Earnings Call Transcript - NVAX Q2 2025

Operator, Operator

Good morning, and welcome to Novavax's financial results and operational highlights conference call for the second quarter of 2025. Please note that this event is being recorded. I would now like to introduce Luis Senay, Vice President of Investor Relations. Please proceed.

Luis Sanay, Vice President, Investor Relations

Good morning, and thank you all for joining us today to discuss our second 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 and 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, including the Nuvaxovid post-marketing commitment study, full year 2025 financial guidance and revenue framework and Novavax's future financial or business performance. Each forward-looking statement contained in this presentation is subject to risks and uncertainties that could cause our 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 provide an update on our progress during the quarter and highlight our growth strategy. Dr. Ruxandra Draghia, Head of R&D, will discuss our R&D updates; and Jim Kelly, Chief Financial Officer and Treasurer, will review our financial results and 2025 financial guidance and revenue framework. Silvia Taylor, Chief Corporate Affairs and Advocacy Officer, will be available for the Q&A portion of the call. I would now like to hand over the call to John.

John Charles Jacobs, President and CEO

Thank you, Luis. I'm excited to be here today with members of our executive team to share our second quarter results and the meaningful progress that we've made. Q2 was a strong quarter as we continue to execute on our strategy to expand access to our proven technology platform by advancing R&D innovation and organically growing our portfolio, strengthening existing partnerships while working actively to forge new collaborations. This focused approach is designed to unlock multiple paths to value creation and supports our outlook for potential non-GAAP profitability as early as 2027. During Q2, we remained focused on our 3 strategic priorities for the year. And now I'd like to take a few moments to highlight our progress on each of them during the quarter. Our first strategic priority is optimizing our partnership with Sanofi. During the quarter, we received BLA approval for Nuvaxovid in the U.S., which triggered a $175 million milestone payment to Novavax to be received in the third quarter. We also completed the transition of commercial activities to Sanofi in the U.S. This means that for the '25, '26 season, Sanofi is now poised to assume the lead commercialization role for Nuvaxovid in select global markets. The Sanofi partnership represents a significant value creation opportunity for Novavax via the multifaceted nature of the agreement, including milestones and royalties associated with the commercialization of our COVID vaccine. As noted, we earned the $175 million milestone for the BLA. And in addition, we are on track for milestone payments associated with the transfer of the U.S. and EU marketing authorizations and the technology transfer related to Nuvaxovid manufacturing, which are anticipated later this year and in late 2026, respectively. Beyond the economics related to Nuvaxovid, Novavax is eligible to receive milestones and royalties associated with the development of new combination vaccines that include our COVID vaccine. As a reminder, Sanofi is developing 2 combination vaccine candidates, which include our COVID vaccine and their market-leading flu vaccines, both of which received fast track designation from the FDA last year. We're encouraged by Sanofi's recent comments on the potential of COVID-flu combo vaccines. And Sanofi has access to develop vaccines with our proven and unique Matrix-M adjuvant for which Novavax is eligible to earn milestones and royalties. Together, we are excited that this partnership has the potential to increase access to our technology and drive long-term value. Our second strategic priority is to enhance our existing partnerships and leverage our technology platform and pipeline to drive additional partnerships. Novavax's cutting-edge tech platform, consisting of our protein-based nanoparticles and our one-of-a-kind Matrix-M adjuvant has the potential to drive the development of both new and improved vaccines that are efficacious and tolerable. This value-creating technology platform has been validated through current marketed products, Nuvaxovid and the R21 Matrix-M malaria vaccine, our growing clinical dataset and our current partnerships. Let's talk about those current partnerships. This quarter, we optimized our partnership with Takeda for the Japanese market through an updated collaboration and exclusive license agreement, which significantly improved the financial terms for Novavax and improved the partnership's operating model. With its advanced infrastructure and strong regulatory environment, Japan is the third largest global healthcare market, and we believe our continued partnership will help to meet the needs of the COVID market in Japan. Takeda filed for approval of Nuvaxovid in June and is on track to have approval and doses in market in time for the fall respiratory season. Additionally, through our partnership with Serum Institute of India and Oxford University, the R21 Matrix-M malaria vaccine has made meaningful progress in addressing the urgent and unmet needs of malaria endemic regions since its first administration in Ivory Coast in June of 2024. The R21 Matrix-M vaccine is helping to expand access to life-saving prevention in communities with limited health care infrastructure with rollouts in 12 African countries as of April 2025. In fact, over 20 million doses have been sold to date since launch in mid-'24. Malaria historically has killed over 600,000 people annually, with the vast majority of deaths occurring in children under 5 in sub-Saharan Africa. R21 Matrix-M, as the first low-cost, high-efficacy malaria vaccine produced at scale, represents not only a clinical global public health tool but also a strategic opportunity in a market where demand significantly exceeds current supply. We are pleased that our active and successful commercial collaborations with Sanofi and Takeda and our public health partnership with Serum and Oxford have positioned us as a partner of choice in the vaccine space. With this strong momentum, we're actively pursuing new partnerships that could help to further accelerate the positive global health impact of our technology and unlock additional value for both shareholders and the communities we serve. We believe that our technology platform can play an important role in driving innovation in the global vaccine market that is expected to grow to over $75 billion by 2030. This quarter, we continued to advance strategic opportunities for our Matrix-M adjuvant. Our unique Matrix-M adjuvant is well positioned to drive innovation via our own organic portfolio and partnering with the potential to generate meaningful future royalty streams for Novavax for years to come. To date, we've signed material transfer agreements with 3 pharmaceutical companies to explore the utility of Matrix-M across novel indications, including its potential application in oncology. These arrangements have led to discussions about potential business partnerships to develop new vaccines and improve existing vaccines. In parallel, we continue to explore the potential for government grants to support the development of our pandemic influenza vaccine candidate, reinforcing our commitment to platform diversification and long-term value creation. In June, we reported positive data from an initial Phase III cohort showing our COVID-19 Influenza-Combination, or CIC, and standalone flu vaccine candidates elicited strong immune responses, similar to licensed comparators in Nuvaxovid and Fluzone high-dose with over 98% of adverse events rated mild or moderate. These results are important and helpful as we continue to engage in discussions with potential partners for these late-stage assets. Ruxandra will share additional insights and new data from this program in a few moments. And finally, our third strategic priority is to advance our technology platform and early-stage pipeline. We're advancing a focused pipeline of vaccine candidates targeting unmet needs in infectious disease, and we are exploring the utility of Matrix-M in oncology. Using a capital-efficient model grounded in strong science and sharply focused on future commercial potential, we're also applying AI-driven insights to accelerate candidate development. At the same time, we're sharpening our strategy to enhance the attractiveness of our technology, particularly Matrix-M to potential partners. This includes exploring new formulations and additional ideas to unlock its full value. As we have noted before, our primary focus is to out-license and/or partner vaccine assets we are developing in our pipeline. But if we discover a significant opportunity via those R&D efforts, we may decide to bring that asset forward on our own if the value proposition indicates it is best to keep that asset with Novavax. As you can see, this quarter, we continued to progress our growth strategy across all of its core elements, delivering on our existing partnerships, furthering discussions with potential future partners and advancing our pipeline. Later in the call, Jim will highlight the progress we've made in driving greater operational efficiency as we transition to a more lean and agile business model. Taken together, the progress we're making is well aligned with our corporate growth strategy and continues to strengthen our foundation, fueling the potential for long-term value creation and positioning us to deliver meaningful impact on a global scale, potentially improving the lives of billions. I'd now like to turn the call to Ruxandra to discuss our R&D updates.

Ruxandra Draghia-Akli, Head of R&D

Thank you, John. Please turn to Slide 7. Since the last earnings update, we progressed our programs, and I'm excited to share several important developments, starting with new insights from our CIC and standalone flu program, followed by promising new data from our H5N1 program. We've also made strong progress across our preclinical pipeline, including our RSV combination, C. difficile and VZV programs. Please turn to Slide 8. I'll start with our late-stage CIC and standalone flu program. In June, we announced results of the initial cohort of our CIC and standalone flu trial, where both vaccine candidates induced robust neutralizing antibody responses that were similar to licensed comparators. In vaccine development for diseases like influenza and COVID, we look for differentiated attributes such as breadth of protection against drifted strains and the durability of response. A vaccine that can provide protection for a longer period of time could have a significant impact. During the quarter, we generated new data, including additional analysis of T cell responses, which showed that in both the standalone flu and CIC arms, increases from baseline in influenza-specific polyfunctional expressing CD4 positive T cells were numerically higher than in the comparator Fluzone high-dose arm. This is notable as T cells recognize conserve influenza epitopes, which are associated with broader and longer-lasting immune responses. T cells also play a key role in viral clearance and contribute to durability of protection. In addition, T cells COVID-specific responses were similar between CIC and Nuvaxovid arms. While this immunogenicity and safety trial was not a pivotal trial, the data can inform a future registrational Phase III program. We intend to partner both candidates to conduct registrational trials. Please turn to Slide 9. In July, we published new preclinical data in Nature Communications, demonstrating that our H5N1 avian influenza vaccine candidate built on our recombinant protein-based platform and Matrix-M adjuvant generated robust immune responses after a single or 2-dose intranasal or intramuscular administration in prime nonhuman primates. This indicates that we may be able to offer flexible options for consumers. For example, intranasal administration could lower viral loads and potentially result in decreased transmission. In addition, unlike vaccines, which might require 2 or more doses for full protection, the possibility to administer a single vaccine dose is important in the context of a pandemic. These findings reinforce once again the strength of our technology platform and highlight the potential of our pandemic influenza program. Please turn to Slide 10. On the preclinical side, our RSV combination C. difficile and VZV programs have continued their rapid journey towards development of compelling, differentiated and commercially attractive next-generation vaccines. These assessments are executed in carefully thought out in silico, in-vitro and animal models that will address dosing regimens and criteria for our predefined target product profiles. Our goal is to rapidly position the programs for the clinic. For the C. difficile program, we are initiating and prioritizing animal models to delineate key biology questions on humoral and mucosal immunity and focusing on translational questions. We have incorporated new proteins into our antigens in addition to the main toxins to enhance differentiation, efficacy and cross-variant protection. One of the main challenges for C. difficile is that vaccines are not cross-protecting against various bacterial ribotypes. Protection against C. difficile and its complication remains a large unmet medical need with no C. diff vaccine available today. For the RSV combination, we are incorporating important lessons learned from our first-generation RSV clinical program and our CIC program into a second-generation antigen design. Our technology platform facilitates combination vaccines development, and this matters as consumers have indicated a preference for combination vaccines. For shingles prevention, we continue to generate key differentiation data in preclinical models with the goal of showing similar efficacy with existing vaccines while demonstrating lower reactogenicity. This comes from the observation that at-risk adults are declining shingles protection or don't complete their vaccination series due to fear of adverse effects. Finally, early data shows initial promise in the use of Matrix beyond conventional vaccines, opening new avenues of research in highly compelling disease use cases. For example, this quarter, we generated preliminary positive data using Matrix-M with an oncology vaccine candidate with potential future applications across several tumor types. As a means to advance our preclinical programs, we also continue to innovate with our technology. We have strategically added to our translational medicine and adjuvant teams to ensure we have the right technological capabilities to continue to build out our next generation of R&D using our existing preclinical programs as a test bed. There will be more to share in the coming months, but 2 main highlights are: number one, use of generative AI methods to inform antigen construct design, tethered with expanded high-throughput cloning and second, the use of AI/ML approaches to rapidly and cost effectively create and test antibodies, including assessing antigen epitope integrity of neoantigens. This data gives us unprecedented insights into the behavior of antigen and adjuvant drug substance, which helps prepare for clinical positioning. Looking ahead, we are excited to host our Investor Day in the coming quarters, where I will go into greater detail on the programs I've discussed today. As we advance our early-stage pipeline, we intend to take a strategic and fiscally disciplined approach, prioritizing programs that address significant unmet medical needs and offer compelling commercial potential. I'll now turn the call to Jim.

James Patrick Kelly, Chief Financial Officer

Thank you, Ruxandra. Please turn to Slide 11. This morning, we announced our financial results for the second 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 12. I'll begin with key highlights from our second quarter 2025 financial results. Novavax reported total revenue of $239 million as compared to $415 million in the second quarter of 2024. Total revenue included $175 million milestone earned from Sanofi related to the May 2025 FDA approval of our Nuvaxovid BLA in the U.S. We expect cash receipt of the $175 million milestone in the third quarter of 2025. During the second quarter of 2025, we continued to transform Novavax into a more lean and agile organization. Evidence this quarter includes the 41% 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 57% as we transferred lead commercial activities to Sanofi and reduced infrastructure. Looking forward, we are updating our full-year 2025 revenue framework and financial guidance to reflect the impact of the recently announced FDA post-marketing commitment study. Importantly, we do not anticipate the cost of the study to have an impact on our 2025 and 2026 operating profit profile as Sanofi reimbursement is expected to cover the incremental study costs added to our plan. We ended the second quarter with over $850 million in cash and receivables, including the $175 million milestone payment from Sanofi. In addition, we anticipate earning an additional $50 million in milestones from Sanofi in the fourth quarter of 2025 upon the transfer of marketing authorization for the U.S. and Europe. Our goal is to drive financial performance by reaching and growing non-GAAP profitability and maintaining at least 1.5 years to 2 years of cash on hand at all times. Depending on the near-term performance of our partners, we see the potential to achieve this profitability mark as early as 2027. Please turn to Slide 13 for a detailed review of our second quarter revenue results and disclosures. For the second quarter of 2025, we recorded total revenue of $239 million compared to $415 million in the same period in 2024. Product sales for the second quarter of 2025 of $11 million consisted of $13 million from supply sales and negative $2 million of Nuvaxovid product sales from the closeout of our U.S. market activities and related return reserves. Our second quarter supply sales were primarily from adjuvant sales to our license partners. We are encouraged by the increased demand for Matrix-M as this enables the company to better reach manufacturing economies of scale and aids the improvement of our margins. Of note, year-to-date sales of the R21 Matrix and malaria vaccine of 14 million doses already exceeds the 6 million doses sold for the full year 2024 and highlights the steady progress being made by our partner, the Serum Institute with the launch. We recorded $229 million of licensing, royalties and other revenue in the second quarter, consisting of $199 million and $27 million related to our Sanofi and Takeda agreements, respectively. Please turn to Slide 14 for a detailed view of our second quarter financial results, where I'll focus on our operating expense results and trends. Second quarter 2025 combined R&D and SG&A expenses were $123 million, and reflect a 41% and $85 million reduction from the same period in 2024. Importantly, our SG&A expenses were 57% lower than the same period last year and are driven by the transition of the lead global commercial activities to Sanofi, plus strong execution of our broader cost reduction plan. Research and development expenses of $79 million in the second quarter of 2025 were primarily driven by our investment in the CIC-flu study and support of Sanofi for the upcoming COVID-19 vaccine season. A smaller portion of this spend is presently directed towards our early-stage preclinical programs. And finally, we reported net income of $107 million or $0.62 per diluted share for the second quarter of 2025. Please turn to Slide 15. In May 2025, Nuvaxovid received U.S. market authorization and with that approval came an FDA request to complete a post-marketing commitment study or PMC. Today, we are sharing the specifics around the execution of this study and its impact on Novavax's revenue framework and financial guidance. Importantly, we are sharing that this update is not anticipated to have an impact on our 2025 and 2026 operating profit profile as Sanofi reimbursement is expected to cover the incremental study costs added to our plans. The PMC study is anticipated to occur during 2025 and 2026 with a total cost of between $70 million and $90 million. Novavax will conduct this study on behalf of Sanofi, and Novavax will be reimbursed 70% of total cost or approximately $55 million midpoint of that range. In the table below, we outlined both the specific updates we are making to our revenue framework and financial guidance and introduce a new metric where we show our combined R&D and SG&A expenses less partner reimbursements. This new non-GAAP metric reinforces that we are on track with our previously communicated expense targets through 2027 when adjusting for partner reimbursements. Please turn to Slide 16. We are committed to streamlining our operations to enable value creation. Our updated full-year 2025 financial guidance for combined R&D and SG&A expenses is now $495 million to $545 million to include the addition of the PMC study. We are also sharing our multiyear targets highlighting our expectations 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 provide investors with a better understanding of our core operating cost structure. The resulting lean and agile operating model is focused on targeted investments in R&D to drive value creation. Please turn to Slide 17. Now turning to our 2025 revenue framework. Today, we are raising our prior revenue framework and now expect to achieve adjusted total revenue of between $1 billion and $1.050 billion. Our 2025 revenue framework excludes Sanofi supply sales, royalties, influenza COVID 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 $5 million increase to adjusted supply sales related to increased demand for Matrix-M from Serum for the R21 Matrix-M malaria vaccine, and a $20 million increase to adjusted licensing royalties and other revenue that has 3 components and includes a $20 million increase to Sanofi cost reimbursement related to the PMC study; a $10 million increase to other partner revenue from Takeda based on milestones and royalties under that agreement; and a $10 million decrease to amortization related to the Sanofi upfront payment and pediatric milestone that we now expect to recognize in 2026. Our year-to-date 2025 sales of $906 million leaves $119 million to be recognized in the second half of 2025 at the midpoint of our revenue framework for adjusted total revenue. We expect the majority of this remaining amount to occur in the fourth quarter. 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.

John Charles Jacobs, President and CEO

Thank you, Jim. In summary, we intend to drive long-term value creation through our corporate growth strategy and continue to focus on our 3 strategic priorities. First, executing on our Sanofi partnership and in doing so, successfully demonstrating we are a partner of choice. Second, enhancing existing partnerships and leveraging our technology platform and pipeline to forge additional collaborations; and third, advancing our technology platform and early-stage pipeline. Thank you all for joining us today and a sincere thank you to our employees for their unwavering dedication to advancing our mission. I'm proud of what we've accomplished, and I'm energized by the opportunities ahead as we execute on our strategy to drive meaningful value. I'd now like to turn the call over to our operator for Q&A.

Operator, Operator

And we'll take our first question from Roger Song at Jefferies.

Roger Song, Analyst

Congrats for all the progress. Two from us. One is in terms of the 2025, 2026 COVID season supply, given you will continue to use JN.1, would you still file for approval for this season for your vaccine? And then when the supply will be ready for the season? And then also second question related to the CIC and flu partnership discussion. Any additional comments regarding the interest level, the progress? And then how should we think about the timeline you will be able to sign a partner to move forward into the pivotal?

John Charles Jacobs, President and CEO

Jim, you want to take Roger's first question?

James Patrick Kelly, Chief Financial Officer

Certainly. Roger, with respect to the regulatory filings for readiness for our COVID vaccine for the fall season, you're right that we had a BLA approval for JN.1, which is our intent to deliver that vaccine JN.1 this fall. We also, however, in parallel, are working to improve the shelf-life profile of our vaccine for this fall to a more competitive profile, the expectation being 6 months, at least. And therefore, the regulatory filings we're doing right now for readiness for the fall are really focused on that improvement in shelf-life profile and stability. All right. And then I believe your next question related to the combination vaccine potential partnering. Can you just restate one more time?

Roger Song, Analyst

Sure. Can you provide any comments on the interest level and the progress of the discussions? Also, what timeline should we expect for the partnership to advance?

John Charles Jacobs, President and CEO

Good question, Roger. Obviously, due to the nature of those types of conversations, we can't give detail or comment on that. But what we did allude to is that we are in conversation with multiple potential partners. And as things develop and we can share, we will. I will say that there's been strong commentary we've been pleased with from our partner, Sanofi. So if you take a look at their statements in their recent earnings discussions, they speak very positively about the potential of combination assets in COVID flu moving forward in the future. Both of the assets they're developing with our Nuvaxovid received fast track designation from FDA, and we're very excited about the potential of that future. Rux, did you want to add anything else on Roger's question regarding CIC-flu combination?

Ruxandra Draghia-Akli, Head of R&D

So the only thing that I would like to add is, as you might remember, this was the first cohort from the trial where we were assessing the immunogenicity and obviously adding to the safety database. The data that we have generated was to actually strengthen the body of data that we already had, and it was not a registrational trial. The registrational trial would be undertaken by that potential partner when that partnership would occur.

Operator, Operator

We'll move next to Mayak Mamtani at B. Riley Securities.

Mayank Mamtani, Analyst

Congrats on the progress. So maybe just following up on the prior comment about the new data that was presented regarding the CD4 T cell superiority versus Fluzone high-dose, including for both CIC and NIV and H1N1 and H3N2. Just curious, Rux, would you expect a relatively comparable data set being generated in the Sanofi study? And also wonder how important is the B strain-specific immunogenicity in context of understanding the profile of standalone flu and CIC when you also obviously talk about what additional strategics are looking for? And then I have a quick follow-up.

John Charles Jacobs, President and CEO

Rux, do you want to comment on Mayank's question?

Ruxandra Draghia-Akli, Head of R&D

Yes. So we cannot comment on Sanofi progress. Obviously, we are not purview to their data, and we can actually just relate our data from our experiments from this first cohort, as I was mentioning. It was very encouraging to see that the CD4 positive T cells, polyfunctional were actually comparing very favorable, both in the case of tNIV and the CIC with a comparator, which is Fluzone high dose. As far as the specific strains, again, that is a little bit speculative because every year, as we know very well, in the case of influenza, you have different strains that are circulating. And the data that we have today is indicative of the direction of travel. How each and every one of these strains is going to behave in a particular season is actually to be seen and assessed.

John Charles Jacobs, President and CEO

But we're encouraged by the data, Mike. We're encouraged by the data, and we will keep driving forward with it.

Mayank Mamtani, Analyst

Great. And my follow-up was around the 3 MTAs that you talked about. It seems this is growing over time. Could you just touch on how process goes to specific deliverables that kind of lead to a financial transaction? And do you have an understanding of what the new evolved BARDA framework is as they consider newer platforms to diversify for things like pandemic preparedness?

John Charles Jacobs, President and CEO

Mayank, I want to make sure I fully understand your question. So I think it was 2 questions in 1 or 2 parts to your question. If I understand you correctly, the first part, you're asking about the process from MTAs migrating into a financial transaction. Is that the first part of your question?

Mayank Mamtani, Analyst

Yes, that's more focused on the industry. The second part of the BARDA question is that the BARDA framework is also evolving as it considers different platforms beyond mRNA. I'm curious about any ongoing progress in that area.

John Charles Jacobs, President and CEO

All right, Mayank. So to take the first question, obviously, that's limited to what I'm able to share here with you today and with everyone today due to the nature and sensitivity of conversations around business partnership deals, but MTAs are good because it allows potential partners to explore our technology in their own laboratory and see what it's capable of. And if it could solve needs that they have, then those said potential partners might want to discuss with us a potential deal for that or a license deal, et cetera. So that's why we're happy to get those MTAs signed because we believe in our technology. We've done experiments internally in our own lab with multiple vaccines that either exist today and/or could exist. And we know what we believe we know what Matrix-M is capable of, and we're sharing some of that data under CDA with potential partners. And then, if they're doing experiments on their own and proving that out for themselves, that's further evidence that there may be something here for them to explore more deeply and perhaps in a financial arrangement. There's not much more we can say on this until these deals materialize, and then we'll be glad to share. So I think there was another comment about BARDA. So let me just pass that over to Silvia Taylor, and then we may have Ruxandra add to that as well. Go ahead, Silvia.

Silvia Taylor, Chief Corporate Affairs and Advocacy Officer

Mayank, certainly, there is a lot right now that is evolving in the policy landscape. And I think as it relates to BARDA, look, we're excited about the asset that we have. We are excited about the data that Ruxandra talked about for our pandemic influenza asset. We continue to work with BARDA on potential funding. Really can't comment too much about what they're looking at in terms of other technology platforms. But we always talk about the importance of having our technology option available, and that's something that I can say is resonating. So as those conversations continue and we have anything to report, we'll definitely keep you posted.

John Charles Jacobs, President and CEO

Yes. And there were news today about contracts getting canceled, Silvia, right? So maybe that's related to your question, Mike, but we believe there's still interest both from the Europeans and the U.S. authorities in exploring potential with Novavax and our technology for pandemic preparedness. Rux, did you want to add a thought to that before we move on?

Ruxandra Draghia-Akli, Head of R&D

Thank you, John. The only thing that I wanted to add is, as we have seen in the past, in every single one of the applications, both for infectious diseases, generally speaking, and for the emerging and pandemic threats, there are a multitude of platforms that can be used to develop safe and efficacious vaccines. We happen to have one of them, which is a protein-based platform with a Matrix-M adjuvant. And our work that has been just recently published, as I've mentioned, in Nature Communications has shown that that is a viable alternative, at least for the moment in nonhuman primates. Obviously, the work has to be continued in order to give data that is relevant for protection of the general public. But there are many platforms out there and the fact that we are moving to a platform or another is just a matter of choice and of science.

Operator, Operator

We'll go next to Chris LoBianco at TD Securities.

Christopher Hue LoBianco, Analyst

First, what is your level of confidence in positive efficacy data from the post-marketing Phase IV trial? And is there an interim analysis? And second, bigger picture question, is the company evaluating or open to acquiring or in-licensing clinical stage candidates? The company has a great platform, but it also has a highly experienced team and strong cash outlook, which could be a value-add for accelerating the development of external clinical stage candidates.

John Charles Jacobs, President and CEO

Could you repeat the first part of your question, please, Chris?

Christopher Hue LoBianco, Analyst

Are you open to acquiring or in-licensing clinical stage candidates?

John Charles Jacobs, President and CEO

Yes. Right now, we're focused on external partnering and internal development of our own candidates via our pipeline. So that's the company's focus right now and then generating, first of all, optimizing our existing partnerships with, first and foremost, Sanofi, but also Takeda and with Serum and other organizations that we're proud to partner with, and then investing in our technology platform where in the coming quarters, we intend to share some initial data that's emerging from those exciting assets that we're working on in very early stage. And we're also exploring beyond infectious disease and seasonal respiratory viral vaccines, we're exploring the potential of Matrix-M in oncology. So we look forward to sharing some of that data in the coming quarters with you. Jim, did you want to add a little color to that?

James Patrick Kelly, Chief Financial Officer

Certainly. One of the things that we are emphasizing about how we unlock value from our technology platform is that the more people we can get this differentiated technology into their hands, driving more innovation, more vaccines, we believe that does the best for global health and for value creation. And for that reason, that is why we are so focused on ensuring folks understand what Matrix-M can do to either develop new vaccines or perhaps even improve upon existing. You saw earlier in our remarks, hey, we see an industry that last year, vaccines was over $57 billion. That McKinsey study notes it's going to grow over $75 billion and even beyond. We have a platform that has utility across multiple modalities. And we believe we've got the ability to really be a driver of growth in this industry, and that's where we're focused.

John Charles Jacobs, President and CEO

Yes, Jim, well said. And Chris, that's a great question. Another way to look at our technology platform is it has utility, as Jim said, across multiple other vaccine platforms, could potentially have utility as a therapeutic, could potentially have utility beyond respiratory and infectious disease. So the way we see our Matrix-M platform is that we haven't really yet begun to tap even the full potential at all of this platform. And we see it potentially being involved in multiple vaccines across multiple partners and coming out of Novavax for years to come.

Operator, Operator

We'll go next to Alec Stranahan at Bank of America.

Alec Warren Stranahan, Analyst

Two from us. First, on the PMC, I appreciate the color Jim provided on the cost reimbursement. I guess what information can you share on the design, the size, the timing of the requested PMC? And second, how does the shifting winds at the FDA with RFK pulling mRNA vac funding maybe provide a tailwind for you guys with potential partners?

Ruxandra Draghia-Akli, Head of R&D

Yes. Thank you, John. So as you know, and as we have previously discussed, this is a post-marketing commitment. So basically a study that occurs after the marketing authorization that could provide additional insights in a specific age population and looking at very clear endpoints. We do work towards starting the study as fast as possible and generating that data per the agreement with the regulatory agency. So we hope to start the study as soon as at the end of this year and obviously, generate the data in the next quarters thereafter.

John Charles Jacobs, President and CEO

And Alec, you can see the estimated cost of $70 million to $90 million, so that probably tells you a lot about the scope and scale and whatever type of burden that may be. The post-marketing commitments are not uncommon, and this is something we can handle, and I think Jim put it in a good perspective. Jim, anything to add on that?

James Patrick Kelly, Chief Financial Officer

Just that we'll continue to support Sanofi and all of our partners to advance their interest. As you're seeing in this case, Sanofi is picking up the vast majority of expenses as we keep the momentum, right, in Nuvaxovid advancing in the marketplace.

John Charles Jacobs, President and CEO

Alec, your second question was about a tailwind, right? I found it interesting considering the news today about some grant funding being withdrawn from mRNAs by the current administration. What encourages us is the continued investment in vaccines by peer companies and larger firms. Recently, Sanofi, which we partner with at Novavax, acquired a vaccine platform. They are also investing in their combination vaccines, both of which were fast-tracked. Other companies are investing in vaccine platforms and technologies as well. For instance, during their earnings call, Pfizer mentioned vaccines as one of their top three investment priorities going forward. Companies that have long been involved in vaccines understand their value for public health and financial performance, and they are continuing to invest. We are excited about the future, and our peers seem equally optimistic. Silvia, you may want to share any insights regarding potential tailwinds stemming from today’s news.

Silvia Taylor, Chief Corporate Affairs and Advocacy Officer

Yes, John, I mean, totally agree with what you said. I think when you're talking about vaccines, you're talking about different platforms. And I think certainly, there have been a lot of questions as we saw about the news that John mentioned yesterday in terms of BARDA pulling funding for mRNA. We think that there's potential impact for us and of course, for our partner, Sanofi, in a couple of areas. I mean, one, I think, is the development of pandemic influenza candidates. We've already talked about the fact that we have an asset. We're working with BARDA to explore the potential for funding. And there is the potential opportunity for us, particularly since other platforms may be taken out of consideration in that. And then, I think, the other thing is seasonal execution and what it could mean for the market going forward. Certainly, I think right now, there is a lot of support for an alternative technology platform for protein-based technology platform. And we're excited to partner with Sanofi as they take the lead commercialization role and execute in this environment.

Operator, Operator

We'll go next to Tom Shrader at BTIG.

Thomas Eugene Shrader, Analyst

The profitability comment for 2027, does that assume worldwide COVID vaccine use is about flat? And then a remedial one for Ruxandra. All your talk about more robust flu responses, the multiyear flu vaccines make sense ever or does the strain essentially always drift too much to make a vaccine that lasted 2 years valuable?

John Charles Jacobs, President and CEO

Jim, do you want to take the first question?

James Patrick Kelly, Chief Financial Officer

Certainly. I appreciate the question. Our goal as a company is to drive value by not only achieving profitability but also ensuring it is sustainable and grows over time. In the meantime, we are focused on maintaining a strong financial position with at least 1.5 to 2 years or more of cash reserves. We are positioning the company to unlock value. Regarding the potential for profitability as early as 2027, this is contingent on our partners' performance, and we see multiple pathways to reach that goal. For instance, our non-GAAP profitability profile targets breakeven by 2027 with an expense profile of $250 million for R&D and SG&A. To simplify the math, our cash operating expenses would be about $200 million to $225 million, meaning breakeven could be achieved through a COVID vaccine. Considering our royalty rate from Sanofi is approximately 20% at the midpoint, to break even, Sanofi would need to sell a billion or more COVID vaccines in a market valued at 8 billion to 9 billion, indicating the market share needed is in the teens. Another option is advancing the flu and CIC combination by Sanofi, which has a milestone approval launch of $225 million, and could help us reach breakeven with royalties and growing revenues from that launch. Additionally, there are other new collaborations we are pursuing that could provide further cash flow. Ultimately, our transformation into a leaner and more agile cost structure lowers the threshold for profitability, combined with our evolving partnering strategy, is aimed at generating sustainable cash flow that creates long-term value for the company.

John Charles Jacobs, President and CEO

Thank you, Jim. And Ruxandra, did you want to take the second question from Tom about flu vaccine, a multiyear flu vaccine?

Ruxandra Draghia-Akli, Head of R&D

Well, as it's implied from your question, the influenza vaccines are typically subtype-specific, yes, and that is changing every year, where there has been a tremendous effort in the field in the 35 years for the more universal vaccines. For the moment, those efforts have not been brought to fruition, I would say. The data that we are generating is actually showing that our vaccine can offer a little bit broader immune protection. So slightly hetero subtypes might be in the scope of that protection and also, the T cell data that we have generated, it's showing that we can probably confer a little bit of more durability of protection. But we need to look at the durability of protection or that heterosubtypic protection in the context, the current vaccines might protect for a season, a season, it means a few months, what if we can actually protect for 6 months or for 12 months, it would already be an advancement versus the current state of science that we will be able to confer protection for 2 years or 3 years or for longer or have the universal flu vaccines, I actually think that the jury is out there. There have been so many efforts in that field, and unfortunately, they all have failed for the moment.

Operator, Operator

And we'll go next to Geoff Meacham at Citi.

Unidentified Analyst, Analyst

This is Charlie on for Geoff. As part of RKJ's comments yesterday about the BARDA situation and the framework, definitely, the comments on mRNA could be perceived as a tailwind for you guys. But among his comments, he also noted the desire for a universal vaccine rather than antigenic specific vaccines. Based on that, how do you think that might impact discussions going forward for interest for your flu and CIC vaccine for partners? And then a second question for us is you guys have noted interest in going in oncology and additional plans beyond respiratory vaccines. Given the importance of that beyond respiratory revenues, how do you think you guys might be able to fund those programs de novo on the current expectations of cash generation from the Sanofi collaboration?

John Charles Jacobs, President and CEO

I want to clarify your question, which had two parts. The first part was about the universal vaccine and its effect on discussions or partnerships. Ruxandra addressed this well in a previous response. We do not view this as a barrier. The concept has been explored for over 35 years with little scientific success. We are enthusiastic about current and potential partnerships involving our technology platform. For the second part of your question, please condense and restate it so we can address it accurately.

Unidentified Analyst, Analyst

Sure, of course. Yes, just the interest in going in oncology, if you could give us more details on that and plans for what other areas you guys may have interest in going into, and then also your confidence in being able to run those programs based on current projections of revenue generation from the Sanofi collaboration.

John Charles Jacobs, President and CEO

Right. Very good question. Appreciate that. We're excited about the potential outcomes of our explorations in oncology. We'll be looking forward to in the coming quarters, sharing some initial data coming out of those explorations, and we're very excited about the potential there for our technology. Let me let Jim handle your question about the financial runway to support our portfolio programs. Jim?

James Patrick Kelly, Chief Financial Officer

Well, certainly, and maybe reinforcing and this is the reason why I really like this question, it reinforces the thoughtful approach we're using to our business model of finding outside this company experts who can utilize our technology to drive new areas of vaccine innovation where we don't have to do it ourselves. And so in the case of oncology, we've recognized the importance of the right adjuvant playing a role in oncology. And we don't intend to be an oncology company. We don't. However, we'll generate the right type of data to encourage you know how vast that marketplace is, to encourage those players to collaborate with us, have access to our technology to advance what Matrix could be. And the return on that could be exceptional. And so, I think what you heard today from Rux, just some preliminary information that we're learning leads us to believe we're on the right path, and we're looking forward to partnering with others.

John Charles Jacobs, President and CEO

Yes. Today, Jim clearly outlined our lean financial platform and the ongoing cost reduction efforts we have been implementing for the past few years. We will continue to execute these measures while maintaining our capabilities and prioritizing investments in areas that align with our strategy. This includes the investments we have previously mentioned in four different programs, as well as our explorations in oncology and discussions about H5N1. All of this is part of the lean financial platform Jim discussed. We have always stated that if we discover a significant opportunity within our portfolio, it will be evident, and we may choose to present it at that time. For now, everything is included in the current financials that Jim provided.

Operator, Operator

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

John Charles Jacobs, President and CEO

Thank you very much, everyone. We appreciate you joining the call today and look forward to seeing you in the near term. Have a great day.

Operator, Operator

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