NOVAVAX INC Q3 FY2024 earnings call

Key Value Drivers

• Sanofi Partnership: License and collaboration with Sanofi to co-commercialize COVID-19 vaccine, with potential for double-digit royalties and additional revenue streams from other vaccines. Received $500 million upfront and $70 million equity investment, with up to $700 million in milestones.
• Late-Stage Pipeline: COVID-19 influenza combination (CIC) and standalone influenza vaccine candidates; clinical hold on IND removed, with intent to begin Phase 3 immunogenicity trial soon. Data from Phase 2 CIC study support non-inferior immunogenicity.
• Matrix-M Adjuvant: Potential to improve existing vaccines and enable new ones; entered material transfer agreement with pharmaceutical company to evaluate in bacterial vaccine program.
• Early-Stage Pipeline: Focus on RSV combinations, pandemic flu, and other infectious diseases leveraging technology platform, with IND-enabling activities planned.

Commercial Updates

• Initiated '24-'25 COVID-19 commercial season in mid-September, with improved authorization timing but faced challenges like limited retail stocking and minimum purchase commitments for mRNA vaccines. Achieved ~70% market share in one regional retailer, with 53% of claims in 65+ age cohort.

Novavax recorded total revenue of $85 million for the third quarter of 2024. Product sales for the quarter were $38 million, primarily from the US market. Combined R&D and SG&A expenses for Q3 2024 were $158 million, a 26% reduction from the prior year. For full year 2024, revenue guidance was revised to between $650 million and $700 million, down from the prior range of $700 million to $800 million.

Financial Guidance

• Revised full-year 2024 total revenue to $650M-$700M, down from prior $700M-$800M. Product sales guidance revised to $175M-$225M, with licensing, royalties, and other revenue expected at $475M.
• Intend to reduce R&D plus SG&A to ~$350M in 2026, with non-GAAP combined R&D and SG&A at ~$450M in 2025.

Milestones from Sanofi Partnership

• $50M COVID-19 milestone expected with pediatric trial database lock in Q4 2024, recognized over transition period. $175M BLA milestone targeted for April 2025. $350M flu COVID-19 program milestones related to development and first US commercial sale.

• Market Access Challenges: Minimum purchase commitments for mRNA vaccines, limited retail stocking, and 3-month product expiry for prefilled syringe.
• Clinical Hold Impact: Temporary delay in Phase 3 trial initiation, though resolved, with standard safety oversight now in place.
• APA Uncertainty: Excluding APA sales from forward-looking guidance due to uncertainty around future cash flows.

Q: On the clinical hold removal and Phase 3 trial timing, what's the outlook?

A: Bob Walker stated they're working to reinitiate the trial in the coming weeks, with safety oversight being standard and no significant additional safety requirements beyond normal protocol adjustments.

Q: Can you elaborate on commercial spend and net price dynamics?

A: Jim Kelly mentioned ~$30M of current quarter commercial spend not expected post-2024, and net price for COVID vaccine is estimated to be 50%-75% of gross, around $70-$100 per dose. John Trizzino discussed market data trends and IQVIA data fluctuations.

Q: On Phase 3 CIC trial timing and design, what's the status?

A: John Jacobs and Bob Walker noted the trial is being reinitiated, with a non-inferiority design for both CIC and standalone flu components, aiming for immunogenicity readout, not clinical efficacy, in the mid-'25 timeframe.