Novavax Inc 2026 Q2 Earnings Call

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. All lines have been placed on mute to prevent any background noise. After today's speakers' remarks, there will be a question-and-answer session. If you would like to ask a question during that time, simply press star followed by the number 1 on your telephone keypad. If you would like to withdraw your question, simply press star and 1 again. Thank you. It's now my pleasure to turn the floor over to Naina Zaman.

You may begin. Good morning.

Thank you all for joining us today to discuss our second quarter financial results and operational highlights today on August 6th, 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, Naina. 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 a 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 licensed 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 three 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. 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 two 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. 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 healthcare 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-19 influenza combination vaccine, reinforce 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 CIC candidate utilizing Nuvaxovid in combination with their flu vaccines. 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.

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. 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 MTA 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.