both partner pipelines as well as our own early-stage assets.

Please turn to Slide 14. As John and Elaine have said, we have some exciting updates coming out of the first quarter. One of the first significant decisions I made in my new role was to prioritize our C. diff bacterial vaccine candidate from among our early pipeline work as the next asset for advancement into the clinic, and we are targeting entry into the clinic as early as 2027.

I'm particularly excited about our C. diff asset for a number of reasons. First, C. diff illness is a major public health threat with no currently available vaccine.

Second, we've had the opportunity to learn from prior vaccine development failures of others. And finally, our vaccine candidate offers the potential to address a significant unmet need through a strongly differentiated approach.

Please turn to Slide 15. Our candidate uses a multivalent antigen approach designed to go beyond toxin neutralization alone and further target a vast majority of circulating clades and ribotypes.

As shown on the slide and shared here for the first time in the public domain, we are seeing positive early data in terms of antitoxin IgG responses supporting our decision to prioritize this vaccine candidate to the clinic.

In a robust preclinical development program that also includes assessments of mucosal immunity that may be important in controlling this disease, as well as other endpoints, including survival from lethal challenge with both toxin and spores and gut pathology, our vaccine candidate consistently outperformed an inactivated 2 toxin alone comparator.

Based on the accumulated encouraging data, we have progressed this candidate to an IND-enabling repeat dose toxicity study with plans, as mentioned, to be in the clinic pending successful regulatory interactions. We believe our C. diff work presents an incredible opportunity from both a business and clinical standpoint.

Please turn to Slide 16. Additionally, the preclinical data we have generated on our RSV and VZV early-stage assets are positive and extremely instructive for advancing our science. Our R&D model allows us to continue to build on our established technology platform that has already produced the highly efficacious and well-tolerated malaria and COVID-19 vaccines.

Combining our deep bench of expertise with AI and machine learning has enabled us to rapidly advance our work in designing superior vaccine antigens for both RSV and related respiratory viruses such as DIV3 and for VZV. The scientific knowledge gained from these low-cost, high-throughput exploratory efforts has been substantial and highly impactful and will continue to inform our antigen design and adjuvant work of the future.

Please turn to Slide 17. The work I've just described also feeds directly into the progress we're making on another key pillar of our R&D strategy, expanding the utility of our Matrix-M adjuvant and creating additional potential Matrix-based adjuvants.

Matrix-M as it stands today is an outstanding adjuvant, with extremely broad utility as is evidenced by the partnering activity Elaine already described. Our ongoing innovation may enable us to do even more and is aimed at designing adjuvants tailored to foster specific differentiated immune properties for new indications, including, for example, prevention of hard-to-treat infections and select areas within oncology.

Some of this early work, I should note, is already underway with partners. And early research being conducted by our R&D teams on our Matrix adjuvant indicates that tailored modifications do indeed have the potential to drive specific immune responses that could be harnessed and directed towards specific therapeutic goals such as induction of highly antigen-specific T cell responses in targeted T cell subpopulations.

Please turn to Slide 18. We are also committed to retaining the appropriate capabilities to execute on and remain focused on our stated areas of R&D innovation, generating data for partner discussions, expanding the utility of our Matrix technology platform and creating new innovative vaccine candidates, with our Matrix-M and nanoparticle technology platforms to facilitate partnership discussions.

We view our data as an asset, and our efforts are focused on expanding our library of data and knowledge regarding our adjuvant and nanoparticle technology platform to better facilitate potential partnering discussions.

This also means that, we expect to use certain early candidates as test platforms for both Matrix-M and new potential Matrix-based adjuvants, generating data in the lab to outline how these adjuvants can enhance immunogenicity, while also assessing cytokine induction as potential markers of reactogenicity.

We also plan to characterize a number of additional antigens, while we will be selective as to which antigens move into clinical development, we have found this detailed examination of how different antigens interact with Matrix-M has yielded valuable insights that can be directly applied across programs.

We may choose to advance select candidates such as C. diff into human trials, when the burden of disease, significant business opportunity and potential for our technology to deliver a differentiated and transformational impact exist.

Please turn to Slide 19. Before passing the call to Jim, I want to make some final comments on data generated by our partners. In April, we were pleased to see that Sanofi announced the results of their investment in the first head-to-head randomized Phase IV study comparing the tolerability profiles of our COVID-19 vaccine and Moderna's next-generation COVID-19 vaccine mNEXSPIKE.

The study known as COMPARE was recently presented at the ESCMID conference and showed that Nuvaxovid demonstrated statistically fewer side effects compared to mNEXSPIKE, across all prespecified endpoints.

Participants who received Nuvaxovid were twice as likely as mNEXSPIKE recipients to say they would definitely choose the same vaccine type again the following year.

Additionally, publication of real-world evidence in partnership with the University of Utah showed participants in the SHIELD study who received Nuvaxovid reported fewer side effects and half as many hours of lost work 2 days after vaccination compared to those who received an mRNA vaccine.

Combined, these data support the well-established reactogenicity profile of our vaccine. We believe a more favorable side effect profile for a COVID-19 vaccine has the potential to enhance vaccine preference by health care providers and individuals, in addition to adding to the body of evidence supporting use of Matrix-M in vaccines by potential partners.

In closing, let me reiterate that I'm excited about taking on the role of Head of R&D and about where we're taking the company with our new strategy, and look forward to sharing future updates.

I'll hand it over to Jim now to discuss our financial results.

Thank you, Bob.

Please turn to Slide 20. This morning, we announced our financial results for the first quarter of 2026. Details of our results can be found in our press release issued today and in our Form 10-Q filed with the SEC.

Please turn to Slide 21. We are pleased to reiterate our full year 2026 revenue framework and R&D and SG&A expense guidance and believe that our first quarter 2026 financial results underscore that we are on track to achieve our financial and operational objectives, to drive shareholder value by monetizing our technology.

First, a reminder that our prior year first quarter 2025 Nuvaxovid product sales included $603 million in noncash revenue recognition from the closeout of Nuvaxovid APA agreement. While a great outcome, this noncash item has the effect of distorting our year-over-year trends in the first quarter of 2026.

For the first quarter of 2026, we reported total revenue of $140 million, a 79% decrease compared to the same period in 2025. In addition, we saw significant revenue growth from partner-related sources in the first quarter of 2026, reflecting continued progress as Novavax executes on our new partner business model. Both our supply sales and licensing royalties and other revenue were up over 100% year-over-year.

During the first quarter of 2026, we continue to drive down our combined R&D and SG&A expenses. On a non-GAAP and net of reimbursement basis, we reduced these costs by 23% in the period.

Novavax ended the first quarter of 2026, with $818 million in cash and accounts receivables. We added $80 million of nondilutive cash in the first quarter of 2026, including a $30 million Pfizer agreement upfront payment and a $50 million initial draw from the new $330 million credit facility.

Based on the combination of our ending first quarter 2026 cash plus anticipated partner reimbursements, we believe we can fund our operations into 2028, without contemplating any new cash flow to Novavax from upfront payments, milestones or royalties. That said, we do anticipate the addition of significant cash flow from partners over time.

Please turn to Slide 22 for a detailed review of our first quarter revenue results. Our revenue mix in the first quarter reflects the evolution of our new business model, with lower emphasis on Nuvaxovid product sales and an increase to partner-related revenue sources.

Nuvaxovid product sales of $10 million was primarily driven by sales into Germany for the 2025-2026 season and reflects the completion of Novavax's commercial activity in Europe, as we have now transitioned that market over to Sanofi as they prepare for the upcoming 2026-27 season. We look forward to Sanofi's Nuvaxovid commercial efforts in 2026 and beyond.

For the first quarter of 2026, we reported $33 million in supply sales, a 139% increase compared to prior year, and reflecting higher demand for our Matrix-M adjuvant to our partners plus COVID-19 supply sales to Sanofi.

For the first quarter of 2026, licensing royalties and other revenues of $97 million saw a 116% increase on a broad set of partner activities. These results underscore our intent to build a diverse set of revenue streams from partners and products by monetizing our technology.

Please turn to Slide 23. We made significant progress improving our cost structure in the first quarter of 2026. Combined R&D and SG&A on a non-GAAP basis decreased by 23%. Non-GAAP R&D decreased by 13% and our GAAP SG&A spend decreased by 40%.

We believe these improvements to our operating efficiency highlight that we're on track to continue reducing our overall expense profile in line with our full year expense guidance.

On a quarterly basis, we anticipate higher combined R&D and SG&A expenses in the first half of 2026 on both a GAAP and non-GAAP basis as Novavax provides support to Sanofi with clinical studies and we execute on the Nuvaxovid manufacturing-related activities for the 2026-27 season. We anticipate these costs to materially decline in the second half of 2026 and be fully completed in early 2027.

Please turn to Slide 24. Since we have already covered most of the first quarter 2026 financial highlights already, I will emphasize that we reported a relatively small $9 million net loss in the first quarter of 2026.

We believe this reflects important progress as we improve our financial performance on our intended path towards profitability.

Please turn to Slide 25. Taking a moment to recap accomplishments made towards improving Novavax's financial strength and performance. A key takeaway from this work is that we have put Novavax in the position to have an estimated cash runway into 2028 as we drive towards our goal of non-GAAP P&L profitability as early as 2028.

Keys to the timing of our path to non-GAAP P&L profitability are the successful development and regulatory approval of the Sanofi flu/COVID combination program and successful commercial execution by Sanofi on both the COVID and combination programs. This could be further supported by any additional cash flow from new business development agreements and further cost reductions.

Please turn to Slide 26 for a review of our multiyear combined R&D and SG&A expense guidance.

Today, we are reiterating our 2026 and 2027 non-GAAP R&D and SG&A expense guidance of $325 million and $225 million, respectively, at midpoint.

Importantly, in 2026, we anticipate operating at an approximately $200 million core spend profile, when excluding costs tied to completion of partner and APA performance obligations. These include non-reimbursed Sanofi R&D support and COVID strain change and commercial manufacturing support of approximately $125 million and $25 million in 2026 and 2027, respectively.

As these near-term activities are completed, we expect to be in a position to further decrease our cost. Our 2028 non-GAAP R&D and SG&A expense targets call for an over $200 million and an over 50% decrease compared to 2025.

Today, we're refining and improving our 2028 expense guidance to a range of $150 million to $200 million. Our core R&D spend and growth strategy is focused on capital-efficient value creation. The significant progress highlighted today would not have been possible, without recent R&D innovation and data generation.

We continuously evaluate all options to create long-term shareholder value, including the potential to efficiently return capital to shareholders, if and when returning cash would be the best use of capital.

Please turn to Slide 27. Today, we are reiterating our full year 2026 revenue framework and expect to achieve adjusted total revenues of between $230 million and $270 million.

As a reminder, for 2026, we are following an approach similar to the 2025 revenue framework in that our non-GAAP adjusted total revenue excludes Sanofi supply sales, royalties and milestones. This means, there may be revenues in 2026 that are additive to our expectations for adjusted licensing royalties and other revenue. That said, we believe that in the 2026 season, Nuvaxovid royalties will grow significantly as compared to 2025.

At midpoint, our full year 2026 revenue framework for adjusted total revenue is $250 million. Through the first quarter of 2026, we've recorded $119 million, meaning at the midpoint, there's $131 million remaining revenue to be recognized over the next 3 quarters of the year, or approximately $44 million per quarter on average in 2026.

Today, we're also reiterating our full year 2026 combined R&D and SG&A expense guidance on a GAAP and non-GAAP basis. We expect to achieve GAAP results of between $380 million and $420 million. On a non-GAAP basis and net of partner reimbursements for R&D, we expect to achieve non-GAAP 2026 combined R&D and SG&A expenses of between $310 million and $340 million.

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

Please turn to Slide 28. With that, I'd like to turn the call back over to John for some closing remarks.

Thank you, Jim. Before I close, I want to spend a moment on the slide in front of you because I think it tells a powerful story.

Please turn to Slide 29. 24 months ago, our company's opportunity was highly concentrated. We had one primary revenue driver, our COVID-19 vaccine, one fully integrated operating model, working largely on our own and a cost structure that needed to change.

Our technology platform and our science were proven, yet we lacked the full opportunity to realize their potential at scale. Today, that picture is fundamentally different. 4 of the top 10 global pharma companies are now working with our technology. Our partner, Sanofi, has 2 combination vaccine candidates in clinical development.

We have realized over $800 million in revenue from our Sanofi and Pfizer agreements to date. We have more than 30 unique fields that are currently identified for preclinical evaluation by partners. And to date, we have reduced our GAAP R&D and SG&A annual expenses by approximately $1.2 billion and over 70% since 2022.

In addition, we've reduced our current liabilities by approximately $2 billion and over 80% since 2022. We went from focusing on one market, COVID-19, to now having the potential to address via our new model, a significant portion of the over $100 billion potential combined global market for infectious disease and oncology vaccines and immunotherapeutics.

To paraphrase a wise saying, if you want to go fast, go alone. But if you want to go fast and far, go together. At Novavax, we've chosen to do both, together with world-class partners who bring scale and reach, together with our own R&D capabilities, advancing next-generation Matrix adjuvants and new innovative vaccine candidates, like our C. difficile asset.

We believe these metrics are indicative of the progress we're making to transform Novavax under our new strategy and assuming continued successful execution, the future for Novavax is bright.

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

[Operator Instructions] We'll take our first question today from Pete Stavropoulos at Cantor Fitzgerald.

John, Jim and team, congrats on the progress. A couple of questions from us. You're exploring over 30 unique fields of experimentation across both infectious disease and oncology. Just trying to understand how much of this exploration is being conducted at or by Novavax and what's being conducted by the companies that you're partnered with or signed an MTA?

And can you just comment on what proportion are novel vaccines? And what proportion is Matrix-M being tested with vaccines that are approved or on the market?

And a second question for me is also for C. diff vaccine candidate, one of the design attributes is creating mucosal immunity. Just curious to hear what from the preclinical data sort of gives you confidence that you will be able to develop mucosal immunity, which correct me if I'm wrong, I assume is IgA response, which would be a key differentiator from prior candidates? What are the gate? Yes, that's it.

Pete, excellent question. So to address your first question, of the 30-plus fields of experimentation and disease areas that we noted collectively, those are via partners. That's one thing we really like about our model right now is that we can leverage the scale and the resources of partner companies to drive a significant portfolio of experimentation with our technology that reaches into over 50% of the potential market that we're trying to penetrate, that $100 billion market mentioned in our prepared comments.

We also have disclosed our preclinical pipeline and our intentions on C. diff. So Bob Walker can handle that question in just a moment on our C. difficile candidate and why we feel confident about it right now.

Your second component of the question, if I heard you correctly, was the mix between novel and existing assets with our partners and how we might -- or what portion of those experiments involve. I would just say, what we can say regarding the confidentiality of our partners, either licensees and/or through MTA collaboration. We can't give specifics, but we can say there is a mix. There is a mix across our full partner set of existing assets as well as new areas of exploration that they're assessing with our technology. We're very excited about that for many reasons, as you can imagine.

And Bob, if you might be able to handle that third question on what gives us confidence to paraphrase in our C. diff program based on what we've seen so far.

Great. Yes. As you allude to mucosal immunity, yes, mucosal IgA is definitely one of the most important readouts that we are evaluating in the preclinical models. And as I mentioned also, the gut histopathology would be another key indicator for us. And it's an area that we're very excited about, and we think could be significantly differentiating for our candidate.

Our next question will come from Roger Song at Jefferies.

So maybe just on the commercial side, any comments you can say about the new season progress and then particularly for the supply readiness? And then also related to -- we also heard Pfizer announced the 35-valent PCV vaccine yesterday. Just curious, have you tested pneumococcal vaccine with them? And then what's the possibility you can use on top of the traditional aluminum adjuvant for pneumococcal vaccine?

Yes, very interesting, Roger. Why don't I take the question first. Obviously, we can't speak on behalf of partners or give any illusion to what they may be doing. But it was interesting to hear Pfizer make that announcement. What I can say is that, we have shared data in the public domain on several targets where Matrix can make a difference. And one of those that we put out in the public domain many earnings calls ago was on pneumococcal. So we know that's one of the areas our technology had some positive effect.

Our method is to approach potential partners by generating data across a suite of assets that they may already have selectively and also on targets they might be interested in. And Bob Walker and our R&D team, and it's one of the reasons we keep that capability dear to Novavax. It's very important that we maintain our R&D capabilities to generate data so we can go into potential partners and have clear conversations about what our technology might be able to achieve with some of the results we're able to show them with early experimentation. So exciting to see vaccine portfolios advancing in any company, and certainly excited to see partners that we have advancing candidates forward.

And your second part of the question, Roger, was about commercial preparedness for the fall. And on that front, what I would emphasize based on some of the guidance we're seeing from other players in the marketplace like Pfizer and Moderna, we're seeing guidance from others that are anticipating, call it, a flattish market year-over-year after the 2025-2026 season, where some of the new, especially in the U.S. recommendations found their way into the marketplace.

So I would start on a macro level with at least what we're seeing and hearing, which is an expectation for a flattish market. When you think about Sanofi this season, I tell you what, we are thrilled to have them as a partner. And one of the things that you heard from both Elaine and from Bob is we have so much respect for their methodical method of building markets and an evidence of that is the COMPARE study that they invested in to get the right information out there to best position Nuvaxovid on a go-forward basis. And so that, in particular, is something that really caught our attention and we look forward to what they're able to accomplish.

Our next question today will come from Geoff Meacham at Citi.

A couple of maybe bigger picture questions. So you guys have MTA or license relationships with a lot of the top 10 biopharma. So how are you thinking about conversion rate from MTA to formal license announcement? And how are you guys managing the field overlap across some of your MTA partners?

And then the second question is just the $75 million Sanofi tech transfer, just give us an update on kind of where that stands and timing-wise.

Thank you, Geoff. Elaine, would you like to take the first question about potential conversion rate and your thoughts on moving from MTA collaborations to potential full licensure partnerships?

Yes. Thank you very much. And I think actually the question is twofold or the answer is twofold. So we've got a very unique process working with our potential partners from the perspective of giving them access to Matrix-M. A lot of the time forward then is dependent on how they execute their preclinical models, what the results show.

And then if they're happy with the results, typically, we are seeing that these partners will come back to engage in a collaborative license agreement to move whatever they're studying ahead into the clinic and then also with the expectation that it will have a commercial launch in the foreseeable future.

And again, it depends very much on the timing of the preclinical models, those experiments running forward being successful and then coming to fruition. I think any of these can happen as early as 4 to 6 months into the time frame, again, depending on the results that the partner is going to see with then obviously stepping into a potential collaborative license agreement in the future post that 6-month period.

So that's the way, I would address the first question in terms of the conversion rate. And then in terms of field overlap, I think I said this earlier, given the fact that we do not have exclusive licenses, these are nonexclusive licenses that we ultimately enter into. We're delighted to have overlap, because it gives us greater probability of success, if we have multiple partners engaged with the study of our matrix in overlapping fields.

All right. And then, Geoff, I'll take the question about the milestones. And what I want to refer our listeners to is a nice overview slide that Elaine had, Slide 12, that outlined the milestones that we have eligibility for from both Sanofi and Pfizer. She highlighted the $425 million in milestones that we were eligible for from Sanofi, including the $75 million for, as you had referenced, the completion of tech transfer, $125 million upon initiation of a CIC Phase III study and another $225 million upon U.S. launch, right, of one and perhaps both of the CIC studies that Sanofi is currently working on.

Then on the Pfizer side, based upon the terms we announced in January, you're hearing $250 million in milestones each for each of the 2 products that they might develop vaccines for. So you are seeing with our strategy, we're able to pull forward and monetize cash flows via milestones versus a traditional biotech that might have to wait years, right, to develop revenues and profit. And so that is core to our operating strategy.

Now, I haven't forgotten your initial question, which is, hey, where are we with the $75 million tech transfer? And what I'll tell you is that, while we are not guiding to that timing, I can tell you, our manufacturing for Sanofi ends with the 2026-2027 season, meaning they have to be fully ready for the '27, '28 to be able to advance our programs. We have every confidence they will and that this milestone will fall as it will within that period of preparedness.

Our next question will come from Mayank Mamtani at B. Riley Securities.

Appreciate the details on partnership process and people development. Maybe just a follow-up on prior question. How do you see the MTA to license cycle time kind of evolve? And is there a particular disease state where you're seeing strategic interest concentrate more than less?

And then just a final point on second part there. I heard a lot more oncology today from you, specifically maybe some of the harder-to-treat pancreatic and colorectal cancers where, for instance, in adjuvant setting, there could be a better biological rationale versus maybe another modality. I was just curious what sort of mono versus combination work is happening preclinically there, which could inform maybe a formal deal execution there? And then I have a quick financial follow-up question.

Thank you, Mayank. Elaine, did you want to take Mayank's question? I think 2 parts, Mayank if we heard you correctly. The first part had to do with any additional color or context that we may be able to add on converting MTA collaborations into full licensure partnerships. And then the second part of your question on oncology. So why don't we have Elaine take those.

Absolutely. So thanks for the question. I think, again, it just really depends on the success rate of the preclinical testing that each partner has. Typically, those studies run between 4 and 6 months, and then dependent on the success rate or what the partner sees, if they like what they see in terms of the data that they're generating in these preclinical studies, then the turnaround time is moving potentially to a collaborative license agreement, where a partner would then enter into the clinic with whatever they're studying as well as our Matrix-M technology, right?

So the combination of their antigen plus our Matrix-M. So I think then, again, the range there is between 6 months to a year to translate that convert that turn around time from preclinic into clinic, again, dependent on the rate of advancement that the partner wants to take on board. So that's the way I would answer that question.

And then with respect to oncology, I can't get into a whole lot of specific details, because of the confidentiality of the preclinical plans. But yes, you accurately described the utility of Matrix-M in some of these oncology models, more difficult to treat cold and/or warm, what we call cold and warm tumors. So a little too early to tell yet, but we are very excited about the prospect of Matrix-M and its ability to solve some of these problems in the field of oncology.

And, Mayank, before you ask your financial follow-up question, just one additional comment. Obviously, we launched our new strategy at the beginning of last year. And just in the last 4 months or so, just in the first trimester of 2026, we've had 4 new MTAs signed, and we had an existing partner. One of those came back to us for 9 additional fields. So we're really getting into a rhythm. This is the most interest we've ever seen in our technology from third parties.

Despite whatever is happening in the macro environment, there seems to be a very strong interest. And we're not surprised because we know what our technology can do and others are really waking up to that.

But that being said, we're still in now this new phase of starting to convert all of this interest into potential license partnerships, and that will be our intention. So it's very hard to put specific metrics on that right now. It's going to depend on any given company. And I think each company is a little bit different on how they may want to approach this. And some may be looking at 9 or 10 fields.

Others may be looking at 1 or 2 fields. Others may be diving deep into a category and exploring deep within certain disease areas. It just depends. And so it's our intention to do that as quickly as we can as Novavax. We're small, we're nimble. We're very responsive to potential partners and to partners. We can move very quickly. They need to move at the pace they need to, to uncover what they're looking for and then act.

But we do have confidence that in many situations, our technology has a chance to work and a chance to make things better that makes it exciting for the future. And the key thing to think about now is how much we've really put in place since the launch of this new strategy and the way that's accelerating from an interest standpoint and from filling the top of that funnel with actual data that we're sharing with partners, potential partners coming back to us, signing agreements to get access to Matrix, running their own experiments to the point of over 50% of that global market opportunity we talked about when you look at the disease areas that these partners and MTA collaborators have the rights to assess right now, that's fairly substantial. So we're very excited. The sooner we can pull it in, we're excited about that as well, but we can't put a specific time stamp on it because it's not 100% within our control.

And actually, John, and actually I was curious about that existing partner expansion, that could lead to a single or like multiple separate deals. But I'll ask my financial question quickly. So the target 2028 OpEx spend being aggressively pushed down. I was just curious how much of this was you're just having more visibility into digging in versus maybe some external pressure. There's the activist campaign and also the top line revs uncertainty a little bit. And I don't know, if any visibility you have with the new leadership with your partner and obviously, CIC approval in EU, we saw for the first time and obviously, very curious how Nuvaxovid kind of fits in the CIC late-stage development paradigm now that the regulatory environment is looking more predictable on both sides of the Atlantic.

All right, Mayank. Of course, I appreciate you highlighting what is, I think, just another very methodical and thoughtful quarter of improving our cost structure. One of the things that we emphasized in our prepared remarks here is that you're seeing a 23% reduction year-over-year in non-GAAP R&D and SG&A. And in particular, that 40% reduction, and that's on a GAAP and non-GAAP basis to SG&A, just shows that continued progress that we're making.

I am going to take an opportunity to just kind of reinforce some of the key themes that we shared, and this is on Slide 26, about the evolution of our cost structure. And that importantly, one, these deals, this momentum in our business development effort comes on the heels of data generation and that our investment, our target investment in R&D is all about creating significant value. And a lot of the momentum you're seeing here today comes on the heels of smart and targeted R&D investment.

Then, I've been emphasizing that in '26 and '27, beyond the part that we're already operating at a core approximately $200 million spend, we do have some legacy obligations, about $125 million in '26 and $25 million in '27 related to non-reimbursed R&D and certain strain change activities, right, as we support our partners.

And as we move to 2028, we chose to refine it. I mean, at least personally, the last update, which was below $200 million, it kind of left a lot for the imagination. So the act of offering up $150 million to $200 million was just sort of a professional refinement more than anything.

And so I do think it gives folks a really good picture of the evolution of our cost structure. But more importantly, I think when combined with Bob's comments on where we're investing and then Elaine's comments about how that's translated that data into tangible momentum on our BD efforts, I think that's our story.

And our focus has been to become as lean as possible while maintaining capabilities and meeting our trailing obligations to close out APAs and other things as we completely transformed the company over the last 24 to 36 months, Mayank. Nothing has changed in our desire to reduce those costs regardless of external commentary or thought from anyone.

We're all aligned that the most lean operating model is the best place to be, and we're doing that in a responsible and thoughtful way as a management team while meeting our obligations, driving a new strategy that's starting to show remarkable results and momentum, right, and maintaining the key capabilities that make that possible.

Our next question today will come from Thomas Shrader at BTIG.

Congrats on the remarkable Matrix-M process. I have a question on deal structure. You've always given us a $200 million trigger for Sanofi to choose a vaccine without a lot of structure. Should we think about that as kind of the same structure as the Pfizer deal, something like $30 million upfront? Or can you give us any sense of what triggers Sanofi?

And then I have a follow-up from a comment that was just made that I think is interesting that you expect partners might go from getting Matrix-M to being in the clinic in a year. Can we conclude these are mostly very mature vaccines? These are people who are almost ready to go or maybe have been in the clinic and maybe need a little more oomph, so that these are kind of simple additions to formulated vaccines. Is that how we should think about a lot of your partnerships?

Yes, Tom, let me address your second question first, and then I'll hand it over to Jim for the first part of your question. I wouldn't put a time stamp on anything related to converting an MTA to partnership or how quickly a partner can get into the clinic. What we were trying to say before is that, we have this significant momentum since we launched the strategy in '25 and especially in the first 4 months of this year where you see 4 new MTAs signed and a lot of this collaboration going on, 30-plus fields of experimentation that these partners and MTA collaborations enable these companies to do now representing over half of the global $100 billion market that we're targeting as described in our prepared comments.

But it's very difficult to put, and we would ask you not to put any kind of a standard framework around that on how quickly anyone can get to clinic, et cetera. But there will be a mix. I think, it was Pete Stavropoulos had asked earlier about what's the mix between existing assets and brand-new programs. So obviously, you can look at typical biotech benchmarks, if that's helpful, Tom, and say, if you're taking an asset from preclinical, right, into early stage all the way through development, that's x type of time frame with typical types of POSs. And we have a proven technology, by the way, right? So that's an important component of that thought process.

And then if there are, and there is a mix, some existing assets and companies are approaching life cycle management opportunities using Matrix-M, that would be a faster pathway potentially forward, assuming success, right? So we really are loath to put a specific time frame on that. Some will move faster than others based on the nature of which asset they're exploring or trying to work on, whether it's existing life cycle management, whether it's new from scratch, right? And others may move more quickly or slowly from MTA to full partnership.

But what we're really excited about is the level of interest that we're seeing in our technology and the action that potential partners and partners who are coming back and saying, Hey, let's explore 9 more fields with Matrix-M, please. We'd like to sign another MTA or already have a license with us, that particular company, right? They've seen something, they like it. They want to explore it much more broadly in the portfolio. So we'll work as diligently as we can, and we'll be nimble and fast in our responses to enable those as soon as possible and as often as possible to convert to full licensure.

And Jim, did you want to take the first part of Tom's question?

Yes. So Tom, this is my answer to your question around upfronts, maybe something more of a clarification. While the new Pfizer agreement, and this is for the ability to develop 2 new vaccines, came with a $30 million upfront payment, it's not something you're going to be able to compare to our existing Sanofi agreement and their access to Matrix-M. And what I mean by that is because, hey, we had a $500 million upfront payment from Sanofi, but it covered many attributes, many dimensions of value. And so there's not an apples-to-apples comparison for the Matrix-M piece. So hopefully, that's clear.

And do you say what triggers $200 million for Sanofi? Is that clinical? Or do you not say at all?

Yes, we say it's a combination of both. It's both development and sales-based milestones.

We'll hear next from Alec Alec Stranahan at Bank of America.

This is Matthew on for Alex. Congrats on the progress. On the pipeline and the decision to prioritize C. diff over shingles and RSV, I appreciate why C. diff looks attractive, but curious if you can speak to why shingles and RSV didn't fit that framework. Was it preclinical profile, competitive landscape, unmet need? And could you still bring these forward in their current form? And then I guess second question, just a brief one. Has your view of the combination vaccine market changed after Moderna's progress with their combination vaccine ex-U.S.? Just curious on your thoughts there.

Thank you. Elaine, did you want to take that question on our thought process around which assets to advance further into potential human trials out of our preclinical asset portfolio?

Yes. Just very succinctly, hopefully, our decision was predicated on unmet need, as well as the actual market opportunity. There are relatively few potential competitors in this space developing a C. difficile vaccine, Pfizer being one. And so we believe, again, based upon the data that Bob shared earlier on in our presentation today that we have the ability to make significant advancements in this market, obviously, depending on our data and our study, but we're very excited about the program, both in terms of the unmet need as well as the actual market size potentially generating over $1 billion in revenue. So again, that was our decision to prioritize this particular program.

And I think, Elaine, also the question relates to RSV and shingles. Would there be any thought to advance those in general? Are we intending to bring forward everything from our preclinical pipeline? How do we think about that in general, I think, is part of the question.

Sure. We were very -- also very excited about RSV as well as VZV and what we've seen in our preclinical testing. We have a very well-characterized candidate for RSV, and we will be potentially looking to have discussions with partners in the future around the RSV candidate that we have developed in-house. So we're very excited about that.

With respect to our VZV program, what's also interesting there is some of the data that we've generated with VZV. And as Bob had stated earlier on, we'll continue to learn with respect to those programs and leverage that data for other programs that we may decide to bring into the clinic at a later point in time.

Yes, just one thing to add. Thank you, Elaine. One thing to add to that would be we may or may not need to or want to advance certain assets into human trials from our clinic. We're going to rotate different targets into our preclinical work field, if you will, as a learning platform, as a testing platform for new adjuvants that we're working on and other things to generate data for conversations with partners.

It is not our intention at Novavax to bring every one of those assets forward. And the data was good preclinically for both of those assets. We're actually excited about it and learned a lot, and we could bring them forward.

But in our current model, we don't see that as a major value inflection that would benefit the company and our stakeholders to bring those into more expensive human trials as they stand, they could be partnered now. They're good learning platforms, but C. diff offers the best opportunity from that first set of partner target or target assets that we put in there to work on to bring forward into human trials. We see that as the best value inflection opportunity. Jim, did you want to add anything to that?

Well, I think one of the keys to the investment process is both our ability to create differentiated, right, programs and assets in high unmet need markets, but also have an eye towards, hey, what are our partners doing? And our partners already advancing assets leveraging our technology at those same, and how might the differentiation work. And so all of those factors go into our thinking as we both experiment and advance. And what you're hearing is not only are we really happy with the data we're seeing as we're working on these assets, but the update you heard from Elaine is that we've got multiple assets with partner overlap where they're carrying the investment burden and driving programs forward. That is the full context of the investment.

[Operator Instructions] We'll hear next from Chris LoBianco at TD Securities.

Congrats on all the progress in the quarter. I had 2 questions, both on your C. diff candidate. Can you remind us what are the key IND filing requirements for this vaccine? And have you had any initial dialogue with FDA?

Bob, do you want to take that one?

As I mentioned during the prepared remarks, so we're currently conducting the IND-enabling repeat dose toxicity study. And when those data become available, we would seek to follow that up with an IND. We are intending to engage in pre-IND discussions with FDA and expect that the results of those conversations will probably inform some of the thinking about next steps.

And then I had a second question on the commercial opportunity. You've highlighted that C. diff accounts for $5 billion in annual health care costs. Is that a reasonable way of thinking about the peak sales potential for the C. diff vaccine?

Elaine, do you want to take that one for Chris?

Yes, absolutely. I mean, it's -- so as I mentioned, there are potentially other competitors coming into the marketplace, Pfizer being one. But I think that is -- the way we look at this opportunity from a commercial perspective is that it's at least between $1.5 billion to $2 billion, making the assumption that there will be other competitors on the market by the time a potential vaccine that we would bring through clinic and then partner would come to market. So that's how I would round up the sales opportunity.

Thank you, Chris. And Matthew, you also had a question on the combination market. So Jim, did you want to just make a brief comment on the combination market, COVID/flu?

Well, certainly. And reminder to folks that when we look at both the COVID and the flu market, they're each approximately $5 billion to $6 billion a piece. We're talking about a $10 billion to $12 billion marketplace that is poised to really merge together, right, because of the significant importance of combination treatments, especially in that setting.

And I think that was one of the questions we heard a little bit earlier was, hey, what's the importance of combination treatments in the adult market? And the answer is, we expect it to follow a path you saw in the pediatric marketplace where the efficiency of getting vaccination is critical, right, to health policy and outcomes.

So with respect to the combination flu and COVID market, hey, we continue to see investment. We see -- continue to see a high unmet need. And we're really looking forward to that next update from Sanofi on their plans for not one, but perhaps 2 late-stage programs with Nuvaxovid plus their market-leading flu products.

We'll wait to learn more. I think, while I can't speak for them, I guess I can repeat what they've said. They met with the agency in the first quarter. They're awaiting alignment and updates for next steps. I think you saw just recently, Moderna getting approval in Europe. And so you're certainly seeing the competitive nature of that industry, it's important and rising. So hey, we can't wait to be a part of it through our partners. And so I'd say that's the update.

Yes, Jim, and we were also really pleased to see Sanofi's investment in the COMPARE study to show against mNEXSPIKE, the tolerability of our Nuvaxovid, which would be a component of a potential combo they bring forward, right? So really excited to see our partner, Sanofi, leaning in, making investments to show data and really start to kick off the season already for the coming year with some interesting data comparatively.

At this time, we have no further questions from our phone audience. Mr. Jacobs, I'll turn it back to you, sir, for any additional or closing remarks that you have.

I just want to say thank you to all of our employees for their constant diligence and effort to help drive Novavax forward toward our vision. Thank all of our investors and stakeholders for supporting us and wish everyone a wonderful day. Thank you for your attendance.

Ladies and gentlemen, this does conclude today's Novavax first quarter 2026 financial results conference call. We thank you all for your participation. You may now disconnect your lines.

Well, thanks, everybody, for being with us this afternoon. My name is Dave Risinger. I'm very much pleased to welcome members of the Novavax leadership team. So immediately to my left is John Jacobs, CEO. To his left is Ruxandra Draghia, she is Head of R&D; and then Jim Kelly, the CFO; and Luis and IR is in the audience.

So thank you for being here with us. I thought we'd just start off at a high level, John, with you, particularly for those that are less familiar with the story, just providing an overview of the company's strategy at this point. The company has been through a lot, but since you've already troughed and stocks moving in the right direction, we'll look forward.

No, absolutely. And just take a moment to look back in appreciation of the opportunity we've had the last 3 years to really pivot the company fully away from its original attempt to launch the COVID vaccine and help folks around the world with that terrible pandemic. And through that generating a proof point, a significant level of proof points on the technology platform that Novavax actually is sitting on, which is this amazing Matrix adjuvant technology and our nanoparticle technology, which allows us to really do some innovative things in the vaccine and potentially immunotherapeutic space that we can talk about a little bit more today. But we've made that full pivot, David, away from a company that was solely focused with all of its energy effort and resources on the one attempt to get a COVID vaccine out and help folks with that to now a company that's focused on partnering and business development supported by innovative research and development to out-license this unique technology platform.

And you just -- you saw the Sanofi deal, of course, back in 2024 and then just this January Pfizer, signing up and you see key components in that deal that we see as potential components of future deals and partners. And Pfizer was one of the earlier companies we initially approached as we began to pivot into the new strategy. There are numerous potential partners, other companies behind Pfizer that are at different stages of discussion with us. Multiple material transfer agreements that have been signed, which enabled those potential partners to experiment with our tech in their own labs to get a sense for what it can do to unlock value in their vaccine potentially immunotherapeutic portfolios. And we intend for some, if not all, of those to become additional partners in the future for Novavax.

And then on an R&D side, Ruxandra and her team support us is really in 3 key areas. And first, data generation. Rux and her team have worked to generate data to demonstrate our technology's effectiveness across multiple vaccine types and platforms as well as in some specific marketed products that our business development team can take that data in and share with potential partners to get their interest, often then stimulating an MTA and their own desire to experiment with our tech to see it for themselves in their own lab.

Secondly, we're innovating Ruxandra, right, on Matrix-M, new formulations of Matrix-M, life cycle management, dry powder for instance, or lyophilized Matrix-M. And then new adjuvants themselves based on the Matrix platform. And it's our vision that we will have eventually or intend to have a portfolio of new adjuvants based on Matrix, selected and targeted to hit very tough to treat diseases and also to penetrate markets like oncology.

And finally, last but not least, on R&D, new assets using our nanoparticle technology and our adjuvant. We have 3 in the pipeline or the C. diff and VZV and RSV combination that Rux can talk about a little bit later today, if you like. And through those, we learned. It feeds the first 2 components of data generation and learning more about Matrix to test platform for some of these new adjuvant approaches as well potentially. And also through that then, we could be in humans as early as '27 with one or more of those programs, generating in-human data to then foster further partnering. That's the new strategy for the company. And we're deep into it now and having fun with it.

Phenomenal. So just talk a little bit more about Matrix-M and that potential extension into immunotherapy.

Rux?

So as John has mentioned, we are working on a new Matrix-based adjuvant. So we took Matrix and we've asked the question, are the immune responses that we are generating with Matrix appropriate for some of the new applications that are coming into our direction, for instance, in oncology. And in some circumstances, the answer is clearly yes. But in some other types of tumors or oncology models, we felt that we need to actually do some tweaks, maybe add some components or actually reengineer the Matrix particles in order to elicit a different type of immune response. So for instance, some of the oncology targets require more CD8-positive cells. So this is exactly what we are doing, using those learnings and the prototypes that we are designing to feed back into the innovation loop. We are actually working on Matrix. We are applying it to different tumor types or to those prototypes and then we are going back and asking the questions, are we good enough for this, that and the other. So very simple.

Excellent. So let's turn to key catalysts for this year. What should we be watching for?

Look, continued execution on this strategy and starting with the potential for new deal announcements. Obviously, we can't provide David, any time lines on that, let you know who we're speaking with. But we're seeing more interest right now in our technology from third-party potential partners, other companies than any time since I joined in early 2023. It's quite remarkable actually what we're seeing. And I think other companies are waking up to understand what Matrix-M and our tech might be able to offer them as a potential unlock for significant value in their portfolio. So very exciting. When those are inked, if they're inked, you will find out at that time. It's our intention to do many, and we have multiple conversations going on right now behind the scenes. No guarantees ever. There's always risk in biotech, but it's our intention to bring forward multiple new deals.

Excellent.

So secondly then...

Actually before you go there...

Yes, please.

You don't mind, could you just recap the Pfizer deal. And there's a limited amount that you could say, but would love to hear about that.

Jim, do you want to comment on the Pfizer deal?

Well, certainly. So incredibly excited in January to announce this new agreement with Pfizer to use our Matrix-M technology with not just 1 but 2 different potential fields. Now at this time, those fields are not being disclosed. This is important, not just to Pfizer, but many of our potential future partners for which they want to maintain appropriate discretion to get ahead in their own clinical development. And of course, we'll honor that.

So I'm sorry to interrupt, but when you say 2 fields, you mean 2 different vaccine or 2 different disease states that vaccines would target? Is that what you mean?

That's correct. Within infectious disease that would result in 2 different vaccine candidates.

And 2 potential revenue streams then composed of milestone -- potential milestone payments for clinical development milestones as well as sales milestones and then royalties.

That's Exactly right. And so the architecture of the agreement itself was a $30 million upfront. And then for each one of these field/new vaccines eligible for up to $250 million a piece in milestones or $500 million total. And so they're split between $70 million development, $180 million in sales based. So exceptionally good upfront and milestones. And then the royalties, 20 years, high mid-single digit. So the way to think about the royalties because that's clearly where the long-term value lies is that over a 20-year period, for each $1 billion in average revenue over that period, we get $1 billion in royalties. So if over that period you average $3 billion, you got $3 billion in royalties based on that mid-single digit.

And I think the way most of the large pharma players when they're looking at our adjuvant Matrix-M technology, they're looking at very significant markets. And so now you can imagine in the future, if you could, a diversified portfolio of agreements across multiple pharma players that have this type of economic profile with respect to our matrix. And what we're seeing is that this concept that in this agreement, it's not just one opportunity or a vaccine, but two. This is fairly consistent with what we're seeing as we continue our dialogue with other pharma players. When they get the opportunity to get Matrix-M into their labs, they not only want to do one deal, but they want access to do more.

Excellent. Excellent. That's great. I had interrupted. So you were going to move to point 2 in terms of the catalysts?

In terms of the catalyst, right? But certainly, key catalysts would be looking for more partnership announcements. Second key catalyst is advancements of existing partnership agreements that we have, right? So announcements from partners like Sanofi watching for what comes of the fall season now, right? We'll look at the meetings like ACIP and others recommendations for that strain. Sanofi communications around the fall season for Nuvaxovid, where they've got their first opportunity, David, for a full cycle launch of Nuvaxovid under a BLA with a full opportunity to do contracting discussions and negotiations for this coming fall season, '26, '27. So we're excited about that.

And any announcements coming from Sanofi on the further advancement of their combination vaccine programs that include their flu vaccines and our Nuvaxovid COVID vaccine. Those were fast tracked. They had positive results on Phase I/II and their own public commentary recently from December forward especially, has been how important, not only vaccines are to Sanofi, but how important those potential vaccines themselves, those products will be to closing some of the gaps they may be facing in the future on patent loss.

And so very exciting that they're very committed to that. They're outstanding partners. So look to updates from Sanofi, look to Pfizer for the selection of a second field and potentially us earning some of the initial clinical milestone opportunities from Pfizer. So that would be pillar #2. And then pillar #3 to watch for in catalysts is things coming out of our own pipeline, data, R&D, innovation, et cetera, and continued cost reduction.

Excellent. That's great. And so just to go back. So I guess we talked a little bit about Matrix-M, but one in particular is it that's drawing these partners, what drew Pfizer and what's drawing these potential additional partners from...

I'll hand it to Rux in a moment, but what I will say is when the ability to unlock potential value and what our technology does for companies that are interested in the immunotherapeutic space that -- where this tech could apply and especially the vaccine space and infectious disease and beyond even into oncology is the potential unlock of value. So if you have, for instance, some partners may have assets on their pipeline that they hit a wall with, they hit an impediment on and perhaps Matrix unlocks the potential to move that asset forward in clinical development and potentially enter market in the future, they didn't think they might be able to. If it's a company that's trying to enter an existing market perhaps and they have an asset that could compete in that market, and they think Matrix could give an edge to that, and they've seen maybe something in their lab. That's another example.

And this is just generically, not particular to Pfizer here, right? But something that can unlock value matters. And you're talking about large markets. I mean the vaccine global marketplace is projected to be over $60 billion by 2032 globally an opportunity. There's a lot of unlock there, a lot of potential for our tech. Rux, what would you add from a scientific perspective?

From a scientific perspective, we are actually experimenting in our labs, and we are asking the question, as John was mentioning, if we are adding Matrix to these different vaccine platforms with different antigens being viral or bacterial, what do we see? And typically, for the applications that we have tested, we are seeing better immune responses, better durability of those responses, consistently, including in human clinical trials we have seen a very favorable reactogenicity tolerability profile, even if Matrix is added not only to our nanoparticles to our protein-based vaccine, but in conjunction with other platforms and with a multitude of antigens.

So those are the types of characteristics that then can enter into the decision-making process that John was mentioning from our partners. Do I have this much of an immune response with the current vaccine, and I would need better immune responses. Do I have a durability of protection of X, but my market would require durability protection of 2x or 3x in order to be competitive? Or if we have, let's say, a vaccine that already have very good immune responses, can I reduce my cost of goods because instead of using, let's say, 10 or 20 micrograms of a specific antigen, I get the same immune response with 0.1 or 0.5 micrograms. So all those considerations, we have evaluated with a number of platforms and antigens, and this is what our partnership with our BD team is generating that the opportunity based on data.

Super interesting. Okay. Excellent. So then I guess we should probably move to your pipeline. So what are you seeing in the preclinical data of your C. diff vaccine candidate that makes you excited about its potential?

I'm very excited about my R&D programs, all of them. But as you are asking about the C. diff, I'll concentrate on it. So first and foremost, we've actually took lessons from the previous vaccine candidates that might not have actually hit the results that were needed to show efficacy in humans. And there are many hypotheses there. So we kind of took one by one. We've looked at the type of antigens that have been used. Prior vaccines have used mostly toxin-based approaches. We've asked the question, is that sufficient? And we decided to go to a multivalent vaccine that might have a broader coverage.

Second question was around mucosal immunity because obviously, this is a bug that lives in the gut. And then we thought that having not only human responses in the blood, but the mucosal level would be actually very favorable. So we've entered that into the design, and we've asked those questions in the experimental -- in the experimental design. And then obviously, this is a pathogen that creates spores, yes? So you give the antibiotics to the patients, the bacteria might go away, but it leaves behind these spores, which are extraordinary hard to treat and to get rid of. So the question was, can we do something about it?

So we've designed both the antigen and then every single one of the experiments to really address those questions. And we are starting to have data from those experiments, including challenge studies which are encouraging. So of course, we need to take it to the next step and ask additional questions before we would be ready to move to the clinic, which we hope to be in the clinic as early as 2027.

That's one of the first things we discussed when the team took months to really assess about 18 months ago plus, which targets did we want to approach.

Exactly.

Engage in the new strategy and make the pivot away from a commercial COVID company to an innovative company through partnering. And this was a big part of that discussion and show me why we should believe that we have a chance to succeed where others had failed. What were the reasons they failed. Is it just another attempt that what are we doing differently? And what could we learn from what's in the public domain on how they approach these studies. How they approach the design of their prototype vaccines that didn't work out of the past from big players who have a lot of knowledge and resource. And I think, Rux, you did a great job with your team on that. And showed us that we believe we can and we're making so far at this early stage, very nice progress there. We're being careful exactly what we share, we think we found a potential unlock pathway here, but still more work to be done, very exciting progress to date.

The North Star being the target product profile.

Yes, exactly.

And if I could, one of the things, and I won't give away some of the details that I like about the work that Rux and her team are doing, is that it moves beyond just delivering unlocks related to those particular markets or candidates. What would each of the experiments that she's working on right now speak to some of the scientific underpinnings of why our technology is working where others have failed. And that matters. It matters not only to partner these programs as you advance them, but as you talk to potential partners who perhaps have their own antigen who may be stuck we're an idea or a market they want to go after, we are putting forward proof points through our early-stage development that open up other BD opportunities.

An innovation feedback loop really.

Absolutely is.

That's phenomenal. And just talk about the patent protection for that, for Matrix. And obviously, you're advancing other candidates as well. But how should we think about that given the competitive nature of the vaccine?

Jim, maybe you want to comment on IP in general.

Yes, certainly. That's right. And I'll start with patents, but of course, it's a broader right set of protections. So for Matrix, we've got either existing or pending applications that would go out through the 2040s. Okay. But as we know with biotech and in particular, vaccines, it's well beyond IP. It is also know-how of manufacturing as an example. But there's more beyond that in terms of supply chain management, and also the safety database that we have accumulated over the past 5 years, not just with COVID, but remember, R21 over 30 million doses delivered and that's being dosed down to as young as 6 months.

5 months.

Five months of age, an exceptional global safety database across multiple indications, across multiple age groups. So that is really tough to replicate.

And for the new formulations for the new Matrix-based adjuvants for new work, as Jim was mentioning, we are capitalizing on the data, and we are continuing to gather additional intellectual property. I'd like to call it an onion because it is really layers and layers of protection that is not only adding to the existing portfolio, but with an eye of where can we take it from here to where we want to be in the future.

And Rux, as you said earlier, we're working on new formulations of Matrix-M. David, we're working on new adjuvants that are Matrix-based that are targeted and selective to certain hard-to-treat diseases and potentially certain types of tumors in oncology, et cetera, each with the potential for its own IP as well.

Excellent. Excellent. So then, Jim, maybe we could turn to the company's financial prospects.

Yes, certainly. What a difference 36 months make, right? And we were very happy to be able to articulate at our most recent earnings that we see a really strong balance sheet that we have, therefore, the ability of the cash runway that could get us into 2028 and at a point where we could be approaching or reach non-GAAP P&L profitability as early as 2028. So that was an incredibly important update that we were able to provide just recently. When you think of, well, how the heck did you get here? Over the past 3 years, we have taken out in terms of R&D and SG&A over $1 billion out of our P&L as we transition the company with the new strategy that John mentioned and focus on our core technology.

In addition to that, we reduced our current liabilities by $2 billion, I mean, which is unbelievable. And then we took the liabilities we had and we renegotiated them, spread them out over time. And then we've been generating cash, 80% of which $1.4 billion from -- of that $1.4 billion from non-dilutive sources, upfronts and then more recently, a credit facility. So we're doing all those, call it, financial management requirements to now turn the business towards value creation through all the innovation through the partnership, and that's the path we're on now.

Excellent. And could you talk about the levers, the pushes and pulls to achieving non-GAAP profitability?

Certainly. To kind of ground folks on where we ended 2025 as we go towards 2028, our R&D plus SG&A, and I speak net of reimbursement was just over $400 million. And then as we look to 2028, we just shared that we're going to target $200 million or below or cut that in half. And so that's going to occur over the next few years as first. We complete some of our trailing obligations to partners and APAs in this year 2026, of about $100 million. So we've guided to -- and I should say, starting in '26 and forward, we're already operating at that mean $200 million or below. We're already there.

The core business.

The core business. What we have in '26 and '27 that add to that are some trailing obligations related to APAs, some aspects of our agreement with Sanofi that aren't reimbursed like our share of the postmarketing commitment. So those are going to play through in '26 and a small amount in '27. But I think the key point is that we are seeing ourselves operate already at that core spend level of $200 million or below.

Perfect. Well, we're almost out of time. So John, let me ask you to just wrap up with what else we should be focused on. We've covered a lot of ground, but we'd love to here any closing comments that you have to offer.

Thank you, David. Well I appreciate your attention and everyone here that's listening and joining us today. Thank you. Thank you very much for that. We couldn't be more excited about 2026. So Jim, like you said, wow, what happens in 36 months. You take a look back what a journey together to put the company together through our collective efforts into a position to focus a lot more on value creation, a much more stable financial position than when 3 years ago when I first came here. So we're excited about where we stand today. We're seeing more interest in our technology than seen since the first time I got here 3 years ago. Lots of other companies coming to chat with us, really interested experimenting with Matrix in their own laboratories. We intend to bring forward more deals and partners.

And our vision is to have, as Jim was saying and Rux has been saying a portfolio of assets that we can continue to out-license, whether those are early-stage vaccine candidates, new versions of Matrix-M, new adjuvants that are matrix-based, a portfolio of partners, plural, with multiple assets in development, each with tiered or stacked opportunities for Novavax to earn milestones on clinical and sales and then royalties for decades. That's the vision.

On a lean expense platform, and we remain focused and diligent. And my last comment is the culture we've developed at Novavax is one of partnership, family, collaboration and humility. We take nothing for granted. We're working really hard to not let any of you down. It's been a tough journey. Biotech is risky, and it's difficult, but we're very proud of the accomplishments that we've had the last 3 years and very excited about where we sit today and the potential opportunities ahead for Novavax to drive value in frankly, make a meaningful impact on global public health.

Phenomenal. That's a great way to wrap up.

Thank you.

So thank you again. Appreciate you being here.

Thanks for joining us everyone.

Thank you.

Thanks.

Well, good afternoon, and welcome back to TD Cowen's 46th Annual Healthcare Conference. We're delighted today to be hosting Novavax. And joining me from the company is CEO, John Jacobs; CFO, Jim Kelly; and Head of R&D, Ruxandra Draghia.

So John, maybe to kick off Q&A. The company is successfully executing its growth strategy. But maybe for investors that are less familiar with that, can you provide a high-level overview of what the company is doing there?

Yes. Thank you, Chris. In the last 3 years, we've executed a successful pivot away from a company that was solely focused on COVID-19 with our one asset made from our technology platform to a company now that's focused on out-licensing that technology, partnering it out with the goal of exponentially seeing the impact of that technology on society and on value in the future for our company and then supporting that with R&D, Chris. And we do that through 3 key pillars Rux can touch on later on today.

But first and foremost, generating data as further proof points of our technology, also working on expanding the utility of our unique Matrix-M adjuvant Matrix platform. We're working on new formulations of Matrix, for instance, like dry powder. We're also working on a completely new set of Matrix-based adjuvants with the goal of having a portfolio of adjuvants in the future that can be targeted and selected -- selectively targeted to very difficult-to-treat diseases, including beyond infectious disease into oncology, which we're currently exploring.

Last but not least, we also have an early-stage pipeline of assets we intend to bring through Phase I, potentially Phase II, with the intent of partnering those out and using that also to generate that data and learn more about where we want to take Matrix-M in the future. So exciting times, proven out by, first and foremost, Sanofi, but then more recently, Pfizer, which we just announced in Q1 this year. Very exciting to have Pfizer on board with up to 2 assets that they can use our Matrix in. We also have a potential pipeline of partners behind Pfizer, as we started that journey of reaching out and letting companies explore with our Matrix technology through material transfer agreements and providing supplies of Matrix, so they can see what it can do to unlock potential in their own portfolios of vaccines. We have numerous parties. In fact, we're seeing more interest than I can recall in the last 3 years since I started in our technology right now today than before. Very exciting.

With so much opportunity ahead, what are you looking forward to in 2026? What -- which data points or readouts or update should investors hone in on?

Well, obviously, continued execution of our new strategy post pivot here. That's really important. And that includes the furthering of our current partnership plans. So looking for Sanofi for feedback on when they're going to initiate clinical trials for their potential CIC vaccines. That's the combination of their world-leading flu vaccines and our proven Nuvaxovid COVID vaccine. In addition, other milestones from a partner like Sanofi and royalties from this fall season for COVID, where Sanofi has the first opportunity for a full cycle launch of our COVID vaccine, starting with early retail negotiations at the end of last year through now under a BLA with all of the pieces they need in place to leverage their know-how and expertise appropriately.

Looking for Pfizer to take initial steps with the one area they have selected to explore Matrix-M in and select that second field that they're eligible for and make that announcement. And last but not least, very important, new partnership announcements, which we're intending to be able to deliver should we continue to succeed on that front as well as data coming out of our pipeline from Ruxandra.

You touched a bit on this topic, and this is one topic we get a lot of investor questions on. What are the key success factors for winning share in the U.S. COVID vaccine market? And in what ways is Nuvaxovid really well positioned in the hands of Sanofi going into the 2026?

Good question. Jim?

Certainly. So as we enter into the fall season of '26, '27, especially in the U.S. market, really excited to have Sanofi at the lead, commercializing with what is effectively their first full year being able to use all the key commercial tools at their disposal. Sanofi has made it no secret that one of the things that they really appreciate about Nuvaxovid beyond the efficacy is the tolerability profile. And so you should certainly expect to hear more about that in their efforts. But importantly, 3 things come to mind as they embark on this first full year.

One, the importance of contracting. I think what folks know about the COVID season, it takes a significantly long contracting cycle. It usually goes about from January through March, April each year to be prepared for the fall. And finally, this year, over the first year, they're able to negotiate with under a full BLA, a 6-month shelf life and integrate it into their core contracting platform. So that's part one.

Part two and related to the profile, I mentioned a moment ago, Sanofi had the ability to pilot some commercial messaging in select markets that last year that they can now pull through as a part of their go-to-market strategy. And then a third piece to watch out for is Sanofi has likely -- the best proprietary distribution network for non-retail in the industry. And so the ability to take full advantage of that network as well.

When it comes to expectations, we, of course, can't speak with them in what they do. But what we know from their flu business, the market-leading enhanced flu business is that they're a methodical competitor, and just watch and it would be our expectation that they seek to build share methodically over time as they unlock the full value of Nuvaxovid.

And just for the benefit of investors, the royalty rate you have on that opportunity is?

Yes. So on the Nuvaxovid sales, it's high teens to low 20s on net sales.

Great. Maybe looking at Novavax' internal pipeline and technology, you've talked about partnering as a core part of that strategy. Can you share some of the recent updates and highlights on your partnering efforts?

Yes. What we had shared publicly, Chris, is that we had in Q4 of last year, another MTA signed by a large pharmaceutical partner in that regard. And then just before earnings in the relatively early time frame this year, we had 2 additional MTAs. One was an extension of an existing MTA with a large top 10 pharmaceutical company who came back to Novavax and asked to expand their exploration of our Matrix-M into another field. So we amended that and had a second field allowed there. And most recently, an oncology company signed up with us also through an MTA.

And that's a key point in our process, again, it gives potential partners the chance to experiment with Matrix-M in their own laboratory with their own assets and technology platforms, and a chance to see what we believe it can do with their own eyes, with their own scientists. And we saw that with Pfizer, and they came back and signed a meaningful deal with us for years to come now with potential opportunity that's significant, and we intend to have others come on board as well through that process.

Maybe digging into that a bit more, what types of questions or hypotheses could be evaluated under an MTA? And how does that differ from the questions that Pfizer could explore under its full formal collaboration?

So when we are talking about MTA, so material transfer agreement, typically, the partner [indiscernible] they are using it in conjunction with their vaccines, be it vaccines where they are facing a lot of competition or maybe things that have been put on a high shelf and now they are to get a new life on a new vaccine platform or with new adjuvants being -- new -- sorry, antigens being viral or bacterial or now in the oncology field. So there are a multitude of areas where that early exploration typically in animal experiments is happening. If the data is turning out to be positive, both from the point of view of immunogenicity, maybe efficacy, if they would run a challenge study, safety, of course, Matrix has a very good safety, reactogenicity tolerability profile, then they can move to the next step where they would explore the use of Matrix potentially in human clinical trials.

And that would be covered under a more formal collaboration like Pfizer?

In a more formal collaboration indeed.

Great. Maybe going back to your Q4 earnings call, you highlighted plans to develop a portfolio of new adjuvants. What's the rationale for doing that? And can you provide any update on timing for those efforts?

Yes, it's a very good question. So of course, we do have Matrix-M. Matrix-M has, again, a very nice safety tolerability profile. But moving into new applications, for instance, on oncology, one might want to tweak the type of immune responses that are generated, for instance, more CD8 positive cells or cell-mediated immunity that would be important for some hard-to-treat infectious diseases and in oncology. And that was the purpose of even asking the question, can we actually do some tweaking to the Matrix platform to the adjuvant platform in order to be able to generate other types of immune responses that might be used in these new applications.

And I believe you mentioned the dry powder inhaler formulation longer term. Could you provide any color on that?

Yes, surely. So aside from the new adjuvants that we referred to in the previous question, we thought that Matrix-M as it is, can be delivered in different other formulations. So for instance, one would need a dry powder, if one envisions an intranasal administration, for instance, of a vaccine or an oral administration of a vaccine or where that vaccine would have to be delivered in climatic conditions that call for prolonged thermostability. And all those can be achieved potentially through a dry powder formulation.

Very interesting. Maybe moving to oncology. You mentioned this is a specific area of exploration. Can you expand upon this and kind of put some time lines around those efforts?

So we are actually exploring the use of Matrix and this new Matrix-based adjuvants in oncology together with partners. So to be very clear, as John likes to say many times, we are not going to be the next oncology company. But there are many partners out there that, again, have not seen maybe the full potential of their antigens. They are hard-to-treat tumors. The type of immune response might not be ideal or one might have to go to a personalization. Yes. So really develop an antigen for each and every one of the patients. We believe that using our technology, we can again target the platforms that would enable to target some different types of tumors and different categories of patients.

Maybe moving to Novavax' internal pipeline. You highlighted your C. diff vaccine. Can you maybe just touch upon the unmet need for a vaccine like C. diff?

So C. difficile is an infection that occurs typically in hospitalized patients, typically in individuals that are 65 and older, and they're going in a hospital to have a specific surgery. Unfortunately, they can be either -- typically, you have already colonized your intestinal tract with C. diff, but it can either reactivate or really one can have these hypervirulent strains that are actually acquired in the hospital, which of course, are treatable with antibiotics, but the problem is that this bug likes to create spores. Spores are not actually responding to antibiotics. So they are colonizing further the colon and it entails repeat and repeat and repeat infections. So a vaccine in this case, would be extraordinarily useful because it would prevent either the primary infection and/or the recurrence of the disease. And currently, there is no such vaccine in the market.

And you touched upon some of the data you're seeing for your candidate vaccine. Could you maybe talk about what makes you excited in the data that you're seeing?

So the data from our early preclinical studies is very exciting for a scientist like I am. So it's hard to say, I love this one more than the other.

This just makes her more productive day, by the way.

We have is, yes. But we have actually took the learnings from previous work done by the scientific community when they've designed their own C. diff vaccines, and we've looked at different antigens to incorporate. We've asked the question, can we possibly generate mucosal immunity? Can we have some durability of our immune responses? So all that was actually taken into account when designing our programs.

That's well said, Rux. I mean I think very importantly, we put a lot of time and energy and effort into deciding where to make these lean bets in our pipeline. And one thing that we all said to our scientific team is tell us why, convince us as a management team, why we should pursue C. diff where others have failed with the vaccine? And what do you know about or suspect about why those vaccines might have failed in the past? And how can we apply those learnings, clinical trial design, approach to antigens, approach to toxins, the way that we're putting together the antigen, what Matrix might be able to do differently, et cetera.

And we're convinced by Rux and her team that there's a shot on goal here that's worth trying. And we're very excited about what we're seeing early on. We're being careful about what we share and how much we put on the table, because we think we found an interesting path forward to continue working on, but we're very excited so far about what we're seeing, and we'll keep you informed as we can over time.

Great. Well, it seems like a major unmet medical need, hopefully to see some good progress there. Maybe moving to the financials. Novavax is in a much stronger financial position today. Can you remind us of your cash runway?

Certainly. So when we provided an update just last week, we shared that we've got an expected cash runway into 2028, so over 2 years. And that's quite a journey since where we were just a few years ago. And the importance on how we characterize that runway is that, that is based on our year-end cash and receivables, our Q1 non-dilutive cash generated from the Pfizer deal and from a new credit facility, plus, of course, reimbursements from partners in the future. But, that said, no incremental cash to the company. right? So no new BD deals, no royalties, no milestones. So we believe we've put the company on a very good financial footing to now enable us and investors to really focus on the value creation to occur that lies ahead of us.

Maybe looking out to some of the financial outlook you've given, what are the pushes and pulls to achieving non-GAAP profitability as early as 2028?

Right. The significance of that goal of achieving non-GAAP profitability is profound. I mean we are super excited about all the things we can do in R&D for our technology, but we also recognize we have shareholders and that we anticipate that over time, we're going to be able to generate orders of magnitude more cash flow into the company through royalties and milestones versus this lean infrastructure that we're maintaining to drive innovation. And as you look at the -- as early as 2028, 8 primary contributor, and there's multiple contributors that get you there. A primary is, for example, Sanofi's advancement to market of their CIC vaccines. It might be 1, it might be 2. That is a $225 million milestone.

To offer context, we recently guided that 2028, our target is $200 million or below R&D and SG&A. And so you get a picture of exactly what a P&L breakeven might look like. And so part one is the potential milestone from CIC, but also consider royalties growing from the Nuvaxovid sales. look at the potential for royalties from a CIC vaccine. Think about new partnerships and different milestones and cash flows that can come from there. So we are certainly looking forward to driving to this not just profitability, but throwing off cash as a company beyond that point.

Great. Do we have any questions from the room? If not, maybe as we close every panel at our conference, what could be the biggest surprise or change at Novavax over the next decade, maybe from a financial standpoint, R&D standpoint, and then overall corporate strategy standpoint?

We're intending for it not to be a surprise. I think the biggest change is what Jim just finished saying, which is that throwing off cash orders of magnitude greater than the lean infrastructure we're building and targeting in. For the last 3 years, we've told our investors that we're reducing costs. We came from a 1.7 -- roughly $1.7 billion SG&A and R&D number. And even if you take out reimbursements from APA contracts about $1.4 billion to $1.5 billion range roughly, all the way down to this target in '28, which we're on track for right now to $200 million or below in SG&A and R&D minus reimbursement from partners. So certainly, that lean infrastructure puts us in a good position, Chris, and we're looking to put multiple shots on goal through multiple partners with multiple portfolios of products that incorporate our technology platform really throughout licensure and partnering over time.

So you've got Sanofi, you've got Pfizer. We intend to put new partnerships with both large, mid- and small-sized pharma companies on the table there, each potentially with multiple assets. So even if some don't work out, some might and then you have lots of shots on goal there to generate revenue. And we're bridging that with milestones, some upfront payments, we would like to consider in the vast majority of contracts that we would put forward.

And then milestones for clinical development, regulatory success, commercial and sales success, and royalties for a long period of time trailing. That's the goal. I think it might come as a surprise to some investors that we announce a deal because we can't really say much about these things as they're underway behind the scenes in the negotiation stage and really can only announce them, obviously, once they're inked. But hopefully, people start to see this is something we're going to be able to do. That's our intention over and over, and it shouldn't be a surprise that we achieve that over time.

Looking forward to seeing all the progress along the way. Thank you.

Thank you, Chris. Thanks, everyone. Appreciate it.

Thank you.

Good morning, and welcome to Novavax's Fourth Quarter and Full Year 2025 Financial Results and Operational Highlights Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Luis Sanay, Vice President, Investor Relations. Please go ahead.

Good morning, and thank you all for joining us today to discuss our fourth quarter and full year 2025 financial results and operational highlights. A press release announcing our results is available on our website at novavax.com, 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 strategic priorities, its partnerships and expectations with respect to potential royalties, milestones, cost reimbursements, the current macro and regulatory environment, the development of Novavax's clinical and preclinical product candidates, the timing and results of clinical trials, timing of regulatory filings and actions, its APA agreements and related negotiations, projected market opportunity, full year 2026 financial guidance and revenue framework, and Novavax's future financial or business performance, including long-term growth, savings and profitability targets.

Each forward-looking statement contained in this presentation is subject to 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 on our website, novavax.com. 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 non-GAAP financial measures, which are total adjusted revenue, adjusted licensing, royalties and other revenue, combined R&D and SG&A expenses plus partner reimbursements and non-GAAP profitability.

Please turn to Slide 4. Joining me today is John Jacobs, our President and CEO, who will highlight our growth strategy. Elaine O'Hara, Chief Strategy Officer, will focus on progress with our partnership strategy. Dr. Ruxandra Draghia, Head of R&D, will discuss our R&D updates; and Jim Kelly, Chief Financial Officer and Treasurer, will review our financial results and 2026 financial guidance and revenue framework.

Please turn to Slide 5. I would now like to hand over the call to John.

Thank you, Luis. I'm excited to be here today with members of our executive team to share our fourth quarter and full year 2025 financial results. We made significant progress on our corporate strategy in 2025, successfully executing against our existing partnerships while advancing our organic pipeline, innovation efforts with our Matrix technology and making progress towards new potential partnerships.

Our progress in 2025 was possible because of how we have reshaped the company since 2023 and with our new strategy, which we launched last year. Since the launch of our new strategy, we have evolved Novavax from a vertically integrated global commercial organization with a singular focus on COVID to a company that is focused on driving both near- and long-term value with our proven technology platform via partnering and R&D, supported by a lean and efficient operating model. We've also come a long way in stabilizing the company financially, doing so in a thoughtful, stepwise manner to maintain the capabilities needed to advance our strategy.

And we are successfully executing our plan. For example, just this January, we announced a new agreement with Pfizer for Matrix-M. This new partnership allows Pfizer to utilize Matrix-M in 2 disease areas within their vaccine portfolio with one disease area already identified. If Pfizer commercializes just one significant product based on this agreement, this partnership could generate billions of dollars of revenue for Novavax over time through a combination of milestones and royalties. This agreement further demonstrates the value other companies with vaccine portfolios see in Matrix-M.

Please turn to Slide 6. The changes we have made to date continue to strengthen our company, and we believe we can do even more to create value both today and in the future. As you can see on the slide, today from our existing partnerships, we have earned and received upfront and milestone payments, including those from our agreements with Pfizer and Sanofi, with over $800 million in nondilutive capital earned in the last 18 months.

Anticipated continued royalties from our marketed and partnered products, including Nuvaxovid and the R21/Matrix-M malaria vaccine. And we're pleased by the progress made by Takeda in 2025, where they delivered over 12% market share for Nuvaxovid in Japan and more than 30 million doses of the R21/Matrix-M malaria vaccine marketed by Serum Institute have been distributed to help people fight this disease.

In the mid- to long term, we intend to amplify this value through upfront payments from new potential partnerships, milestone payments from both new and existing partners for continued development of their assets with our technology. For example, Sanofi's combination vaccines with their flu products and our Nuvaxovid for which we are eligible for a $125 million milestone when their Phase III study initiates and/or development of additional assets with Matrix-M, for which we are eligible to receive launch and sales milestones of up to $200 million plus mid-single-digit royalties for each new vaccine Sanofi may choose to develop in the future using Matrix-M, plus a growing set of potential royalty revenue streams from multiple partners.

Please turn to Slide 7. In addition to partnering, the other key lever in our growth strategy is R&D innovation. We are focused on leveraging R&D to strengthen our technology platform, expand its utility both within and potentially beyond infectious disease and drive further proof points and data to develop new assets with which we can partner.

Our Matrix technology is a cornerstone of our partnering model, and we believe that we can build on our proven technology and expertise to create a portfolio of Matrix-based adjuvants to serve as an engine of innovation and value creation, reflecting our conviction that differentiated adjuvant offerings could represent a significant and expanding long-term growth opportunity for Novavax.

Importantly, this model potentially positions us to generate diversified recurring revenue across multiple partnered programs. For example, we're exploring the potential development of new Matrix-based adjuvants for oncology and some hard-to-treat infectious diseases, potentially opening an even wider opportunity set. And we are exploring new formulations of Matrix-M, such as dry powder with the intent to increase its utility in our own and in partnered candidate vaccines.

You will hear more about our approach to building a Matrix-based adjuvant portfolio from Elaine and Ruxandra later on in the presentation.

Please turn to Slide 8. In 2025, we continued our commitment to operate in a lean and efficient manner. Of note, during the year, we significantly decreased our R&D and SG&A spend. As we continue to advance our growth strategy, we intend to continue reducing our operating expenses while maintaining the capabilities needed to support the strategy. Jim will provide an overview of our operating expenses and guidance later on in the call.

We are pleased with the progress we made last year in 2025 and are excited about the potential that lies ahead in 2026, such as the potential for more partnership announcements, making continued progress across the spectrum of our R&D efforts, including the advancement of our preclinical pipeline and continuing to support our existing partners with implications for incremental milestone revenue. Elaine will address this component in her next remarks.

Before we continue with the call, I want to acknowledge that the current macro and regulatory environment in the United States poses some significant uncertainties for vaccine companies. However, we remain optimistic about the future of vaccines and of Novavax. Deadly diseases are here to stay, and people still need proven approaches to protect themselves and their loved ones from those diseases. This is a long-term, serious and meaningful endeavor to be part of, not a short game. And with continued execution of our growth strategy, we intend to see our technology fueling multiple new vaccines and immunotherapeutics across multiple partner portfolios with the potential to save millions and potentially even billions of lives over time, driving significant value for our stakeholders and leaving a global health legacy we can all be proud of. We look forward to the year ahead, and we approach it with enthusiasm.

And with that, I'll turn it over to Elaine to talk about our business development efforts. Elaine?

Thank you, John. As John said, we're excited about the potential for 2026. On the business development front, we're focusing on driving immediate value with our existing technology platform.

Please turn to Slide 10. We're pleased with the progress we have made on partnerships to date and have honed our capabilities in this area to drive future success. And we have proof points that this model is working. We are successfully executing on multiple partnerships and business deals since the launch of our company transformation.

Some of the highlights include, in January, we signed a license agreement with Pfizer, which provided Novavax with an upfront payment of $30 million with the potential for up to another $500 million in development and sales milestones across 2 disease areas, $70 million in development milestones and up to $180 million in sales milestones for each disease area, respectively, plus future sales royalties for 2 decades.

We have also signed new and expanded existing MTAs with a variety of pharmaceutical companies who are presently evaluating the potential of utilizing Matrix-M in their vaccine portfolios. This has included a new MTA with a large pharma company in the fourth quarter -- in February, the expansion of an existing MTA with a major global pharmaceutical company to include an additional field for exploration. And just this week, we signed a new MTA with an oncology company.

So as you can see, we are quite active on the partnering front, and there is a depth of interest in our Matrix technology. We're seeing that once vaccine-focused companies experiment with our adjuvant, they often come back to us to explore more broadly after seeing results from their initial experiments.

We have also continued to execute on our Sanofi partnership with all $225 million in eligible milestones achieved in 2025, and the expansion of our agreement to include Matrix-M in Sanofi's pandemic flu candidate program, which has recently received funding by BARDA.

In addition, we're excited about the progress of Sanofi's combined flu and COVID-19 vaccine candidates with each combined Nuvaxovid with their leading flu candidate as further proof of the potential value that our platform can generate. We are encouraged by the recent public updates from Sanofi that included positive Phase I/II results from both flu/COVID combination programs shared in December and their recent comments highlighting this product as a key driver of future new product growth for them.

Importantly, market research presented by Sanofi at last year's World Vaccine Congress suggests that 82% of those people who receive both influenza and COVID vaccines and 54% to 69% of those who receive one would adopt combo barring no material impact to reactogenicity and/or efficacy, thus indicating potential significant value over the current standard of care.

We've also seen continued execution of our other partnerships, where, as John mentioned, we saw market share gains for both Takeda with Nuvaxovid in Japan and Serum with malaria. Finally, we executed agreements related to our facilities as we rationalized our footprint. Agreements signed with AstraZeneca to transfer one U.S.-based facility and sell certain equipment netting $60 million in cash and resulting in future cash savings of up to $230 million and the sale of our Czech Republic manufacturing site to Novo Nordisk for $200 million.

So please turn to Slide 12. As we look to generate new partnerships, our goal is to create a funnel of interested organizations, all of whom may be in various stages of discussions with us, and we are partnering closely with our R&D team to facilitate these conversations in 1 of 3 ways: First, generating our own data to share with potential partners and providing Matrix-M to potential partner companies for their experimentation to help determine if they want to move forward in a formal partnership.

Secondly, continuing the exploration of potential new Matrix-based adjuvants. Matrix-M is our cornerstone adjuvant with broad utility, and this unique product is in our existing marketed products. We are working with our Matrix platform to develop new adjuvants each with their own unique attributes. The intention of this work is to create tailored adjuvants for disease areas such as oncology and difficult-to-treat infections.

Third, advancing our recombinant technology with our own internal pipeline of vaccine candidates such as C. difficile, shingles and RSV combinations.

In summary, as you can see from the slide, our strategy has several core pillars. We generate data for partner discussions, we expand the utility of Matrix to enable a portfolio of Matrix-based adjuvants and we create data from our preclinical programs to facilitate partnering discussions.

Please turn to Slide 13. Importantly, the focus of our R&D efforts is grounded in where we see market opportunity. The markets we are targeting have the potential to reach over $100 billion by the early 2030s, with the global vaccine market projected at over $60 billion in the next 4 or 5 years and the immunotherapeutic vaccines subset of the oncology marketplace projected to reach over $42 billion by 2032.

In addition, we're strategically directing our development work with the intent of creating differentiated assets. For example, our R&D team is exploring a multivalent adjuvanted C. diff vaccine candidate with potential for enhanced activity in a market where others have failed. If successful, this vaccine would address significant unmet need in this underserved population. Not only do we see this as a significant opportunity to reduce human suffering, but it also has the potential to tap into a projected over $2.5 billion total addressable U.S. market opportunity.

We believe our partnering strategy best positions Novavax for long-term success and shareholder value creation while maintaining the flexibility to internalize assets when strategically advantageous. With each partnership, including existing, expanding and new partnerships, we have the opportunity for upfront payments, development milestones and royalties for current and future commercial sales, ultimately creating the potential opportunity for Novavax to earn billions of dollars over time, assuming, of course, successful execution.

So Ruxandra will provide more detail on these programs supporting our business development efforts, and I'd like to turn the call over to her now.

Thank you, Elaine. Please turn to Slide 14. As John and Elaine have said, we are very excited about the potential in 2026 for R&D. We believe that our R&D efforts can generate incredible value for both our shareholders and the people who will benefit clinically from our innovations. The driving force behind [ this ] is our technology, which is front and center in our own pipeline of assets and R&D work and now in our partners' development efforts and pipelines. Let's take a look at each.

Please turn to Slide 15. On our in-house R&D efforts, first, we are expanding our efforts in infectious diseases with our internal early-stage pipeline, including programs targeting C. diff, shingles and an RSV triple combination. We are making steady progress with the intent to advance at least one of these assets into the clinic as early as 2027. As Elaine mentioned, we are intentional in moving forward with work that targets an unmet medical need and offers the opportunity for differentiation.

Please turn to Slide 16. Let's take C. diff, for example. This disease is a major public health threat, in particular, in the United States, Europe and in the elderly population, causing nearly 500,000 infections and tens of thousands of deaths annually in the U.S. Currently, there is no vaccine available. We have learned from existing data and applied available learnings when designing our antigens and implementing experimental plans. Multiple hypothesis might explain the type of data generated by previous vaccine candidates.

Previous vaccine candidates were toxin-based designed to neutralize toxins rather than kill the bacteria themselves. Consequently, vaccinated individuals could still become colonized and the vaccines might not have reduced the overall burden of C. diff in the gut.

Second, previous vaccine candidates might have generated insufficient mucosal immunity. Because C. diff infection is restricted to the gastrointestinal tract, protection is sought to require robust mucosal immunity, which we assessed in our very preliminary studies.

Third, previous vaccines might have targeted only 2 toxins, A and B. However, a proportion of clinical C. difficile isolates express a binary toxin, which these vaccines candidate did not cover nor did they cover any of the pathogens/antigens.

Please turn to Slide 17. As we started exploring how our technology might make a difference, we have been encouraged by early data. Our early-stage Matrix-M adjuvanted C. diff vaccine candidate uses a multivalent antigen approach, targeting a vast majority of circulating clades and rybotypes. Aside from immunogenicity studies, we have explored mucosal immunity and conducted challenge studies, results of which showed that this vaccine candidate outperform a 2-toxin alone comparator. We look forward to next steps and if successful, bringing this vaccine candidate into the clinic.

We are sharing C. diff just as an example today. As we've previously stated, we believe we can advance one of our preclinical assets into the clinic as early as 2027.

Please turn to Slide 18. Next, our R&D work is also looking at driving life cycle management and innovation for the Matrix-based adjuvant platform. Matrix positions us as a platform partner that can help to enable next-generation bacterial and viral vaccines because it has the potential to be utilized across multiple platforms such as in protein-based vaccine, our own vaccines are based on that platform, nanoparticles, inactivated toxoid conjugate or VLP vaccines.

Matrix-M has a remarkable broad utility. But in addition to Matrix-M and based on our expertise with this asset, we have used the know-how and history to explore the potential creation of other Matrix-based adjuvants with differentiated properties. In fact, a key focus for our R&D work with our Matrix technology is to broaden the utility of Matrix, both inside and outside infectious diseases, while also evolving the life cycle of this critical technology. This includes potential new versions of Matrix-M and new Matrix-based adjuvants as we look to build a portfolio of new adjuvants.

These efforts could enable expansion beyond infectious diseases, such as powering next-generation immuno-oncology strategies. Early research on this potential new adjuvants indicates that modifications to our technology have the potential to drive specific responses such as robust CD8 positive T cell activation responses as part of a comprehensive immune response.

Please turn to Slide 19. Beyond our in-house R&D efforts, the impact of our technology has the potential to be amplified via our partners. First, we have marketed products, which include our technology, Nuvaxovid and the R21/Matrix-M malaria vaccine. In line with our strategy, our R&D efforts are designed to be an innovation engine for Novavax, supporting partnerships through our BD team.

Elaine discussed the development work Sanofi is undertaking and could undertake in the future and the recently announced partnership with Pfizer with the potential for development of 2 vaccine products utilizing Matrix-M with one disease area already identified. And as Elaine mentioned, we have multiple MTAs in place as well as ongoing conversations with other parties about the potential of Matrix-M and the portfolio of new Matrix-based adjuvants.

Our partnering discussions have the potential to result in collaborations and partnerships focused on a variety of areas across the respiratory, nonrespiratory and oncology markets and other areas, perhaps not yet contemplated. Of course, our approach hinges on the fact that in every instance, whether it's adding our technology to other platforms, creating new candidates with our own platform or creating a new portfolio of adjuvants, we strive to offer something new and different to potential partners.

This R&D model, coupled with the infrastructure we have built using our deep bench of expertise and AI and machine learning enable us to quickly and efficiently explore opportunities in a low-cost, high-throughput manner with the potential for earlier value creation for the company.

With that, I'll now turn the call over to Jim to discuss our financial results in more detail.

Thank you, Ruxandra. Please turn to Slide 20. This morning, we announced our financial results for the fourth quarter and full year 2025. Details of our results can be found in our press release issued today and in our Form 10-K filed with the SEC.

Please turn to Slide 21. I will begin with key highlights from our fourth quarter and full year 2025 financial results. We reported total revenue of $1.1 billion, a 65% increase year-over-year. As a reminder, our current year revenue results include $625 million that is primarily noncash revenue recognition from the resolution of Nuvaxovid APA agreements with Canada and New Zealand announced in the first quarter of 2025.

For the fourth quarter of 2025, we reported total revenue of $147 million, a 67% increase compared to the same period in 2024. In addition, we reported positive income for both the full year and fourth quarter of 2025. We believe this reflects important progress as we improve our financial performance on many fronts, including addressing historical liabilities.

During 2025, we continued to drive down our combined R&D and G&A expenses. On a non-GAAP and net of partner reimbursement basis, we reduced these costs by 42% and 53% for the fourth quarter and full year 2025, respectively. We accomplished these reductions while continuing to execute on partnership commitments and targeted core R&D investments to drive value.

Novavax ended 2025 with $857 million in cash and accounts receivables. In addition, we added another $80 million of nondilutive cash in the first quarter of 2026 including a $30 million Pfizer agreement upfront payment and a $50 million initial draw from the new $330 million credit facility announced today. We executed this new credit facility with MidCap Financial to enable flexibility and continued access to nondilutive capital as we execute on our growth strategy.

Based on the combination of our year-end 2025 cash and receivables and the $80 million in nondilutive cash in the first quarter of 2026, we believe we can fund our operations into 2028 without contemplating any new cash flow to Novavax. That said, we do anticipate the addition of significant cash flow from partners over time.

Please turn to Slide 22 for a recap of our full year 2025 financial performance compared to our revenue framework and expense guidance. A reminder for all is that our non-GAAP adjusted total revenues exclude Sanofi supply sales and royalties that totaled $22 million in 2025. On a non-GAAP basis, we achieved $1.1 billion in adjusted total revenues. This was approximately $50 million higher than the midpoint of our revenue framework range and was driven by additional Nuvaxovid product sales, primarily to Israel as we delivered doses on an amended APA schedule. Additional adjuvant supply sales and royalties from Takeda and the Serum Institute as they continue their successful marketing of Nuvaxovid in Japan and R21 malaria vaccine in Africa, respectively. And finally, $22 million additional from R&D reimbursements from Sanofi related to clinical supply and support for commercial manufacturing preparations for the 2026, '27 season. These points highlight strong execution as we support our customers and partners and advance our growth strategy.

For combined R&D and SG&A, I'll begin with GAAP performance of $500 million that was approximately $20 million favorable to the midpoint of our guidance. This was primarily related to R&D cost reductions and lower spend in the fourth quarter. On a non-GAAP basis, the approximately $42 million favorability result comes from a combination of the $20 million in lower GAAP R&D spend and the $22 million increase in Sanofi R&D reimbursement noted earlier.

Please turn to Slide 23 for a detailed view of our fourth quarter revenue results. For the fourth quarter of 2025, we recorded total revenue of $147 million, a 67% increase year-over-year. A few comments on fourth quarter results. Nuvaxovid product sales of $20 million was split between Israel APA deliveries and Novavax sales to other global markets. Supply sales of $19 million reflected both Nuvaxovid finished goods sales to Sanofi and Matrix-M adjuvant sales to our partners.

Sanofi licensing, royalty and other revenue of $98 million was primarily driven by the $50 million in milestones for the achievement of MAH transfers for both the U.S. and Europe and $28 million from R&D cost reimbursement in the period. We look forward to Sanofi's Nuvaxovid commercial efforts in 2026 and beyond. Importantly, 2026 reflects the first year where Sanofi is in a position to leverage all the commercial tools to compete effectively in the U.S. and global markets.

Please turn to Slide 24. We made significant progress improving our cost structure in the fourth quarter of 2025, and I will focus my comments on our non-GAAP results for combined R&D and SG&A net of partner reimbursements. We delivered a 53% decrease in the fourth quarter of 2025 with major contributions from both R&D and SG&A as we executed on our cost reduction program. This highlights that excluding the R&D reimbursed by partners, our fourth quarter cost structure is just under half the size of where we were a year ago and annualizes to a $328 million run rate, highlighting that we are on track for a significantly lower spend profile as we enter 2026.

Please turn to Slide 25. Now since I've covered most of fourth quarter and full year financial results already, I'll emphasize the positive operating and net income for both the fourth quarter and full year 2025.

Please turn to Slide 26. Taking a moment to recap accomplishments made towards improving Novavax's financial strength and performance. Key takeaways from this work are that we've put Novavax in the position to have an estimated cash runway into 2028 and prior to contemplating any new cash flow into the company as we drive towards our goal of non-GAAP P&L profitability as early as 2028.

Keys to the timing of our path to non-GAAP P&L profitability are the successful development and regulatory approval of the Sanofi flu/COVID combination program and successful commercial execution by Sanofi on both the COVID and combination programs. This could be further supported by any additional cash flow from new business development agreements and further cost reductions.

Please turn to Slide 27 for a review of our multiyear combined R&D and SG&A expense guidance. We are committed to continuing to streamline our operating expenses to enable value creation. Today, and for the first time, we are providing our 2028 guidance of $200 million or below. This 2028 target calls for a $200 million and approximately 50% decrease compared to 2025.

For 2026 and 2027, we're improving our non-GAAP combined R&D and SG&A expense guidance by $25 million each year to $325 million and $225 million, respectively, at midpoint. Importantly, in 2026, we anticipate operating at an approximately $200 million core spend profile when excluding costs tied to completion of partner and APA performance obligations. These include non-reimbursed Sanofi R&D support and COVID strain change and commercial manufacturing support of approximately $125 million and $25 million in 2026 and 2027, respectively. As these near-term activities are completed, we expect to be in a position to further decrease our cost.

We recognize that reducing cost is only part of the value equation. Novavax's core combined R&D and SG&A run rate of approximately $200 million or below is focused on a targeted R&D investments to unlock value from our technology, including advancement of the early-stage pipeline with the potential to bring at least one program into the clinic as early as 2027, generation of new data supporting partnering Matrix-M, advancing our adjuvant technology for both infectious disease and oncology use, including new formulations as we look to build a portfolio of adjuvants and support for our ongoing Matrix-M manufacturing operations.

Please turn to Slide 28. Now turning to our 2026 revenue framework. For 2026, we're following an approach similar to the 2025 revenue framework in that our non-GAAP adjusted total revenue excludes Sanofi supply sales, royalties and milestones from CIC and Matrix-M. This means there may be revenues in 2026 that are additive to our expectations for adjusted licensing royalties and other revenue.

We believe that in the 2026, '27 season, Novavax royalties will grow significantly as compared to 2025 as 2026 reflects the first year where Sanofi is in a position to leverage all the tools needed to compete effectively in the U.S. and global markets.

For 2026, we expect to achieve adjusted total revenue of between $230 million and $270 million. This includes $35 million to $45 million of Nuvaxovid product sales under existing orders to Israel and Germany, $40 million to $50 million of adjusted supply sales to our license partners, which primarily reflects sales of Matrix-M, $155 million to $175 million in adjusted licensing, royalties and other revenue consisting of $70 million to $80 million in R&D reimbursement as we continue our R&D support and technology transfer activities for Sanofi. $50 million to $60 million from other partner revenue from Takeda, Serum Institute and Pfizer, including the $30 million upfront payment under the Pfizer agreement received in the first quarter of 2026. And finally, $35 million of noncash amortization related to the previously received upfront and R&D milestone payments from Sanofi.

While our current revenue framework excludes the potential for the $125 million milestone linked to the initiation of a Sanofi flu/COVID combination Phase III study, we are encouraged by Sanofi's progress and public comments and look forward to sharing updates in the future.

In addition, we are highlighting our expectation that we will be earning the Sanofi $75 million technology transfer milestone although we are excluding this milestone from our 2026 revenue framework at this time. This is due to the recent Sanofi request that we complete a subset of these tech transfer activities at a new manufacturing site, and we are evaluating the potential timing impact of this request. We don't anticipate the outcome to impact either our stated estimated cash runway or vaccine supplies for the current or future seasons.

We look forward to sharing additional updates as we 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. In summary, we are proud of our progress in 2025 and look forward to continued progress this year. We have started the year off strong with the new Pfizer partnership and look forward to executing against this agreement and our Sanofi agreement this year while continuing to pursue new partnerships.

We're also excited about the continued advancement of our R&D efforts, including our early-stage pipeline, Matrix-M life cycle management and the exploration of new potential Matrix-based adjuvants. We are executing our growth strategy and believe that we are on a path to deliver long-term sustainable value.

Thank you to our shareholders for your support. And as always, we appreciate all of the hard work and dedication of our employees without whom the success would not be possible.

I would now like to turn the call over to our operator for Q&A. Operator?

[Operator Instructions] Your first question comes from Roger Song with Jefferies.

Maybe 2 from us. So one is we know Sanofi is about to have a new CEO. Just curious, based on your interaction with them or recent interactions, any updated views, strategies on their vaccine business? We saw quite a few M&A in the past couple of months, but just curious about the new management or the new leader for the vaccine business. And particularly, if anything you can give us some comments around the 2026 expectation for the COVID sales, that would be very, very helpful.

And secondly, totally here, you used the C. diff as the example for your pipeline showcase. Just curious about your early pipeline, any prioritization you are contemplating understand the first IND as early as next year into clinical.

Thank you, Roger. Great to hear your voice. Appreciate you joining us today. Let me take on your first question about the new CEO. The new CEO for Sanofi is not in place yet. There's a long history with Sanofi. But we -- our connectivity with our partner has not changed at all. They're outstanding partners, completely transparent and positive relationship. We're very pleased with Sanofi as a partner. And the folks we work with on a daily basis are there fully engaged and nothing has changed. So we see a continued bright future with that partnership.

And I think you had a follow-up question then from there on potentially the fall season. Elaine, did you want to touch base on that?

Yes. Thanks, John. I'll just take that. Hopefully, Roger, this is the question that you asked around the COVID, the upcoming COVID season. So we're very excited about the upcoming COVID season. Just to pick up on John's point, we obviously have multiple teams that work across both companies as it relates to COVID and future programs with Sanofi. And we've been working expeditiously over the last -- since we signed the collaborative license agreement back in 2024, both for last year's season and this upcoming season.

This season is going to be the first real full season that Sanofi will be selling Nuvaxovid globally. And so all of the plans that we've been engaged on with Sanofi over the last year, very deep. Obviously, they've had a time to get through their contracting cycle at the retail level. This is the first full year that they'll have had the ability to do that.

And so yes, the upcoming season looks very promising. They have direct-to-consumer advertising programs that they will be initiating later this year as well. So it looks like all systems go from a good -- for a good season in the 2026, 2027 year and season for Nuvaxovid.

And then Ruxandra, did you want to take Roger's question? Roger, I believe you were asking about our pipeline. And if we have priorities, we chose to share some information about C. diff today as an example. Rux, did you want to take that one?

Yes. Thank you, Roger. So indeed, we have chosen to give an example in C. diff. But of course, we are advancing with all the other early programs, the VZV, the RSV triple combination as well as the work around Matrix in -- both in the sense of new formulations and maybe new Matrix-based adjuvants. So all these programs are advancing each and every one at their own pace. There are actually very interesting results that we are generating in the preclinical space with each and every one of these programs, and we are looking forward in the future to sharing with you data from other programs. And thank you for the question.

Your next question comes from Tom Shrader with BTIG.

Just kind of a broad question. I assume you don't want to build another vaccine commercial framework or at least you'd love help. As you look for partnerships for the Matrix-M, are co-promotes attractive? Is that something we might hear about.

And then a very different question for Ruxandra. You've obviously piqued our interest that you've already tweaked Matrix-M to get a bigger T cell response. How do you develop from here? Do you need a partner with a vaccine, maybe a cancer vaccine? What are the next steps we might look for because it's certainly an exciting comment?

Tom, thank you for your questions, as always. And number one, as you know, Novavax has gone through a remarkable transformation in the last 3 years with this -- with the new management team and our focus and new strategy. And we've cut out our commercial capabilities, reduced expenses and are really focusing on partnering business development under Elaine O'Hara's leadership, who's with us here today and R&D under Ruxandra's leadership.

And so we reserve the right always, of course to think about down the road, doing some kind of commercialization or co-promote, et cetera, with a product that might really be a game changer in a blockbuster if we were to get one out of the clinic. But our core focus right now is not that. So we'll be open-minded. If we get a real winner coming out of there and it looks exciting, we'll make the right decision to drive value for our stakeholders, for Novavax and for everyone who's counting on us when that time and if that time were to come.

But our intention is lean investment, drive data and proof points for our tech, invest in Matrix as a platform creating -- our intent is to create new adjuvants tailored specific adjuvants for different purposes, both within and outside of infectious disease. We have a vision to have a portfolio of adjuvants based on this Matrix technology, starting with Matrix-M, which as we all know, is a remarkable adjuvant and product. That's our focus.

And our new pipeline of assets, which we shared a bit about C. diff today, we're very excited. We're excited about all 3 of those assets right now, but we chose that as an example. Such significant unmet need there with C. diff. And I will say very quickly, Tom, we -- my family felt the impact of that as my sister-in-law lost her best friend to C. diff infection and the sequelae following that on a routine procedure in a hospital. So quite a difficult condition to treat, and we really hope we can bring forward a vaccine that would be meaningful.

So then the other point on your question, go ahead, Ruxandra, about Matrix.

Yes. Thank you, Tom, for the question. So we are actually using our know-how and historical knowledge of not only Matrix-M, but this entire adjuvant field in order to create new formulations and new variants, versions of Matrix-based adjuvants that can be tailor-made to specific immune responses. Of course, that is a type of work that is undertaken in-house by our teams -- and when those types of new variants of Matrix will be actually completely tested and ready to partner, of course, that we are going to offer them to our partners in different fields like in oncology or in hard-to-treat infectious diseases as we have actually -- we, Elaine and her team went and realized these fantastic deals around Matrix-M. So internal work in view of partnership.

Your next question comes from Anupam Rama with JPMorgan.

This is Joyce on for Anupam. It's great to see the continued progress on new Matrix-M partnerships. I think you noted one of your agreements this month was expanded to explore an additional field. I was just wondering if you could provide any more color on that.

And then just broader, what is your view on the potential time horizon for these MTAs to turn into more formal partnerships? Just at what stage of development or evidence generation do you think you could start having those conversations with your partners?

A really great question. I'll have Elaine elaborate on that. Elaine's team leads our efforts on business development and the strategy on how we approach partners, which she shared some of in our prepared remarks earlier today. There's a methodology to that, that starts with R&D, with data that Ruxandra and her team generate and then Elaine and her team are able to share that data in partnership with our R&D colleagues with potential partners.

And one comment I'll make and hand it over to Elaine for a little bit more elaboration on the process and what we might be able to expect. But what we're seeing is as other companies start to experiment with Matrix, learn more about it, most often, they're coming back to us to do more. And you heard that in some of Elaine's comments today.

Elaine, you might want to elaborate there.

No, thanks very much, John. So in some instances, we create and generate data ourselves internally to utilize and have that presented to various partners in partnering discussions. In other instances, we allow and provide Matrix-M to companies to test and experiment in their own clinic and in their own preclinical situation across either existing vaccines or vaccines that they may have in development.

And as John mentioned, what we're seeing at the moment is several companies are coming back and asking to expand that opportunity to other fields, whether it's bacterial, viral situations and most recently, even oncology as well. So we're very excited about that.

The time line is TBD. We don't have any -- necessarily any control over that because it's up to the partner in terms of what they're developing and how long that time line is going to sort of unfold. But that's why, obviously, we work with our partners then to gain an upfront payment for the ability to utilize Matrix-M and go through a collaborative license arrangement then where we can receive various milestone payments depending on when those partners hit those milestones as well as royalties in the future as well.

So that's really the structure of the and strategic sort of direction that we move in with our partners, and we work very closely with them in many situations to get them from the start to the finish. And then obviously, they take it over themselves as well as they move Matrix-M through their own pipeline. So hopefully, that answers your question. Thank you.

Well said, Elaine. And Pfizer was one of -- just to build on that a little bit, Pfizer was one of the first organizations as our new strategy began to launch to begin assessing the potential of Matrix-M as we were focused on out-licensure of our technology and making this a cornerstone of the future for Novavax.

There's been multiple potential partner discussions behind that and all at different stages. And we're not in a position to ever promise or commit that we're guaranteeing anything about another partner coming on board, but we can say that we have a pipeline of potential partners that is now building and growing.

And as Elaine said, we had a large global pharmaceutical company, a top 10 kind of company that came back to us to expand their MTA into another field to explore. So as these companies learn and they see Matrix, Matrix won't work for everything, nothing works for everything. But it often works to solve problems and help these other companies unlock value or value potential in their pipelines. And as they see that, they're coming back again and again to us to expand and create additional opportunities with this asset.

So we're excited. We anticipate and intend to drive additional partnerships in the future, and we will share those with you when they're inked and done should that occur. We can't say much more about it before that other than a lot of traction, a lot of work behind the scenes, all at different stages of progress and dialogue toward that eventual intended end.

Your next question comes from Mayank Mamtani with B. Riley Securities.

Congrats for the momentum you have on partnerships and pipeline...

Thank you, Mayank.

Impressive discipline on spend scale down. So my 2 questions. One on the respiratory vaccines, FDA and also ex U.S. regulatory road map, what's your best understanding since you do have some correspondence relating to your own Phase III stage programs, CIC and flu. And there's obviously the Sanofi-partnered CIC program -- I don't know to what extent you've compared the 2, the Sanofi partnered and your own wholly owned CIC program. And I was just curious if this uncertainty starts to clear up, like what is sort of the way to assess value of your own 2 clinical stage programs? And then I have a follow-up.

Mayank, I apologize. So I just want to make sure we understood your questions. So first, I believe you were noting that we had received some feedback in the past on our CIC and flu programs. Obviously, we're not making further investment ourselves in those programs. We're looking to out-license those and partner those.

And I believe you were asking us to compare and contrast that with some of the things that have been disclosed in the public domain from Moderna and others recently. Was that your question [indiscernible] any insight?

And also the Sanofi data, we learned some in December. So there is, I think, a way to compare at least a high level, your CIC program with the Sanofi program. So I was just curious if that Sanofi program does go into Phase III, is there a way to ascribe value to the 2 programs, which I understand you're not investing, but are partnerable assets?

Got it. Well, what I can say about that, Mayank, is we were very pleased to see our partners advance both of those programs, 2 combination vaccines with their 2 flu vaccines, their leading high-dose flu vaccine, right, and Flublok and Fluzone High-Dose with our proven COVID vaccine. Very exciting.

And there's been more recently -- and as you know, we can't and won't speak for our partners. But what we're excited to see are their comments in the public domain and their CFO was recently out on the road with analysts and investors, and they've publicly been speaking about the importance of these combination programs to their future as they start to contemplate the post-Dupixent Sanofi and how important that is.

So I encourage everyone to take a look at those comments from Sanofi leadership in the public domain as they're getting ready for further leadership change, they've been quite direct about how important these assets are and how excited they are about it and have noted regulatory review, this is their words, not ours, expected in the '27, '28 time frame. So we're very excited about that. They're outstanding partners. They have tremendous capability in the vaccine space and a leadership position in flu globally, and we see a bright opportunity there.

There's a pathway forward, we believe, and that we're encouraged by Moderna's progress with their flu vaccine. So what we're seeing there in the public domain, you can see and our investors can also see. So we're seeing a pathway forward there and ability to negotiate and work with the current administration. We're also hearing from the current administration that they believe in vaccines and want them to move forward.

Obviously, some of the positions they've taken our industry and our scientific community may not agree with all the time, certainly. But there seems to be a pathway forward here, at least from what we can see together. So just making comments on what we see publicly, what our partners have said publicly, we couldn't be more excited about our future here and looking forward to next steps and hearing more from Sanofi.

Very helpful color. And if I could ask a follow-up on your expected annualized run rate you want to be at ending this year. I know you mentioned you're at about $320 million ending 2025. So I want to understand target for year-end since it's a big step down '27 -- sorry, '26 to '27. And maybe just a bit more color on the new manufacturing site request from your partner, Sanofi, if any color you can give there more on time line of resolution there?

Thank you, Mayank. So I think I'll have Jim cover your questions about costs. I think very importantly, you heard in Jim's prepared comments, some non-GAAP description about the core costs for our company and then obligations we have that are trailing and the end stage of those trailing obligations on remaining APAs and tech transfer activities and things like that, that we're supporting our partner, Sanofi with. And that you can see very -- hopefully, very clearly in the provided slides and here in Jim's commentary, how those costs are anticipated to roll off towards the end of this year in a large part, those extra costs on those trailing obligations and that we then get closer to the core where we're operating our business. Jim, why don't you comment further on that for Mayank?

Yes, certainly. Mayank, as you've watched the evolution of our cost structure, a couple of important points to think about in 2026. One in particular is that, a, we exit 2025 fourth quarter and an annualized rate that is consistent with the non-GAAP $325 million that we are guiding to in 2026. That said, when you -- while I'm not providing quarterly guidance, it is worth noting that it will be a bit front-end weighted for the following reasons. When you think about our preparations for the fall season and the type of manufacturing support and route to the fall, much of that work happens in the first and the second quarter of the year. So that's the first reason why you'll see a higher amount in the first part of the year.

A second part is, as you might remember, we're supporting Sanofi on numerous R&D activities, including a post-marketing commitment, the majority of which will be front-end loaded into the year, a portion of which we're covering as well. So on that net of reimbursement basis, you'll see some incremental spending there as well. So therefore, the shape of our spend throughout the year towards our full year targets will be more front-end loaded for the reasons I just mentioned. And that is why as we look towards our ability to hit the appropriate both quarterization at the end of 2026 but also acknowledging that there'll be a drop-off in certain spend profiles as we complete activities, that's the shape of the business for 2026. So hopefully helpful on that front.

And Elaine, did you want to address the question about the tech transfer?

Yes, absolutely, John. So thank you. Yes. So we -- as I mentioned earlier in one of the questions-and-answer sessions, we have multiple teams working very collaboratively, both with Novavax and Sanofi and one of those is actually a tech transfer team as well. And Sanofi made the decision to actually fully realize all of the tech transfer to a U.S. facility. And so as a result, that's just going to extend the time line for the tech transfer and take a little bit longer. That decision was recently made. All of their capability for the manufacture of Nuvaxovid will actually occur in the U.S. So again, we're supporting them and working with them to make that happen. Again, it doesn't affect, as Jim mentioned, our -- the health of Novavax from a cash perspective. And so I just wanted to give a little bit of additional information and context on that.

Jim, any further comments there?

I would reiterate that, first of all, Sanofi, amazing partner. We've got the same conviction and confidence that we're working with the right partner, and we're going to help them do what they need to do to get all the technology transferred into their hands to manufacture effectively and have supply available for coming periods. So we don't see any impact on that. It's just simply working with the team on what I outlined as a subset of activities. So that's fine.

And then I made a reference earlier about the milestone, $75 million. We'll come back to you regarding the implication and timing on that. It doesn't impact our cash runway. It doesn't impact, in our view, the likelihood of achievement. It's just simply working through some details with what we think is an excellent partner.

Your next question comes from Pete Stavropoulos with Cantor Fitzgerald.

This is Sarah on for Pete. Congrats on the quarter progress.

Thanks, Sarah.

Question on Nuvaxovid. You've described 2025 as the transition and 2026 is the first commercial year for Nuvaxovid under Sanofi control. And so how much of that COVID 2026 uptake assumption depends on contracting wins versus physician patient-driven pull-through? And then additionally, can you just remind us how many MTAs are currently in place?

Good questions. I'll have Elaine comment a bit on the nature of contracting. We wouldn't be able to disclose for our partners the percentage or the wins or things like that. But certainly, contracting matters in the United States is the vast majority, over 90% in my recollection of COVID distributions in the United States have been through retail pharmacy. And that contracting begins the year before wraps up in sometime around second quarter the next year, and they're deep into that process right now, and it's very important.

They were able to start that process this cycle for the first time because they had the BLA now in hand, the full -- all the tools, all the pieces in place at the end of last year, so they could start that full cycle negotiation with retail. So it absolutely matters in the U.S. marketplace, and they're in it from the beginning, and that's the first time for Nuvaxovid under BLA that we've been able to have our asset in the hands of a partner at that full cycle with all the pieces in place for them to work their knowledge and experience to begin to optimize over time, the penetration of the market for our asset.

Elaine, anything to add to that?

No, that's it, John. I mean, again, the cycle for Sanofi starts in November of the previous year. By the time they hit March, April time frame, those contracts should be wrapped up. I can't speak to the volume or the level of detail since they have full commercialization rights. So that is TBD yet, but we're very inspired by the conversations that we've had at our joint commercial committee that the 2026, 2027 season is going to be a full cycle season, again, based upon all of the components from a marketing perspective that they aim to put in place. So hopefully, that answers the question.

Yes. And the other question was about the number of MTAs. So we haven't disclosed all of the MTAs that might be signed. We're being very careful and selective. Like I said earlier, Sarah, in my prepared comments, since I joined the company in January of 2023, I've never seen this level of interest, but it's not surprising because Novavax historically, when they had first acquired the asset, brought it forward, right, through eventually R21 and a COVID vaccine. So those were the first assets that showed the world this adjuvant can make a difference.

And then we transformed this company over the last 36 months to focus on out-licensing our technology and really making the world aware of that. And our R&D team was generating data to show that we have utility across multiple vaccine platforms, which was part of our comments today. And that Elaine, I brought Elaine in as our Chief Strategy Officer. She created a new capability here in Novavax to really start to negotiate these kind of things, reaching out to partners.

And it's through the efforts of our employees here, Elaine and her team, Ruxandra and our R&D team and the concerted efforts and focused strategy that we've enabled the awareness of this amazing technology and help to enlighten others as to its potential. And then when they experiment with it themselves, most often, they're seeing the results and they're seeing it has the potential to unlock problems they might have been wrestling with for a while, unlocking value potentially in their portfolios. And then we see the actions from Sanofi. We see the actions from Pfizer.

And under the new strategy, Pfizer was one of the first to be approached by Elaine and her team in this new construct post the Sanofi deal. That's turned into a deal that could, assuming successful execution by Pfizer, result in billions of dollars in future revenues and value for Novavax and all of our stakeholders. So there are many MTAs in place. We announced that we had existing partners ask for expansion or amendment of that MTA.

Elaine, you may want to comment a little more. You just signed a new one in the last week with an oncology company.

Correct, John. Yes. Actually, we've had some interesting weeks here in February with signing a new MTA with an innovative oncology company and then also an additional signature for an amendment for a large-cap pharma company to expand their initial MTA to cover another pathogen that they're interested in pursuing.

So lots of interest. And again, we're delighted with that. Our goal is to accommodate our partners in every which way that we can from our research and development perspective to support all of the initiatives that we have with our partners at the moment. And so we're very excited about the future.

Your next question comes from Chris LoBianco with TD Securities.

Congrats on all the progress over the last few months.

Thank you, Chris.

Can you provide any color on the specific characteristics or potential differentiating factors of Matrix that were most attractive to Pfizer? And then I had one follow-up question.

So we're -- Chris, just so my team could hear it, we had a little bit of trouble hearing the question. I believe you were asking, can we comment on the differentiating characteristics of Matrix that were attractive in particular to Pfizer? Is that -- did we hear you correctly on your question?

Yes.

Yes. We won't be able to comment specifically on what Pfizer might have found attractive because Pfizer is keeping that confidential due to competitive reasons. But obviously, they saw significant value to sign such a meaningful potential deal with Novavax that's now on the books, and they're moving forward with their work. One of the 2 fields that they're allowed to explore with Matrix through the agreement has already been selected and they're contemplating the second.

So -- but I think Ruxandra and Elaine could comment, maybe Elaine from a business perspective and Ruxandra from a scientific perspective, in general, why Matrix is such a powerful tool and why others in general, may be interested in it, Elaine. And then Ruxandra, please.

Just very quickly, from a business perspective, I think Ruxandra said this in her commentary earlier on, Matrix has a lot of flexibility. The platform, the technological platform is very flexible, and it can support many vaccine platforms. I think that's very attractive.

The whole nature of an adjuvant is that it can provide and enable a more targeted or specific or a broader immune response. And so with each one of those value propositions, what we -- when we have discussions with partners, obviously, they're interested in any or all of those. And that is largely the discussion that we have.

And as I said earlier, they then take that back to their clinic to their preclinical situation of their clinic. And then that, as John mentioned, potentially helps them to either solve a problem or unlock additional value for their vaccine or their portfolio of vaccines. Rux?

Yes. Thank you, Elaine. Excellent point. On the top of what Elaine just mentioned, we might remember that in the clinical studies, we have generated significant amount of data showing that Matrix-M as an adjuvant is associated with a very favorable reactogenicity tolerability profile.

So together with this broad type of immune response in combination with different vaccine platforms and different types of antigens being bacterial, being viral, now in our latest explorations in oncology, we are looking to actually capture and capitalize on all these characteristics, a broader immune response plus a tolerable profile. So I think that those might be some of the criteria that are serving as an impetus for potential partners to come to the table and start the conversation.

That's great. That's very helpful. And then second question is, do you think there is more upside or downside risk for Nuvaxovid from the upcoming [indiscernible] 2026 ACIP meeting? And can you remind us if there is data that shows differentiation on long COVID and safety for Nuvaxovid relative to the mRNA COVID vaccines?

So I'll let Ruxandra comment on the long COVID question and the differentiating data. Regarding ACIP and upcoming interactions with the FDA and regulators and different decision-making bodies, we see -- we're optimistic about a pathway forward. Last year, the season rolled out and everyone was out at the same time, et cetera. We're anticipating the same thing to happen this year. But until it happens, you know what we know. So we can all see it in the public domain.

There's a meeting now on the books. So that's good. And we'll pay attention to that. And as that unfolds, we'll roll with it. But we are doing everything we can to ensure that we are prepared to support Sanofi in their commercial efforts in the U.S. marketplace this year. So we're ready with supply for Sanofi. We understand the strains that are circulating, and we've been focused on that. Our team knows how to do that. Sanofi certainly is a global expert at doing that with their flu. We collaborate very closely with them.

So we are ready. We are poised and what's beyond our control, we'll watch unfold together with you, and we'll go with the flow on that. But we're anticipating a pathway forward. We do not anticipate choice being completely removed from the American population on important tools like vaccines. But again, that's my personal opinion. That's our team's thought about it. We know what you know. We can watch it in the public domain. So let's see.

But we do expect and anticipate optimistically a season to unfold this fall and are looking forward to seeing, assuming that smoothly goes this spring from the regulatory authorities, how well Sanofi can perform now in their first full cycle launch.

As far as your question around long COVID, epidemiological data published in high-level peer-review publication has actually pointed to the fact that vaccinated individuals have a lower risk of developing long COVID compared to unvaccinated individuals in different populations and geographies. And obviously, with any vaccinations, in particularly boosters are associated with this lower risk of long COVID per the published literature. So I don't know if that answers your questions, but at least whatever is out there as peer review data is showing this particular association.

Your next question comes from Geoff Meacham with Citigroup.

This is Jarwei on for Jeff. Really exciting and encouraging to hear that you guys are expanding the pipeline opportunities beyond respiratory vaccines. Maybe just thinking about C. diff, shingles and RSV, what will inform timing for moving that into 2027? Could we -- could this possibly be more of a 2028 situation? And then also, could partnerships or potential partnerships for these programs influence expediency and selection on which one gets moved in the clinic first? And is that something you're exploring as well, partnerships that is?

Thank you for your question. And very importantly, your question focuses on one of the key elements of our R&D strategy and how R&D is supporting our efforts. Very importantly, the investments we're making in R&D are multiple and important to support primarily Matrix, that technology to expand the utility of Matrix to create new formulations of Matrix-M, such as dry powder, et cetera, and also working on the creation of new adjuvants based on the Matrix platform with the intention over time, should we succeed there of having a portfolio of adjuvants that are tailored and specific to target some very difficult to treat infectious diseases to go beyond infectious disease into oncology for specific types of oncologic conditions.

So very -- that's where we're really focusing a lot. We have experts here on the scientific side in Sweden with Novavax that understand Matrix and for years, have worked with it and a lot of expertise in Rux's shop on that. Another key element, generating data and proof points that our business development team can utilize.

And then third, but not last, that's important, we have some early-stage assets in development. The goal of that is to further -- to your point, Jarwei, is to further partnering opportunities and also to generate more proof points and data. So all along the way, and we're learning from each of these approaches. And combining that synergistically with our efforts on Matrix to further inform how we approach building this potential library of adjuvants, if you will, that we're working on.

When it comes to expediency or timing, what we've said is as early as 2027, we could be in the [indiscernible] humans with one or more of these assets should we choose. We're not disclosing exactly where we are on time lines right now, but we feel confident in saying that at this point.

Elaine, did you want to elaborate further?

Thanks, John. I mean the only thing I would say is, a, we selected these antigens and these programs because we believe that they have a significant market opportunity, but also address unmet medical need. Each one of the programs has its own unique path forward from a preclinical perspective and also its unique opportunity in the marketplace as well.

The way that we selected these programs was based upon competitive landscape, opportunity and other characteristics. And as John said, we will attempt and move into the clinic in 2027. That is our goal. And as we have data that's relevant to a potential partner, we will begin those discussions with those partners as they become available. That's the goal.

And Ruxandra, we're deeply into the preclinical work on all 3 of these programs, slightly different stage for each. We chose to share some information today on C. diff because it's obviously such a huge unmet need globally. There's no vaccine available. Others have -- importantly, Jarwei, others have tried and failed at least in their initial attempts to create a vaccine for C. diff, and we see companies going for that again now and trying.

Our team was able to learn from there's a lot of data out there in the public domain and publications learn from those past attempts. And you heard some of the commentary from Ruxandra on how we're approaching this very differently from a multivalent antigen perspective, antigen versus toxin perspective, other things like that, that are very important. And of course, we have Matrix-M.

And so we're very excited about what we're seeing. We're standing by our commentary that as early as '27, we could be in the clinic with one or more of these. And again, it's providing value to us in these behind-the-scenes discussions on business development.

And the last point there, obviously, any management team, executive team working on a strategy like ours will always know more about where we are than we're allowed to share with everyone in the public domain. We won't make and cannot make promises about success on any of these endeavors. They have risk, they're challenging, but we're excited about what we're seeing on progress with potential partners what they're seeing in their own experiments and what we're learning from our R&D efforts, and we look forward to keep bringing you information as we can and as the story continues to unfold.

Your next question comes from Alec Stranahan with Bank of America.

This is Matthew on for Alec. Maybe 2 from us. Can you just speak to the current agreements for Matrix-M that have been signed, whether those agreements also apply to sort of the portfolio of adjuvants you're thinking about developing going forward and sort of different formulations of Matrix-M?

And then maybe on the pipeline as well. Curious if 1 of the 3 programs is sort of ahead of the others? And if they're all sort of similar stage, I guess, which one you would think about bringing forward? Is it dependent on developments in the therapeutic area, sort of updates there or something else?

Thank you for your question. I'll let Elaine comment on the current agreements that are signed regarding Matrix. Go ahead, Elaine.

Thanks, John. Yes. Clearly, all signed agreements, all material transfer agreements that we have signed today focus exclusively on Matrix-M. So that's the answer to that question, sorry. And then, John, back to you.

No, you're right. And any new adjuvant, should we succeed in developing one or more additional adjuvants, that's our intent. That would be purely Novavax. And importantly, we have not exclusively out-licensed Matrix-M to any party. That's Novavax asset. And so we give licenses for particular indications and things like that to partners.

So this would be -- should we succeed with one or more additional targeted adjuvants, that would be -- those would be ours, our IP. We can work with those, we can out-license those. We see that as a potential future engine for continued innovation and partnering opportunity, both within and our intention is to go beyond infectious disease in that regard.

And you asked also about pipeline assets in that way. Ruxandra?

Yes. Thank you for the question. As far as the early pipeline assets, you might remember from our previous presentations and from my intervention that each and every one of them actually is addressing a different unmet medical need. For C. diff, there is no vaccine. For shingles, the issue was the reactogenicity that is associated with current vaccines. For RSV, it's a triple combination. So we are going and adding other antigens to that particular antigen of RSV. So each and everyone have their own complexities.

We started these programs by designing a very rigorous target product profile that is based on where we are in the field and where we are from a business opportunity. That TPP is evolving as the ecosystem is evolving, it is a living document. And as we go along in our discovery and development efforts, we are always relating back to that TPP.

If new data is created by somebody else, we are taking that into account, and we are asking the question, are we good enough, are we better, what do we need to do or what data should we develop in order to convince a partner and to convince ourselves that, that is a program that is worth pursuing.

Your last question comes from Sean Lee with H.C. Wainwright.

Most of my questions have been answered, but I just have one more on the early pipeline. So it's for these 3 products that are in preclinical right now, can we expect to see any milestones this year regarding data disclosures? I mean, specifically, are you targeting any specific conferences where we can see some of the preclinical data on these?

Let's have Ruxandra go into a little more depth on the answer. But we're excited about what we're seeing. We're going to be very cautious about how much we share for competitive reasons. So for instance, in one scenario, if we think we have unlocked a potential pathway forward with an asset, I'm not saying that today, I'm saying that scenario, let's call it a hypothetical. We wouldn't want to share how we figured that out in the public domain, even though that might be exciting. So we're going to be cautious.

Next steps, as we wrap up the work in the near term on our preclinical efforts, we could ready one or more of these assets. That's our intent for IND with the regulatory authorities. We would expect the potential of that to occur this year. And that's why we say as early as 2027 for -- to be in humans with one or more of these programs.

So yes, we will continue, as we did today, begin to unveil first for C. diff here as an example, some of what we're learning and the progress we're making. We're going to remain cautious and a bit guarded on some of it because we want to be careful from a competitive standpoint. But we're making excellent progress.

Our lean and careful investments are paying dividends internally from what we can see, and we're excited to continue to bring these forward with the intent of success with one or more of these down the road. So we'll keep you informed.

This concludes our question-and-answer session. I would like to turn the conference back over to John Jacobs for any closing remarks.

Just want to thank everyone for joining us today. I want to thank all of our investors who believe in Novavax, believe in our technology. I want to thank our investors for being patient with us as we converted this company and transformed it from a company focused on COVID alone with one asset and the remarkable effort of our employees to unwind the large global organization built to commercialize one asset and do so without hurting our capabilities while changing strategy and while starting to move forward and teach the world about the technology this company had and was sitting on and made one asset with and to then start to enlighten others about the potential of that technology and the effort and the time that takes -- and everyone likes to see things right away. Show me yesterday, why did do a deal in a day. But this took time to convert the company. It took time also to enlighten others and share data and generate data to show them how this product might work with their pipeline assets or technology platform, then they do their own experiments.

We saw Pfizer, one of the first that we started with our new strategy come forward. We're telling everyone we've got a pipeline of potential partners behind that. We'll never promise anything until we deliver it, but we want you to know we're working really hard every day. Our employees are having fun. We're excited to be engaged deeply into this new strategy and really optimistic about the legacy we can leave on global public health and the value we can drive for all of our stakeholders.

Thank you again for your patience, your belief in us and our technology. We're working really hard for you. We're going to work hard not to let you down and to keep growing this business. Thank you, everyone.

This conference has now concluded. Thank you for attending today's presentation. You may now disconnect, and have a wonderful rest of your day.

All right. Let's go ahead and get started. Welcome, everyone, to the 44th Annual JPMorgan Healthcare Conference. My name is Anupam Rama. I am one of the senior biotech analysts here at JPMorgan. I'm joined by my squad, Priyanka Grover, Joyce Tso and Rati Pinhe. Our next presenting company is Novavax. And presenting on behalf of the company, we have CEO, John Jacobs.

Thanks, everyone. Welcome, and thanks for joining us to kick off 2026 at JPM. I'm John Jacobs, the CEO of Novavax. Before we get started, I just want to remind everyone, we'll be making forward-looking statements. So please review our SEC filings and disclaimers in the slide deck to make sure you get a good handle on the risk factors for the company before we present. Thank you.

So our first slide says this is Novavax. And what's on there is a vision statement. And I know pretty much every company has a vision statement and a mission statement. We've all been through helping to build them and seeing them. But this particular vision statement has a real meaning to me, to our employees, and I think to almost all of us in biotech, if not all of us. My kids ask me as they're growing up and finishing college, dad, why did you pick health care? Why did you pick biotech as a career? Now we could pick anything. If you want a career that's super exciting, ups and downs of a roller coaster, right.

Whether you're on the financing side or you're on the development side, it's a little hairy, a little scary, but wow, when it succeeds, what a high? What an amazing experience you can get from this job. But even more importantly, leaving a legacy, we all hope that we'll be remembered, but you watch these little blogs on Instagram and things and it says 50 years, no one will know who you were, right? But hopefully, we're all part of something bigger than ourselves. And in doing something really well, we can have an impact on the whole world that makes lives better around us.

So our vision, we envision a world where our tech is amplified to touch the lives of not just millions, but billions of people, sparking transformation in global health. We mean this. We believe this, and we intend to achieve this. And we believe we can because we've got the tech platform to do it. We've got the talent and the people and the strategy and the vision. When I joined Novavax in 2023, and since then, we've been on a steady journey to transform this company. And when I joined in '23, it was a vertically integrated global commercial company with a singular focus on selling its COVID-19 vaccine.

One asset created from a remarkable platform technology that has the capability to generate multiple assets that can impact the globe. So our mission was to stabilize the company financially in Chapter 1 of the transformation and to pivot to a new growth strategy where we can amplify the impact of this technology for our stakeholders, for people around the globe that are counting on us for our company. So what did we achieve in this '23 to '24 time frame? The first chapter of the transformation, restructured the leadership team, the management team, reshaped the organization with aggressive cost and liability reduction.

In fact, when I joined in '23, the annual run rate on expenses was about $1.7 billion a year, 2,600 employees and $2.5 billion in liabilities with less than $1 billion in cash in the bank. They're having trouble selling the vaccine and manufacturing it. We cut over $2 billion in liabilities, eliminating them, renegotiating them, with the lead of Jim Kelly, our CFO, is here today. Jim, we did it as a team together with our Board. Charlie is a member that's here today, we did it together. We eliminated over $1 billion in annual expenses and over 65% to 70% of the headcount in the company.

I had built a company prior to this. I was the third person hired at my prior organization, and we grew it 10x from the original founding investment. And when I came here to Novavax, I had come from an experience of building something from scratch. I was the third person hired. I actually bought the folding board table from Staples and a coffee machine that I put together myself as we started mapping out on a whiteboard how we were going to build this company around an asset.

Very different when you're arriving somewhere and you're unwinding something without breaking it while maintaining your capabilities, saving it from insolvency, turning it and shaping the new strategy. But we're so proud of that first chapter that's behind us and what's next. So here we are in the middle column of the slide, our new strategy was launched in 2025 to drive value through partnering and R&D innovation, and we'll talk about that on the next few slides.

With a vision in 2028 and beyond to a path to non-GAAP profitability as early as 2028, and that's with existing partnerships and plans without any new partnerships or deals done, potential to do that assuming execution. We envision a company with multiple large pharma partners, multiple diversified royalty streams and milestone opportunities and a very low cost base with the potential to see -- achieve billions in milestones and royalties with current agreements alone.

So what is this new strategy? It has 2 key components. One is partnerships. We have strong existing partnerships that drive current value right now, but have the potential to amplify that value over time in and of themselves. In parallel, we're seeking new partnerships to help grow that platform, and we'll talk about how. Part of the way we're doing that is through R&D innovation. So unlike a traditional biotech model where we have a pipeline of assets, we bring them all the way through Phase III. We try to commercialize those. We're raising capital. We're doing that. We're using R&D for 3 things.

And Ruxandra Draghia, who we brought in about a year ago and has revolutionized and evolutionized what we're doing at Novavax, Rux, great job, with R&D is helping her team to fuel this partnering and this strategy approach through 3 legs of the stool. First, driving further proof points and value of our tech with data generation. Rux and her team actually work to generate data with our tech platform and other companies' assets and platforms.

So our business development team led by Elaine O'Hara, who's in the front row over here, can go into these other companies and say, here's what you have, here's what you have plus our technology, look what this can do. Get them involved to experiment with it on their own, and it's our intent to turn that into future partnering and deals across multiple portfolios. Number two, expanding the utility of our technology. Ruxandra and her team are helping us explore oncology as a new avenue to open up a totally new dance floor of potential partners for the future. And finally, in a little bit more of a traditional sense, we can make our own assets from our tech platform, but we're planning on taking them through only the early stages of development to initial proof of concept, initial point of potential value, so we can use those to drive additional partnerships.

And that's all supported by a lean operating model. As I've said, we've driven down those costs, and we'll talk to you about how we're guiding to where we're headed with those cost. I mentioned a few moments ago that we see the value creation opportunity amplifying over time at Novavax. So let's talk about just existing partners alone. We've got Sanofi, Takeda and Serum Institute of India, each remarkable partners in their own right. We're very grateful to be partnering with them on this journey.

As Sanofi for an example alone, currently, the first left column, that's now. So were eligible for milestones, royalties for 20 years on sales of our COVID vaccine. Nuvaxovid from Sanofi in markets around the world, including Europe, the U.S. and other select marketplaces. In fact, we've already earned from this partnership over $800 million in nondilutive capital in the last 1.5 years or so. But then what could be next with Sanofi, it doesn't stop there. In the near to midterm, we're eligible for milestones and royalties should they and when they choose to advance combination vaccines.

So they have 2 combination vaccines in development. They announced last year that they had positive Phase I/II results both of those programs that were fast tracked by FDA. They both include our COVID vaccine. And if any one of those moves to a Phase III study, we're eligible for a $125 million milestone and that study initiates. And then upon commercial launch another $225 million milestone and royalties for a couple of decades following that for one or both of those products in addition to what we can earn on Nuvaxovid.

Moving over to the right side of the slide, you can see that there is a deal for Matrix-M as well. There's a component for that. Sanofi has unfettered access to our platform with Matrix-M. They can create as many new assets as they would like to with our adjuvant, our proven tech. For each one that they bring to commercialization, we're eligible up to $200 million in milestone payments and ongoing royalties for 20 years. So you can see as the partner advances over time, we can amplify the value of that partnership. We're looking to deepen existing partnerships, strengthen them.

We expanded our partnership with Sanofi last year to include pandemic flu, which helped them to earn a grant from BARDA and to advance their flu product with our Matrix adjuvant, as an example. I'll point down to the bottom left of the slide before we move on, where it says other. We've made recent announcements about these MTAs. So what that means is we signed an agreement with another company, they get to experiment with our Matrix-M. We provide the supply to them and then they experiment in their own labs.

And as I said earlier, Elaine and her team can go in and say, look, we've done a lot of work. We can show you that Matrix-M can work across different vaccine platforms, including potentially yours as a potential partner. We show them what we can do. They get excited. They signed an MTA. Now they're trying to duplicate that and more in their own laboratories. Should that pan out right and they get excited about that, we intend to turn those into future partnerships.

In the last year or so, 2 top 10 pharmaceutical companies above and beyond our current partner list have signed those MTAs and have been experimenting and assessing is firming with and assessing Matrix-M in their own portfolios for their own purposes. We just announced here at the conference that last quarter, another large pharma in addition to those 2 and in addition to our existing partners, just signed an MTA and has received their samples of Matrix-M and are starting their experiments. We have other MTAs that were signed including an oncology company and others we haven't even disclosed yet in smaller organizations that are each at different stages of experimenting with our Matrix-M.

It's our intention that some or all of these turned into partnerships over time that we can then have amplification of value through over time on a low lean cost base. So looking back at '25, we're sitting here in January '26, it was a year of achievement for Novavax. We finally achieved our U.S. BLA licensure on an even playing field with mRNAs for the first time now this year in 2026. We're looking forward for Sanofi's launch, formal full launch of that product under a BLA license with the chance to do full contracting in retail in the U.S. Very excited about their intelligence, their prowess, their capability and what they'll be able to show this year on the first full year of launch for Nuvaxovid in their hands.

We achieved every anticipated milestone from Sanofi to the tune of $225 million last year. And as I said, they announced positive data on their 2 combination programs that should they bring that forward further we're eligible for milestones and royalties. Takeda, our partner in Japan, a top global pharmaceutical market delivered over a 12% market share in that key market in 2025 for Nuvaxovid. Great partner, very proud of Takeda and glad to be on the journey with them.

Serum Institute of India, if you've never been there, I encourage you to visit, if you can. What an amazing facility that they've built. They provide most of the vaccines for children around the world at a very good price point. In fact, the R21 malaria vaccine, it's not the biggest revenue maker for Novavax. It won't be in the future. But it's probably the biggest legacy and impact on global public health you could imagine, 25 million children in Africa over the last year received a shot of that vaccine. 85% market share, by the way, in about a year from Serum Institute of India, fabulous.

Imagine the millions of lives we can save from malaria. And what that does provide is a huge safety database, a large database that others can reference from a value perspective for Novavax and more proof point for our technology. What to look for in the future, '26 to '28. Look, we want you to watch out for more partnership announcements. You won't know until it's done and it's inked, and then everyone will find out at the same time. It is our intention to do many of them. We don't promise. We don't get over our skis until it's done, it's not done, but it's our intention to do that, and we look forward to hopefully exciting you and surprising you with some of those things in the near future, preclinical data coming out of our pipeline from Ruxandra and her team, products going into the clinic as early as 2027 from our pipeline and additional licensing agreements as discussed.

Another thing that excites us about where we're headed with the new strategy is the potential that we're tapping into from a global market perspective. So our technology and our strategy is leading us towards tapping into a market potential globally of over $100 billion by the early 2030s. And that's composed of 2 components, obviously, the vaccine space. So on the left side of the slide, global vaccine market was projected to be at $57 billion or so in 2024 and grown to over $60 billion in the next 4 or 5 years, driven by the key markets that you see there underneath on the other part of that graph to the left.

And then on the right, this is a subset of the oncology marketplace, the subset that involves immunotherapeutics vaccines and adjuvant opportunities within oncology. And that's a new and growing area about $12 billion or so in '24, but projected to grow to over $42 billion or so by 2032. And Rux is in the middle of leading, we call Ruxandra Rux, in the middle of leading experiments with our technology to explore applicability in the oncology space. So very exciting for the future. And it is that very tech that allows us to fuel our pipeline, our partnerships and our value creation journey.

Our Matrix-M adjuvant is very unique, right? It helps induce a broad potent immune response, compatible with multiple vaccine platforms, as I said. And it also allows the ability to lower antigen content in vaccines, which can help with side effects profile and also cost or COGS once the vaccine is commercialized. And then you have a recombinant protein-based nanoparticles and that proven platform, that safety profile, we just talked about a moment before. I won't go through the pipeline in detail, and I put this up and those of you or investors may see it and say, oh, is that going to burn a lot of cash or that looks like a lot of things going on for a smaller company that just came out of that prior journey. I think 2 or 3 things to point out here, they're very important.

If you look at the far right column of the slide, what you see there are partners, Sanofi, Takeda, Serum, Sanofi, Sanofi, Sanofi, right? So we're leveraging these partnerships to bring forward these assets. If you look at the top, those are our 2 commercialized vaccines done through partners. In fact, we shed our entire commercial structure as part of that cost reduction, Jim, bringing that down. On the bottom, you see Sanofi bringing forward a series of early-stage assets and who knows what they might be doing preclinical, they don't announce that or speak about that. We can't speak for them, but they have access to Matrix. You have to imagine they're at least interested in experimenting with that, right?

And then you have our late-stage assets in the middle to Phase III that we note there we're not making further investment in. So we're not burning your cash on that. Those are sitting ready and we're in discussions with potential partners all the time. And these are some of the assets on the table for consideration during those discussions. So the last thing -- the last point I'll make on this slide is the shaded box where you see those 3 assets, those program C. diff, shingles and an RSV triple. These are the early-stage programs. And in fact, in 2025, we spent less than $10 million starting to bring these forward. And in just the coming months, this is a low cost bet, lean, efficient model to bring forward more proof points for our tech, more data for our technology and potentially, should that data be amenable to us, should it be exciting marketplace, we can bring one or more of those into the clinic as early as 2027 and further them to the next proof point for value and use those to engender more partnerships.

So the planned path to profitability. Hopefully, you can see our new strategy is intended to drive revenue growth through partnering and R&D innovation with a focus on a lean efficient model. Our target in '27 for SG&A and R&D expense, net of partner reimbursement is $250 million and a potential path to profitability as early as 2028. We talked about cost reductions. We came all the way down from $1.7 billion It was such a big graph. It sort of threw off the slide here before. So we knocked that part off.

And you can see where we wound up 2025. But what a remarkable reduction in unwinding a global organization from the top down while not hurting our capabilities and pivoting at the same time, down to a $450 million net in 2025. We intend to take out, or Jim, another $100 million in this year, another $100 million in 2027 from that. And potentially, we could do even better than that, while not hurting our capabilities and while increasing shots on goal to drive value.

And finally, before I wrap and join Anupam and the team here for our fireside chat. Really proud of this, in '24 and '25 we earned $1.4 billion in cash for Novavax, and almost 80% of that was from non-dilutive sources. In fact, we haven't tapped our ATM for any equity capital since Q2 of 2024, despite the difficulties the company had when I first joined it. We're very proud of that. Our priority is to seek nondilutive funding to drive this strategy forward as we continue to drop down cost and put more and more irons in the fire and drive potential value. And you can see the breakdown of the components of that capital on the bottom right of the slide.

So I want to say thank you very much for your attention to this portion of our fireside chat. I'm going to sit down and join the team here and let's continue the dialogue a bit. Thank you.

Thank you. So I'll ask the first questions, there will be opportunities for the audience to ask questions as well. So when prompted just raise your hand, and we'll make sure your question gets answered. John, in your presentation, you covered the strategy here in a lot of detail. What are you most excited about in 2026 specifically about the strategy? And what should we be expecting next just in terms of catalysts and priorities?

I'll tell you what I'm most excited about is the interest we're seeing in our technology and it's honestly multiples above what it was when I first got here as a company because not everyone understood, the other companies didn't really understand fully what we were sitting on here in Matrix-M, what Novavax really has at its core, it was all focused on 1 product that we made out of dozens of potential products that could come out of this technology platform. And the focus is turning away from COVID season, all these things now to this amazing technology platform that we have, company after company after company after company are now chatting with us.

Our BD team is out there. Rux, you and your team have generated an amazing data set, Elaine, you and your team, amazing job reaching to other parties and sharing that and really starting a good dialogue. The other thing I'm excited about and remain excited about is the dedication to the vaccine space. And despite macro factors that at times make us say, what can I expect there? We've had some stability coming from that with decisions that are getting made. And what I see and I think what we see, a couple of things, a really good energy reset now in early 2026 coming into this conference with all of you. And the companies that are dedicated to vaccines long term, they're dedicated to vaccines long term. They're doubling down. They're bidding against each other to buy other vaccine companies.

There's M&A occurring. There's launches of new clinical programs getting announced. I think one of the CEOs from one of the top companies in vaccines was asked this question the other day, and he said, I'm thinking 4, 5 years ahead, not 4, 5 months ahead, that's the game here. It's a long game and we're in it and relatively insulated from some of those things because we're helping others to bring forward their assets. So those things have me the most excited. I don't know, Jim or Rux if you wanted to add anything else about the year.

From my perspective, obviously, focusing on R&D as we were able to generate the data with Matrix and different vaccine platforms, be it with viral antigens, being bacterial antigens, now these exploratory work in oncology. And they don't say that Matrix is going to work with every single antigen and every single platform that is there. But for the moment, what we have tested have actually yielded very interesting results that can be taken by Elaine and the team and those discussions are going with a variety of partners. And that's actually, that intel that, John -- in each of the computers that John is talking about, this is how we see Matrix. And I think that partners are not going to be disappointed.

If I could, when investors are thinking about the year ahead for Novavax, what Rux just mean is just such a critical catalyst for the company as she unveils that early stage technology. Increasingly, people are seeing well beyond what was initially a COVID story to what can be. And so you see that in the case of C.diff, VZV, the RSV triple, then you move forward and you say, how about our partners. Well, you got Sanofi who had great Phase I/II data with not 1, but 2 combination products, Nuvaxovid and their market-leading flu products, excellent.

We get to hear about the potential to advance those programs this year. Another key milestone. Sanofi launching with Nuvaxovid COVID this fall. People are really excited about what is essentially the launch year, putting their full commercial prowess behind it. And then the piece that you can't necessarily know when and how it might come. These deals, John was talking about and Elaine, Rux and team are all working on. So yes, we're pretty excited about how the year will unfold.

And we'll talk about the deals here in a second, but what's your path to achieving sort of significant royalties from the existing agreement? Can you point us to any milestones that we should be expecting in 2026 from the Sanofi partnership?

Yes. And great question. And with the initial eye towards the Sanofi partnership, but of course, there could be others along the way. What we have -- for those of you who are familiar with the partnership, multi pieces to it, we had received $500 million upfront. In the case of COVID, we had the opportunity for $350 million in milestones and with combination products, another $350 million and we'll come to a Matrix as well in the moment. In the case of COVID, that $350 million in milestones, well, we already earned the first $275 million, okay? We did so through the end of last year. This year, 2026, we're guiding to the $75 million milestone.

It's essentially when we complete tech transfer. Teach Sanofi how to manufacturer Nuvaxovid on their own. So that's the end of the COVID milestones. In terms of economics, long-term royalties, I think, 20 years more, we receive high teens to low 20s royalties on sales of Nuvaxovid and to give you a sense of what that could mean, the reminder is Sanofi is the leader in flu and has about a 50% market share, right, $3 billion franchise on a $6 billion global market, just to give you a sense of what they can accomplish in a seasonal space.

So if you think about the COVID market, well, the manufacturers at your conference this week kind of reaffirmed the flattening of the market, stability there, about a $5 billion to $6 billion market and $25 million looks to be similar in '26. So what that means with the royalties I just mentioned, in order to get to non-GAAP profitability, we've got a breakeven point of about $225 million. In order to get a COVID royalty of $225 million or so, you would require Sanofi to sell somewhere just over $1 billion, which means it would require about a 20% market share.

Do we believe Sanofi, who's got a 50% flu market share, has the ability over the coming years to grow to a 20% share and help drive us the non-GAAP profitability? We do. We think it's credible. In addition to that, John mentioned, hey, Sanofi is going to be working on their Phase III programs. There's a $125 million milestone tied to that. Well, that's pending their development plans, but certainly important, could that happen as early as 2028 as well, a 225 launch milestone, certainly possible as early as, look forward to hearing more.

And then partnering your technology, right, that's core to kind of your growth strategy here. We just heard that. Can you speak to the potential value creation from Matrix-M platform, additional partners. Do you have internal goals here on what you want to achieve?

Absolutely, we do. I may not share all of that with you today. But what I will say, look, it's a great question because well, I think we set a benchmark with the Sanofi deal. And when you look at the components that our team was able to negotiate, we have many members of our team here who are part of that. I mean, you're talking about a mix of upfront cash, milestones for development, milestones for commercialization, royalties. And anywhere we've done anything like this so far, it's been decades of royalties to come, right? So look for a mix of components to -- should we announce a new partnership in the future, a mix of those types of components across the spectrum.

And what we're looking to do with each partnership is not just one asset, right? It's not like we have one asset, we give that to them and that's it, it's a platform. And they can apply that platform to their portfolio, to their goals, to their dreams about who they want their company to become and how they want to compete. So the goal will be to keep deepening and expanding those relationships over time. So what we see is now immediate opportunity with existing partners with the revenues coming in due to royalties that we expect to grow, right, over time as Sanofi penetrates that market now with the first full launch of our COVID vaccine this year on an even playing field forward milestones that were eligible for in the near and midterm, additional partnerships with perhaps some upfront cash and then milestones to bridge that gap as multiple. This is the vision and our intent. Multiple royalty streams start to come to fruition and start to grow.

How do you think just more broadly about sort of the global and U.S. vaccine markets, both in the short term and the long term, you talked about, what we think about it in 2026. But I mean, like, for example, this flu strain that's going around is like wicked, right?

No, really. We were looking at some of the stats and hospitalizations in the U.S earlier today.

So in the context of that and everything like how do we think about sort of your COVID sales for the year and the key levers to success for your partner?

Yes, certainly. So I think one of the things that we'd want to continue to emphasize is that, and you mentioned it in the case of the, what I'd say, very difficult flu season is the continued significant morbidity and mortality associated with COVID. I mean there's a high unmet need there and the hospitalization rates, the mortality rates at a higher level than what we see with flu and therefore, I mean, the reality is there may be vaccine hesitancy or certain years of ups and downs, but mother nature is what mother nature is.

As Rux has reminded us quite often, and when the need is there, we would expect policy and vaccination to follow. And it's for that reason that we expect to see a very durable and important COVID market over time.

Also, I would like to mention that you are actually looking at this year's flu. But as we are talking about the platform technology, whatever strain or flu or any other variance or strain from the different pathogens would come up, then we will be able in a very short time, relatively speaking, come up with the right antigen and develop an appropriate vaccine. So we are looking at it not only as a singular kind of event, but as a continuing effort towards ensuring as John was mentioning from the very beginning that spark in global health.

Now you had the specific question about the levers, hey, how do you succeed in the COVID market in 2026, a market that we just said, and we're talking about $5 billion to $6 billion globally, all right? It's about an equal mix, I think, an expectation of U.S. versus non-U.S. Sanofi, it's going to be a launch year. It's going to be the first year putting the full commercial prowess behind it, and then have you think about 3 things. The first one, full contracting cycle. So critical to get our COVID vaccine in, in mass, in the retail pharmacies.

And when you have someone like Sanofi, who has a full portfolio that they bring to a critical retail customer base, that matters, right? They can get you those pre-books. And this occurs early in the season. Think of the pre-book season being now through sort of the March time frame, where retail pharmacy says, I will commit to a certain amount of buys Sanofi, it's the first year of full BLA, prefilled syringe, competitive shelf life to go after it and add it to their portfolio. So that's part one.

Part two, they use as a part of the learning season of 2025, the ability to do some piloting on commercial pull-through. So they've got all new campaigns tested, ready to go, right? So think digital, think about traditional DTC, it's ready to go. So that's number two. And then number three, and this is unique in many ways to what Sanofi brings, they're nonretail distribution through Baxter, proprietary distribution has the ability to really tap into that market, I think long-term health, integrated health systems with some leverage, you may not see from others.

So I think with those 3 pieces to the puzzle, great opportunity, right, to launch and start what we would expect is just going to be a nice methodical build of market share over time for a great product and on the heels of it, really looking forward to them bringing the combination product Nuvaxovid plus their flu franchise over time.

Questions from the audience? I've got one more, but I wanted to open it up. Maybe final question for me. What are kind of the push-pull levers for reaching non-GAAP profitability, the guidance is 2028?

Yes. So maybe where I'll start there because in answering it is, hey, where are we today in terms of financial strength. We ended the third quarter with cash and receivables of approximately $810 million and then in the fourth quarter, announced another $110 million, right, through milestones and sale of assets. So you start pro forma with about $920 million. That gives us runway into 2028. And so -- and that's before you had any revenue coming in. So we're starting, right, starting in 2026, I think from a point of we're really pleased with exceptional financial strength. Then how do you get to non-GAAP profitability. You saw 2027 R&D and SG&A of $250 million. So point estimate noncash items, let's say, $25 million. So your breakeven is $225 million. You can get there with either the milestone on a launch of a kick program, but importantly...

Share of Sanofi growing...

On COVID, new deals, there's multiple paths to get there. And that's why we say we feel like we can get there as early as 2028, we're not relying just on cash coming in. We're driving down cost, right? And so we're going to control what we can control and then support our partners as they drive products.

And they need fiscal discipline, Jim, across. And we work together, the whole management team, our leadership team here to really change the culture of the company, the mindset of our employees to fiscal discipline. You've got people making recommendations on the napkins where the people eat on how to save even a nickel there, right? Everyone's thinking about prudence, focus discipline, lean operating model, we continue to drive it down. We're not relaxing there. We're not taking our foot off the gas there at all as we continue to drive value.

And for what it's worth, getting to non-GAAP profitability, really important to us, getting to cash flow, orders of magnitude beyond our cost structure. Well, that's where we're headed.

That's our vision.

That's our vision. That's our intent.

That's our intent.

All right. Thank you, john and the team.

Thanks, everyone.

Welcome to Jefferies London Healthcare Conference 2025. My name is Roger Song, one of the senior analysts cover semicap biotech in the U.S. It is my pleasure to have my next fireside chat with Novavax. Welcome, Jim and Ruxa.

Very nice to be here.

Thanks for having us again this year.

Absolutely. Welcome you. Okay. So Jim, if you can just give us a little bit kind of an overview of the Novavax today. I think it's different from last year for sure, and then the very big strategic focus for the new Novavax. And then why don't you give us an overview?

Right. Fantastic. So thanks, everyone, for joining us today. For many of you, you may be familiar with Novavax from our most recent history during the pandemic. One of the very few companies that cracked the code actually created a highly efficacious COVID vaccine. And you might be asking yourself, how did this company achieve that when so many big pharma couldn't do it? And the answer is our technology. Our core technology based on subunit protein nano-based technology for antigen creation when combined with what we believe is the most effective adjuvant Matrix-M.

And we think that, that's been critical to our success that you will see in the form of both our COVID vaccine but also in terms of products on the market today, an exceptional malaria vaccine, our license partner, Serum used our Matrix-M in a game-changing malaria vaccine, and we can talk a little bit about that in a minute.

But when you think about our company and chapters, and that's something we outlined and John Jacobs, our CEO, outlined on our most recent earnings call, you have that chapter, which is the pandemic chapter that, seeking to address a world pandemic is a huge deal, but transitioning the company to be an endemic-based vaccine manufacturer, a different story. And as we executed across that chapter, partnering with Sanofi, the world leader in vaccines to take that COVID-19 vaccine, Nuvaxovid and drop it into their portfolio of market-leading respiratory and other vaccines is the absolute right move, both for patients to have access but also for Novavax in terms of the economic interest. And so -- but that's just the first piece of a groundbreaking partnership we have with Sanofi.

In addition to that and during what we're calling really a transition period, we're reducing our cost structure, strengthening our balance sheet and then seeking through additional partnerships and advancement of our pipeline to truly highlight this game-changing technology. And so that's the next few years, that's what we're doing. We're sort of assisting Sanofi to execute commercially, while we, in parallel, advance our technology and partner. Then the end game, which is a few years out, is to drive profitability of the company. So think about a diversified top line, multiple partners, a lean infrastructure and then an emerging, both in our hands and in the hands of our partners, a portfolio of projects moving forward in vaccines that are game changers. And that's the unlock -- the full unlock for the value creation.

Excellent. I think that's a good kind of set up for the growth strategy across different prongs of the strategy. So maybe we are still going to start with the commercial part, and I understand your partner with Sanofi right now, which is a major player for the vaccine and then the leader -- one of the leaders. And then Sanofi has been guiding the 2025, 2026 season is a learning year. So as the first year, they start to do this. And then how should we interpret that, right? So -- and then what's the expectation for the first learning year and then we talk about the coming years?

All right. Excellent. And so what I like about your question is when we think about the layers of value to unlock here, you've got sort of layer 1 is the Sanofi agreement. Layer 2 is additional matrix deals. And then layer 3 is our early-stage emerging pipeline currently on partnered but with great opportunities to partner. When we unpack the first layer, which is the Sanofi agreement, think at a minimum about 3 layers for that one. You've got the ability to commercialize our COVID vaccine beginning this year, and I'll come back to your specific point around the COVID market and sort of their transition year.

Part 2 is the ability to take Nuvaxovid, our COVID-19 vaccine and combine it with their market-leading flu franchise with not just one but two. They have 2 combination products in development, right? And by the way, for folks who are watching the evolution of the combination flu and COVID-19 markets, and I'm going to point to an Air Genesis report from World Vaccine Congress, you're talking about a market that could be as big as $8 billion a year. We've got the market-leading flu vaccines, high-dose Fluzone and FluBlock, where Sanofi has just announced that they had positive Phase I/II data and they're working with agencies to advance those programs into pivotals. Now under that part of our agreement, we're eligible for up to $350 million in milestones and then royalties, high single digits to low teens. So exceptional opportunity for value creation.

And then three, under the Sanofi agreement, is the ability to leverage our Matrix-M in their portfolio, and there'll be certainly many opportunities to do so. A recent announcement was that Sanofi received a BARDA agreement with their H5N1, their pandemic flu vaccine with our Matrix. So you're beginning to see that layer of the agreement come to fruition as well. So I'll answer the specific question around the market, and then Rux can give some updates on the CIC market and then right, the H5N1, that's an exceptionally big deal, right?

So in terms of the market and Sanofi's work with COVID, the 2026 season is their full launch season, all right? This year, it's a transition year. And so when we look at the 2026 season, we see the following. We see the ability to do the full cycle of contracting in the U.S. market, which occurs in the January through April time period, with in hand, Sanofi, we put all these items in hand this year, a BLA, which we got in June of this year and at least 6 months dating. So you had to have both those things in hand to be able to go ahead and do those negotiation contracts.

And so that is going to mean that in the coming contracting cycle is when you're going to see the full strength of Sanofi's commercialization effort come into play for the 2026 season. And that is why for this season, 2025, they've said, listen, transition year. We're just going to do some spot marketing efforts, make some of the vaccine available through outlets and really use it as something of a learning year to prepare for '26. All right.

And then, Rux?

Yes. Just a few words. So for those who don't know, CIC means combination influenza COVID vaccine. So Sanofi has just announced positive data from their Phase I/II, both for FluBlcok and Fluzone high dose. And for both of the programs, the FDA granted to Sanofi the Fast Track designation. So obviously, that entails a much faster review of the dossier when that would come to pan.

For the BARDA, as Jim was mentioning, that is a big deal because while for the moment, human-to-human transmission have not been actually described for the current H5N1 strain of flu. For global health security purposes, having a stockpile of vaccine is really absolutely necessary and having Matrix, so our adjuvant combined with Sanofi's pandemic flu actually offers both companies to capitalize on the strength of the technologies. So that's a little bit of nuance to what Jim has been saying.

Yes, absolutely. I think 3 layer for the Sanofi and then from commercial and the and then CIC, even earlier pipeline. So just to also remind the investors how that will impact your balance sheet. I think the CIC is $350 million. But I think Matrix-M is also is an additional...

It's an additional.

That's exactly right. So under the agreement, Sanofi made a $70 million investment in our company. We received $500 million upfront -- and then in addition to that, $700 million eligibility for milestones split equally across both the COVID performance and then also the CIC. So exceptional value on upfront and investment and milestones. This year alone, we earned $225 million in milestones, really proud on the execution against that. And then in addition to the milestones, as you move forward, royalties. So you got the ability to have high teens, low 20s royalties on the COVID sales globally. And then on the combination CIC vaccine, COVID plus flu, you've got the ability to have high single digits, low teens.

And while a lower number, what we'd remind folks of is that flu vaccine, that franchise, the market-leading franchise, $3 billion plus for Sanofi, the expectation is that's got a high percentage migrate over into a combination setting, and we have the opportunity to have royalties on that. So we're thrilled.

And so that's an exceptional opportunity for not just cash through upfronts and milestones but long-term durable growing royalties. And what we're seeking to do as a company, and this is the value creation on a cash flow basis is to drive a lean cost structure as those royalties come in and grow so that, right, we can be capital independent and grow shareholder value.

And how about the Matrix-M? So that's additional, right?

That's exactly right. And forgive me for not hitting that harder. The Matrix-M is a nonexclusive right that Sanofi has, and we purposely made it nonexclusive because we believe Matrix-M as an adjuvant can be the engine of innovation across the vaccine industry, an industry that currently in 2024 was $57 billion. McKinsey study noting it could go as high as $75 billion plus by 2030. And that this adjuvant, we think, could be a critical driver of innovation for new vaccines or improving existing vaccines. Okay, in terms of the economics there. So mid-single-digit royalties for up to 20 years from launch on any new vaccine developed by Sanofi with our Matrix-M.

And then in addition to that, up to $200 million in milestones, each new product. So we couldn't be happier with both the partnership and the structure of the agreement.

And from the science, Song, I have to mention that in our own labs, we have tested matrix in combination not only with different antigens for us and for some of our partners, but with different vaccine platforms. And we have noticed that breadth of immune response, enhancement of immune responses, indicators of durability of protection across different platforms. So this is, as Jim was mentioning, with the nonexclusive license to Sanofi opens the door of other deals, other actually collaborations where we can be the engine of innovation behind different new or improved vaccines.

Yes. That's a perfect segue to the next layer of the growth driver, which is the partnership and then using the Matrix-M. I believe you have a couple of relatively recent master contract, so just get access to your technology and then use that in the test in the lab. Just remind us of what's that any updates from those relationships and then how likely they will materialize into the formal partnership?

Sure. So a couple of points there. The first one I'd make is that you heard me mention before, a growing vaccine industry going up to $75 billion plus. But what we recognize is we work with Matrix across different modalities in different vaccine categories is that it has such high utility that if we try to control it 100% and do it all ourselves, we'd actually thwart innovation, right? Because we have limitations to capital and the ability to advance. By making Matrix available on a nonexclusive basis to others, we really see an ability to be -- it's almost like an Intel inside strategy where you're going to be, right, the key driver inside to drive innovation. Maybe I'll say NVIDIA chip instead, right, and maybe a little more current.

So -- but that's exactly what we're seeking to do. And so then you say, okay, I wonder if some of the major pharma players are familiar with what Matrix can do. And the answer is they all know, right? The data that either we're generating ourselves is out there and they can see it. And we often do these proof points where we've shared, oh, here's what the data looks like and it's our business development sales brochures, right, for them to go in. But nobody is going to believe you unless they tinker with it themselves. And so you're correct.

We have 2 top 10 pharma who are under MTAs who are doing just that. They're taking Matrix and they're tinkering with it in their labs. The way BD works, at least with disclosures with us, we'll tell you when we got something, right? So I can't give an update, but this is core to our strategy. We have every expectation that there's going to be matrix deals, not just with the ones that I just mentioned, but multiple over time. And so we're really looking forward to that.

And then in terms of -- I mentioned 2 major pharmas, vaccine players, MTAs, plus you add to that Sanofi, plus in addition to that, we also mentioned we're working with an oncology player with a new innovative approach to oncology vaccines that we think could be a game changer. We're not going to be an oncology company but we might have an adjuvant that's precedent for using adjuvants in that setting. And we think there could be an opportunity to unlock that part of the business.

And maybe, Rux, maybe you want to speak about what we're doing there?

Yes. So we have made comparisons with other adjuvants that are currently using vaccines. So if compared, for instance, alum with Matrix and for those who are scientifically inclined, Matrix is actually fostering a very balanced immune response. So alum engages 2, so predominantly antibody responses, which are very good for specific applications. With Matrix, we see a balanced Th1, Th2 response and you have CD4 positive cells, you have CD8 positive cells.

So we thought that the type of immune response that is generated adjuvating with Matrix can be used not only for vaccines that are suitable for infectious diseases, but also for oncology vaccines. And to the point, we are actually working in collaboration to generate proof points with somebody else's peptides, yes. So somebody else's technologies plus our Matrix and other formulations, including we are envisioning tweaking a little bit Matrix because now we know how to do it and generate more type or another of immune response.

So really making it tailor-made to the needs of that particular vaccine. So it's very exciting. There is a lot of AI machine learning also involved in all this modeling work, but that is something that aside from our infectious disease early programs, is very appealing.

And then in terms of market sizing there, in addition to the $75 billion size ID right vaccine market, this oncology market, we're speaking about is growing to over $40 billion. So now you've pushed the combined over $100 billion. As I mentioned, hey, we're not going to be an oncology company, but for a targeted low investment, we can do a proof of principle here, and let's figure out if there's an unlock.

Got it. So I think this is new information to a lot of people, including myself. And you do have an earlier pipeline. So that's mostly focused on the infectious disease and then sugar and then the flu and RSV. So are you actively working on this oncology with your partner? Or that's something you take that internally as well?

Yes. So on the -- and we should talk about both, of course, both the guiding principles around our early stage and what we're doing, plus this work that we're doing in oncology. We've got a specific partner we're working with at this time on this proof of principle. And so some really fascinating work. Look forward to sharing some updates with you. I think you've heard from us in coming quarters. We're going to be walking through both the latest information of our preclinical early-stage programs, and it would be inclusive, for example, of some updates on this oncology collaboration as well.

Excellent.

And then as we think about what we're working on in our early stage, I'm going to start with maybe the end market in mind and then kind of dial back to, hey, where are we in terms of working on it? So what we recognize is that there are many markets out there with exceptional high unmet need. So we do a combination of, I'll call it, markets with economic promise, but also high unmet need. And I need only point to our license partner, Serum in the R21 malaria. That's not a big economic boom but that is a great, great vaccine for world health.

And so we'll continue to kind of keep that mindset as we move forward, right, the ability to do good, do right and then also play in the important markets, right, commercial markets. As we look at some of the early-stage vaccines we're creating, it includes categories where, hey, nobody could crack the code, much like COVID once upon a time. And what can we do there? We'll talk a bit about C. diff, the vaccine in that area. Then you look at major markets where you'd say, hey, this is a great market. We got incumbents but they have flaws and you can potentially do better. Shingles is a really good example. High efficacy, tolerability, kind of tough. What can you do to address that? And then you look at pandemic areas, areas where governments may want to be a part of solving problems. I think the H5N1 pandemic flu is a really good example.

And then one more category, combinations, much like the pediatric market that went through a consolidation in combinations because, frankly, kids just didn't have enough arms, right? You couldn't vaccinate enough. You need only go into any pharmacy today and they ask you, which one of our 18 vaccines would you like to get today? And you realize the ability to create combination vaccines matters. It genuinely does.

And so our platform protein nanoparticle with our adjuvanted technology is really good for layering on multiple vaccines. And we're able to show we can do this with on par tolerability of the stand-alone vaccines. And the RSV combo is a third example that we're talking about. So that's more of the framing. But in terms of, hey, why believe this? Why should we be able to do it? I mean maybe, Rex, you could share some thoughts.

Yes. So taking it from the top, so C. diff, there have been spectacular failures in Phase III. From the very beginning, we decided to take a very different approach. And instead of designing a toxin-based vaccine, we have used, again, AI machine learning to identify specific antigens that might confer a higher immune response and the different type of immune response. Obviously, there, you are looking at mucosal immunity and something that works well in the gut. There, the unmet medical need is really big in particular, in hospitalized patients. So a specific category that is totally unaddressed.

For the next example, which was VZV, so shingles, we have a very efficacious vaccine. The issue there, the unmet need is the tolerability. 40% of patients that are getting the first shot of shingles don't go back to get the second shot, because of this tolerability reactogenicity issues. So we thought that, again, we can design a vaccine that is equally effective but much more tolerable based on the Matrix-M adjuvant.

For the RSV combination, we have quite efficacious RSV vaccines there. There, if you wish, unmet need is twofold. Number one, that we don't know exactly the durability of protection but it's not extraordinary long. And the vaccines up to now have proved to not be able to be boostable. Yes. So at the second administration, you don't get the same return on investment as your prime. So there, that's one issue.

The second one, as Jim was mentioning, is that you might be able to combine different respiratory pathogens and create a vaccine that addresses a multitude of diseases. So RSV, HMPV, PIV and this is our desire.

For the pandemic flu, we have a different pandemic flu than our colleagues at Sanofi but not less interesting. So we have preclinical data that we have published that shows that we actually -- the vaccine can be delivered either intramuscularly or intranasally, intranasally means possibility of self-administration, number one. And number two, we have demonstrated at least in our friends the mice and nonhuman primates that intranasal administration results in mucosal IgAs, which translate to lower viral loads. Lower viral loads, if we see them in humans, mean less transmission.

So in the case of a pandemic, that is one of the essentials when we are talking again about this global health security. We really need something that is efficacious, that at the population level can cover it much better than classical vaccines. So that's in a nutshell where we are with our pipeline.

Excellent. I think we went through every -- the growth factor and the drivers. Thank you for the time with us today, and then thank you, everyone.

All right. Thank you all for joining.

Thank you.

Good morning, and welcome to Novavax's Third Quarter 2025 Financial Results and Operational Highlights Conference Call. [Operator Instructions] Please note this event is being recorded, and I would now like to turn the conference over to Luis Sanay, Vice President-Investor Relations. Please go ahead, sir.

Good morning, and thank you all for joining us today to discuss our third quarter 2025 financial results and operational highlights. A press release announcing our results is available on our website at novavax.com, 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 strategic priorities; its partnerships and expectations with respect to potential royalties, milestones, 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; the timing and results of our clinical trials, the timing of regulatory filings and actions, its APA agreements and related negotiations; full year 2025 financial guidance and revenue framework; full year 2026 revenue framework preview; and Novavax's future financial or business performance, including long-term growth, savings, and profitability targets.

Each forward-looking statement contained in this presentation is subject to 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 on our website at novavax.com. 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 non-GAAP financial measures, which are total adjusted revenue, adjusted licensing, royalties, and other revenue, combined R&D and SG&A expenses, less partner reimbursements, and non-GAAP profitability.

Please turn to Slide 4. Joining me today is John Jacobs, our President and CEO, who will highlight our growth strategy and provide an update on our progress during the quarter; Dr. Ruxandra Draghia, Head of R&D, will discuss our R&D updates; and Jim Kelly, Chief Financial Officer and Treasurer, will review our financial results and 2025 financial guidance and revenue framework.

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

Thank you, Luis. I'm excited to be here today with members of our executive team to share our third quarter results. During Q3, we progressed our corporate strategy of driving growth and value by continuing to strengthen existing partnerships and build new collaborations while advancing R&D innovation and our early-stage pipeline.

Please turn to Slide 5. We've been on a steady path to transform Novavax since I joined the organization in 2023. With our new corporate strategy as our guide, we have an exciting opportunity to drive value for our shareholders and the communities we serve for decades to come. Let me take you through how we intend to get there and the progress we've already made.

When I joined the organization in 2023, we were a fully-integrated commercial organization, primarily focused on sales of our COVID-19 vaccine. Our imperative at that time was to stabilize the company financially. And to that end, we removed more than $1 billion of current liabilities by year-end 2024 compared to 2022. During that same period, we also reduced almost $1 billion in operating expenses. In addition, in 2024, we announced a significant and multifaceted partnership with Sanofi, which has now allowed us to accelerate the next phase of the company's planned evolution.

This year, we relaunched Novavax as a company, focused on partnerships and R&D innovation. Our new strategy is centered on amplifying the impact of our technology platform through collaborations with other biopharmaceutical companies and a new diversified pipeline. And this represents a strategic and thoughtful departure away from a single focus on the resource-intense commercialization of 1 product, our COVID vaccine.

To date, we have made significant progress on this strategy. For example, over the past 8 quarters, we've achieved approximately $1.1 billion in nondilutive cash flow to the company, including $800 million from our partnerships in the form of upfront payments and milestones earned to date. We also just recently expanded our Sanofi partnership to include use of our Matrix-M adjuvant in their pandemic flu vaccine candidate, for which Sanofi received a U.S. BARDA grant. We renegotiated our agreement with Takeda, which enhanced our revenue opportunity from their activities with Nuvaxovid in Japan, one of the world's largest health care markets.

On the R&D front, via a lean strategic investment approach, in Q1 of this year, we launched a new early-stage portfolio, including programs targeting C. diff, shingles, RSV combination, and pandemic flu, and initiated an exploration of our Matrix-M technology platform to assess its applicability in oncology.

And finally, on our financial profile, we continue to improve the financial strength of the company while maintaining our capabilities. For example, most recently, we brought in $60 million in near-term cash and anticipated long-term savings of approximately $230 million by consolidating our Maryland campus footprint.

With this steady progress since 2023 to transform our company, we are now in a new phase of opportunity for Novavax. As we look ahead, the work we are doing now is intended to position the company well for a period of long-term growth and profitability. The intent is for this growth to be driven by a growing and diversified revenue base that stems from multiple partnerships, milestones, royalty streams, and our emerging R&D portfolio.

Assuming continued execution of our plan and by our partners, both existing and new, we are executing toward a future for Novavax in which we have the potential to achieve non-GAAP profitability as early as 2028. During this time of transition, before we reach our intended goal of profitability, we expect our revenue mix to change as we rely on milestone payments in the midterm to bridge to an increased emphasis on licensing and royalty revenue, which we expect to grow over time, both in magnitude and in the number and diversity of our royalty streams.

With this as our focus, our 2025 priorities to advance our strategy and grow shareholder value are threefold: number one, optimizing our partnership with Sanofi; number two, enhancing existing partnerships and leveraging our technology platform and pipeline to forge additional partnerships; and number three, advancing our technology platform and early-stage pipeline.

Across all 3 of these priorities, we have made significant progress in the third quarter. In our partnership with Sanofi, we have achieved all milestones expected for 2025, securing a total of $225 million for the year from the BLA approval for Nuvaxovid and including $50 million from the successful transfer of our marketing authorizations in both the U.S. and the EU. We also completed the transfer to Sanofi of lead commercial responsibility for the U.S., allowing us to fully discontinue our own sales and marketing efforts this year for Nuvaxovid. On their recent earnings call, Sanofi stated that 2025 marks an important transition year for Nuvaxovid with their full commercial launch in the U.S. and select other global markets expected for the '26-'27 season.

Beyond Nuvaxovid, Novavax is also eligible to receive milestones and royalties associated with the development of new combination vaccines that include Nuvaxovid. Recently, Sanofi indicated preliminary positive Phase I/II safety and immunogenicity data for both of their combination products featuring Nuvaxovid and their approved flu vaccines and are planning to engage with regulators on next steps.

And finally, the agreement with Sanofi enables them to develop new vaccines using our Matrix-M adjuvant. Though we cannot speak for our partners regarding any specifics on their plans and activities here, we can say that they are exploring the potential of Matrix-M across several early-stage pipeline programs, and we look forward to any potential opportunities emerging over time from these efforts. In addition to our partnerships with Sanofi and Takeda, our partnership with Serum and Oxford University on the R21/Matrix-M malaria vaccine continues to make an impact on global public health. Through September of this year, approximately 25 million doses of R21/Matrix-M vaccine have been distributed to about 24 countries in Africa, with the most recent launch in Zambia announced a couple of weeks ago. This is a much-needed option for a region where malaria continues to be one of the continent's most persistent public health threats with economic and social impacts, historically killing over 600,000 people annually, and disproportionately impacting children under 5 in sub-Saharan Africa. We are very proud that our technology is a critical component of this important solution for global public health.

Our strong performance as a partner helps to set the stage for future potential collaborations to generate additional meaningful royalty streams for Novavax for years to come. In the global vaccine market that is expected to grow over the next 10 years, we believe that Novavax is well positioned to capitalize on this growth by continuing to leverage our technology and expertise to tackle some of the world's most significant health challenges. Finally, during the quarter, our R&D team continued to make progress in advancing our early-stage pipeline. So at this point, I'd like to turn the call over to Ruxandra to share more. Rux?

Thank you, John. Please turn to Slide 7. I'm excited to share more about our progress in R&D. I'm just returning from several of the quarter's key medical meetings during which I've had the opportunity to discuss and reflect on the current trends in vaccination. As you know, infectious diseases know no borders and the need for vaccination is no different. While the need for vaccination globally remains constant, we know that regional differences in actual vaccination rates as well as vaccine confidence can fluctuate greatly. This is a phenomenon known since the introduction of the first vaccine, the smallpox vaccine. Vaccine confidence is a leading indicator of vaccination rates and varies worldwide, influenced by political, historical, cultural, and socioeconomic factors, with highs and lows, sometimes varying as much as 50% to 60% in the same region or country year-to-year.

This is something we have seen in the flu and other vaccine markets over the years and to some degree, more recently in the United States with RSV, shingles, measles, COVID-19, and other vaccines, so it is reasonable to expect that vaccination rates could improve in the future. Additionally, many recent reports, such as those from McKinsey and others, have estimated that the global vaccine market could steadily grow at an average annual rate of 6% to 8% to reach a size of over $75 billion by 2030.

Coming back to recent medical meetings, I had the opportunity to speak more about our technology and its incredible potential. I am energized by the reception received from colleagues, researchers, and industry participants at this meeting. Like us, they see the potential of our technology in both new and existing vaccines and are excited to watch our early-stage programs evolve.

One of the key topics we have been presenting on has been the continued assessment of the tolerability profile of Matrix-M-containing vaccines, a key differentiator of our vaccine platform. For example, active comparator studies of Nuvaxovid versus mRNA COVID vaccines revealed lower frequencies and intensities of local and solicited adverse effects and lower impact of reactogenicity on quality-of-life measures among our vaccines recipients. These findings are consistent with systematic review and meta-analysis which are expected to be published in the near future and are important because we expect that, that improved tolerability associated with comparable, if not better efficacy and durability, is likely to lead to higher rates of vaccine uptake.

Please turn to Slide 8. During the quarter, we have been making continued progress on our 4 current early preclinical vaccine candidates: C. diff, shingles, RSV combination, and pandemic influenza. We are continuing to refine these candidates, investing smartly and using AI and machine learning to rapidly and cost effectively inform design, create new antigen, and then test to help prepare the assets for clinical work as programs progress. I will provide a brief update of each program. Our C. diff vaccine candidate targets a major pathogen responsible for antibiotic-associated diarrhea, frequently observed in hospital settings. The incidence and severity of C. diff infections are rising across the world with no approved vaccine. For our work on the shingles program, we are advancing 2 different activated protein antigens with Matrix-M. Early preclinical results suggest both induced immunogenicity and, as anticipated, potentially a better reactogenicity profile.

Finally, we believe that our RSV combination program has the potential to meet the desire of both the public and health care providers for combination vaccines that can address multiple respiratory viruses at once. For all 3 programs, we have exciting preclinical data that is beginning to emerge and further indicate the potential of our technology platform to make a difference in these critical areas of unmet need. We look forward to sharing more with you in the coming quarters as our initial datasets from these early programs begin to crystallize.

Our Matrix-M adjuvant in pandemic influenza vaccine candidate shows promise in potentially being able to deliver a single-dose vaccine option that can be given either intramuscularly or intranasally to protect against pandemic influenza infection in individuals who had a previous exposure to seasonal influenza or received a seasonal influenza vaccine. This benefit may be critically important in the context of a future public health emergency given options for administration and fewer doses needed for protection. We are actively seeking funding from government programs to test our vaccine candidates in clinical trials.

Matrix-M has been proven to provide positive clinical benefits in infectious diseases, and we are excited about our early progress with the new pipeline of programs in both viral and bacterial applications. As noted earlier, a key component of our corporate strategy is to leverage our technology platform and to diversify both within and beyond infectious diseases. For example, since January, we have begun early work to explore the potential utility of our adjuvant, including new formulations, in oncology. Our early clinical work is aligned with our corporate strategy and is supportive of ongoing discussions with both existing and potential partners. We continue to progress these relationships with the goal of developing new partnerships, and in doing so, new vaccines or improving existing vaccines, that could have a positive impact on global health for decades to come. I look forward to continuing to update you on each of these exciting programs as more data becomes available.

I'll turn the call to Jim now.

All right. Thank you, Rux. Please turn to Slide 9. This morning, we announced our financial results for the third quarter of 2025. Details of our results can be found in our press release issued today and in our Form 10-Q filed with the SEC.

Please turn to Slide 10. I'll begin with key highlights from our third quarter 2025 financial results. We reported total revenue of $70 million, and importantly, Sanofi has now taken on the lead commercial role for Nuvaxovid in the U.S. and select ex-U.S. markets. Sanofi recorded $23 million in Nuvaxovid sales in the third quarter of 2025 and reiterated that 2025 is a transition year as they establish their commercial capabilities in the U.S. Novavax has recorded $4 million in royalties related to these sales in the quarter.

During the third quarter of 2025, we continued to transform Novavax into a more lean and agile organization. For example, this quarter saw an 18% reduction in our combined R&D and SG&A costs compared to the same period last year. And of note, we reduced SG&A by 55% as we reduced commercial and general infrastructure spending. In October, we announced a set of transactions that enable Novavax to further consolidate our Maryland sites and is expected to result in $60 million in cash proceeds by the first quarter of 2026 and approximately $230 million in cost avoidance over the next 11 years. Investors will see $126 million in noncash charges in the current quarter related to this Maryland site consolidation and the convertible debt financing transactions, emphasizing that these are noncash in nature and each transaction serves to materially improve our financial strength as we execute on our growth strategy.

Novavax ended the third quarter with $812 million in cash and accounts receivable. This is prior to factoring in an additional $110 million earned for MAH transfers and Maryland site transactions announced in the fourth quarter. Year-to-date, Sanofi milestones earned of $225 million is consistent with our 2025 revenue framework and includes the $50 million earned related to the U.S. and EU MAH transfers.

Please turn to Slide 11 for a detailed review of our third quarter revenue results. For the third quarter of 2025, we recorded total revenue of $70 million compared to $85 million in the same period of 2024. Product sales for the third quarter of 2025 of $13 million comes from COVID vaccine and Matrix-M supply sales to our license partners and reflects a change to our business model as we now primarily support our license partners who market products that leverage our technology platform. Licensing royalties and other revenue of $57 million in the third quarter of 2025 was primarily from our Sanofi agreement and includes $46 million of R&D reimbursement and $4 million of royalties from the sales of Nuvaxovid.

Please turn to Slide 12 for a detailed view of our third quarter financial results where I'll focus on our operating expense results and trends. Third quarter 2025 combined R&D and SG&A expenses were $130 million and reflected an 18% reduction from the same period in 2024. While our R&D spend of $98 million exceeds the prior year, $46 million, or almost half, is subject to reimbursement by Sanofi. Importantly, our SG&A expenses were 55% lower than the same period last year and are driven by the transition of lead global commercial activities to Sanofi plus strong execution on our broader cost reduction plan.

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During the third quarter of 2025, we incurred noncash charges totaling $126 million, inclusive of a $97 million asset impairment related to our Maryland site consolidation and $29 million related to loss on debt extinguishment for the convertible debt refinancing. The convertible debt refinancing in August extended the maturity of the majority of the 2027 notes to 2031 with improved terms. This transaction supports Novavax's financial strength during a key transition period for the company. And finally, we reported a net loss of $202 million, or $1.25 per diluted share, for the third quarter of 2025.

Please turn to Slide 13. We're committed to streamlining our operating expenses to enable value creation. We are reaffirming our full year 2025 financial guidance for combined R&D and SG&A expenses of $520 million at the midpoint and narrowing the range to $505 million to $535 million. On a non-GAAP basis and net of partner reimbursement, we now expect full year 2025 R&D and SG&A to be approximately $450 million at midpoint. This reflects an approximately $15 million improvement versus the prior estimate of approximately $465 million. We are also reaffirming our multiyear targets for 2026 and 2027 combined R&D and SG&A expenses, net of partner reimbursements, of $350 million and $250 million, respectively. We believe that providing both the gross spend and net of partner reimbursement views provides investors with a better understanding of our core operating cost structure. We are awaiting our license partners to complete their 2026 planning processes to better understand if there are any new updates to our R&D support. We do not expect potential updates to impact our core spend targets net of reimbursement outlined today.

Please turn to Slide 14 for a recap of sources of 2024 and 2025 cash flow earned through November 2025. During 2024 and 2025, we significantly improved Novavax's financial strength by securing $1.4 billion in new cash for the company while in parallel reducing our cost structure and liabilities. $1.1 billion or 78% of this cash came from nondilutive sources, including partner upfronts and milestones plus sale of assets. Important to note, we have not raised equity capital from our ATM facility since the second quarter of 2024 as we prioritize nondilutive funding sources and cost reductions.

Please turn to Slide 15. Now turning to our 2025 revenue framework. Today, we are raising our prior revenue framework by $25 million at the midpoint and now expect to achieve adjusted total revenue of between $1.040 billion to $1.060 billion. Our 2025 revenue framework excludes Sanofi supply sales, royalties, influenza COVID-19 combination and Matrix-M-related milestones. This means there may be revenue in 2025 that is additive to our expectations for adjusted total revenue for the year. At midpoint, the $25 million increase to our 2025 adjusted total revenue is driven by a $7.5 million increase to adjusted supply sales related to increased demand for Matrix-M from Serum for the R21/Matrix-M malaria vaccine, a $12.5 million increase to Sanofi cost reimbursement related to ongoing R&D activities, and a $5 million increase to other partner revenue related to Serum and Takeda royalties.

Please turn to Slide 16 for a preview of our 2026 revenue framework. For 2026, we are following an approach similar to the 2025 revenue framework, in that our non-GAAP adjusted total revenue excludes Sanofi royalties, CIC milestones, COVID-19 supply sales, and Novavax COVID-19 APA sales. This means there may be revenues in 2026 that are additive to our expectations for adjusted licensing, royalty, and other revenue. That said, we believe that the '26-'27 season Nuvaxovid royalties will grow significantly as compared to 2025 as next year reflects the first full year where Sanofi will have the opportunity to prepare for its marketing and contracting efforts and build upon the learnings from the current transition year in the U.S. and markets outside the U.S. This preliminary preview is intended to help investors better track the Novavax transition period revenues under our Sanofi agreement. Investors should not anticipate a similar update at this time next year as these activities are expected to be materially completed by the end of 2026.

For 2026, we expect to achieve adjusted total revenue of between $185 million and $205 million. This includes: a $75 million milestone from the completion of manufacturing technology transfer expected to be earned in the fourth quarter of 2026; $30 million to $40 million in R&D reimbursement as we complete our R&D support and technology transfer activities for Sanofi; $30 million to $40 million of adjusted supply sales to our license partners, which primarily reflect sales of Matrix-M; and finally, $50 million of noncash amortization related to the previously received upfront and R&D milestone payments from Sanofi. In the case of both R&D reimbursement and adjusted supply sales, these preliminary ranges are subject to the completion of our license partners' plans for 2026.

When comparing our non-GAAP adjusted total revenue for 2026 to 2025, please note that 2025 includes $610 million in noncash product sales related to the settlement of APA agreements. While currently excluded from our 2026 adjusted total revenue, there is the potential for a $125 million milestone linked to the initiation of a Phase III CIC program and its addition is pending feedback from Sanofi regarding clinical plans for their CIC programs. We are encouraged by the recent Sanofi announcement of preliminary positive results from both of their CIC Phase I/II programs and their intent to engage with regulatory authorities to advance development.

As Novavax drives towards our goal of non-GAAP profitability, we expect this could occur as early as 2028. Key to the timing of our path to non-GAAP P&L profitability are the successful development and regulatory approval of the Sanofi CIC program and successful commercial execution by Sanofi on both the COVID and CIC programs. This could be further supported by our expectation that we will add additional cash flow from new business development agreements. We look forward to sharing additional updates as we 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.

In summary, we're proud of the continued progress being made on our corporate strategy with a consistent track record of execution to date. We are seeing continued success across our strategic priorities for the year, including optimizing our partnership with Sanofi, enhancing other existing partnerships, and working to forge new potential collaborations. We've been advancing our early-stage pipeline and working to expand the utility of our technology platform. This is all underpinned by a continued focus on further improving our financial foundation while ensuring we have the right capabilities to successfully execute our strategy into the future. We remain committed to our growth strategy and believe that it puts us on the best path to deliver long-term sustainable value for our shareholders. Our progress to date has set us on the right path heading into the year-end and into 2026, and we remain excited about the future of Novavax. Thank you to our shareholders for their support. And as always, we appreciate all of the hard work and dedication of our employees without whom the success would not be possible.

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

[Operator Instructions] We'll take our first question today from Roger Song with Jefferies.

This is Nabeel on for Roger. Maybe 2 from us. How do you see the 2025 COVID season as compared to last year? Are you getting any feedback from pharmacies on stocking and consumer preference for the product? And then could you provide some more color on that BARDA grant? And does it reflect any attitude from the FDA?

Thank you for your questions. Jim, did you want to take that?

Certainly. Why don't I begin -- and thanks for the question about the COVID season. And by the way, a lot of credit to Jefferies. You put out an exceptional COVID [ tracker ] every week. And so what I'll do is, for all your customers, I'm going to reference it. I know it's a lot of IQVIA data, but you do exceptional work.

And then on the BARDA piece, which I think is referencing the new pandemic flu BARDA grant to Sanofi, I'm going to speak -- have Rux speak to that and some of the latest on the pandemic flu front. All right. So beginning with the COVID season, as folks know, especially in the U.S., we had a policy update this year, certainly more restrictive in the below-65 age groups. When we look at the year-over-year, and I think folks know we started 1 week late, so if you adjust for that, the season in terms of Rxs are down about 20% compared to last year. That's fairly consistent, at least, I'll say, with our internal analytics and expectation for how ours and actually others in this market, how their labels have been altered. So when you think about the label for COVID then in the U.S., it's beginning to become far more aligned to Europe and global markets. So when we think about the COVID market this year and its go-forward expectations, there's just a bit of a resetting occurring in the U.S. and then our expectation is you build from there with a sound footing.

So that's some of the feedback on the COVID market. And we're really looking forward to Sanofi and what they're going to be able to do with Nuvaxovid, especially starting next year when they get their full year. But with that said and talking about Sanofi, perhaps, Rux, some feedback on the new BARDA announcement.

Yes. Thank you, Jim, and thank you for the question, Roger. So we are talking here about a BARDA grant that has been awarded to our partners to Sanofi for early-stage work with their vaccine candidate for pandemic influenza, but including our Matrix-M adjuvant. The companies have announced previously that we've amended our collaboration agreement to include Novavax's Matrix-M adjuvant in this Sanofi's pandemic influenza vaccine candidate. So this candidate is going to go through Phase II. And as you are, we are very keen in seeing the results and obviously eventually contributing to pandemic influenza preparedness in the United States and elsewhere in the world.

Our next question will come from the line of Mayank Mamtani at B. Riley Securities.

Appreciate the detailed R&D updates today. On the Sanofi collaboration, it seems like that's progressing well, including the preliminary positive CIC data they talked about. Could you talk to your awareness and next steps there? And I also ask since you may have some of your own guidance regarding your CIC program, and it seems from Moderna's earnings this morning, they're still awaiting the FDA feedback on their Phase III CIC package? And also was curious where you stand with your wholly-owned stand-alone flu program? And then I have a quick follow-up.

Mayank, thank you for your question. We were very excited to hear Sanofi's announcement in their recent earnings call that they had positive data on both of their combination programs, including their world-leading flu vaccines and our Nuvaxovid. And as our investors, I hope, are well aware, Novavax is eligible for significant future potential royalties and milestones as they initiate a Phase III program, should they do that, and then start to sell that product and market it or [ product ]. Both of those products were fast-tracked by FDA about a year ago. So we're very excited. We can't comment on where they are, but what they did say, we can reference you and our investors to their public commentary that they're approaching the regulator for next steps on that. So we look forward to hearing updates and to them advancing that program, hopefully, to Phase III and beyond.

Regarding our own program, what we've said consistently about that, Mayank, is that we intend to outlicense our CIC, our combination COVID flu program that's Phase III ready as well as our flu program, both of those assets and that we continue to seek partners for that and have dialog about that. Not much we can say about that. If we get a partner and do a deal and we sign it, we'll be able to announce it. But that is the intention. And look, we have good data on both of those assets and programs. We think our technology, and believe and have seen it's proven over time, can make a big difference on global public health, and we'll be excited to hopefully see those assets in the hands of another organization someday in the future. That's our intention. We'll keep you posted.

And then on the rollout of some of the preclinical data that, Rux, you talked about on C. diff, shingles, RSV. Was just curious if these experiments were done, keeping in mind head-to-head comparisons with current available vaccines could be interesting. And was also curious, we've seen some mixed updates, for example, the Pfizer C. diff vaccine not playing out in terms of events after initial immunogenicity data was strong a couple of years ago. Was curious if you could talk to how we can think of the 3 programs as investors obviously want to start ascribing value there. And then lastly, just quickly for Jim. On the non-GAAP profitability goal now targeted for 2028, can you just clarify if anything has changed to what you had communicated previously?

Thank you, Mike. Rux, do you want to take that first question from Mike on our pipeline?

Yes. Thank you, John. So in our experimentation -- in all our experiments, we are always introducing a negative control and a positive control. For the positive control, we are typically using either approved vaccines, which will serve as, if you want, the guidepost for our experiments, if such vaccines already are approved and on the market, or in the case of, as you were pointing out, C. diff, where an approved vaccine is not yet on the market, we are actually using positive control constructs that are very similar with what competitors have used in their clinical trials. So every good scientist has to include these negative and positive controls in the experiment. If not, one would not really have the right type of information. So that's from my side to respond to the first part of your question.

Thank you, Ruxandra. And Mayank, thank you for pointing out our 3 programs, and we're making progress in the lab, early-stage, preclinical, and we're looking forward to in the coming quarters, unveiling some of the learnings. We have some exciting information we're learning internally here where the teams continue to progress that quarter-on-quarter, and we're excited about what we're seeing so far. Beyond the 3 programs you mentioned, we also have our own pandemic flu initiative. And our team has been working with both the European and U.S. governmental authorities to seek funding for our own pandemic flu. That's above and beyond what Sanofi may do with our Matrix-M and their flu product. We're also looking at intranasal application potentially for that asset. And so we'll keep you posted as that progresses. And in addition, very importantly, we're working on Matrix-M itself to expand its utility, expand the IP around Matrix-M, and its applicability we're exploring in things beyond infectious disease. So we branch beyond just viral antigens to also explore in bacterial, which you mentioned today, and thank you for that. In addition, we're looking to go beyond infectious disease and see what Matrix-M can do. And so Ruxandra and her team are deep into the early exploration of some of those other avenues. And again, we're excited about the potential and excited to unveil in the coming quarters what we're learning there good. Jim, did you want to take the profitability question from Mayank?

Yes, certainly. Mayank, I think you and the investors have heard from us consistently that driving this company to non-GAAP profitability and beyond, throwing off cash as a company, delivering shareholder value, is a critical priority for the company, the timing of which, our goals to how we get there, you're watching us control what we can control, which is driving down our costs, seeking nondilutive funding along the way, making sure we have that strong balance sheet. But we also recognize we're, in many ways, reliant on our partners, Sanofi, in particular now, but heck, we're moving to bring more partners online as well.

New information since last we spoke, great news on CIC, 2 positive Phase I/II studies. But what we also learned, hey, Sanofi is going to be working with the regulators to get those programs advanced. This new information leads us to view the more likely time frame to potentially initiate a Phase III or get to market with CIC to have shifted out probably at least 6, 12 months just based on the timing of this update. Therefore, we updated the timing for the as-early-as estimate from 2027 to 2028. All said, though, when you look at all the pieces to what can drive us to profitability, we're seeing positive trends across the board. You heard our feedback on how we view the market. You heard from Rux and John how we view our technology, the advancement, and therefore our abilities to partner, including not just early-stage pipeline, but also our late-stage assets. And then you're hearing what I think is exceptional news, like I said, from Sanofi on their preparations for next year and beyond with COVID. So we are certainly going to continue to endeavor and drive to this non-GAAP profitability and beyond. Just providing the latest update on that today.

Yes, Jim, and it's our intent to take a conservative position on that as we communicate with investors, toggle to what we know is in front of us as we learn related to the Sanofi deal itself. Just that one vehicle can lead to that with our base business that we already have, not including anything new we may do. So right now, that's what we see in front of us based on that latest update, and we'll work really hard to do even better than that.

Our next question today will come from the line of Eric Schmidt at Cantor.

It's Eric filling in for Pete today. First, John and team, just congrats on the complete makeover of your company. You guys were way out ahead of the curve here and far larger companies in the space could certainly learn from your lead.

Thank you, Eric.

It's been fun to watch. Question on Matrix-M and some of the MTAs you got exploring use of this with potential partners. What's the cadence of time lines and milestones, deliverables that a partner would need to go through in order to convert some of these evaluations to more formal arrangements. What time scale are you thinking about?

It's an excellent question, Eric. I'd love to be able to put a clock on that for you, but I cannot hear today. Obviously, there's more we know than we'd be able to say theoretically in any of those types of situations, right? The good news is that we have, to your point, multiple MTAs signed with organizations, a couple of large top 10 pharmaceutical global organizations that have an interest in this technology in this space, as well as a smaller company outside of infectious disease, even. So very, very interesting.

That work is ongoing. Those companies, in general, I think the way to frame it in that type of arrangement, when you're working with a technology like we have, and this isn't Novavax specific, but I'll give you a framework to think about, company would take that type of technology, put it into the lab, do some experiments, they've done some thought experiment before that, obviously had communications with our team, business development team. We have data we share. We do experiments in our lab. They get interested. They duplicate those and do their own experiments in their lab. But these are not years. These are experiments that are shorter than that. They're in animal models in the lab. And if that's confirmatory, that would be the potential type of early pivot point in that journey where they might consider an arrangement with us. That's the type of framework to think about.

So I won't put a clock to it, but I will say it's not years and years and years down the road. They'll know whether or not they'd like to do something with it as they get results out of their lab on early experiments. And then obviously, it takes a certain period of time, if we were to get to that point, to then negotiate deals. But our team has shown we're able to negotiate deals, whether it's selling real estate and downsizing certain areas that no longer support the new strategy, and thank you for recognizing how we've reshaped the company, or do something like a Sanofi arrangement and even these MTAs. So lots ahead is our intention. We're really excited about the potential, and there's a lot of interest in our technology outside of Novavax. So we'll continue to work to mine that and hope in the near-term to have some updates for you that are exciting.

Maybe another question on Nuvaxovid. Realizing that this is a transition year and that maybe traditional benchmarks like market share and sales don't really apply, are there things that would make this a successful transition year in terms of distribution channels and maybe softer metrics that you're looking for your partner to achieve?

Yes. I think a lot of that already happened, Eric, and I think Jim Kelly will comment as well here. But certainly, the transition from an EUA to a BLA to a full U.S. license was a critical first step, and that's a first for Novavax. So we handed the baton off on the EUA and picked it up for Sanofi on a BLA. And that happened mid-calendar year, and after initial retail negotiations begin. So you're halfway into the cycle.

But that was very important, though, that, that BLA was approved. Also prefilled syringe, also competitive shelf life approved at the same time as mRNAs by the regulatory authorities. It's an even playing field now. For the first time since I came here to Novavax, it's now an even playing field. And it had not been, as you know, through the pandemic and those things. But we've got it there, and it's in the hands of a world leader in vaccines on an even playing field. So we're very excited. Jim, anything to add to that?

Well, John, really 2 things I'd add. So while this year set the table with an even playing field, then what do you do with it? Well, we're seeing a couple of things. One is you got a full 12-month cycle time to get the contracting right. And what we know is Sanofi is an infinitely better contractor than we ever were with that full vaccine portfolio. So really looking forward to that piece of it. And then we also know, given the transition here, Sanofi is doing some piloting right across the country on different marketing techniques in submarkets. Excellent. That means their marketing capability toolkit is going to be optimized as they go into next year. And that's what we meant when we said, hey listen, we're really excited to have Sanofi as our commercial partner, and we're really happy at what the table has been set to enable them to do moving forward.

Our next question will come from Chris Lobianco at TD Securities.

Congrats on all the progress this quarter. So we've seen the competitors' Phase II shingles vaccine data, which showed comparable immunogenicity and better tolerability than Shingrix. Can you remind us what Novavax thinks the clinical bar for success for a novel shingles vaccine is? And how might your vaccine platform be differentiated from some of the competitive data we've seen in Phase II?

Ruxandra, were you able to hear the question from Chris?

I think that -- Chris, thank you for the question. I think that you have asked if we have looked at other competitors' data when it comes to the efficacy and tolerability of their shingles candidates. Is that so?

Yes, that's correct. And just how Novavax's platform might be differentiated.

So again, coming to the response that I gave at the previous question, we do actually have positive comparators and multiple comparators in all our preclinical testing using, obviously, for nonapproved vaccines. It is really based on the scientific endeavor and on the published data. This being said, in all the experiments, we are including groups that are treated either with shingles, yes, or with the type of vaccines that could mimic whatever is happening in other people's hands. So we are very confident that the data that we are generating is actually very informative, and it's potentially going to compare well in human clinical trials. Obviously, we need to get there with our experiments, and we are actually looking forward to sharing with you more data when that is becoming available.

Yes. It's a really good question, Chris, because -- and Rux, let me build upon what you just shared, and thank you for that, Rux. It's a good question. Obviously, the shingles vaccine, we've seen data that up to potentially 40% or so in certain markets of consumers may not get their booster shot on the current shingles vaccine because they're concerned about side effects. So obviously, Chris, the bar on efficacy with the current marketed shingles vaccine is very high. That's an excellent vaccine when it comes to efficacy, and we're glad it's there to protect all of us as consumers.

The baggage on the side effects piece is an area for opportunity there for competitors to come in and improve. So we're glad to see other companies are investing there. It's one of the top 5 or 6 areas of vaccine investment, actually, according to McKinsey and other sources because of this opportunity that's there. Let me just say this, there's no guarantee, as you well know, in biotech -- this includes Novavax, right -- that anything coming out of your laboratories will go all the way to success. We're excited about early results we're seeing, but it's early. It's preclinical. Like Rux said, we have to go through all of the different studies and tests to get there, so do competitors. So it's good to see other programs advancing. How many of those may go all the way through full Phase III and meet that high efficacy bar that's out there or come close enough to it and deliver on the tolerability in the end in a final product, that's a difficult bar to achieve.

We'll be glad -- we'll bet on our technology every time because we believe in Matrix-M and what we're doing, and we believe that we've got a strong shot to have a competitive product. Again, we're not promising on anything, future deals, things coming out of the clinic. There's risk in biotech. You have to execute. It's our intention to do so. We've got a great technology platform we're confident in, and we're excited to bring it forward.

Next we'll go to the line of Alec Stranahan at Bank of America.

Congrats on the continued progress in the quarter. First, good to see the second $25 million milestone come in a few days ago. So we've got that for 4Q. Looking to next year, appreciate the preliminary guidance for '26. Could you maybe walk us through the $75 million milestone estimate? I guess, what does this entail? And assuming this is fairly high conviction given the preliminary guidance, any other high conviction items that you maybe single out beyond the Sanofi milestones next year? And then I've got a follow-up.

All right, Alec, thank you for your question. And you're certainly right. We're very pleased with the progress we've made to date across both pipeline advancement and also supporting our partners. In particular, as we look at the milestones for next year, the $75 million milestone that we've included in the 2026 adjusted revenue framework relates to completion of manufacturing tech transfer with Sanofi. So specifically, what that means is we knew when we signed our CLA with Sanofi that we'd be supporting them with commercial manufacturing while they learned what it would take to be self-sufficient to manufacture on their own.

And we believe we're right on track to be able to complete that manufacturing tech transfer by the fourth quarter next year. So what that's going to mean for our financial statements is not just the milestone hits, but that 2026 will be the completion of when we act as a bit of a middleman on getting supply for Sanofi for them to market. And as you know, Serum Institute is who we've been working with for multiple years to do so. So that's the transition period, that's the milestone, and the conviction to complete it really just comes from the methodical work we've been doing to date with a great partner.

And then maybe just a quick follow-up, Jim, on the supply sales piece. Is it right to assume this is essentially just reimbursement for the COGS on Nuvaxovid production as you manage through the transition of manufacturing? And I guess, is it for the most part, on-time production? Or do you still maybe manufacture some number of doses at risk?

All right. Excellent. So our supply sales, so that's a new component this year to our product sales, has 2 primary pieces. One is COVID vaccine that we provide for Sanofi for them to sell. So that's part one. And next year, that's anticipated to be the final year we do that because we would have completed the tech transfer I described. Under our agreement with Sanofi, the intent is to have just a little bit of margin on top of our cost there. So think of it more as a just over breakeven proposition. Then when you look at the other component of supply sales, well, it's Matrix-M, and it's Matrix-M to all of our partners. And that's going to be a more durable stream of revenue, but with the same concept. The intent that -- and listen, we're really just trying to support our partners. There's a small margin there. And what you're witnessing with that part, and this is the Matrix supply sales in particular, is that as our partner unit volumes grow, and the example I'll give you here that is really going great in volume is R21 malaria vaccine. And you heard that since launch last year, approximately 25 million doses. Well, what that's doing is that's driving us to a critical mass, economies of scale for our Matrix manufacturing. And so what it does is it allows us to be efficient, to be right there for our partners.

You also asked a question about just in time. So the way this works, the cycle time, and I'll speak just to the COVID right now, is that manufacturing effort really begins in the first quarter, when you're working through the different variants, you do PPQs and you do a lot of that DS production early in the season. The more or closer to just in time is the DP fills. And you do this so you can maximize shelf life. And those really begin to occur over the summer leading into the season. So that's the cycle time. That's how production works.

Our next question today will come from Tom Shrader at BTIG.

Quick one on the Sanofi pandemic effort. Is there any guidance on the size the government stockpile would be? And would that be meaningful to you? Is there one royalty for Sanofi? Or because this is a different type arrangement, is that a very different royalty back to you? And then I have a COVID follow-up.