Novavax, Inc. Price & Performance (NVAX)

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 under the heading Risk Factors in our most recent Form 10 ks, and subsequent Form 10 Qs filed with the Securities and Exchange Commission, available at sec.gov and our website, Novavax.com Novavax. 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 three. This presentation also includes references to a non GAAP financial measure which is forward looking information royalties and other revenue. Please turn to Slide four. Joining me today is John Jacobs, our President and CEO, who will provide an update on our progress during the quarter and highlight our growth strategy. Additionally, Doctor. Ritzandra Dragia, Head of R and D, will discuss our R and D strategy and clinical development. John Trozzino, our President and Chief Operating Officer, will provide an update on our Sanofi partnership and finally, Jim Kelly, Chief Financial Officer and Treasurer will provide an overview of our financial results and 2025 financial guidance and revenue framework.

I would now like to hand over the call to John Jacobs. Thank you, Louis. I'm pleased to be here with you today along with members of our executive team. To discuss our financial results and highlight our progress on our corporate growth strategy. 2024 was a year of significant accomplishments for Novavax Novavax. We developed and embarked upon a new and ambitious corporate growth strategy. We which is designed to maximize the impact of our cutting edge technology through R and D innovation, the expansion of our organic portfolio, and through building new and diversified partnerships with other companies via the outlife Consistent with that new strategy, we announced our wide ranging partnership agreement with Sanofi, [indiscernible] I will discuss in a few moments, and made important additional progress on our portfolio and in other areas during what was a transformational 2024. We saw the acceptance of our COVID-nineteen BLA by the U. S. FDA for which we have an action date in April of this year. The launch of our twenty fourtwenty five season updated COVID-nineteen vaccine Novavax successfully operationalizing our partnership with Sanofi. Which enabled them last month to assume lead commercial responsibilities for our COVID-nineteen vaccine beginning with a twenty five, twenty six vaccination season.

The initiation of an initial cohort of our COVID-nineteen influenza combination vaccine and standalone influenza vaccine Phase three trial.

The addition of a new head of R and D and the [indiscernible] including programs focused on C. Diff, varicella zoster virus, pandemic flu and the triple RSV combination. And finally, we made continued and significant progress in improving Novavax's financial strength Examples include the sale of our Czech Republic manufacturing facility for $200,000,000 and in the process, reducing our go forward annual operating costs by Significantly decreasing our current liabilities by $1,300,000,000 over the last two years and significantly reducing our combined R and D and SG and A expenses so that we are well positioned to achieve our goal of decreasing our expenses by approximately 85% by 2027 as compared to our 2022 baseline. With this significant progress, we have positioned NOVAVAX well to execute on our corporate growth strategy. And with this new strategy in place, we have reshaped our company mission to be in line with this future direction. It states by leveraging our science, our technology and our people, we will innovate and collaborate to tackle the world's most significant health challenges We have also aligned our company vision, which reinforces our belief in the impact our technology can and should have. We envision a world where our technology is amplified, to touch the lives of billions sparking transformation in global health.

Together, our management team and employees are united in our commitment to this strategy. And in our belief that expanding access to and the utility of our proven tech platform via R and D innovation, organic portfolio expansion and enhanced partnering and collaborations with other can truly help us to fulfill our mission and ultimately our vision for what Novavax can achieve and become as a company. And with our new growth strategy, renewed mission and vision, we have developed a clear pathway to how we will strive to positively impact global health and achieve value for all of our stakeholders in 2025 and beyond. We believe that our new strategy has potential to drive NOVAVAX to profitability as early as 2020 assuming execution of our plans and timely execution by our partners, particularly Sanofi. Jim Kelly will touch on this more during his portion of our prepared remarks. Upon reaching our planned steady state operating model, we expect to continue funding our R and D pipeline through organic cash flows from ex executed transactions to thus produce additional early stage assets for out licensing and partnering to further increase profitability and cash flow. Between now and then, there are several near term catalysts you can look for to signal progress.

The April PDUFA date for our BLA and assuming BLA approval, the associated MAH transfer for our COVID-nineteen vaccine to Sanofi generating $225,000,000 in milestone payments combined. Advancement of Sanofi's own COVID influenza combination vaccine [indiscernible] which include Novavax's COVID-nineteen vaccine thereby setting up opportunities for additional milestone and royalty payments. Data readout from the initial cohort of our Phase three KIC and standalone flu trial by mid year. Preclinical data from our early stage pipeline program in the second half of this year. We plan on hosting an Investor Day in the second half 2025 and announcement of additional partnerships and collaborations. While we can't give specific projections around timing or the nature of any new potential deals or partnerships, our team is actively working to seek new partnerships And also and finally look for further cost reduction efforts and initiatives from our team. Please turn to Slide six. As we continue with our commitment to positively impact global health, while delivering value for our shareholders, we've set three strategic priorities for the year. As an evolution of our previous value drivers, these will guide our work through 20 Our first priority is to be a partner choice and in the process increase access to our existing COVID-nineteen BEC [indiscernible] with the goal of growing revenue and continuing to improve the long term We intend to optimize our existing partnerships with a focus on mutual value creation.

Our license and collaboration agreement with Sanofi set a new bar for what is possible with this strategy and further solidified the credibility of our proven tech platform. The partnership combines Novavax's proprietary protein and nanoparticle technologies Matrix Adjuvant and our R and D expertise with Sanofi's world class leadership in launching and commercializing innovative vaccines. As a reminder, in 2024, we received an initial cash payment of $500,000,000 upfront and an an approximately $70,000,000 equity investment in Novavax Novavax. Sanofi is taking the lead commercialization role for our COVID-nineteen vaccine vaccine program through potential milestones and royalties and to significantly reduce our operating expenses that were related to leading prior commercial efforts. In addition to the royalties and remaining mile [indiscernible] strong desire to leverage the power of our proven technology. And we are eligible to receive additional mile related to other vaccines developed by Sanofi in combination with our existing COVID-nineteen product. In fact, Sanofi has initiated two separate Phase onetwo trials combining our COVID-nineteen vaccine with their market leading flu products, Fluzone High Dose and Flublock, And both combination products were granted fast track designation by the USF access to our proven Matrix M adjuvant, Sanofi has broad non exclusive access to Matrix M and Novavax is eligible to receive up to $200,000,000 in launch and sales milestones and mid single digit sales royalties for twenty years for each new product Sanofi may choose to develop using our Matrix M adjuvant, above and beyond anything they may do with our COVID-nineteen vaccine.

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

Both for our shareholders and the people who would have broadened access to our As part of our new strategy, we intend to enter additional new partnerships with the goal of further increasing access to our tech and benefiting global health, which is in line with our new mission and vision for Novavax Novavax. Therefore, our second strategic priority is to leverage our technology platform and pipeline to forge additional partnerships our proven protein based nanoparticle technology and our Matrix M adjuvant have the potential to facilitate the development of new best in class vaccines. Or to improve existing vaccines with the potential for enhanced durability of protection, greater immune response and or reduced COGS, In addition, our new early stage pipeline is intended to create additional assets that we intend to partner and out license at early proof of concept stages. Optimizing our R and D investment, and creating additional opportunities for new collaborations and partnerships in in addition to what our tech platform alone could provide.

Our existing collaboration with Sanofi and Pre clinical evaluation agreements with other organizations highlight a significant interest in Matrix M. We intend to continue to seek opportunities to leverage Matrix M via part Our late stage programs include a COVID influenza combination vaccine candidate as well as a standalone influenza vaccine candidate both targeted for adults 65 years of age and older. We know that significant market demand exists for a combination vaccine with greater than sixty percent of consumers stating a preference for an all in one option. We expect data by mid year from the initial cohort of our Phase three trial, which began in December. Consistent with our new corporate strategy, we plan to stage gate additional investment in this this program. Beyond the completion of this initial cohort and ongoing regulatory [indiscernible] until a partner is in place.

With the expectation that the partner will fully fund any additional clinical investments in these programs. Finally, our third strategic priority is to advance our technology capital efficient approach and with the intent to partner early stage assets at proof of concept, allowing our partners to carry those assets forward through full clinical development and commercialization. We are actively advancing our pipeline of early stage programs focusing on high value assets in areas of significant unmet medical need compelling scientific rationale and strong commercial potential. With that in mind, we are continuing to expand our pipeline with the addition of of four new early stage programs that Roxandra will touch on in a moment. As we laid out last quarter, we intend to take a disciplined and capital efficient approach as we make smart investments and expand our pipeline. In summary, our corporate growth strategy allows NOVAVAX to focus on what we do best leveraging our scientific expertise and our proven technology NOVAVAX is well positioned to expand access to our technology deliver transformative advancements for global health and deliver value for all stakeholders. I'd now like to turn the call to Roxandra to discuss our research, and development updates.

Roxandra?

Thank you, John.

Please turn to Slide seven.

Good morning. I'm Roxandra Dragia, Novavax's new Head of R and D. And I'm very excited to be participating in my first earnings call as a member of our executive team. I made the decision to join the company in November because I see so much potential in our technology, as I'll be elaborating further in my remarks. As John said earlier, we are at a defining moment in the company's history reshaping our strategic plan to focus on driving value through innovation and building out a new robust R and D portfolio and via partnerships and collaboration with other organizations. Regarding R and D, and our new focus in this area, We just announced last month, under my leadership, the addition of four new early stage programs We have also initiated development work on novel matrix formulation with the potential to further differentiate and take us into new therapeutic areas and potentially improve next generation vaccines. Our focus on R and D cost effective innovation, early partnering and leveraging our technology with a goal of positively impacting the health and well-being of people around the globe is what brought me to Novavax. And now I would like to share some specifics on where we are and where we are going. [indiscernible] H5N1 Avian Influenza continues to command attention from public health officials the greater medical community and the public at large.

While human to human transmission has not been documented to date from the strains currently circulating in animal populations, infections and illness in humans have resulted from exposure to infected birds, and dairy cows with recent reports of transmission to domestic cats. During this current outbreak, H5N1 virus has infected more than seventy persons in The United States and Canada and accounted for one death. We have developed a protein nanoparticle and Matrix M vaccine against highly pathogenic H5N1 virus that is currently undergoing preclinical evaluation. Nonhuman primate studies have shown our candidate pandemic vaccine can produce protective levels of immunity after a single dose Other vaccine platforms may require more than one dose to achieve protected levels in equally prime population. In a pandemic with a dangerous pathogen, that factor alone may make our protein based Matrix M adjuvated vaccine an important option. The preclinical data supporting advancing our age vaccine into the clinic are currently in review of a major scientific journal. Using the same technology platform, we are assessing our other influenza strains in an effort to establish the capacity to quickly pivot to creating vaccines against new strains as they emerge. We stand ready to join pandemic preparedness efforts and are currently pursuing funding and partnership opportunities.

Our early stage pipeline also includes development of an RSV combination vaccine candidate that will build on the company's extensive history in this area. Lessons learned regarding superior protein antigen design together with new computational artificial intelligence machine learning capabilities, should allow us to enhance structural stability and immunogenicity and combined multiple different respiratory virus antigens with Matrix M into the program creating a competitive meaningful and differentiated offering in this key area. One of our goals is to advance the science of respiratory virus vaccines by providing multivalent durable protection for the millions we experience severe respiratory illness throughout the year. Our other infectious disease vaccine targets are Shingles and C. Diff. For signal prevention, we believe our technology has the potential to improve on the current standard of care by enabling a more tolerable, less reactogenic equally efficacious vaccine. Many at risk adults are declining shingles protection or don't complete their vaccination series because of the fear of side effects. By providing a more attractive options, we believe our technology has the potential to do we intend to change this dynamic and address a persistent public health need. We believe our technology may lead to better vaccine candidates for the prevention of C. Difficile morbidity and mortality.

There is no approved vaccine for C. Diff yet the medical need is large with S. Diff related illness including recurrent infections accounting for approximately $5,000,000,000 to $6,000,000,000 in annual U. S. Healthcare costs. Our technology has the potential to facilitate the development of a multivalent adjuvated vaccine with enhanced activity. And the potential to deliver a differentiated impact in an underserved patient population. For each of the early pipeline vaccine candidates, I've discussed, we expect to share initial data and early learnings in the second half of the year. I would like to discuss our ongoing exploratory science with respect to our Matrix M adjuvant. We believe that Matrix M can play an even greater role in the future. And we are seeking to explore how newer formulations different regimens and doses schedules and other enhancements can lead to improved vaccines, targeted approaches and advancement in therapeutic areas beyond infectious diseases. We are currently developing research partnerships and collaborations in immuno oncology. A field that is rapidly progressive, where we envision exciting potential opportunities for our technology. By taking targeted steps to employ validated translational models and to leverage AI and machine learning approaches where it makes sense, we hope to identify specific areas where Matrix M is currently formulated or as a next generation formulation could improve rates and duration of antitumor responses.

We look forward to sharing preliminary data with you later this year. Turning now to our late stage pipeline, comprised of our COVID influenza combination vaccine and seasonal influenza vaccine program we issued a press release in December announcing the dosing of an initial cohort of approximately 2,000 participants had begun in our Phase three safety and immunogenicity trial. Enrollment of this initial cohort in these studies complete and top line data are expected midyear. Our intent is to partner the program and we believe that additional positive comparative immunogenicity results if achieved an expanded safety database contributed by this cohort should facilitate those interactions. In summary, my first priority when I joined the company was to identify the most exciting potential candidates and bring them forward into the pipeline. Which we've done. Now with an intense focus on science, and readiness for partnering, we intend to advance and optimize our programs and generate initial proof of concept in preclinical evaluation. I couldn't be more excited about the work ahead the opportunity to keep you abreast of our developments and our plans to share with you some of our first data readouts in the second half of this year. Thank you.

And I'll turn now it over to John Trezino, for an operating update. Thank you, Roxandra. Please turn to Slide nine.

We are pleased with all the progress we made in COVID-nineteen vaccine program during the twenty twenty four-twenty twenty five season. And are excited about our partnership with Sanofi, as they assume lead commercial responsibility beginning with the 2526 vaccination season. To their leadership of our co commercialization activities for nuvaximid and believe that we have laid a solid foundation for our partners to increase access to the vaccine in seasons to come. This in turn allows us to focus on winding down our commercial infrastructure and reduce expenses to align with our corporate strategy. We could not have asked for a better partner with Sanofi's vast resources and deep knowledge in developing and commercializing vaccines. For this year, Sanofi has stated they will use 2025 as a learning year to understand COVID-nineteen market behaviors. And they believe there is further opportunity for nuvaxavid with the COVID-nineteen market given its tolerability profile. Looking to the future, Sanofi has initiated two separate Phase onetwo trials for their combination of vaccine candidates combining nivaxavid with its market leading influenza vaccines Fluzone High Dose and FluBlox. Furthermore, these vaccine candidates were granted fast track designation by the U. S. FDA. If successful, these assets have the potential for future milestone payments and royalties to Novavax Novavax.

As we move into 2025, our near term potential milestone payments include our COVID-nineteen BLA approval which has a PDUFA date in April and transfer of COVID-nineteen market authorizations for The U. S. And EU, later in 2025. These milestones account for a combined total of $225,000,000 in potential payments. In summary, we believe there remains a continued demand for COVID-nineteen vaccines and are excited about our partnership with Sanofi. We believe that Sanofi, a market leader, with its large commercial infrastructure and expertise we'll be able to drive additional market share in 2025 and beyond. With that, I'd like to hand the call to Jim to discuss our financial results for Thank you, John. Please turn to Slide 10.

This morning, we announced our financial results for the fourth quarter and full year 2024. Details of our results can be found in our press release issued today and in our Form 10 ks filing. Please turn to Slide 11. Before reviewing our financial results, I I would like to first discuss Novavax's Novavax to significant Our business plan is designed to deliver profitability supported by a potential Sanofi kick launch as early as 2027. Our plan includes revenues supported by the existing Sanofi agreement execution including the commercialization of the Sanofi kick program. Plus new BD business development deals to drive cash flow. On the expense side, we plan to further reduce R and D plus SG and A expenses down to a lean core spend profile of $250,000,000 by 2027, and we expect this will position us well to enable efficient value creation and capital independence. We are acting with urgency to both drive value from our innovative technology platform and fully describe for investors the shape of our business over the coming years. Keys to the timing on our path to profitability are the successful development and regulatory approval of the Sanofi kick program and successful commercial execution by Sanofi on both the COVID and KIC programs.

We define profitability as GAAP operating profit less non cash items such as stock based compensation and depreciation. Our expected breakeven revenue for 2027 is approximately $225,000,000 We estimate this breakeven amount by starting with our target of approximately $250,000,000 for R and D plus SG and A spend in 2027 and then adjust to remove $25,000,000 in expected non cash items. As a reminder, the KIC launch milestone is $225,000,000 and its achievement would allow us to realize this goal. Breakeven sales from Sanofi on COVID and kick of over $1,000,000,000 and $2,500,000,000 respectively, or a combination of each could achieve the same result via royalties to Novavax. As noted, The achievement and timing of each are the key to enable our path to profitability. This could be further supported by our expectation that we will add additional cash flow. From new business development agreements. A few guiding principles related to our $250,000,000 core spend profile and include the expectation that we would only invest beyond this amount if we are being reimbursed by others or established a cash runway to enable a and had exceptional data for a program that supported greater investment. We expect to achieve significant revenues and cash flows from our Sanofi agreement.

However, since we're reliant on Sanofi's forecast, we're unable to provide guidance for 2025 related to Sanofi's COVID royalties and KIK milestones and these would be additive to our 2025 revenue framework we're sharing today. Please turn to Slide 12. A few comments about 2025 and its importance as a transition year for Novavax Novavax. From a financial statement perspective, you'll see our revenue line change. As we increase emphasis on licensing and royalty revenue from [indiscernible] and pursue potential grant revenue opportunities as we decrease emphasis on product sales. Our operating expenses are expected to decrease significantly as we eliminate the cost and complexity associated with global commercial For 2025, these R and D activities primarily include the completion of our Kik Flue investment towards partnering, and support for Sanofi's clinical and commercial activities. In addition, we will begin targeted investments in our early stage program. During 2025, look for a number of important updates and catalysts that track our progress. From Sanofi, these include preparations for commercializing nivaxavid, the U. S. BLA action and advancement of the two Sanofi KIC development programs. We expect to share the status towards achievement of $225,000,000 in anticipated milestones under this Sanofi agreement.

For the Novavax kick flu program, we expect initial study cohort results by mid year. We will also keep you abreast of the latest business development activities as we continue to create value from our technology. As demonstrated in 2024, these BD related announcements can come at any time. And we are engaged with the key industry vaccine players on this front. And finally, we are planning for an Investor Day on this second half of twenty twenty five to share important updates from our early stage programs. Please turn to Slide 13. Will begin with key highlights from our full year 2024 financial results. Novavax reported total revenue of $682,000,000 Of this, U. S. And European sales were the primary contributors to our 190,000,000 of product sales In addition, we recorded $492,000,000 from licensing, royalties and other revenue. During 2024, as we continued to transform Novavax into a more lean organization, we both strengthened our balance sheet by reducing our current liabilities by approximately $500,000,000 and improved our cost structure by reducing full year 2024 R and D plus SG and A cost by 40%. Compared to full year 2023. For 2025, we're targeting to further reduce R and D and SG and A expenses by another 30% at the midpoint and are guiding to spend of between $475,000,000 to $525,000,000 Importantly, we have successfully executed on actions that will reduce our go forward operating expenses.

By over $250,000,000 compared to 2024. Related to both the transition of commercial lead responsibilities to Sanofi and the sale of our Czech Republic manufacturing facility at the end of twenty twenty four.

We ended 2024 with over $1,000,000,000 in cash and receivables that benefited from the $200,000,000 sale of the Czech Republic facility to Novo Nordisk.

In addition and in the fourth quarter, we earned a $50,000,000 milestone under the Sanofi agreement that we expect to receive in the first quarter of twenty twenty five. Please turn to Slide 14 for a more detailed review of our fourth quarter and full year financial results. For the fourth quarter of twenty twenty four, we recorded total revenue of 88,000,000 compared to $291,000,000 in the same period in 2023, These total revenue results were in line with our expectations. Product sales for the fourth quarter of twenty twenty four were $50,000,000 with the majority coming from The U. S. Market.

Fourth quarter twenty twenty four combined R and D and SG and A expenses were $183,000,000 and reflect a 43% reduction These reductions are accelerating and based on this, we believe we're on track to further reduce our cost structure in 2025 and beyond. A key addition to our fourth quarter results our Czech Republic manufacturing facility that closed in December.

As a result, our fourth quarter loss of $81,000,000 reflects an almost $100,000,000 improvement compared to the prior year. Please turn to Slide 15.

We are committed to streamlining our operating expenses to enable value creation. We are targeting a 1,500,000,000.0 and an 85% reduction to R and D plus SG and A expense by 2027 when compared to 2022.

With the achievement of $1,000,000,000 of this reduction through 2024, we are well on our way to achieving this goal. For 2025, we expect our R and D plus SG and A to be between $475,000,000 and $525,000,000 and intend to invest approximately 70 of this spend in R and D to drive shareholder value as we allocate our resources against the highest return activities. The majority of our 2025 R and D expense relates to the completion of our investment in the KICK and FLU program towards partnering, and supporting the Sanofi agreement.

A smaller portion of this spend is presently directed towards our early stage preclinical programs. Compared to 2024 and beginning in 2025, we anticipate a greater than $250,000,000 improvement in our operating cost structure. Resulting from over $170,000,000 in savings from the transition of lead commercial activities to Sanofi approximately $80,000,000 in savings from the sale of our Czech Republic manufacturing facilities. Please turn to Slide 16. Since 2022, we've made significant progress towards reducing Novavax's current liabilities by $1,300,000,000 and over 50%. In 2024 alone, we decreased current liabilities by $481,000,000 are highlighting the status of our current liabilities as this results in a balance of less than 500,000,000 at year end 2024, a decrease of over $900,000,000 We share this sensitivity analysis as the vast majority of deferred revenue has limited cash flow implications and further reinforces the significant improvement achieved over the past twenty four months that has us well positioned as we enter 2025. Now turning to our 2025 revenue framework. I'll start by reinforcing that our 2025 revenue framework currently excludes Sanofi royalties, Sanofi Kick and Matrix M related milestones, and Novac Savid product sales. At this time, This means there may be revenues in 2025 that are additive to our expectations for adjusted licensing, royalties and other revenue.

We expect our adjusted full year 2025 licensing royalties and other revenue to be between $300 dollars This includes the following components and contributions. A $175,000,000 milestone to be earned upon the approval of the COVID-nineteen BLA, which has a PDUFA date in April 2 separate 25,000,000 milestone to be earned upon the transfer of the marketing authorizations for The U. S. And EU markets. Dollars 15,000,000 in revenue recognition related to the earned COVID-nineteen pediatric database lock milestone achieved in the fourth quarter of twenty twenty four. Dollars 35,000,000 in revenue recognition related to the Sanofi agreement upfront payment received in 2024. Dollars 25,000,000 to 50,000,000 in cost reimbursement from Sanofi. Related to select R and D and technology transfer activities. And finally, $0 to $25,000,000 in other partner revenue. Royalties and adjuvant reimbursement associated with our collaborations with the Serum Institute on R21, and our collaboration partners for COVID-nineteen vaccine, including the Serum Institute SKBIO and Takeda, update and add more revenue components to the 2025 revenue framework. Please turn to Slide 18. As noted, we expect to create significant value from all the Sanofi related revenue components.

I will take a few moments to share more details on three components currently excluded from our 2025 revenue framework. These are Sanofi Royalties, to Sanofi, Kik and Matrix M related milestones and three nivaxivate product sales. First, for Sanofi royalties, Sanofi will initiate lead commercial responsibility for the twenty twenty five-twenty twenty six vaccination season in select markets including The U. S. On the recent earnings call, Sanofi communicated that the upcoming twenty twenty five-twenty six season will be a learning year. We look forward to supporting Sanofi's 2025 launch and long term commitment to commercializing our COVID-nineteen vaccine.

As a reminder, Novavax is eligible to receive royalties in the high teens to low 20% on Sanofi sales. On Sanofi KICK and Matrix related milestones, Novavax is eligible to receive up to $350,000,000 in Phase three development and commercial launch milestone payments associated with the Sanofi Influenza COVID-nineteen combination products.

In addition, each new vaccine using Matrix M Novavax is eligible to receive up to $200,000,000 in launch and sales milestones in a mid single digit sales royalty for twenty years. Finally, for nivaxavid product sales, During the first half of twenty twenty five, as it transitions the market to Sanofi beginning with the 2025 vaccination season. These sales are expected by Novavax to be immaterial. Novavax will sell Novavaxivate commercial supply to Sanofi for the 2025 and 2026 seasons. And the reimbursement of this supply will be recorded as product sales. Regarding our EPA agreements, Novavax is working to amicably negotiate and deliver doses or when appropriate exit agreements with the goal of these activities to be cash flow neutral or favorable on a go forward basis. Returning to our discussion of cash and cash flow, Based on our current operating plan, including the multiyear expense targets, we we have highlighted a path to our goal of maintaining at least one point five years to two years of cash on hand at all times.

In addition, today, we have mapped out for investors our view on the path to profitability and value creation for Novavax. We look forward to sharing additional updates as we seek to improve Novavax's Novavax financial performance cost structure [indiscernible] to deliver shareholder value. With that said, I'd like to turn the call back over to John some closing remarks. Thank you, Jim. Please turn to Slide 19.

In 2025, we intend to build on our accomplishments from 2024 and drive value through our new corporate growth strategy by focusing on our three strategic Number one, executing on our Sanofi partnership and in doing so successfully demonstrate that we are a partner of choice. Priority two, leveraging our technology platform and pipeline to help foster additional partnering and growth opportunities. In closing, 2025 will be our first year operating under our new growth strategy. Our significant year of transition for Novavax we will continue to lower our operating expenses with the goal of making our organization more lean. While executing against our new strategy to drive near and long term value through existing and potentially new partnerships with other companies through our proven technology platform and through our emerging new early stage pipeline. This means that we will be generating revenue from milestones and working to build momentum momentum on potential future royalties versus booking sales of our own in the COVID market. The shape of our company will change further. The way we will earn revenue is changing from past years and the way we intend to grow our business the future will now be based on R and D innovation and partnering for selling one asset in a competitive marketplace.

Back to our roots, back to what we believe we are good at, and back to doing what our people love to do, to innovate and help to take on some of the world's biggest health challenges. Thank you all for joining us today and thank you to all of our employees for their continued efforts in advancing our business. I'm proud of our accomplishments to date.

And excited about the opportunity to drive future value for our strategy in 2025 and beyond. I'd now like to turn the call over to our operator for Q and A. Operator?

Thank you. We will now begin the question and answer session. We will pause momentarily Our first question is from Roger Song. From Jefferies. Your line is now open.

Great. Thanks team for the update and then taking our question.

So two from us. One is for the twenty twenty five-twenty twenty six COVID season under partnership with Sanofi, how much prep work has been in progress under the new administration and new HHS HHS chief, particularly any potential pros and cons as Novak's also NoFede COVID vaccine is the only protein based COVID vaccine. So that's number one. Number two is for the upcoming Phase three initial kick in the flu cohort readout in the year, what will be considered as a pardonable profile as you are seeking partner after the data? Thank you.

Roger, let me take your first question and I'll ask for a clarification on the second just to track with you and thank you for your questions. Good to hear from you, Rajar. So first of all, we see our vaccine and I think public does as well as an important differentiated option. And so we're excited to be able to offer a protein based option to U. S. Consumers and look forward to continued partnership with Sanofi, which has been strong and going very, very well. And also with with the new administration, I think we shared the mutual goal of improving the health of all Americans and we look forward to the coming season in that regard. Roger, would you mind just clarifying your second part of the question for us please?

Yes. So the third question is for the Phase III, the kick and flow initial cohort data readout in midyear. What will be considered as the partnerable profile as you're seeking the partner after the data. All right. Let me hand that over to Rexandra Dragia, our new Head of R and D. Rexandra?

Thank you, Roger, for the question. So this first cohort that was enrolled in the Phase III will provide additional immunogenicity and safety data. That would complement the data that we already have available. We do believe that that additional data can be used for a better design of the Phase three trial. And obviously, it will contribute to the safety database. That particular profile would be of interest for a potential partner.

Thank you.

Thank you. Your next question is from Munyank Mamtani from B Riley Securities.

Good morning, team. Thanks for taking our questions and congrats on the progress So are you able to comment on any recent BLA related in [indiscernible] to maybe a prior question, any subsequent steps being planned for CDC ACIP as you think about the strain update that would be needed for the twenty fivetwenty six season? And what sort of visibility you have on pandemic preparedness resources, accessible under the new administration? In light of the H5N1 funding news we heard in the last twenty four hours. And then I have a follow-up Thank you, Mike. So three questions there. First progress on BLA. So I'll let John Trazzino handle that one. I believe your second question was on recent news around ACIP. So on that one, it's really wait and see. That meeting was postponed. So we're not going to overreact to that at all. Let's see what that means. And these are important meetings and important advisory committees to companies and The U. S. And we'll look forward to participating in that robustly when the news news comes forward that it's back on. John, did you want to handle the BLA question for Mayank.

Yes, sure. Thanks, John. Hi, Mayank. Look, while we can't comment on specific FDA interactions, what we can say is that we are actively in conversation. It's very positive and very productive. And we're moving towards the PDUFA date in April and are looking forward to making it through that process. So I'll leave it there and say that those those FDA interactions are all have been very positive and supportive.

And Mike, you said you had a follow-up question as well.

Actually, can you comment on the last part of my question on H511 [indiscernible] Anything there? I know you're working on a publication, I think Roxanne said. So is the new data in some way helps in taking that forward, any thoughts there? I'll let Roxandra comment. Roxandra?

So our study in non human primate was positive. We do have immunogenicity data that is supportive to actually a one dose vaccine on our protein based platform. Matrix adjuvant. That is very important. We know that other platforms may require multiple administrations of a vaccine in order to provide protection. In an equally prime population. In a context of a pandemic, we do believe that if data that was generated in animals could be replicated in humans that could have a very, very positive outcome. It is too early to say. Obviously, but we are working diligently on that particular program.

Mike, we're working to speak government funding. Toward that and as an alternative as the only protein based alternative there. At least currently. We think that's an important choice for consumers. So we continue to work with USG to seek funding for that asset. Very helpful. And second, kind of important team here is looking forward to your R and D Day update second half of this year, Could you just maybe give us a little bit of a preview on which programs we may get the most up updated data from the list that you highlighted earlier. And I'm specifically obviously interested in some of the recent developments we've seen with, for example, the E. Coli vaccine. Not being positive and how you're thinking to address some of the unmet needs both in respiratory and also non respiratory side of things? Thanks again for taking our questions.

And Mike, right now we're in the experimental phase on these products. Pre IND, preclinical. So I think it's important that we we hold our powder just a little bit on that and give Roxandra and our team some time to generate that exciting data. We hope to bring forth as much data as possible four four programs that we've shared with you in the second half of this year. So as that develops, we'll let you know more. We do appreciate your interest and excitement. Our I have to tell you our team internally, our scientists, our entire company are very excited about what we're starting to work on here in the new portfolio. Thank you.

Thank you. Your next question is from Chris Lovianko from J. D. Cowen. Your line is now open. Thank you. We have two questions. First, in what ways could the official FDA label for your COVID vaccine differ from the current EUA stat sheet? Do you expect to have a warning for pericarditis and myocarditis in the official label? And second, has Sanofi provided Novavax with Sanofi's initial and total estimates for COVID-nineteen vaccine sales in 2025? Thank you.

So Chris, I'll take the second question and then give John Trezino your first question. Sanofi is not projecting sales right now. And so if we did have information on that internally, we won't share that. They're not projecting that publicly, but we're excited to have it in Sanofi's hands. They're a global leader in vaccine commercialization and we're very excited to see what they can do with our product this season and forward. John, did you want to take Chris' other question?

Yes. Again, we can't talk about specific interactions with FDA. But it and certainly we can't talk about what is going to be on or not on the label. As we're still in conversations with FDA about the BLA. And then also remember that we have to go through a strain change process and we're dependent upon the VERPACK meeting to occur in a timely fashion to give us some guidance there. We are under active surveillance of circulating strains. But there is yet some decision making to be done. So not but other than whatever the decisions are made regarding strain for the 2526 season.

Operator, next question.

Your next question is from Alex Tranhan from Bank of America. Your line is now open.

Hey guys. Thanks for taking our questions. Just two from us.

First, on plans to partner the KIC and FLU for future development, Just to clarify that the expectation here now is an additional Phase three.

Will be required in that you partner ahead of that study? And any color on flexibility here on partnerships since it shares the the COVID component, with Sanofi. And then just maybe one for Roxandra on the new early pipeline assets.

Curious if you could elaborate on the new RSV program. Is this maybe based on your prior RSV asset or is it maybe leveraging a different approach given more recent learnings in the field? Maybe you could just expand on that a little bit. Hi, Alec. Thank you for the question. Regarding Kik, I think as Roxandra was saying, we're looking forward to the data readout on our initial cohort, which will help further inform next steps from a clinical development perspective. And then we're seeking a partner to take on that that funding and development all through to full commercialization, which is in line with our new corporate strategy to out license assets, technology, create new partnerships and collaborations to drive value. Roxanne, I'll let you comment on our RSV combination.

So as far as our RSV combination, we are levering [indiscernible] and the new AI machine learning computational resource that will allow us to enhance the structural stability, to better look at immunogenicity and to combine multiple versions of the different pathogens in order to actually come up with a combination that is meaningful for the patients and to tackle the unmet medical needs. So it isn't just a plug and play. With what was done in the past, but it's really taking all those lessons learned and coming up with a much better product.

Thank you, Alexandra. And John Trizzino as some additional commentary. Yes. Just to add a little bit, right. Rox, being new to the organization and assessing all of our pipeline activities, you're absolutely right, right. This is just not a redo of something in the past. You might be making reference to kind of our prior RSV programs changes to the antigen construct are embedded in this new program. The addition of Matrix to the program. And as Ruck said, all of the lessons learned from the the COVID program during the pandemic, I think put us on a a significantly better and improved path with RSV addition to the fact that it's now would be a combo which is another differentiating and significantly important to the commercial market and unmet medical need.

Thanks.

Thank you. Appreciate the question.

Thank you. Your next question is from Eric Joseph from JPMorgan. Your line is now open.

Thanks. Good morning. Just a follow-up question on the kick program. Can you talk about what your latest outlook is with respect to regulatory requirements or what needs to be satisfied for the purposes of approval even though it would be in the hands of a potential partner? Is the expectation that immunogenicity would be efficacy being a requirement here in to what extent is the the initial cohort or the readout from the initial cohort midyear serve as a means to get for additional regulatory interaction in getting feedback on that point? Thank you. Good to hear from you, Eric.

And obviously, we're still working with the regulatory authorities on the pathway forward. To your point, that data will be informative into that process. And as we continue to work through with them to a final conclusion, we'll communicate that Okay, great. Thanks for taking the question.

Thank you. And your last question is from Vernon Bernardino from H. C. Wainwright. Your line is now open.

Hi, good morning, everyone. For taking my question and congratulations on progress with operational efficiency. Regarding the strain change in composition of the seasonal flu vaccine for the twenty twenty five-twenty twenty six season, there's a view that the flu vaccine for the twenty twenty four-twenty twenty five season wasn't particularly effective Given what we've seen so far, can you comment on perhaps what you think if there's any changes in perhaps strategies on the composition of the seasonal fluvac for the twenty twenty five-twenty six season, and the Phase three part of the CIC program.

Bob or Xandra, would you like to take that one from Vernon?

Thanks, John. Hi, Vernon. [indiscernible] have no current plans to extend the Phase three beyond the the initial cohort that you heard about already. So influenza strains for the upcoming season We're obviously tracking that. And if and when we identify a partner that may become more relevant And of course, we'll align with the public health authorities, whether those be U. S, WHO, etcetera, in terms of strength selection.

Great. And how like as a follow-up, do you think manufacturers can wait for the strength selection before perhaps manufacturing food vaccine at risk might need to occur.

Thank you for the question, Vernon. We're not going speculate on that at this time. And obviously, we don't have a commercialized flu vaccine either. So better not to speculate. Let's wait and see how things play out here go forward.

Okay. Thanks, John. Congrats, everyone. Thanks for taking my question. Thank you. Good to hear from you, Vernon.

Thank you. That concludes our question and answer session for today. I will now turn the call back to the management for closing remarks.

Thank you for joining our call today, everyone. Have a great close to the week.

Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.