Good morning, and welcome to Novavax's Third Quarter 2025 Financial Results and Operational Highlights Conference Call. 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 one 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 three of these priorities, we have made significant progress in the third quarter.

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 vaccine 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 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 four 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 two 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 healthcare providers for combination vaccines that can address multiple respiratory viruses at once. For all three 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.

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. 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.

We'll take our first question today from Roger Song with Jefferies.

This is Nabeel on for Roger. Maybe two 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. I'll start by acknowledging the question about the COVID season and commend Jefferies for their excellent weekly COVID tracker. I'm going to reference that for all your customers. I know it relies heavily on IQVIA data, but it’s impressive work. Regarding the BARDA grant related to the new pandemic flu, I'll have Rux provide insights there along with updates on the pandemic flu situation. Now, focusing on the COVID season, particularly in the U.S., we implemented a more restrictive policy this year for those under 65. When comparing year-over-year data, and considering we began a week later this season, prescriptions are down about 20% from last year. This trend aligns with both our internal analytics and general expectations regarding changes in market labels. The COVID label in the U.S. is increasingly mirroring those in Europe and other global markets. As we look forward to the COVID market this year and expectations moving ahead, we see a process of adjustment in the U.S., which we believe will provide a solid foundation for future growth. We're eagerly anticipating what Sanofi will achieve with Nuvaxovid, especially in the upcoming year when they have a full year of data. With that, let’s turn to Rux for his insights 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 on 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. Both of those products were fast-tracked by the 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 three 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. In our experiments, we always include a negative control and a positive control. The positive control typically consists of approved vaccines that serve as a benchmark for our experiments. In cases like C. diff, where there is no approved vaccine on the market, we utilize positive control constructs that closely resemble those used by competitors in their clinical trials. Including these controls is essential for obtaining accurate information. That addresses the first part of your question.

Thank you, Ruxandra. And Mayank, thank you for pointing out our three 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 three 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, two 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 six, 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 timelines 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 here 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 two 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 the line of 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?

Thank you for the question, Chris. Did you ask if we have considered the data from other competitors regarding the efficacy and tolerability of their shingles candidates?

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, and Rux, let me build on what you just shared. Thank you for that, Rux. It's a good question. Obviously, we've seen data indicating that in certain markets, up to 40% of consumers may not receive their booster shot for the current shingles vaccine due to concerns about side effects. Therefore, the efficacy bar for the marketed shingles vaccine is very high. It's an excellent vaccine when it comes to efficacy, and we're grateful it's available to protect us as consumers. The concerns about side effects present an opportunity for competitors to enhance their offerings. We are pleased to see other companies investing in this area, which is identified as one of the top vaccine investment categories according to McKinsey and other sources. That being said, there's no guarantee in biotechnology that anything developed in labs will achieve success. We are excited about the early results we are observing, but it is still early and in the preclinical stage. As Rux mentioned, we need to complete various studies and tests, as do our competitors, to reach that point. It’s encouraging to see other programs making progress, but how many will successfully advance to full Phase III trials and meet the high efficacy standards, or come close enough while ensuring tolerability in the final product, remains challenging. We are confident in our technology and believe in Matrix-M, which gives us a strong opportunity to create a competitive product. Again, we’re not making promises about future deals or products coming out of our studies. There is risk involved in biotechnology, and execution is key. We intend to succeed, backed by a robust technology platform we trust, and we are excited to move forward with it.

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?

Our supply sales, which is a new component of our product sales this year, has two main parts. The first is the COVID vaccine that we provide for Sanofi for them to sell. This is expected to be the final year we handle this as we will complete the technology transfer I've mentioned. According to our agreement with Sanofi, our goal is to achieve a small margin above our costs, so it is essentially a breakeven situation. The second part of our supply sales is Matrix-M, which we provide to all our partners. This will create a more sustainable revenue stream, maintaining a similar approach. We aim to support our partners with a modest margin. Specifically for Matrix supply sales, as our partner's unit volumes increase, we are seeing significant growth with the R21 malaria vaccine, which has already reached approximately 25 million doses since its launch last year. This increase is helping us achieve critical mass and economies of scale in our Matrix manufacturing, enabling us to operate efficiently for our partners. In response to your question about just-in-time production, for COVID specifically, the manufacturing process starts in the first quarter, where we work through various variants, conduct process performance qualifications, and begin a lot of the drug substance production early on. The just-in-time aspect mainly relates to drug product fills, which are timed to maximize shelf life. These processes typically occur during the summer as we prepare for the upcoming season. This is how our production cycle operates.

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.

Yes, that's a very good question, Tom. We don’t have any guidance on what the government might be targeting in terms of stockpiling. There is some historical precedent that you and our investors could refer to if necessary. However, I can confirm that including our Matrix-M in the pandemic flu was not part of our original agreement with Sanofi since we were also working on our own. We did collaborate with Sanofi to extend our agreement to allow them to use our Matrix-M in their flu vaccine. This is beneficial for business and significantly important for global public health to have options available if a situation arises. We believe it’s our responsibility, and it strengthens our partnership while presenting a potentially lucrative opportunity if the need arises. That said, we mentioned in our last earnings call that if Sanofi decides to advance this initiative to a specific point, we will negotiate the economic terms with them in good faith. Let's hope, for the sake of global public health, that this situation doesn't come to pass for us or any vaccine companies. If it does, we are prepared to utilize our own assets through a partnership with our flu vaccine, and also through Sanofi. We will keep you updated.

A significant concern in the COVID landscape is the duration of protection offered by mRNA vaccines. This topic has sparked considerable debate. The question arises whether you see this as an area for further clinical studies to demonstrate that your duration of protection is indeed superior. There are some indications of this possibility. Do you believe it’s something you might pursue? Alternatively, could it be something that is imposed on you? I recognize this is speculative, but thank you for addressing it.

No, very good question. We'll hand that over to Ruxandra. Rux?

Yes. That’s a very good question. So there are some ongoing real-world evidence studies that are undertaken. Obviously, these are studies that last a little bit longer than just one season that are looking exactly at that, at the durability of protection. And as the data is coming in, us and partners, we are sure that, that type of data is going to be published. As that entails large populational studies, they are typically undertaken by third parties, academic investigators, research institutes, your Centers for Disease Control because they do impact large swathes of the population. So to make a long story short, that type of studies are ongoing, and we hope to see the results soon.

Our next question will come from Geoff Meacham at Citi.

This is Mary Kate Davis on for Geoff this morning. We'd love to talk through a little bit more of the strategy behind your early-stage pipeline and the impact here. And thank you for giving great detail so far this morning. You walked us through the progress towards IND and would love to dial in on the opportunities for early data updates and what they could look like. And then as a follow-up, just given the public health burden of these diseases, how are you looking at the opportunity of these chosen targets? And would you consider partnerships in this space as you move these programs forward?

Thank you for the questions. I’ll let Rux take over shortly. Our leadership team has invested considerable time in discussing our transition. We are currently in the second phase of this change, shifting away from a fully integrated commercial organization to one that has an advanced technology platform. Our focus now is on out-licensing and partnering to create more opportunities through our pipeline R&D innovation. This aspect is crucial to us, as we view our technology platform and the efforts by Ruxandra and her R&D team as a driving force for generating additional future partnerships beyond just infectious disease. You raise a valid question regarding the potential for partnering our pipeline assets, and it is indeed our plan to do so. As previously mentioned, we maintain the ability to make our own decisions regarding these assets, ensuring economic stability, enhancing our P&L, and strengthening our cash runway during this transition. We are committed to maintaining the option to retain successful projects from our pipeline if we deem it suitable. However, our current strategy revolves around partnering with other pharmaceutical companies while maintaining a streamlined and focused structure, leveraging our technology and assets to generate revenue and partnerships. Our R&D and innovation engine will continue to create new future opportunities.

Sean, appreciate the question. The primary step-downs in changes to our cost structure as we look at 2026 and 2027 are the following. 2026, what you’re seeing is that many of the transition activities that we’re doing with Sanofi, actually virtually all of them, are completed in 2026. So you’re seeing that as we support Sanofi’s both commercialization through the form of manufacturing support, strain change, and continue to support their clinical efforts, completion of certain R&D and clinical study activities, those are hitting our financials, and our team is working on them through 2026. But they’re becoming smaller year-over-year, ’25 versus ’26. As we move into 2027, and these are virtually complete, you’re seeing the next step-down in activity. And so, it’s that $250 million net, which is our target, because you never know, maybe one of our partners might come back and say, do you mind doing some incremental work for us? We’d say, certainly, just cover our cost. So it’s that net number, which is our core spend target. It is that number that we’re driving towards, and we think we have excellent line of sight to get there.

This concludes our question-and-answer session for today. I would like to turn the conference back over to John Jacobs for any closing remarks.

Thank you, everyone, for joining us today. We appreciate it. Look forward to speaking with you next time.

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